 Hello and welcome to the Cube Pod episode 45. I'm John Furrier with Dave Vellante. We're here for 45th podcast. This isn't the podcast we go up and review what we've been looking at. It's the beginning of the year. It's not even end of January yet. And so much going on. Dave, great to see you. I'm here in the Boston office again. Awesome to see you, John. A lot going on. Actually, there's some news we're gonna get to that happened after our podcast last week around Microsoft and a big cybersecurity challenge from the Russians. But Dave, a lot of stuff going on in cold weather in Boston, but it's heating up for the beginning of the year. We've seen a lot of action going on and it's been incredible. Couple of things we're gonna run down real quick and then we'll get into it. The AI, FTC, interchange around generative AI. You got the FTC probing big techs AI investments. Agencies looking into how Microsoft open AI, Amazon, Anthropic, Alphabet are affecting competition. I mean, this is, and by the way, NVIDIA is not included but we talked about last week in the podcast, the idea that these more investments coming from, you know, Microsoft, ADEP, Amazon, Google, NVIDIA, okay? Not so much anybody else, but those big whales are investing. And so we actually talked about last Friday, Dave, remember that? They're actually coming off that news. And so there's been a big focus certainly since Sam Altman left open AI. What's the impact? Is that the big guy's gonna take over the impact of AI, the generative AI wave? That to me is the question in the industry. This is just out of bounds. Let's save it for the RAN section, but we're gonna come back to the AI generative AI, the FTC getting a terrible trend. The other big news, Apple's app store breakup in the EU puts a crack on the whole walled garden of app store. They have to change it for regulations in Europe. Again, more regulatory issues. They have to change how the browsers work, how iOS apps work, and it's earning season. We've got more earnings next week. Ralph Hobs all over that and the Silicon Angle team are still tracking this. We track all the earnings, but Dave, I want you and I to riff on this. I know you've got a lot to share on Intel and IBM. And actually last Friday, Microsoft had the midnight blizzard, which was not, was a trivial hack that actually got into their system was reading emails of all their top executives. And they had their way for a long time. They had to disclose it. And they did it on late Friday because of the new law around, you have four days to notify the SEC around that and they've confirmed it was a Russian foreign intelligence service that hacked everything. And then it's not even the end of January in 2024 there's been a media meltdown. The broken business model of me, media mainstream media is showing its head. Slow death becomes a fast boil here inside the media. LA Times, Pitchfork, Business Insider Forbes, and it's still January LA Times, 20% of its staff. Most of it's business and tech teams, time 15%. Pitchfork, all of it pretty much. Sports Illustrated, Shutdown, Overnight, National Geographic, Business Insider, NBC News, tons of stuff. And finally the ecosystem, Startup, Silicon Valley, Venture Capone, Private Equity, Ed Sim and I had a podcast and cube conversation around this, this notion of investing before formation. They call it inception. Sierra, a startup founded by Brett Taylor who was a Facebook and Google Facebook and then Salesforce, raised $85 million at a billion dollar valuation. He just even, he just started it. That's his pre-formation. He's also on the open AI board. And then Lightspeed partners are selling stakes and 10 startups to get liquidity. Dave, it's insane. Earnings are here and yet the market's great. Everyone's like, oh, look at the stock market, S&P at 500 at an all-time high. So you can see it's not even the end of January yet. And you got the FTC probing in. The Capone markets are kind of looking good on paper on the stock market, mostly dominated by big tech. Yet now FTC wants to get in their underwear and check everything out on General AI. And it's just so much going on. Still AI companies still getting funded. Yeah, I think when you look at, just zoom out and look at IT spending, tech spending, very much still tracking with the Fed. We exited the pandemic. People were thinking, oh, we're gonna grow our budget seven and a half, 7.8%. And then Ukraine hits recession or inflation kicks in. Fed starts to tightening. What happens is all through 2022 and 2023, we just saw those expectations for budget increases, dropping, dropping, dropping up until July of 2023 when the Fed stopped tightening and that's when those expectations stopped dropping, but they stayed pretty flat. We ended the year okay, maybe 3.4% budget growth or spending growth in 2023 versus 2022 with an expectation that'll grow like 4.5% in 2024, but it's all back loaded, John. So, Adam Salipsky, I invoke this line a lot because I think it resonates with me. We've seen better times, we've seen worse times, we've never seen uncertain times. And I think companies right now are like, well, we don't really know. We're gonna watch earnings, we're gonna watch the Fed. So I think, and then there's AI. And AI right now, almost half of the companies report that they're stealing budget from other areas to fund AI. Okay, so there's not incremental budget. So what does that say? That says that unless you start to see real AI ROI, we're gonna be in this tied to the Fed, tied to the economy, tied to earnings situation. Once, if and when AI starts throwing off ROI, like people expect, then that will self fund and you'll have gain sharing, but we're not there yet. And I don't think we're gonna be there in the first