Michael Dell – Invest America Act Becomes Law, AI Talent Wars, Compute Demand, Market Update | BG2

30:15And there's many ways to address that. But we should be worried about where the deficit is and the rate of increase. Let me ask a question about that. Well, first, maybe to level set. So the argument out of the White House is that the reconciliation bill cuts the deficit. So the deficit was about 1 .9 trillion. Their argument is that it cuts the deficit by about 150 billion a year. So 1 .5 trillion over 10. Okay. And then they also argue you get another 250 billion dollars in tariff revenue incremental from the start of the year. Right. We saw that in the run rate revenue in the month of May. So you add those two things together.

31:03Now you're at 400 billion. So if you're at 1 .9 trillion deficit, now you're down to about 1 .5 trillion dollar deficit. By my math, that drops it to about 5 % deficit to GDP. Bessent has said he will get it to 3 % deficit to GDP, which is what most people say is, you know, reasonably healthy. I think people would like to, you know, not have any at all. But I think most people view 2 to 3 % as reasonable. He thinks he can get there by 27 or 28 through the two things I just mentioned, right. Tariff revenue and the deficit reduction in the reconciliation bill, plus an incremental 100 to 200 basis points of growth in the country caused by, you know, lower taxes, less regulation, AI productivity, et cetera.

31:54So, you know, our, is your view that we just have to wait and see, you know, like does that show up or does it not show up? Well, obviously we have to wait and see. I think on the, on the, on the trade and tariff's front, I think this is, this is very tricky, right. We have products flowing back and forth and we have services flowing back and forth. And if you think about, you know, the market cap of the US companies versus the rest of the world, hey guys, US is doing really well, we're out to the rest of the world in market cap. And the reason is that we have a substantial lead in the most viable industries in the world.

32:51Correct. And so the issue there is that if you, if you think about, you know, the, the trading products, you also have to think about the trading services and, you know, how that's going to be dealt with in a negotiation. I don't know how they'll all get sorted out. But I, I don't think it's a, I don't think it's a simple one line item fix. Right. Right. No, I think it's, you know, it's all relevant right now. Elon's talking about forming a third party, the American party, really in response, what appears to be frustration over doge and the budget deficit and the concerns by folks like Radalio about, you know, a debt spiral in the United States.

33:43You know, you got guys like Scott Bezos and saying, you know, Elon, you catch rockets, leave the finances to me. Bezos seems very confident that he's going to get this back down to two to three percent deficit to GDP. I actually like the, the suggestion bill by DeSantis, you know, rather than forming the third party, which seems to me just chaotic and a lot of overhead and has not historically been that successful. I would love to see, you know, you know, like if this is his main issue, if it's, if it's the budget deficit and debt, which I would love to see him take on, right? He could do a series of things.

34:20Number one, he could really sponsor a balanced budget amendment to the Constitution of the United States under Article five. If he put $10 billion against that effort, it would be the single largest constitutional effort in the history of the country. I think there's broad bipartisan support for a balanced budget amendment. We have 30 32 states that have supported this in the past. I think you only need 34 to get it constitutional convention called 38 states to get it ratified. You know, it would, it hasn't happened. You know, the founders made it hard to amend the Constitution for a reason, but I actually think if he put those type of dollars and that type of focus behind it, we could get it done.

35:00And then on top of that, he could target both Democrats and Republicans and primaries around this issue. And to me, it just seems like that targeted approach, that very focused approach to balancing the budget would have all sorts of positive impacts. Number one, it keeps the country focused on this issue. It keeps this administration focused on this issue. And, you know, I think you have an outside chance of getting a constitutional amendment. And you certainly are going to have a lot of Republicans and Democrats who will run on that issue if they think they'll get, you know, Elon support. So I'm not sure how this will all evolve, whether there's going to be a third political party or not.

35:40But I would love to see this issue get dealt with. I remember Ross Perot tackling it 1992, 1991, Michael. I know, you know, you knew Ross. And, you know, to me, that that type of attention is the type of attention that we're going to need. Why don't we, why don't we shift gears here for a second? This one, I, you know, I've been dying to ask you both about there's this really unprecedented war for AI talent going on. And it was kicked off by Zuckerberg and Metta. They made the aqua hire of scale for $15 billion. They brought on board Alex Alexander Wang, you know, to help lead that effort. Then they brought on board and that freedman and Daniel Gross.

