Salesforce, Figma Decline After Earnings

23:10It is time now for Talking Tech. And first up, Red Note saw its valuation surge 19 % in just three months, hitting$31 billion. Now, the social media firm emerged this year as a real viable competitor to TikTok, which faces threats of a ban in the United States, remember. Some red-note investors anticipate an imminent IPO. Plus, SK Hynix is set to pay$2.7 billion in bonuses to quell labor tensions. Now, the company's labor union has approved a landmark agreement, allocating 10 % of the company's annual profit retention to a bonus pool of its 33 ,625 employees. For 2025 alone, employees could receive nearly$80 ,000 in bonus.

23:50And NVIDIA's venture capital arm is set to invest in Honeywell's Quantinum for the first time. NVIDIA is the latest big name backer behind the quantum computing company, with the latest investment set to value Quantinum at$10 billion. Ed? All right, this week, British finance app Revolut offered a secondary share sale with a$75 billion valuation. We covered it on the show. Bloomberg's learned that Revolut is putting in extra work to remain private while retaining talent and appease some of its VC backers. Let's get out to Bloomberg's Tom Metcalf, who's been following the company. So this is like some financial engineering, like different valuations on different transactions.

24:28But there is one big point here, which is that Revolut wants to stay private. Why? Yeah, exactly. Exactly that. It's the age old story of, you know, you get you get a little bit more flexibility as a private company. And if you can put off quite a tricky task of keeping those investors happy, your employees happy as well, then you're able to I think do get a competitive advantage against any public peers. You know there's very few sort of startups that can do this they always grab the attention but you know it's that blended valuation that's really interesting there is a little bit of kind of give and take here like on the primary they're getting given out a lower valuation employees getting a pretty decent one and then they actually are buying back some shares from a very select class of investors at a different valuation as well.

25:11And a 45 billion dollar valuation but that's probably a lot of upside if you've been a very early investor. But more broadly, I mean, you cover the billionaires here, right? The CEO really does seem to be up there in terms of his own valuation as a billionaire now. Yeah, exactly. I mean, I remember, gosh, it's been years now since I've been tracking these folk. And, you know, when Stronsky first came out, you've seen Revolut go through a whole range of valuations. But unlike Klarna, which is sort of the other European startup, I always kind of compare it with those paper valuations. which should be clear.

25:43They're on paper. So, you know, until that crystallizes, it's a long way off like kind of money in the bank, I suppose. But whereas Klarna had a very much a roller coaster ride, is now just about to IPO. Revolut always seemed to be in a position where it could pick and choose when it could go out for new money. So its valuation has very much been steady or in recent years or even months has jumped. So it was 33 billion, then 45. Now it's hit 65 and now 75 but that's on a secondary valuation of course. Nick Stronsky, 201st richest person if you're basing it on that 75 billion dollar valuation. Bloomberg's Tom Metcalf, brilliant to have you, thank you.

26:23Welcome back to Bloomberg Tech, let's get straight to earnings now because shares of HPE, they are trading higher throughout this morning. The company reporting fiscal third quarter earnings that did show operating margin in the server unit had narrowed but the CEO Antonio Antonio Neri on the call telling investors, look, it's going to return to roughly 10 percent by the end of the current period. Well, now we've got him here to explain a little bit more. HPE CEO Antonio Neri, we get into how you're building out this business, how Juniper adds to the networking side. But for now, the AI systems, the server unit, how is profitability to improve?

26:56Well, good morning, Kater, and thanks for having me. We are very pleased with our quarter. It turned out to be very solid with record-breaking performance on revenue. and we expand the profitability sequentially. And to your question around the server segment, we deliver what we say we will do, but most importantly, our traditional server business returning to a historical level. And so when I think about U4, we're going to see a return to approximately 10 % for the quarter because of that momentum in traditional servers, which, by the way, grew double digits year over year, and the balance of AI mix between sovereign and enterprise, which now represent more than 50 % of our orders compared to the service providers.

27:41So the AI server bit, is that set to improve? How more broadly is the AI systems profitability improving as we see this monumental build-out of infrastructure? Well, as I think about the AI servers, I think it's important to think about different customer types and how we participate in each of the segments. Should we think about the service providers and the hyperscalers and the model builders where a lot of the capital expenses are taking place, to your point, we are now going to lead with networking for AI. We are extremely pleased we closed the Juniper transaction. Juniper is already a reference in many of those build-outs, and that's how we're going to lead in that particular segment of the market, and we're going to sell the server compute platforms with our partner, where it makes sense from a profitability perspective.