quarter. I mean, we talked about last podcast. I mean, I think the general AI thing this year is about productivity. And I think I feel like this market is in a weird point because all the signs on Wall Street, you look at CNBC, you're hearing people say, oh, the rising tide. I'm telling you, I'm feeling people, I think it's a lot worse than it really is on paper. Budgets are being cut. People we talk to are not spending as much. There's a cautious optimism. And if anything, people are pulling back. I think Q1 and Q2 is going to be very difficult. If you look at this expend on tech companies and just in general macro, if the tech companies are superior to the powerhouse, a lot of them are looks like they're pulling back Dave. So I think, I'm nervous when I hear, almost everyone I talk to is that budgets are down, we're cutting back, I'm really nervous about that. Let me jump in on this one because it's one of my predictions this year. So I do my predictions with Eric Bradley at the end of January because we have the new data coming in and the new survey data informs us. The second prediction was AI is not a tide that lifts all ships. I think that's a BS narrative. I think it's a very much a two-edged sword as we're saying AI is stealing from other budgets. So those budgets are getting impacted. So Me Too AI is a loser. It's a loser strategy. So you have to be... What do you mean by that? What do you mean by Me Too AI? If you're AI washing or you're just saying, hey, we have AI too and you're sort of throwing, bolting on AI and you don't have the talent to actually drive it and innovate, then I think you're going to fall behind. And so I think, and so we laid out actually, we looked at about 660 MLAI accounts and said, okay, who's doing well in those accounts? The companies that have the most momentum, no surprise, Azure, AWS actually looking pretty good within those MLAI accounts. Salesforce, ServiceNow, Databricks, Snowflake, CrowdStrike, Workday, UiPath, doing okay, Maraki, Cisco, Google Cloud. Actually, Google Cloud doesn't appear to be getting as much of a tailwind, even though they're the AI company. Cloudflare, you know what else is, seems to be high alignment with AI? Dell laptops and Apple laptops, pretty amazing, right? Now, Apple's had NPUs in laptops forever. Dell's talking about them coming, but everybody's looking for a big year in laptops, including Intel, which we'll talk about. But then you got Cisco, we sat in on Cisco's Tech Talk for Silicon One and they were making a case that it's tied to AI or it's infrastructure for AI. I think Cisco could have a great story around AI, but they don't communicate it well. I mean, think about Cisco, they've got the full stack, they got Silicon, they got the infrastructure with the networking piece, they got the security, observability, they got collaboration, they have all the way up the stack to apps. And so they could have a kick ass story around AI, but they don't put it all together. I think there's so stovepipe sometimes that story gets in their way. And I think AI has to be something that cuts across all the whole company. Not every department has to have their own kind of leadership. Yeah, they have to get AI in the product, but Cisco's a company that can't put my finger on what their identity is for AI. And I think that's an opportunity. I think Dell has done a great job and we've covered them extensively, putting their finger on saying, hey, at least we're going to have laptops, we're going to have servers. I think Dell's done a good job there. I think that's one, I think the real challenge on AI is going to be what Cisco is, are they going to be abstracting away the complexities around multiple clouds? And I think the super cloud equation is going to be, I think a bigger thing this year than ever. And, you know, if Charles Fitzgerald thought super cloud wasn't a thing in the past two years, I think he's going to be surprised this year when you see super cloud, super chips, super apps. Super startups talking super cloud. We saw multiple startups actually quoting super cloud saying we're going to be at the abstraction layer because if you can't run your apps across clouds, then you're going to have challenges on an operation side. So I think, and I predicted this last week on the pod and multiple pods before that, platform engineering has to be in place for this next generation and there's none of talent. And so the talent gap between traditional IT and super cloud like capabilities will be an issue. And I think VMware is an opportunity there. We'll see if they can capture it. And again, like Cisco, they have the chips too now at Broadcom. So come back to the topic that we started with, which is AI voting the tide that lifts all ships. You remember the internet dot com boom in the stock market. It was like, oh, yeah, pets.com or whatever it was, you know, pets.com, right? And everything was up. But it was illusory, right? It was fake. And I think you're not seeing as much fake today. I think there's a bifurcated market. I think they are the AI haves like Nvidia and the AI have knots like Intel. AI is everywhere. Why isn't it seeing it in Intel? Because it's not there yet. Okay, it's going to take a long time. And who knows if I- So Ed Sim, who I interviewed on theCUBE, it's part of our CUBE series. He's a VC, he said, both started VC, he invests. He said, he thinks, he said this quote, if you're not thinking about how to leverage AI in your product, whether it's just a feature, maybe a new product offering, then you're insane. Okay, he thinks, and then he then goes on and says, the demand by enterprise to have AI tools are going to be rapidly assimilated into the business. Okay, and he's saying, and he's saying, oh, it's