36:32They've poached a bunch of people from open AI, a bunch of people from Google and now today, another, you know, announcement of somebody from from Apple. The talk is $75 to $100 million annual pay packages, massive signing bonus, really dollar amounts, Michael and Bill, I don't, I've never heard of, you know, in the tech industry. So Bill, given that recent set of facts, like what is this, is this a good thing? Is this a bad thing? What do you think the downstream implications of this are? Well, I mean, I would, I would back up a little bit. I don't think it started with Metta. I mean, I think it started with the cycle that we've been under in the private funding market.

37:15You know, we saw some of this stuff during the search, but you know, we've moved to a world night. I talk about this in detail on, on O'Shauna Seas podcast if someone wants to go listen to it from a few weeks back. But we've evolved to a place where when there's a successful company, the late -stage private market writ large tries to shovel feed cash into them. And so we have private companies that have raised not just 100 million, but a billion or more. And we have a handful of private companies, including Open AI who are voracious and audacious enough to burn to three, four, five billion dollars a year.

37:59And so you start doing that and you create a situation where private companies, and we saw this a lot during the search, but private companies have an odd advantage against public companies in the market. The, their investors are more willing to let them lose a lot of money than the public investment, you know, investors may be willing to. And so they get bold and they get audacious. And, you know, Open AI and Thropic, they were all paying people tons of money before Metta did this. They were paying them 10 million a year, you know, maybe a smaller than what you were talking about, but they were doing it.

38:39And they were providing liquidity earlier, like two years in instead of waiting for four. And liquidity is a private company and all of these things, which in some cases may have let these people leave because they didn't have any lock -in. So that may, that part may have backfired. But in Zuck, you know, you have someone who's had his back against the wall a couple times and gotten bold and changed what he was doing and succeeded again. And so he has conviction that he's willing to take a big bet. I think he's very willing to look at cost as a percentage of his market cap. And if you risk it's spending against a percentage of his market cap, not everyone's capable of doing that.

39:22I think it may be the right math, actually, in terms of, you know, how big a bet he wants to make. But yeah, it's an, what he has done here in the past three weeks is it is an experiment that's never been tried before. But there's unlimited free agency and business, unlike sports. And he just went and bought, you know, 27 Yankees, you know, of AI. Yeah, I mean, and I think your point is a great one. And listen, we're shareholders in Metta, we're shareholders in OpenAI. Wouldn't be a shareholder in Metta if I didn't think, you know, in fact, I remember back in 22 when, you know, when we took our big position there and people said to me, Oh, what are you, what are you doing?

40:04This is a founder controlled company. He's never going to become more efficient. He's never going to do these things. I said, the whole reason I want to be all in on this company is it's founder controlled. I think it is a massive advantage that he has today, right? And he's talking about risking one percent of his company, right? In order to reboot around AI, that seems to me to be a very, very rational economic decision. And there's no, and this is just a talent war. He's got a, you know, Lama Four was not where it needed to be to compete heads up. But he has one advantage. None of those other companies have.

40:39He has the world's biggest printing press shooting out billion dollar bills, right? He's not relying on the beneficence of venture capitalists. The guy has a business model that is generating the cash to fund all this. And so he's leveraging that cash as a source of competitive advantage, which seems to me to make a lot of sense. I think it's going to make it very difficult. And I'm, you know, that's why I was asking about the downstream implications bill. If you're a company that's trying to compete against that, I don't think many venture companies can compete against that on a durable long term basis.

41:13Yeah, I was certainly not the real startups. Yeah, I was having a discussion with a real AI startup founder this weekend. And, you know, he was asking about talent. And like I don't know what you do. I mean, I don't think you hire anyone that's top thousand in the Bay Area. You won't be able to afford them. But I do think there is a fundamental question because it's easy to, and I want to get my goals opinion on this. It's easy to say the percentage of market cap and make that bold decision. But there are cultural implications, right? Yeah. Of bringing in employees that make radically different and amounts of money than the other employee base.

