Alibaba to Ramp Up AI Spend, Kimmel Returns to Late Night

22:22So they're solving problems, smaller problems at a smaller cost. And that, I think, is going to be the formula. And there will be many of these, but unlike OpenAI that seems to think that, you know, we're going to have servers from New York to San Francisco, you know, throughout the country, like all of the country is going to have those. It's hyperbole. Of course, I don't think that. But, you know, the scale is not the same as with a smaller AI sort of model. Kim Forrest and Boca Capita Partners always love the straight talking. Thanks for joining.

23:03Jimmy Kimmel returned to the airwaves last night after Disney lifted its suspension following remarks made by the host about the assassination of Charlie Kirk. Here is what Kimmel had to say about the controversy. And the truth is, I don't think what I have to say is going to make much of a difference. If you like me, you like me. If you don't, you don't. I have no illusions about changing anyone's mind. But I do want to make something clear because it's important to me as a human. And that is, you understand that it was never my intention to make light of the murder of a young man.

23:39Bloomberg's Hannah Miller, who covers Hollywood and entertainment, joins us now. Emotional at times, but also fighting talks at others, particularly when targeted at Brennan Carr of the FCC and the White House. Yeah, if you listen to the rest of that monologue, Jimmy goes hard after Brendan Carr and really calls him out for stifling free speech. And he makes very clear he's not sorry about what exactly he said. He's sorry if he caused offense over the death of Charlie Kirk.

24:08Caroline Hyde:Hannah, the president reacted in a post on Truth Social. And we also had the reporting from Bloomberg about recent days, Kimmel meeting himself directly with Disney executives. What's the reporting we need to know about on that? Yeah. So even before Jimmy Kimmel went on air, you had President Trump posting on Truth Social, you know, making these vague legal threats, you know, saying that he had previously gotten millions of dollars from ABC referencing a past lawsuit that they had settled and that, you know, he might go after them again. So, again, we're seeing this contentious relationship between the Trump administration and media.

24:47And also the two major TV station owners, Sinclair and Next Star, that put out the content to many, many Americans are still having Jimmy Kimmel Live on hold. So how does that impact Disney's business model here? Yeah, so about 23 percent of the country was not able to see this. They saw other broadcasting, news programming, things like that. you know we've seen a lot of talk about the business impact when it comes to subscription cancellations when you look at disney plus and hulu uh jimmy kimmel actually made a joke about that where he read instructions about how to you know get your subscription back if you did cancel um so you know it's it's been very interesting to see um the impact on disney

25:30Caroline Hyde:bloomberg's hannah miller and the team at screen time round the clock reporting really appreciate it

25:40Caroline Hyde:Welcome back to Bloomberg Tech. I want to get right to Alibaba's US-listed shares or ADRs. We've just in the last couple of minutes come off a session high. We're up 9.5%, on track for the biggest jump in about a month, the shares trading at their highest level since the middle of 2021. The story is really simple. Overnight, Alibaba said it was going to commit to spending even more than the$50 billion it had already committed for artificial intelligence. and that is something we see in China, Caro, from Huawei through to Tencent. But Alibaba, a key name, and clearly it's driving markets. And the last thing I'd say is I saw a headline on the terminal this morning that when those ADRs jumped in the pre-market, the rest of the market went with it.

26:20Caroline Hyde:We saw futures gain as well. So we're paying attention. We are to$35 billion added in market cap and to a new large language model update too from Alibaba. Let's get to it. Bloomberg's Henry Wren, who covers equities in tech, joins us now. And it does seem to be the fact that Alibaba is all in, whether it's offering cloud, whether it's expanding its investment, whether it's thinking about its own chips, too. Yes, it's about building an ecosystem. Thanks for having me. So it's Alibaba's annual developers conference and lots of surprise. The biggest surprise, as you mentioned, is about them raising the CapEx guidance for AI CapEx over the next three years.

26:57We already knew from February that in the next three years, they're going to commit over US$50 billion of spending on AI infrastructure. But they said they will be spending more. But although they didn't give specific numbers, the investors are already getting excited about their AI projects. So the shares rallied, of course. And on data center and cloud, the company said it has already been expanding overseas. It will continue to do so. And over the next year, it will be building data centers in countries like the Netherlands, France and Brazil. And that's another plus. And on the model side, the company released this new QN Max 3 model, which, according to the company, is among the top in the charts, the benchmark as well.