not a product, it's everything. So he thinks AI, like we do, that's the disruptive enabler. So it's not so much AI as a product as it is, it's going to be infused into the business. And I think your conversation when we talk about it, about productivity, it's on point. So okay, so where it will rise the tide is, the tide is business, right? So if business is the tide, they are their own boat. So I see the metaphor off a little bit, but I would say that if AI is here as a trend, like the internet was and the web after, then it's just a matter of time before it becomes just part of the landscape. In other words, there's no AI company anymore. I think everything is AI enabled, and that's why it's a disruptive enabler, and the same exact thing happened to the internet. But at that time, the big whales didn't have the monopoly power, I shouldn't say the word monopoly power, the market power that Amazon Web Services and Amazon Google and Microsoft have. So Microsoft just hit three billion in market, three trillion in market cap. That's incredible. So AI's lifting that boat. That's a big fricking, well, it's their harbor. The boats are in that harbor, it's Microsoft, but that's going to be the question. I mean, obviously it's a good deal for the 10 billion that haven't drawn down. Our analyst emeritus, David Floyer, sent me some stuff this week, which I thought was useful, disruptions that are coming this decade. He thinks there could be a potentially 10 to one productivity improvement by the end of the decade. And he's saying the biggest hit in productivity is going to come from fully automated businesses end to end, new businesses that are formed that are developing processes from scratch, not paving the cow path. He's saying productivity from programmers developers is going to prove at least two to one by mid decade. He's saying a lot of this stuff is going to come from better use of analytics. And he's saying software, not people are going to be using those analytics. So, and it's new infrastructure. You've been talking about this, you were the first on top of this, that infrastructure is going to need to support this new AI that's distributed, these multi-clouds, these super clouds. So that's very different than the past 30, 40 years. And that's the problem that Intel's facing. And I know we're going to talk. Let's get into one last point on the AI. I think that we're going to see a wave of wealth creation in our industry that we've never seen before, even in other waves. I think Wall Street around the quote, magnificent seven, all the top tech companies driving most of the value, certainly got the attention of Lena Conn of the FTC. But I think that's just the canary and the coal mine as part of the hype factor. I absolutely see that generational shift of AI, generate AI will be a game changer in the sense of how things are going to change from a power dynamic standpoint. The role of founders, you're seeing how they're funded. They're being funded pre-formation Dave. You're seeing an $85 million pre-formation financing at a billion dollar valuation. Why? Because Brett Taylor's on the board of OpenAI. Is that overfunded? Is that kind of overfunded out of the gate? So power dynamics are shifting to the founders. You're going to see productivity gains shift power to whoever captures that. So opportunity recognition and value capture is going to significantly shift faster pace, new players. I think new brands are going to emerge. I think at some point, the tipping point here on the tide shifting will be generational and you're going to see a whole new ball game. Let me ask you one last question. So Microsoft revenue grew about $20, $23 billion last year. Okay, we're going to see that when they announce some January there. So let's assume it's $20, $23 billion. They traded about 10 to 12 times early. So call it $200 billion of new revenue that translated into valuation, okay? But their valuation increased by a trillion this year. So people are saying there's a trillion dollars of value in Microsoft from just AI. So let's say it's not a trillion, let's say it's 750 to 800 billion. Okay, would you rather invest in Microsoft because they got the AI chops or would you rather invest in a company? We were just talking about Cisco where the AI is not built in to the valuation yet. And they've got the potential if they can execute and tap their ecosystem and AI innovation to get that value down the road. It's an interesting question. Well, it's a good one. And I think John Chambers had the famous line of companies can make that transition if they don't make that transition. That was his famous line and Cisco made transitions. The question on Cisco is can they make the transition? And I'm questioning that. And so I would look at that and that would be my big thing. And Cisco, who's traditionally had under John Chambers leadership made market transitions at the time they needed to make them. I have yet to see the tell signs from Cisco. Maybe I'm not looking hard enough but from what I see they have some elements in place Dave. But if the answer is yes, they could make the transition, it's a bargain. They're Microsoft. Remember when we weren't doing the cube pod back when this was happening. But I remember when we started working together 13 years ago, Microsoft was trading around 26 bucks a share. Okay, so do the math. They just completely transition. And I remember the moment they donated when formed Open Compute. South Italy started transitioning when Balmer hand them the keys to the kingdom. Boom, it was just a complete game changer. Microsoft made the transition. Eight Amazon and AWS are in a similar position. Can they make the market transition to their business? Which is retail and cloud but