41:54How do you think that will be? How difficult will that be to manage? I think it'll be a challenge culturally for sure. You know, he could have a long line outside of his door with people, you know, wanting this or complaining about that. And that could be a distraction. So, you know, I think people generally have a sense of fairness, right? And they want to be treated fairly, relative to others and relative to the opportunities that they have out there in the overall market. And if they feel that they're not being treated fairly, that's going to be a problem. So I don't know how that gets sorted out.

42:41I do think the math could work for them given everything you guys just talked about. And obviously if you reduce this down to a race to superintelligence or something along those lines, the size of the prize is tremendous. And they do have an incredible business that is aided by these advancements in a big way. And there aren't a whole ton of companies that can go do this. Yeah. And by the way, Brad, you mentioned that they have this unfair advantage of this huge printing press. But Apple and Google have the same exact printing press and chose not to do this. Yeah, but neither of them are controlled by founders.

43:31And, you know, that's what I was the point I was trying to make. These are the type of bets that I think it's very, very difficult for a Google or an Apple to make. For the reason you mentioned, Bill, can they sell it to the public markets? Do they have the type of decision making in the boardroom that allows this to occur? I mean, at the end of the day, I think at Metta, if Zuckerberg wants to do it, that's what's happening. And that board gets on board. In fact, he's reshaped the board over the course of the last couple of years with folks who are, I think, signed up for this for this mission with him.

44:07Michael, to your point, that's why I think he reorganized this into the kind of super intelligence division. I think the way they'll try to manage this culturally is to say, listen, there's going to be an elite SEAL Team 6 group, which is called super intelligence. And we're going to pay them elite pay because it's good for the entire business. That doesn't mean we're going to inflate everybody else. And in fact, what I think that Metta will do is, you know, you'll probably see them rolling back like you see with Microsoft, like you see with Amazon. My sense is that companies are generally going to get smaller, right?

44:46On the backs of the productivity gains from AI, but they'll redeploy some of those profits into these areas. If you're in the model business and you want to be on the frontier competing in the front, you know, for super intelligence, and they're only whatever, five to seven companies that really are in that game, then I think you're going to have to have something similar. Now, in the case of open AI, it's only 2800 employees, and they're all part of that division effectively. But you have to really get scale quickly because if you're not bringing in 10, 20, 30, 40 billion dollars of annual revenue, I don't think you can stay in this game.

45:22And so the question is whether or not anthropic and X and open AI have a sufficient escape velocity, right? That they can take on this frontal assault by Metta and still compete. My sense is open AI does. My sense is both of those companies do, but it's not a long list that can compete with them. And by the way, the net Friedman edition was particularly interesting, just with his GitHub background. You know, we had talked in the past that Metta had made a couple of hires on the enterprise side, and we'd heard rumors of, you know, certain payments when they pass through the cap on the open models.

46:03But, you know, you have to wonder with that coming on board if there are more aspirations on the enterprise side. Yeah. It's a great point. It certainly creates some optionality there. Hey, Michael, question for you. You know, on this related topic of productivity gains from leveraging AI and kind of what you're seeing at Dell. We've talked on this podcast, what we call the Golden Age of margin expansion. You know, this idea that you're seeing AI is certainly re -accelerated your top line in a pretty dramatic way. But it's doing that at a lot of companies. At the same time, you're able to do more with less.

46:42Is that overstated? Or do you think that we're in this phase over the next three, four, five years, we're generally as an economy and certainly within a lot of companies that they're going to be able to, you know, have their top lines grow faster than their operating costs because of AI. It's absolutely real, Brad, and we are doing it. We know of other companies that are doing it. And I think, you know, maybe only 10 % of large companies have figured this out. And the other 90 % are sort of a bit confused at this point. But, you know, if I step back and look at this, you know, 10 % productivity improvements pretty easy, 20%.