27:43So all those are pluses. And for Chinese investors that are enthusiastic about AI developments, the shares have reacted positively.

27:53Caroline Hyde:Bloomberg's Henry Wren out of London. Thank you very much. China's biggest tech firms are pouring unprecedented sums into artificial intelligence, matching the massive investments already underway in the U.S. Global tech investment firm process holds a significant stake in one of those giants, Tencent. Joining us now is CEO Fabrizio Bluisi, who visits us in San Francisco. Henry did a good job breaking down what Alibaba had to say. You, through your lens of Tencent, understand what's happening in China. How do you interpret and react to what Alibaba told us overnight? Hello, Ed and Caroline. Pleasure to be here.

28:30Thanks for receiving me. We are extremely excited about AI in China. I know there is so much geopolitical tension about who is going to win. This is not like a simple win thing. This is going to change the world in the next 10, 20 years substantially. And the giants of China are invested substantially against that. Alibaba is doing a great work, but also Tencent is doing a great work. DeepSeed had a big impact in what everyone is doing here, also in Europe and the U.S. So we are bullish. This is going to keep growing. I want to give you one extra data. China, 10 days ago, released its AI plus policy, where they say in three years, 70 % of the device are going to be AI enabled using open source AI.

29:14In 10 years, the whole society is going to be disrupted by AI. So it's amazing how committed China is to AI. And I think it's our obligation in the U.S. to do that. It's our obligation as one of the biggest European companies to invest in Europe so we can keep the pace or do better.

29:30Caroline Hyde:You know, overall, what these Chinese technology companies share is their commitment to spend. But they are very different. They have different proportions of the business on e-commerce, pure cloud computing. how should we distinguish Tencent's AI strategy from Alibaba? What is the piece of Tencent's AI plan that you are most bullish on? Tencent has WeChat and WeChat Pay and all the communications in China runs through WeChat and the impact of AI in communications and companionship is amazing and now in shopping through messaging. So we are very bullish that there is a lot of things to do through Tencent.

30:10But I want to remind you all, we are trying to replicate that in Europe, India, and Latin America. That's what Prozos is doing today. I think China is playing very well. U.S. is playing very well. But there is a big space for other big tech champions in Europe. Europe is more or less the size of the American economy, but has like ASML, Prozos, Spotify, Mistral, maybe three or four hundred billion dollar companies. We believe there will be a trillion dollar company in Europe. That's why we're investing hard in Europe to build there. The same thing in India. We're investing hard in India. We're investing a lot in Latin America.

30:45And it's good to remind sometimes everyone, including my U.S., France, AI is going to be a global thing, and we have many global tech champions around the world. That's what Prozis is doing. Fabrizio, yeah, you're trying to make Prozis that global tech champion. Can you describe the exact tactic of that at the moment? because it seems like you're all in on this idea of lifestyle e-commerce system more broadly. How do you become bigger than the sum of your parts? Definitely. We are very excited about what we are doing. Our first part of the strategy is to invest in our three ecosystems. Latin America, where we are doing very well through iFood and a whole ecosystem around iFood.

31:24For example, the Despegar acquisition we did for$2 billion a few months ago. In India, we are making many investments that are growing faster through AI. For example, today we announced the investment in the biggest mobility player in India. And in Europe, we are really investing to develop technology and innovation in Europe. We did the Just Eat Takeaway acquisition there just five months ago. It was approved by European Commission in five months, what is like a record time. We are very excited about that. That's what Europe needs to move faster, to take more risk and to create local champions.

31:57We expect to close this offering in one week, next Wednesday, actually. And this is just the first step. We are going to keep investing harder in Europe. We are launching next week the AI House Amsterdam, where we have hundreds of people together with universities and other companies developing local models in Amsterdam and the Netherlands because we need players investing really hard there. I'm quite confident with the level of scale that we have with 30 ,000 people, the level of investment in disruptive AI models. we will help Europe to position itself as a leader in this race. What about other areas of M &A then, Fabricio?