mainly on the cloud side which we cover. Can they rein in and restructure their organizations so they can capture that enterprise value given on the tailwind of AI? And then a lot of people are skeptical. I hear people saying I'm gonna sell my stock on Amazon. You got people chirping about Microsoft and not continuing the growth. And then you got Google. I like Amazon, by the way. I wouldn't be selling on Amazon here. But so back to Cisco for a second. See, I think they've got the stack. You think stacks. We saw Amazon, Salipsky talk about their stack. We saw Satya Nadella at Ignite talk about the co-pilot stack, right? Oracle has got a very strong AI stack not the silicon level, but everything above that. Cisco's got every layer of the stack and a lot of software content. And they're shifting. They are transforming their company. The problem is I don't think they communicate it well. And they also, they don't have somebody and this is I think in part why they miss cloud. They don't have somebody guiding that strategy. It's very much sort of bespoke to your point about Stovepipe, but I think- They need to achieve AIsR. I think so. And I would say that- It's somebody with credibility. Yeah, I mean- They can pull that together. And it's very nuanced. This is the question I would ask the CEO. Chuck Roberts and the team. Is your data available? Now, because the way routing and their switches work it's at their customer premise Dave. So you know Cisco data and privacy a lot of people are really nervous about how they leverage the data. I think maybe they might be handicapped here. So what I want to find out from Cisco, in fact I will find out when I ask the question now that we bring it up, where's their data? Because I remember when we were at Cisco Live last year we brought this up and they were talking about the role of data. Now, if they have, then they have Splunk. Okay, so I think Cisco is sitting on a treasure trove. Yes, I think Splunk could be, could help with that challenge that you're talking about. Now, as you're bringing up a good point their data is kind of locked into switches and routers that are on-prem. But if it's on the customer premise what's the licensing fees on that? What's the license on that? I mean, I don't know. I don't know, it's another one question. And I don't know the answer. I completely could be off base, but if they can get access to that Dave they'll have massive amounts of IPA. AI is a data challenge and it's a data opportunity. I know that sounds like a bromide, but if Cisco can tap that data, it's got silicon, I'm going to say it again, silicon, it's got the networking infrastructure, it's got cybersecurity, it's got observability. It's got the collaboration piece and we know G2 puts a lot of effort into AI there and it's got software on top of that. I mean, I've always, I mean, I am a Cisco fan just to kind of lay my biases out there. I've always said for decades the fact that their network is so sticky you just can't rip and replace. The switching cost with Cisco is so high. It's just, it's hard. They're so nested in there. And I think, you know, they have to do a better job and keep innovating. They are, we're tracking that there, but we'll see in earnings, Dave. Let's get into the earnings. IBM and earnings came out next week. We got IBM SAP Intel service now and that cert went out this week and you got more next week. The big three of the cloud, F5, super micro alphabet, AMD, Samsung, Commvault, Qualcomm, Extreme Networks, Apple, Amazon, Meta, Alassey and Open Text. That's next week. Big week next week. And Microsoft. You say Microsoft? Microsoft, yeah, on the 29th Monday. Monday's alphabet, Microsoft, AMD, Samsung, Commvault, the 30th Qualcomm, Extreme Networks and then we'll see. I mean, so what do you, so we've got some signs in, you got IBM in, you got Intel got killed. IBM is getting it done. I mean, we talked about IBM in previous Q pods. I mean, Arvin's strategy I've always said is very clear to me, you know, we got consulting. We're not going to shy away from that. We're fixing Watson, Watson X actually, when you compare Watson X to some of these other, you know, players, I mean, I think it's competitive with Databricks with what they have. You know, they've got competitive with Snowflake, competitive with the cloud guys. So Watson X, Watson got it right. When I went down there at the IBM research facility in Yorktown Heights, I tell you, I was really impressed. And then I did a, I did a breaking analysis with Tony Bear, Sanjeev Mohan, Mervedrian, part of the cube collective. And I think I was very impressed that they got it right. They, they, I think he's fixed the negative, you know, the problem with Watson now he's going to shun the negative perception. And I think that's happening. You look at the ETR spending data, it's doing quite well. What really impressed me about the quarter was the free cash flow outlook. They're saying they're going to grow free cash flow by a billion dollars this year. They're consulting businesses strong. They got the hybrid cloud strategy, which is, you know, kicking in and they're, they're, they're leveraging the Red Hat acquisition. So you're seeing these legacy companies come back in a big way. I think Oracle's very strong. I think IBM's very strong. Going to be interesting to see what happens with Dell with the laptops coming back. We talked about Cisco. So IBM's looking good right now. So let me ask you, so Charles Fitzgerald, our friend, Fitz, over there, talks about the CapEx clowns. He actually puts IBM in that category. IBM CapEx down 52% for the quarter, down 20% for the year. As with cloud, CapEx is the big AI tone. Is that a factor? Is, does IBM already have the preexisting CapEx? Or is CapEx