47:29You know, reasonably common sightings of 30 % or 40%. Those are massive numbers. If you sort of step back and think about this, you know, you got a $114 trillion dollar global economy, right? In 2025. And services economy is two thirds of that. You know, if we believe that a 10 % improvement is possible in productivity. If you just keep it simple, you say 10 % improvements, that's worth $10 trillion, right? And so the amount of investment that is occurring today and AI could be quite a bit less than he has really justified. I mean, if we, if we believe in a 10 % to 20 % improvement, and I don't say that lightly because that's it like, that's like an enormous thing if it were to occur.

48:26But let's just stick with this for a second. If we had a 20, 10 % to 20 % improvement, the investment in AI should be more on the order of two to four trillion dollars per year. Yeah. Yeah. And that's not that's not where we are. It's a lot less than that. So, you know, I don't want to get too ahead of myself here, but but I do think there is a big change that is occurring and we're just at the beginning of it. And it's going to affect every part of our world. Well, you have particular standing here, Michael, right? You saw the productivity gain that came from a computer on every desktop. You saw the productivity gain.

49:15We were talking about that. Exactly. That was fun. You saw the productivity gain from the internet. And now you're two years into observing this is the, are the productivity gains from this going to be as big or bigger than what we saw from personal computers in the internet. Well, it's far bigger. It's far bigger. Yeah, I feel 98 % confident that it's far bigger than the PC. What about the internet?

49:48Yeah. I mean, so of course, all these build on each other, right? It's compounding. But this is, this is bigger because it is essentially all knowledge work. And I think it's an expansion of the pie, right? It's really easy to figure out what will be more efficient and how you can reduce costs. But, you know, if you go back 20 years ago, it was very hard to see where the new jobs would be. I think we're in a similar situation here as well. I do, I do think it will be expansionary for the overall economy and for prosperity and for well -being and human potential broadly across all domains, whether it's in education, health, societal outcomes, etc.

50:46But yeah, this feels bigger. I remember in 2001, 2002, Michael, some companies that were early to, for example, Google, they figured out how to gain, you know, like, I think a booking .com, right? They figured out how to arbitrage the internet and Google to build this giant business, right? And so I would say, like, they figured out productivity gains before the next person. And that was hugely advantageous. And when you say that only 10 % of companies are leveraging this today, it kind of sounds like the same thing. Like, the early companies are really there, but there's a huge amount yet to come.

51:26Well, you know, I think I think about the big companies in the world. I'm talking like, you know, 10 billion plus revenue companies, you know, 50 billion, 100 billion plus revenue companies, these companies have an, an incompetency of sorts, right? They have data, they have customers, they have brands, they have IP, etc. But if they don't move quickly to reimagine their businesses, give it all this technology, they will be destroyed by new companies that come in with a totally clean slate. And, you know, that's, you can already see signs of that happening. So I think this is all going to play out, you know, in the next three to five years.

52:15And it will become sort of an urgent priority for companies to reimagine themselves. And, you know, what what we've done at Dell is, you know, our team knows this because we talk about it all the time internally. You know, as I think it's almost two years ago, I stood up in front of a group of our leaders and I said that five years from then, that would be three years from now, we're going to have a new competitor. And that new competitors going to be in every business that we're in, except they're going to be faster and more efficient and more capable. They're going to put us out of business.

53:00And the only way we're going to prevent that is we're going to become that company. And this is how we're going to do it. And I sort of laid out our best guess as to how to do that, you know, two years ago, we're pretty far, you know, into that path and well on our way. And it's working. But it's not an easy thing to do, right? This is sort of cut -wrenching stuff to reinvent, reimagine. We've had to do it many times. If you don't do it, you just go out of business. And that's no fun. So we're not doing that. And not everybody wants to do it. It's hard. I was wondering if you could expand on that a little bit.

53:45So your server division is your fastest growing division. You've, you know, we've talked about on this podcast, some of the big wins you've had as part of large AI clusters. How did you get Dell in a position to be part of that next wave? And what are the key, what's the key value add from your products in those large deployments? Yeah. So last year, our server networking business grew 58 % year over year. In the first quarter, we had, we received $12 .1 billion in AI orders. And by the way, our shipments for all of last year in AI servers were about $10 billion. So we, so we had two years of billion.