32:34Because you're trying to make your portfolio ever more focused. Where could you make additional add-ons? Where's interesting? As I said, we spent$7 billion the last few months. We are going to keep spending, hoping the next few days announce another big investment in France. Do it now! Do it now, Fabricio. Yeah, just a few days to keep investing a lot in Europe. My commitment was to invest up to$15 billion in Europe, and we are moving fast in this direction. I'm a little frustrated. The European Commission also asked me to divest$2 billion,$1 billion, before I keep investing. I think this is the wrong mindset.

33:09Europe needs to invest 10. I can do it by myself,$50,$100 billion, and that's what Europe needs.

33:15Caroline Hyde:Fabrizio, I want to hold you to account on something, because you said to our US audience, don't forget Europe. When I look at what you have done, there's been some selling down in Delivery Hero. Also, some of the Chinese, Meituan, for example. Yeah. So net-net, you're going to continue adding proportionately to the European investment and taking potentially from other parts? Not proportionately. We are going to invest substantially more in Europe. We have up to$15 billion to invest in Europe. The Delivery Hero discussion about selling down was an agreement with the European Commission. They asked us to divest Alito.

33:52That's why I asked, yes. And I disagree. Thank you, European Commission. We did a deal in five months. We are moving fast. That's what Europe needs. But they also said, please sell Alito. That's the wrong strategy. We had to invest more$15 billion faster. That's what I'm going to keep talking in Brussels. And that's what I think Europe needs. Everyone was talking this week about the Mario Draghi report. Yes. He said Europe needs to be more aggressive, needs to consolidate local champions. One year after the report, just 11 % of the report was implemented. That's not enough. But the good news process is very committed to help collaborate, work together.

34:25We need bigger companies investing more and fast in Europe, specifically in developing AI. So I'm quite excited. I know many times here in TV we say, is it a bubble? It's not. I'm absolutely sure the impact in AI in the next 10 years is going to completely change who are the winners. So if you're not moving fast and the impact in AI today in process is disruptive. We are moving faster. We have better service for our customers. We are more efficient. Obviously, there is lots of people investing a lot, specifically here in the US. Obviously, lots of the companies that people are investing today, they are also going to fail.

34:58That's part of the process. We're not going to have only winners. We have winners and losers. We are working three times harder in process to make sure that we are one of those winners, specifically in Europe and India and Latin America. Well, let us know which is the French winner in the next few days, Fabrizio Bluisi. Great to have you back, process CEO. Now, let's turn to the efforts to harness the power of AI. That's what Ruth Porat, Alphabet's president and CIO, has just been discussing with Bloomberg's Francine Lacroix at the Bloomberg Global Forum in New York. Take a listen. I think where we are with AI is it is both moving really fast and really slow.

35:33And what I mean by that is when you focus on the science, the breakthroughs in science are breathtaking, the pace at which we're seeing advancement. And I think one of the best ways to think about that is actually with my colleague, Demis Asabas, who runs Google DeepMind. And the work he did to develop something called AlphaFold, which is the 3D prediction of protein structures, which is viewed as the single greatest contribution to drug discovery in our lifetime. And he went from working on that, he's been in neuroscience and computer science physics for his whole life, but four years ago started on this journey to take on what had been a 50-year grand challenge to predict protein structure of the protein structures for all known proteins.

36:18And in four years, he went from an idea that people challenged, is it possible, and he said, why not, to a solution, which has now been open sourced. Three million scientists around the world are using it, 190 countries, and the Nobel Prize. That is the speed of change, and we're seeing that across Google DeepMind. What is slow is actually the implementation in both the public and the private sector. We're still very early days. The excitement about AI is across the board. The economic upside,$4 trillion potential contribution to GDP by 2030 with proper application across industry and the public sector, what's called diffusion.

36:57It's the better delivery of health care, better delivery of education. And that is still very early days. AI is clearly a lot more than a chatbot. It's about a fundamental rethink of the processes that we have. And I would say for each one of us as leaders, we need to start on that journey.

37:13Caroline Hyde:That was Alphabet President and CIO Roof Porat from the Bloomberg Philanthropies Global Forum earlier today. OK, coming up, Steve Jang, founder of Kindred Ventures, joins us for a conversation about the opportunities all of these AI announcements create for the private investor, for the venture capitalist. That's coming up next. This is Bloomberg Tech.