28:33But what we saw in the last couple of quarters, in particular this quarter, Sovereign and Neoclouds and Enterprise now represent more than 60 % of the market. There we participate in a slightly different approach, which the margin profile is different. We lead with a rack-scale integrated architecture for the Sovereign space, and we lead with an integrated solution for Enterprise. Enterprise grew for the seventh consecutive quarter. and we doubled the number of logos. And then in Sovereign, we grew more than 250 % and we won some marquee deals in the Middle East. Antonio, that might be the answer, actually.

29:09I've studied the traditional server business and the storage business and you're doing better than your peers, Dell, NetApp. But why are the dynamics better for you when you have these analogous businesses with those other names I mentioned? It's multiple things. First, in the enterprise traditional server, we see a refresh cycle taking place for edge infrastructure with more richly configured servers. And we have two phenomenal platforms, which is HP ProLiant, Gen 11 and Gen 12. We did a fantastic job in really hitting the sweet spot of the market with better performance per core, lower energy consumption, better security, quantum proof for that matter, and true workload optimization.

30:01And so now as we go to the June 12th, that AUP continues to grow and the ability to attach services is much higher. As I go to the storage business, we really transform the entire industry, in my mind, by deploying a consistent architecture, whether it's structured data, block storage, or whether it's unstructured data, which you need for AI. And that's what we call the object data with file ingestion. So the customer can do one investment with a peace of mind as they grow their data needs for AI. So I think that's what's resonating in the market. But ultimately, we have a fantastic go-to market.

30:43We play in 172 countries. And that reach together with our partners is a major differentiation, in addition to the fact that GreenLake provides through AI dream and lifecycle management observability. Those are the things specific to you. Antonio, would you give me an outlook for enterprise IT spending? because we have a lot of macro uncertainty right now, and you must see in the pipeline how that uncertainty is really manifesting. I will say based on our pipeline, first of all, it's solid across the three segments we participate, network and server and hybrid cloud. It is uniform across the three geos.

31:27There was another question in another interview. How North America versus others are doing? North America did very, very well for us this quarter. And so I think the demand will continue to be there. Every enterprise has to modernize and deploy AI. We as a company are deploying AI very extensively. We see the productivity improvements across many functions and many businesses. So that will continue. But at the same time, there is a way to modernize the legacy by freeing up space, power, and cooling so you can deploy this new technology. So we are very confident about the outlook. And with Juniper, that outlook becomes even stronger because now we have a complete portfolio networking that makes us unique as we want to build the best networking business in a modern, secure, cloud-native and AI-driven portfolio.

32:19And you're expecting to cut costs. I think we're seeing$600 million in cost savings are expected by that combination, Antonio. Cost savings are necessary for many businesses right now as you think about some of the pressure from tariffs. Your bird's eye perspective on how much that's implicating your business right now. You have to have a mindset of continuously transform the company. That's a fact. And, you know, the future belongs to the fast, as I said, all the time. But the at least$600 million in synergies is related just to the Juniper transaction. And I reiterated that yesterday. And then there is an incremental$350 million through three key strategic levers.

33:03Continue to optimize our portfolio, continue to optimize our workforce, and aggressively deploy this set of technologies. And at the core, it's not just a cost takeout. It's a way to improve experiences and become more efficient and agile in this market, which you have to react in the moment. So we are very encouraged about what we're seeing. and Juniper actually give us the opportunity to rethink some of the processes we have had for a long time here. Antonio, I ask you this every quarter. How is the relationship and partnership with NVIDIA? But as Jensen1 would see it right, the supply chain and the partners, they give great visibility to future iterations of product, right?

33:47They commit to the annual cadence of new GPU. They're increasingly involved in the networking through MVLink. Is anything changing for you because of the way that NVIDIA operates generationally, technology to technology every year? We have a fantastic, strong partnership at the company level and at the personal level. Jensen is available in the moment. If I need something, he picks the phone and we chat and we solve it. But I will say the following. I think from a collaboration perspective, from a co-engineering perspective, the proof of that is our AI factor for enterprise with our private cloud AI.

34:29We actually took a very different approach together with NVIDIA. We integrated the entire NVIDIA AI suite of software inside our GreenLake cloud. We took a software down into infrastructure, and together we provide an integrated solution for our enterprise customers. That's a testament how you co-engineer, despite the fact a lot of the value is on the GPU, but reality is the software and the experience that you deliver. On the other hand, now with networking, we have another set of opportunities because above the NVLink and the Spectrum X you refer to, you need a full data center architecture.