54:35Two years ago were two billion. Yeah, it was, it was not very much two years ago. So we, we took orders in the first quarter for over 12 billion. And last year, we shipped about 10 billion. So this is growing super fast. And now we have a backlog of a little over 14 billion. So what happened? Well, you know, we, we, we were already the leader in servers. We kind of saw the GPU thing. And it's, it's a combination of things. I mean, when, when Nvidia releases a reference design, it, it's kind of a reference design. It doesn't really work. You know, we love it video, but, but, you know, somebody's got to make all the stuff.

55:30And so we, tons of tons of engineering. And obviously, there's logistics of the supply chain, building these 100 ,000 plus GPU clusters and making them work reliably is super complex. So it's a combination of engineering operations. You know, we, we often will help with the financing of these with our, uh, Dell financial services. And, uh, you know, this, the scalability things is enormous. I mean, right? We talked about this adult tech world. We right now we're deploying these systems that will produce, uh, you know, deliver more than 50 trillion tokens per month. And if you put that in the context of Google statements or Microsoft statements, I mean, this is massive scale, uh, systems.

56:32And, uh, yeah, I don't think there are tons of companies that, that are able to, to, to do this and have them work reliably. And Jensen has said, you know, you guys have distinguished yourself against your competitors, um, other ODMs like Foxconn or Quanta, et cetera. Um, you know, you've been first to market your launching the GB 300s right now. Your partner. Yeah, we delivered the first GB 300s, uh, a couple days ago to Core Weave. We announced that we actually have delivered another GP 100 to GP 300 system to another customer. Uh, you don't think we've disclosed through that as yet. But, um, if we're listeners of this podcast, probably yes.

57:18So, so the, the thing that I'm, you know, a year ago, we were all sitting around and talking about the ups and downs of the over build in 2000, right around the internet. And, uh, you know, and, and yet, when I look at the trajectory that we're on, right, I saw Mike Intratour on, you know, CNBC today and he said, listen, we're still underestimating the amount of demand that's out there in the world. And when, when he says it or when you say it or when Jensen says it, in some ways, people would argue it's self -serving. Of course, you guys are going to say that that's your business. You're going to, you're going to tell everybody your business is great, but you're known as a very sober guy who tells it like it is.

58:01And what I want you to do is reflect a little bit on the comparison between this and the period in early 2000 when we did get overbilt, right? And, you know, the, as the saying goes, every shortage ends up in a glut. Why are we not near that point yet today, uh, in this market? Yeah. Well, I mean, you guys, the students of the market can go back and, you know, sort of review what the multiples were on earnings and cash flow, you know, around that time. We're nowhere near that for the most part. But if we go back to the underlying activity here, uh, it's all about the tokens, right? And as we go from basic queries to, uh, test time compute, to deep reasoning to agents and multi -agent systems, the number of tokens just explodes.

59:03And what are we talking about in tokens? When we're talking about tokens, we're talking about knowledge. Right? Exactly. You know, I don't know about you, but I'm using these tools like 50 times a day of my thought partner to solve problems and, uh, you know, quelch my curiosity and, uh, you know, my usage is skyrocketing. And, uh, you know, often multiple models and it's going out there and querying all these websites, doing calculations for me and helping me solve problems, you know, faster than I ever could in the past. And, uh, you know, the, this, this, I think it's just at the beginning, right?

59:54And, uh, the substrate for all of this, of course, is compute and data, right? So we love that at Delta Technologies because that's what we do. Right. So there is a, there's just a ton of growth here. I think it will also be, um, highly distributed. I think it will be, uh, you know, it'll occur in devices, it'll occur in the edge, it'll occur, uh, you know, in all sorts of places. And it does, it does feel like we're, we're still a lot closer to the beginning here. What can you share about on -prem AI deployments, Michael? Are you seeing anything interesting there? Yeah. So we, we in the last year, uh, you know, delivered a little over 3 ,000 of these still AI factories and, you know, those are increasingly to enterprise and commercial customers that want to bring the AI to their data, not the data to the AI.