37:43Caroline Hyde:putting on a hedge. On public, you can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English. Like, if the VIX hits 25, buy a put option on the S &P 500. Or, if my cash balance goes above$20 ,000, move the excess into my direct index. You approve of the workflow, and your agent handles the rest. Monitoring the market, watching for your conditions, and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API.

38:20Caroline Hyde:Go to public.com slash market and fund your account in five minutes or less. That's public.com slash market. Paid for by Public Investing. Brokered services by Open to the Public Investing, Inc., Member FINRA, and SIPC. Advisory services by Public Advisors, LLC, SEC Registered Advisor. Complete disclosures available at public.com slash disclosures. The Bloomberg Sustainable Business Summit returns to Singapore on July 22nd. Our fifth annual Asia-Pacific Summit will explore how business and finance leaders are shaping the next phase of globalization by strengthening resilience and driving a multi-speed energy transition across Asia's diverse markets.

39:00Join us for solutions-driven discussions and networking opportunities. Thank you to our summit advisor, Bangkok Bank. Learn more at BloombergLive.com slash SBS dash Singapore.

39:13Caroline Hyde:companies are investing hundreds of billions of dollars in ai data centers we've been talking about that announcements just keep coming from alibaba to open ai and nvidia on monday i want to get the private market perspective on this with steve jang founder of kindred ventures an early ai investor and here with us for vc spotlight and um you're operating at a different level of of the curve, right? I think that's one way of putting it. But I do want to get your reaction to that OpenAI NVIDIA deal because it's all of it that's happening in the market right now. Right. And thank you for having me.

39:49It's great to be back. It's both surprising in scale, but not surprising that it's happening. Number one, I think we're undershooting or underestimating how much compute we need for not only training but for inference. That growth, that growth in demand is scaling out in every direction right now. We're seeing that across early stage startups as well as growth stage startups and public companies. So if you think about what's happening today, globally, first off, every region is now in the AI competition, the model competition race. Number two, there are specialized models in video, in audio, in voices, in speech models.

40:29physics models, medical science models. You look at what DeepMind is doing. You look at what small startups like SoFont are doing in medical sciences. And then you also see what's happening in particular with demand. And so we're just moving from an experimental phase into a commercial application phase. So everything that's happened up until today has just been in that experimental testing phase. And so if you think about TikTok and Instagram and YouTube on the consumer level, there's double-digit adoption right now on creators and users that are using AI tools. And then if you look at enterprises and small businesses, they're already starting to use voice AI for call centers.

41:10They're using it to write reports. They're using it for search and answers. So we're just at the beginning, and I think every single... I looked back yesterday before we came on today, and I saw all the projections from a year ago, and we're already surpassing that by 10x today. inference demand alone. But Steve, the reason we come to you is because the prowess of the bets that you've already met, and we think about perplexity and we think about play AI. How do you ensure, Steve, that you're not part of what some are starting to feel is like a house of cards, of everyone giving money to the same sort of players?

41:42And ultimately, if the productivity doesn't achieve, if the money doesn't achieve, then suddenly we start to see some real holes. I think what's important here is that you do see the demand and you do see the uptake commercially. You see revenues, you see adoption, you see usage. I'll give you an example of this. So today, in terms of generative media, generative video is relatively new. Well, let's say it's about a year and a half old. Google, ByteDance, and many other small startups are providing these models. The compute just for that, which is showing up on YouTube, which is showing up in video ads, which is now showing up through Creatify on Comcast and Universal Channel video ads now is making real money.

42:27It's making real CPMs for real brands. And so as long as there is economic productivity on the demand side, that's why you're seeing all this scaling of cost of investment in GPUs, data centers, and energy. And you see these long-term contracts. $100 billion was an amazing size for a SoftBank Vision Fund five years ago. And today, that's just one company making investment for a round-trip commercial deal.

42:53Caroline Hyde:Steve, you were in the green room, right, when Fabrizio Baurici was sat in that chair, and he talked about a bubble in the context that, like, well, that's a normal part of the game. Some failures, you need to find successes. Do you think about it in those terms, in the context of there's such a capital concentration in these few names? There's always going to be an arbitrage between current demand and economic productivity revenue, right, and the investment capital and the timeline in between. Bubbles are necessary for a collection and hyper-focus of talent, engineering talent, research talent, building talent, as well as capital.