a sign that they already have the GPUs? They were not relying on NVIDIA. Does the CapEx give you any comfort that is down when others are rising? I think Arvin came in, I don't know. I haven't talked to him about this, but, you know, I will when I see him next. I think that he looked at this and said, you know, they got the hyperscalers. I'm not going to do what Larry's doing. I don't have the software margins and the free cash flow that Oracle has to pound all this money into CapEx. So rather than do that, let's leverage what we have. Let's rather, I'm going to take some debt, spend whatever, $32, $35 billion on Red Hat, leverage that and open shift to do hybrid cloud because there's clearly a need for hybrid, right? The whole lift and shift movement, that to me, there's not a lot of juice left in that lemon to squeeze. So let's double down on hybrid cloud, AI, we've got the consulting organization to make all that happen where you need the pieces to be put together by services. And let's save money and not have to try to compete in those CapEx wars. So I think Fitsi's right in that they're not hyperscaler. And I think Arvin said, we don't want to be a hyperscaler. We're going to lose that battle. We missed it. So let's focus where we can make money, throw off free cash flow for the first time ever. IBM looks like, not the first time ever, but the first time since Hal Masano that looks like the company is going to have a sustained valuation increase, which is great news for shareholders. Well, I like IBM. I think the red hat acquisition was smart. I think the operating system for the internet is going to be up for grabs. And certainly the operating system for what AI will be, will be up for grabs. It's going to look completely different than the way we see it today. And so, you know, that's why there's platform engineering things on my mind, because not every company could be a have platform engineering. Some entrepreneur will build a super cloud interface so that developers can code faster because that's what's happening with AI right now. And if you look at IBM and Intel's earnings, it's the hardware and the chips are now the enabler piece that's now meeting up with the demand because the developer is pushing hard on whether they're coding on a laptop, Dell and HP or whatever, those chips got to support those models. And that's my prediction that LLMs and the foundation models will be interacting and there'll be mashups. The power law that we talked about last year is in play. I think people are going to have their own models and they're going to interact with other models, whether it's a neural network or knowledge graphs and that interaction will be that kind of the API economy was for cloud, you're going to have the model economy for AI. And I think you'll see software built around it, glue layers, abstraction layers, bolt-on software and accelerators, hardware, software all around it. So I think a new operating system and underlying and infrastructure will power it. So, you know, to me, we had a CUBE interview, I remember in 2017, the cloud just hardware with middleware and applications. Amazon's the hardware. Okay, well, okay, that's oversimplifying it. But today, all the top conversations are hardware, which is from chips to machines and then configuring whether it's infinite band versus ethernet, all these things we cover. And then middleware, which is essentially abstraction software Dave across multiple environments and then ultimately apps sitting on top, that's what developers are doing. So the open source community is a absolute canary in the coal mine for where this is going. If you look at open source right now in AI, it is surging and it's going to be a battle royale for, you know, where the action is. Hugging faces saying they got the leaderboard, you got to have new things coming out. I haven't heard people talking about startups to be competing as GitLab and GitHub. So I mean, I wouldn't be surprised if people come out and use AI to replicate LinkedIn. So, you know, the question on all this, Dave, is what does AI disrupt and who leverages it? Because if you're Microsoft or Amazon, you don't want AI to rewrite office. You got to figure out how to keep it competitive. And so to me, I think it's going to be another sideways years for seeing this, but we're going to watch it. I think leaders in markets AI is going to confer advantage to those leaders, assuming obviously they got to execute. I think ecosystem is really, really important in AI because there's so many other moving parts. You talk about legal concerns, governance, privacy. So you've got to have an ecosystem that can serve as a flywheel and can fill some of those gaps. Intel, what's your take on Intel? Stock got hammered, analysts were on TV. Patrick Morehead was saying on TV, oh my God, it's rising tide. Obviously you disagree with that. But I mean, Intel, he's trying to put that smiley face on Intel, but it was, boom, it plummeted. Well, like I said, AI is everywhere except at Intel. And everything's great except everything's growing except the growth businesses. I mean, it reminds me of IBM in the Ginny Rometti days where they had all these strategic growth businesses that weren't growing. And I think the big concern with Intel from investor standpoint is their outlook is 15% below where people were expecting to hear. And, you know, Mobileye, which was a big acquisition, Altera, Altera was a big acquisition. I mean, they're talking multi-billion dollar acquisitions that just aren't paying back. And they're hoping to spin some of these seeds out as you know and throw off some cash. Intel needs cash. I've said before, Intel could go bankrupt. The problem is they're fighting a multi-front war. They're