1:00:57Yeah. And, you know, there's just a ton of data that, uh, is still on -prem and being generated on -prem. And it turns out, you know, these large models are fantastic, but you don't always need the largest model to solve every problem. A lot of the corporate use cases are perfectly, uh, done with smaller models and open source models. And so you see this enormous proliferation and a hugging face of models of all shapes and sizes, tons of cascading innovations. And so I think this is going to be highly distributed. Uh, and we're definitely seeing growth in on -prem and a co -lose are also a big deal.

1:01:43Uh, you know, because many customers don't want to have the data center themselves and so they'll put it in a co -location facility. And we've also adopted the consumption type models so you can pay on a, you know, usage type basis. What is your, you know, when you look at just kind of the relative distribution between, you know, kind of the custom A6 world, what you see happening across, you know, folks like AMD and Nvidia, you know, there's obviously a lot of chatter. You have an interesting perspective, both as a consumer of these products, also as a builder and distributor of products. Is there any, you know, pending big changes or as you look ahead over the course of the next year or two, that's probably as far ahead as you can see.

1:02:31Does it look like the relative landscape is stable or are there big breakthroughs coming that may unseat somebody like Nvidia? You know, Nvidia is in a great spot. I mean, to your question, I think, for the larger model companies and hyperscalers, certainly custom A6 are gaining a lot of share. And when you have control over the workload and you can, you know, take the time to optimize your workload, you know, that's certainly going to be a part of what occurs in the infrastructure. But it's not a large number of customers who are talking about the number of companies developing models. It's sort of that number of customers, but they're large, right?

1:03:26As you've seen with Google and Meta and others who are deploying the A6. You know, maybe just in the, to be respectful of time, Bill, I could talk to Michael for, you know, for hours about this particular subject, but maybe do, you know, one of the people I talk to when the market's going wild is, is, is Michael. You know, we certainly saw that earlier this year. You know, it's pretty incredible to see the snapback that we've seen out of the NASDAQ, the S &P. I think the NASDAQ is now up 32 % off of its bottom two months ago. Just as a data point, I think, I think Dell got as low as, I don't know, 75, 72 bucks.

1:04:12It's back at 120 bucks. Now, that is an incredible bounce off the bottom, but it's still basically up, I don't know, five or 10 % on the year. It's not like it's in this astronomical range when you look at kind of year -to -date or over the course of the last 12 months. And, and so when I look at the markets, and I want to get both, you know, your read on this is as well, Michael. Here we are. We have the NASDAQ, the Q's and the S &P at an all -time highs, Bitcoin's near an all -time eye. The VIX is back to 15 or 16, basically where it was in February, despite, you know, all of the things around tariffs.

1:04:52The 10 year, everybody talks about this, you know, the great debt spiral that we have in the country, but the 10 years been between 3 .7 and 4 .7 for the last two years, except 4 .2 kind of smack dab in the middle if not at the lower end of that range. You know, and then you see companies like TSM and Nvidia and Microsoft, Oracle, Booking .com, Uber, Dash, they're at all -time highs, but notwithstanding the fact that they're at all -time highs, you have Tesla down over 20 % on the year, Apple down 15 % on the year, Google's down on the year, Amazon's basically flat on the year, so you have a lot of dispersion in the market.

1:05:34When you look at the market, you know, does it feel to you, again, like we're in this bubble territory? Does it feel as a company that it's kind of accurately reflecting set aside your stock? I don't want you to comment on your stock. I'm just talking about the market writ large. Are the you know, or are they not given given where we sit today? I would bet they're higher. I would bet that more and more companies figure out how to, you know, grow their businesses. You know, I talked earlier about the productivity and efficiency. I think the ultimate benefit is going to come from the speed at which companies transform and the growth that they're able to create.

1:06:20That's certainly how we see it in our business. And yeah, I think a lot of these companies will be able to compound their earnings on a double -digit basis and the market largely, you know, overall indices will become more valuable. Yeah, it's a, you know, I do think that this moment in time, we're seeing a dispersion. I mentioned it, right? Some companies being down this year. Some companies up a lot. I really think the companies that are leveraging AI that are in a position to leverage it and to capture that margin expansion, we're going to see a re -acceleration. And we've heard this out of folks like McDermott and Shredar and Jensen, you know, at all these companies, how they're re -accelerating top line, but they're not adding people, right?