43:29And that's what creates that enormous growth and velocity in any sort of tech cycle. We saw this every tech cycle. This tech cycle is very different because there's real revenue and commercial application happening. So, again, look at GPUs as just one part of this. Energy is the other part. Data center space is the other. then there's a software infrastructure layer there so-called middleware which is a bad word in the last tech cycle but is actually where value capture and differentiation happens now and so this is really important you see companies like together a you see companies like foul and generative media cloud space uh these companies and and core weave a core weave is a company that started out as a bitcoin yes a mining data center steve can i go to that can i go to crypto because We're talking about a potential bubble, and I know that you've got a lot of experience in crypto.

44:18I'm looking at Tether, potentially looking at funding with a valuation of$500 billion. Is that a bubble sign to you or not?

44:30The stable coins right now and crypto, there's an interesting thing happening right now where fintech, as we knew it, global payments infrastructure, companies like Stripe and many other companies fragmented around the world in FX, it's getting slowly transformed by crypto, especially stable coins. We don't, it is again, very easy to underestimate this. I think it's harder to really look at the frontier and just say, how big could this be? But you see the US government and many other foreign governments, this is an area, unlike AI, where there isn't a concept of sovereign crypto. In AI, we have sovereign AI and there's a competition.

45:09In crypto, interestingly, there's much more of a cross-border collaboration. that wants to be on blockchains. This is obviously very recent in terms of government push with this new administration. But underlying that is still compute. Same data centers that are providing AI compute, high-performance compute, are also supplying it for crypto. So fascinating, Steve Zhang, managing partner and founder of Kindred Ventures, giving us the full picture. Social media app Instagram is proving more popular than ever, reaching 3 billion monthly users. This is parent company Meta looks to short form videos and private messaging to really drive the growth.

45:46For more, Blue Mox, Kurt Wagner joins us. You've had a really interesting conversation with Adam Massari. What did he detail about the forward path for Instagram?

45:53Caroline Hyde:Yeah, the big thing for me that I took away is that they're leaning into these products that have not necessarily been historically how you think of Instagram. You think of these glossy life moments, the traditional feed. They're leaning into DMs, leaning into Reels, stories, things like that. So Instagram has changed a lot since 2010, and the 3 billion, they're leaning into that change, I think. Kurt, part of the discussion was about testing and changes to the algorithm. What are they doing? They're going to let people essentially pick the topics they want to see more of, so be more explicit in the things that they're hoping to see.

46:27Caroline Hyde:You know, you can pick your favorite sports team. You can go very granular. And they say they're able to do this because of the advancements in AI. They're able to read videos with AI, determine exactly what's in them, and then feed that to you. Historically, Ed, you know it's been more implicit. Like, they will look at your behavior and try and guess what you like. They're going to run this test where people can be a lot more specific about what they want to see and hopefully change their algorithm to show that. And also interesting where they're testing that and which parts of the globe they really want to penetrate.

46:56Yeah.

46:57Caroline Hyde:So the algorithm test is going to be in several different markets. they are doing a test in India, specifically around Reels, where they're going to open the app into Reels. So instead of opening into that main feed, you're now going to get basically TikTok when you open Instagram. Where it's banned in India. I was going to say, and there's a reason they're doing it in India because TikTok is banned in India, right? So this is a great opportunity for them to kind of take advantage of the fact that a core competitor is not in that market. Bloomberg's Kurt Wagner. It's a kind of must read, based on an interview, and Maseri, who heads up Instagram, really appreciate you joining the show on it.

47:28Caroline Hyde:That does it for this edition of Bloomberg Tech, Cara. You do not want to forget to check out our podcast. There is so much debate out there around AI. Stick with us for it. You can find it on the terminal. This is online on Apple, Spotify and iHeart. What an incredible time to keep on telling these stories. This is Bloomberg Tech. This week on Leaders with me, Francine Lacqua. I speak to tennis legend Rafa Nadal about how he stayed competitive despite injury. I was able to enjoy the victories probably more than if I will not have this issue. One iconic match. In my mind was, I am almost dead.

48:05And whether he misses playing. I don't miss tennis because there was nothing else to offer. Listen and watch Leaders with me, Francine Lacqua, on Bloomberg Television or wherever you get your podcasts.