fighting AMD, you know, in their backyard data center. They're fighting NVIDIA to try to get to the GPU game. They're fighting TSM and Foundry. I've never loved the Foundry strategy. Tim Badger is coming on the breaking analysis in a couple of weeks. And he knows more about this than I do and he's optimistic about Foundry, but it's just so expensive. It's such a cash drain. Pat's fighting China. He's fighting other merchant silicon vendors. This whole thing about five processes in four years and it's never been done and it looks like they're gonna do it. That's all true, but so what? If you don't have volume, it doesn't matter. You know, they've taken this chiplet approach, which is smart because it's, you get there faster and it's lower cost, but they're never gonna get the price performance out of that. In my opinion, that you're gonna get from, look at NVIDIA chips, you look at Apple chips, you know, the big, big chips, they're gonna get better price performance. They're gonna get better performance. And so supply chain, what's the, how's impacting that? What's your take on that? I mean, you know, the supply chain in semiconductors, I think is misunderstood. The supply chain's never been global in semiconductors. It's very isolated. You got EUV out of the Netherlands. You got, you know, the world's top Foundry in Taiwan. You got the best software companies in Silicon Valley. And so there are these choke points. And this was, Chris Miller was, his book, Chip War, if you haven't read it, it's outstanding. He articulated this. It's really not a global supply chain. It's like choke point supply chain. And this is where, you know, the US still is very prominent in semiconductors, just not in Foundry. This is why we need a strong Foundry, but the problem is Intel needs cash. It's very hard for them, in my opinion, to compete both in the design and in the manufacturing. I had always said, I wish they had spun out Foundry, done some kind of joint venture, and allow, you know, the core Intel designers to spend the money on design. Now they got, they're going to get money from the US government, they get money from you, but okay, what, 10 billion is not going to move the needle. They're going to need $100 billion to catch up and compete. And I don't know where that's going to come from. Well, I mean, I think we're going to see how they respond to the market where there's more horsepower needed and a lot of competition. I mean, everyone's coming out. We see how the supply chain impacts it. You know, with the whole China situation, you know, companies like Lenovo, I've heard people saying, you know, we're not buying Lenovo because it's the, of the supply chain from China. So I got, I'm not sure how valid that is, but that's the buzz. Again, we'll see. I mean, Pat Gelson here has told us we got to be in the cloud. We got to be in the AI and we'll see what they do. I mean, but NVIDIA, they're not in the discussion. Let's get into the FTC thing with AI because it's transitioned with- Well, just by the way, NVIDIA, to me, NVIDIA widens its gap this year. I just don't think all these, you know, investments and other competitors are going to close that gap. AMD will get a little chunk of the market. I think Lisa Su said the market is 400 billion. You know, they'll get eight, 10% of that. NVIDIA is dominant and they're going to widen their lead in my opinion. I would not be, again, we're not, don't take our advice. This is, we're not a stock channel. You got to do your own research. But I hear people saying, well, you know, NVIDIA, how much more can they grow? You know, they're really rich. They're really expensive. It's for a reason. Sell, you know. I say sell. I know. Okay, there you go. Make a mark. I don't, I would hold NVIDIA. Luke can take that to the bank. I would buy the dip on NVIDIA. But again, we're not a stock. You've got to be careful, do your own research, disclaimers, et cetera, but. Can we get sued for saying that? I don't really know. Why the disclosure? No, we have to have that disclosure. Yeah, I think we should, right? Because people might say, oh, wow. John said sell. John on the cube said sell. And I sold the last one. Dave said buy the dip and then, you know, the market crashed. So don't, don't take our stock advice. You got to do your own artwork. All right, so NVIDIA was not in this probe that the FTC and Lena Khan was done. Here's the headline. Hilarious. Here's the headline from the Wall Street Journal. FTC launches a probe of big techs, AI investments. Agency said it will look into how roles of Microsoft, open AI, Amazon, anthropic alphabet effect competition, okay, in this red hot field. NVIDIA's not mentioned, but this came out of our story last Friday on this podcast when we talked about how these companies were specifically the big ones of Microsoft, Amazon, and Google, and NVIDIA was actually in that list that we reported, make up more VC investment than all the VCs combined. So they're number one. If you put those companies in one group, they're dominant, meaning they're influenced in the market. My take on it was a little bit different than some of that CNBC and Bloomberg take, which is more of, are they trading credits? Which we, that's a trivial, low, low hanging fruit hot take. But if you dig deeper, our analysis was, besides the fact that they're getting credits for equity, which is a whole nother discussion, is it influencing the community? Because as these startups are going more inception, meaning funding to the point of, hey, Dave, we have an idea, let's start a company. And then, oh, the VC is just happy. I'll throw money at you. That's what's going on. The founders are more experienced in AI than ever before. And the younger founders that are coming