1:07:13That, you know, it's kind of net flat. We see this out of Uber. We see it out of Dell. When the market dipped down our share buyback program went into, went into the high gear, you know, right? And we bought back 22, we bought back 22 million shares. So, you know, stock was down well for you. As I look at this flight path, we just, we just landed, you know, the reconciliation bill. So there was a lot of uncertainty in the world to start the year. One was what was going to happen was this reconciliation bill going to pass. Now it's passed. So we have tax predictability, right? You have an extension of the existing tax regime.

1:07:49And then you have the no tax on tips, the no tax on overtime. So you have this incremental stimulus now coming from the reconciliation bill. On top of that, you know, tariffs while still up in the air, the market kind of has digested the tariff stuff, right? And absent some big blow up between us in China, you know, if we follow the best in a court that they reached in Switzerland and then reiterated in London, it seems like the big pieces of the tariff puzzle are falling in place. And then on the rate front, the market is estimating that the next move is down. Whether we're going to have one or two rate cuts, you know, at the end of the year is the question.

1:08:32Some people, the Fed is saying we're on hold. We're going to wait and see whether or not inflation reaccelerates this summer due to tariffs. So that's what everybody's eyes are on over the course of the next six to eight weeks, this core PCE tick up, you know, due to those tariffs. I'm taking the the under on that, but we're going to have to wait and see. And then on fundamentals, I think what we're hearing from companies. And this is where the rubber meets the road earnings. I think we had 85 % of companies beat in the S &P 500 in the quarter. And if you just go through and look at keywords, it was accelerating.

1:09:04It was AI. It was reinventing our business. There is a real growth, you know, feeling in the market and among these companies. And so from our perspective, and we try to give people an indication of where we are, I mean, I was as negative as you well know, Michael early in the year, I was as negatives if I've been in 10 years because I thought if we were going down the path of Navarro and $2 trillion a tariffs that it was all, you know, every all bets were off. That was scary path. And, you know, we talked about how if they went down that path, I thought they would reverse course because it wouldn't work.

1:09:45You know, and this, I think this is a very iterative team that will experiment, lay some stuff out there, not all of it's going to work. There's a piece of bad ideas. And then they'll reverse course. Yeah, I hope we don't we did do that. I hope we don't snatch defeat from the jaws of victory here with with policy though, you know, I think, you know, going back into the tariff game, some type of bold confrontation with China. And, you know, our AI policy. I mean, one thing we didn't talk about in this past week, the AI moratorium got removed from the bill and we're going to have 70 state laws in the United States, which is not great for AI startups.

1:10:33So anyway, I hope we don't hope we don't hope we don't I hope bad policy doesn't upset what would be and otherwise very potent landscape based on AI. Yeah, fully agree. I think it's one thing that the three of us are in violent agreement on. One of the things that's moved this country forward for the last three decades is we've led globally in technology and we've led globally in technology because we've allowed our best technologies to move freely around the world and to compete and to win. This is the first time since I've been in this business that we're talking about export controls and AI diffusion laws that are restricting the ability of our technology to go compete and win.

1:11:15And there's both the question mark as it relates to inside of China, but also the question mark outside of China. And while we've seen the repeal of the Biden diffusion rule, what I'm told is that no new licenses have been granted for distribution of AI technologies around the world, despite all of the discussion around this. So it's critical that Washington follows through and that we accelerate diffusion around the world of the entire American AI stack that we don't regulate that out of Washington. And then I think there are some legitimate regulations that you can have as it pertains to China.

1:11:56But even there, I would much rather let our deprecated chips out of Nvidia go compete against Huawei in China, keep the developer mind share in China because it's going to make it easier for us to win globally and elsewhere around the world. And I think it's important that that Michael, myself, everybody else bill you are those voices are being heard. We're not out of the woods on this by a long shot. By the way, and you reminded me of one of the thing I just like to harp on, which is the skilled immigration piece. So someone highlighted to me that they made like the huge wanted poster of all the people that meta has borrowed from other companies.