35:09NVIDIA does not participate into that. Our major competitors obviously are Cisco and Arista, But Juniper has become the reference for many of these large AI deployments. But I do believe together with NVIDIA, we can do a better job in the way we deploy that CapEx. And we run that infrastructure from an OPEX perspective using AI technologies for that matter in full managed network. So we are very excited about that. And look, you know, in the last quarter, we announced new innovation together with NVIDIA. the RTX 6000 Pro, the latest Ultra, you know, Blackwell. We are committed to be time to market with Jensen and team.

35:49I'm interested by the adoption of generative AI by the companies that are helping it become a reality. Of course, it benefits your share price, which is near a record high, Antonio. But how is it benefiting your employees? Or indeed, how are the pilots running? Because there's been a lot of questions about whether there's been efficacy there since the MIT report. Yeah, I think it's fair to say We went from generative AI to agentic AI. And I think about agentic AI as the next evolution for what really enterprise needed. And my view is that agentic AI will transform business processes by simplifying them, automating them, and then bring intelligence to it.

36:28In our company, we are using agentic AI aggressively in our offers. So GreenLake Intelligence, which we announced in June, is one of the most comprehensive clouds that includes AgenteKI and observability in the way they deploy and manage infrastructure and so forth. On the other hand, as a company, we are deploying AgenteKI across finance. Our CFO is incredibly aggressive on this. So she's on the leading edge on this. Our marketing team uses for demand generation and brand campaigns and targeting segments where it makes sense. And our services team is used to provide better support experiences in our supply chain.

37:09We use it for forecasting and planning. And there is many other examples of that. And so I think this generative AI now became agentic AI. In the future, of course, will be the robotics part. But the productivity level we see is pretty significant. And we are not proof of concept. We have deployed more than 60 use cases across the company, and we have more than 200 in testing as we speak. Some will fail, Caroline, and that's fine. And the mentality there needs to be fail fast and improve and focus on our return on invested capital. Antonio, you've been CEO since the start of 2018. Where does HPE sit today relative to your big vision for what HPE is, can or should be against your peers?

37:59When I became CEO, I had the vision to be an edge-centric, cloud-enabled and data-driven company. We invested at the edge, it was the Aruba acquisition, and we delivered tremendous value for our shareholders from$750 million revenue all the way to over$5 billion. And obviously now the next move was the acquisition of Juniper to make this company a networking centric company, because I believe the next AI era here is the convergence of networking, cloud, and then obviously the business process that we all run as an enterprise. And that to me is the core foundation that have been envisioned for our company going forward.

38:41And on that core foundation, we deliver the best cloud and AI experiences. So it's continued to be shaped. I'm very pleased with the progress. But let's not forget, it's not just the vision itself. It's how you execute with a culture and a set of values that makes us unique. And HP has been recognized also along the way as one of the best places to come and work by many surveys and magazines and institutions. So my view is that we are shaping the future, but ultimately it's about delivering shareholder value. and we are going to be positioned for the next three years to accelerate that value as you see today because our stock price still undervalue in terms of multiples.

39:23Our goal is to deliver that value accelerated for our shareholders and be relevant to our customers in this new environment we live in. I should have just asked you if your stock price was undervalued. Antonio Neri, president and CEO of HPE, we'll leave it there, but a really robust conversation. Thank you very Now coming up, tech leaders are set to gather at President Trump's brand new Rose Garden for a discussion about AI. We're going to have more on that next. This is Bloomberg Tech.

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42:26President Trump and the First Lady, well, they're set to host a group of tech leaders at the newly renovated Rose Garden. Those joining include Mark Zuckerberg, Tim Cook, Satya Nadella for an event on AI education. Bloomberg's Catherine Lucey joins us now. This really is a powerful Rose Garden meeting. Yeah, it's quite a lineup, right? A lot of boldface names are expected, both for an event, as you said, with the First Lady around AI and children, but also for a reception the president is hosting on the newly repaved Rose Garden, which he has made clear he wants to use more as a space to host gatherings at the White House.

43:11Catherine, I went to D.C. for the winning the AI race speech the president made. So while this is, you know, it's a nice thing with the CEOs go, at the heart of it, what is this administration's attitude to AI? I feel like there has been a lot of traffic of leaders from California, Silicon Valley going to the White House to discuss that issue. The president and his administration have been very clear they are interested in investing in AI. They have put out a big action plan around AI. They have had a lot of tech CEOs in not just today, obviously, but throughout this year as they look for ways to invest in manufacturing, to invest in domestic production to support tech centers.