out of school have some pedigree or experience. They're being found out in hackathon. So what's happening is the capital markets on the VC side are going after them early, kind of like athletes trying to draft before they graduate college. So they want, okay, they're not ready, but I'll still fund it, I'll make that bet. That's how competitive it is. Okay, so that's the VCs. If the big guys are investing, is it market power, Dave? Do they just have access to what they're doing? Does it shorten that liquidity cycle? And now, by the way, is the step up valuations like medieval in the sense of, oh yeah, I just started a company and then you got three days in, and you do a B round at $100 million of cash, a billion dollar valuation. But that's what's going on. These valuations are insane. So do you jump in? Brett Taylor, pedigree, experienced, raises his hands. I'm gonna start a company called Sierra. $85 million he raised at a billion dollar valuation. Never seen this before in my life at this level. Normally you see those step ups after some series A, but this is interesting. On one hand, Lena Kahn has no trekker with me, but I hate this move from a regulation standpoint, but there's still a lot of attention. Is it good that this is happening? Well, so here's my thing. So actually, I love to rent on Lena Kahn, but I think in this case, look, she's right. These companies have extensive power. I don't know what she's going to do about it. I would much rather see the government go to these companies like Amazon, Microsoft, Google, Apple, Meta, and say, listen, we'll back off a little bit, but you got to carve out some of your balance sheet. And we got to get the foundry business back to this. We got to get manufacturing of silicon back to the States. And okay, Intel here. We're going to do some kind of joint venture or something to take the pressure off you. Sounds like socialism. We're going to pour money. No, it's not socialism. It's what China's doing. How do you think TSM? They're communists. But how do you think TSM? And that's terrible. But how do you think TSM got to where it is today? It's the government poured money into it. So I'm saying, keep the capitalism, but we need more subsidies in order to compete in silicon. And so I'd like to see Apple give its volume to Intel or some spun out foundry, but it can't because it can't get the quality. It can't get the yield. This is a tough, tough call. That might be the same. Instead of busting their chops, like, why don't they partner with them and do something that's good for the country? Is that free market economy or is that socialism? I am a free market capitalist, but there are some markets which are so importantly strategic that you got to cheat a little bit on the, you know, put your thumb on the scale to get the government and the businesses working together or you're going to get killed. And I'm not saying it's got to be regulated, right? It shouldn't be regulated, you know, give them some guidelines, but then let the market take care of it. But you've got to pour capital into silicon or we're going to lose. It's definitely going to be a conversation worth watching. In fact, at Davos, what was hot there was the Argentinian speech where you got the free market economy and he says, we were once the largest, most powerful capitalist nation and then became the worst because of socialism and what happened, people got complacent. And basically saying the U.S. is like that right now. That was an amazing speech. And that and Jamie Dimon's comment around Trump's policies, not Trump the person, he's basically saying it's kind of right. And he had no axe to grind. Wasn't he's not pro-Trump. He's just saying, hey, look at it, we're a disaster right now. You got division in our country, you got Trump's policies, which now if you look back, we're actually accurate. The election is going on, Dave. It's going to be great. You should see what's going on. And I think divisiveness doesn't work, right? So unity, unification, it has to be there for on the policy. I just- And if it affects the chip business, we need a competitive advantage and not be relying on other countries. Would you agree chips and AI are two of the most important strategic areas for the United States, the long-term competitiveness. And so if that's the case, I'd like to see the government and by the way, there are certain parts of the government that totally understand this, analysts and others that a lot of people in Congress understand this and are supportive of this. But then you got the FTC and the DOJ, you know, attacking. So I'd like to see us all get along and think about a 20, 30, 40, 50, 100 year plan to keep the United States more competitive. I think we have a lot going on. I think I want to see more faster chips. Chips will power faster applications, which is the whole middleware AI convergence. It's going to be fun. I mean, I think we'll see. Again, the action still continues to grow. Earnings side, we just saw a bunch of earnings, IBM's results, Intel's tank, but SAP Swords service now beat on all metrics. Yeah, I mean, service now. Chronosphere, one of our Cube alumni is when they've launched, they launched on the Cube, they bought a company. Databricks, backing some startups. Do you think Databricks, IPOs this year? Yeah, I do. I think they go public. I'd love to see it. I'd love to see, I mean, Databricks, Arctic Wolf is another one that I'm watching that could go public. Yeah, of course, people talk about Stripe. You know, last year was really a crappy year for IPOs. ARM was the big IPO and it's just like. Cyber security continues to be the other hot area. AI and, Gen AI and cyber super hot, Zscaler and that enhanced network security and zero trust architecture