1:12:36Like like 60 or 70 % of them were of Chinese origin. And as I understand it right now, you know, there are PhD students are candidates in China that can't get visas and get in to the United States right now. And we go back to what Trump said on all in that he wanted to staple a visa to every diploma. I'd really like to get not that we're in charge, but I'd love to get that conversation going again. It would be very powerful for the country to increase skilled immigration. And it feels like we might be decreasing it. Yeah, absolutely agree. And to your point, Brad, I mean, if we don't aggressively work to sell our technologies around the world, other countries are going to do that.

1:13:28And you know, reminded of story long time ago, the Defense Department had this thing called M -tops. And it was a it was a Bill might remember this, but it was it was like a restriction on how fast the computer was that you had to get approval from the government and to sell it. And I was in this group of technology CEOs and we went to the Pentagon to talk to the generals and before we went to Toys R Us store and we bought a PlayStation.

1:14:09And we took it out of the box and we brought it to the Pentagon, you know, this big room. And we, set the PlayStation down on there and we said, you know, this exceeds the M -top restriction. Right. But unfortunately, you know, it's not it's made by a Japanese company. And so, you know, it doesn't follow under the rules. So anybody can buy it. It's it's also $399, right? So you guys think you're going to control the access to this thing or little things that, you know, move easily. You kind of fool in yourselves. Yeah. And so we have to come up with more intelligent ways to restrict access to the most advanced technologies.

1:14:57And oftentimes you just get all kinds of unintended consequences with these rules that are created. And it doesn't create the outcome that the government was originally looking for. Well, in I think it's a good way to wrap. Michael, it's awesome having you here. I wanted to say, you know, Michael and myself, Darik Ashtar Shahi, David Solomon from Goldman, Renee Haas from ARM, you know, Bill McDermott from service now and a group of us were at the White House a few weeks ago to testify on the Invest America Act. And Michael kicked it off. And if you haven't seen the video, I'll that will include it here.

1:15:48You should watch it. But he reminded everybody captivated the entire room. We've used this initiative as a powerful platform for philanthropic innovation, aimed at helping children thrive wherever they come from, particularly those families who have been historically left behind. Mr. President, you articulated it perfectly. These Invest America accounts will give every new American child a genuine opportunity to participate in history's greatest engine of economic growth, the American economy. These, the funds of these accounts invested in American enterprise and innovation will grow over time into substantial nest eggs, providing support for education, home ownership and starting families.

1:16:34The ability of families, friends, benefactors and employers to match the government's generosity, amplifies the life changing potential of this initiative. Thank you, Mr. President, for your visionary leadership on this critical issue. These Invest America accounts will profoundly impact countless young Americans, ensuring they truly benefit from what Abraham Lincoln described as a right of every American the right to rise. As I sit here on on the 4th of July week and you know, I'm just I'm super grateful to you, Michael. You did a huge service to the country by helping us get the Invest America Act passed.

1:17:11And I think everything that we just talked about here, including allowing American technologies to go compete. Remember, these Invest America accounts are only worth something if America does great. Right. And the fact of the matter is, Warren Buffett has said, Warren Buffett has said the smartest thing he did was just bet on America. He bet on America. And I'm I'm betting that the next 50 years, next 100 years are going to be an American century again, but we can't get in the way of the innovation and the entrepreneurship, you know, and the creative destruction, frankly, that has allowed America to be so great.

1:17:49And finding that balance between between government and Silicon Valley has always been, you know, challenging, you know, as you just related, Michael, with M -tops. But, you know, we have to show up, we have to have a voice, we have to, you know, continue to push in that direction. I think if we're allowed to compete our best days lay ahead, if we get in the way Bill like you talk about, then I think we can upend our advantage. Thanks for joining us. Thank you, Michael. Thank you guys. Appreciate. Bye -bye. Let's talk soon. Take care.

1:18:31As a reminder to everybody, just our opinions, not investment advice.