43:54They've also been closely aligned with chip manufacturers. So there's been a lot of activity in this space throughout the year. Bloomberg's Catherine Lucy with the reporting. Thank you very much. Let's stick with recent news from the Trump administration. The president has torn up a Biden-era compromise that allowed some of the world's biggest chip makers to maintain operations in China. I want to get out to Bloomberg's senior editor, Mike Shepard. We're talking about validated end user authorizations or VEUs, and there's been this pipeline of breaking news announcements around it. There's a little bit of pressure on the chip stocks.

44:31Why are we focused on what the president's doing in this domain? Well, this ends the so-called blanket waiver that had allowed the companies Samsung, SK Hynix and TSMC to avoid becoming collateral damage, Ed, in the U.S. effort to rein in China's artificial intelligence ambitions. And that effort has included imposing export restrictions not only on U.S. companies, but also on businesses in Europe and elsewhere that supplied those makers with facilities in China. Samsung and SK Hynix are South Korean companies, and they do have facilities in China. And even though they are not Chinese flagged, they were nonetheless targeted by potentially these export restrictions.

45:19So the waivers were designed to spare them from feeling the brunt of it. And it would allow them to ship in semiconductor manufacturing equipment, materials, chemicals and things needed to keep those plants running. And it was really critical for Samsung and SK Hynix to have that ability to not have to go to the U.S. government for permission every single time they needed to make a shipment. It allowed them to keep those facilities running. And it has become a complication for them and for their suppliers, too, Cara. I mean, what a labor impact it's going to have. I mean, we see the U.S. government trying to brush it off.

45:57It's going to be easy to facilitate. But remind us of why the current administration was so worried about this particular loophole, as they call it. Well, you know, Cara, I mentioned data leakage. And that, of course, you know, the idea that tech from these factories could somehow leak into the Chinese market and that China would be able to somehow copy or mimic or use this technology in some fashion or these materials in some fashion, learning the know-how. But there is also another factor. We're seeing more than just South Korea and Taiwan getting caught up in the tug of war between the U.S.

46:33and China. This is also a tug of war with allies, with South Korea and Taiwan and the U.S. over competition, over trade. The Commerce Department made clear that, look, they see this as a question of leveling the playing field, not just with China, but with companies from South Korea and Taiwan. They want to make sure that advantages given through these waivers are also not unfairly putting U.S. companies in an unfair position themselves. So this is why the waivers have ended. And it's going to set up four months of intense negotiations for these companies to figure out how to proceed. Thanks, Mike Shepard.

47:14We thank you from Washington. Now coming up, French AI firm Misra is solidifying its position as one of Europe's most valuable tech startups. We talk about the funding that's going on now. This is Bloomberg Tech.

47:35French AI startup Mistral is in talks to raise a new investment that would value the company at$14 billion. Bloomberg's Kate Clark joins us now with a story. It's a high evaluation. This is really the French startup, the European version of OpenAI. Exactly. Has it got any niche tool to compete against the rest? It's developing open source models. So that's one of its niche. But it's also a European company, as you said. So perhaps people in Europe would prefer to use a European homegrown AI company as opposed to ChatGPT or Anthropics Cloud. It's interesting where the capital is coming from. It's also based on the news flow of this week.

48:11$14 billion is modest, right, Kate, relative to Anthropics? That's exactly right. I was thinking, wow, this seems cheap compared to Anthropic's$183 billion valuation and OpenAI's$500 billion valuation. Is there any crossover in some of where the capital is coming from at the moment? Because we all focused on the fact that Anthropic kind of went to the Middle East when many thought they wouldn't. Exactly. And we don't know who's leading this mistral around. I have been told it is not likely to be a Middle East investor, but we'll see. And we're doing that reporting to find out. But it does have several U.S.

48:47venture capital firms that are backers of Mistral. Andreessen Horowitz is one of the major investors, which is also a firm that has invested in other U.S. LLMs. Very quick, Kate, just summarize demand. I'm seeing a lot of news flow, deal flow, primaries, secondaries. The appetite is still there for these AI startups. There is an incredible amount of appetite for these AI startups. Words cannot really even describe how much appetite there is for an open AI, an Anthropic, even a Mistral. Investors are extremely excited to put their money into these large language models and into the application layer AI companies.

49:24Bloomberg's Kate Clark, great reporting as always. And yeah, there's a lot going on. Caro? That does it for this edition of Bloomberg Tech, where there is insatiable demand for content, whether it be on open AI or Mistral and many others. Yeah, hardware or software. We got it all. So check out the podcast. You know where to find it on the Bloomberg Terminal as well as online on Apple, Spotify, and iHeart from San Francisco, New York City. This is Bloomberg. bag.

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