in their latest release. Single vendor, Sassy, the whole SD-WAN market and observability Dave's changing radically with secure cloud. And just in general, it's just a lot going on. And the thing that's going to be interesting is the whole EU Apple thing. I mentioned that earlier at the top. They're splitting up their app store to make it regular, make it make the regulatory, regular stores, regular is happy in EU. They got to change everything. So this puts a crack in the walled garden. That was from Jordan at CNBC. Jordan Novitz said that and he's right. The walled garden, Apple's always been this proprietary thing and they just been making so much bank. And so I don't see that Apple slowing down anytime soon but this does go against their philosophy. So again, a lot of regulation in Europe, a lot that could really be a problem. We'll see how that. But they didn't basically get a reach around on the ruling, right? Wasn't there a ruling said, okay, you've got to allow links to other websites. And then they said, okay, instead of taking 30%, we're going to take 27%. I mean, really? All right. More layoffs coming. We've been in a major, major layoff. Salesforce just hitting now plans layoff 700 employees after they already cut 10%. So another 1% and they still have 1,000 open jobs. It's probably weird that they do that. The whole media meltdown, Dave, has been interesting, right? So you're starting to see the business model of media start to plummet. This is the frog in boiling water, right? In my opinion, this is long overdue. I forget years ago when we were doing the Cube early on, you say, what do you see search? I see search, Google's going to die soon. Proplexly now making a shot at Google search. I've always said banner advertising, click through advertising is still good, but that was going to just die a longer death. But media journalism in particular, which we do is we're all digital, so we're a little bit well-funded. We have a good business model and stable and growing. But old school media is built on banner ads and advertising. And that business is now going away just like classified ads for the people who are younger. If you're under the age of 30, 40, you might not know classified ads is how you found stuff. You open the paper up and you go look for stuff. Now it's all online. You mean the newspaper? Yeah, yeah. They still exist. They still exist. It's good to see you doing your homework from yesterday's news. I'm talking about today's news. Classified ads drove the business that moved online. So I think media is the people who didn't transition to online subscriptions are getting screwed and you're seeing the has and have nots. Well, Sports Illustrated gone. LA Times just laid off really good group of writers and staff basically hold departments and some are just shutting down, huge consolidation. Forbes has a walkout, they're laying off more people. It's just that is a tell sign, this whole digital culture. And I still think it points down to the things we've been talking about Dave. Productivity, change of user behavior, expectations are changing. The mobile phone changed the game. Facebook used to suck all that as dollars out too. So there's no money to be made in journalism and it's really a problem. Journalism's needed. Now, I think companies like ours that have been born digital first who have built the journalism model around other revenue streams like sponsorship and data are doing better, right? So Wall Street Journal, they made the transition. New York Times, they made the transition. They got on subscriptions early. And I think you're gonna see even more consolidation and you're gonna see the rise of reputation networks. And so subscriptions pointing to that and for the people watching wanna hear the vision of media, it's gonna be less about fake analysts, fake journalists. It's gonna be about real journalists, real analysts, real data and real networks, reputable networks where influence and reputation are important. Some of the most influential people in our world have bad reputations. And so I think, you know, people are gonna make decisions around influencers around their reputation. What are they known for? Are they just taking the cash? Are they on the payout? So I think it changes disclosures. David changes everything in the media business. What you're doing, be transparent. And the people who aren't transparent, who were hiding the ball around their views are gonna get challenged and they'll probably lose business and they'll lose reputation. So, you know, always ask about people's reputation. That's gonna see the tell sign of things to come. But journalism, I see it rebooting. So I think a whole another generation is gonna go come in and reset it. But it's gonna be ugly this year. It's not even January, and it got all this layoffs. And companies too, like I said, budgets are down. So I don't see the economy as solid as everyone else does. So, you know, even Shemath and all in, you know, they talk about how great the economy is. He couldn't even raise capital for a fund. And he's got all that action. He tried to raise a billion dollar early stage investment fund due to fundraising challenges. Yeah, I mean. Yeah, I was like, yeah, really? So. Well, when did he do this? When did he try to raise? In the summer. Well, I mean, if you were an LP and you had an opportunity to invest or just park your money and get, you know, five, 6% in some, you know, fund, not fund, but just money market, right? Why not? Why not take advantage of that? Now, that's probably gonna change. I don't know. When, you know how these things are. When the headlines say, oh, things are bad. Everybody's like, oh, things are bad. And all the things are good. Oh, things are good. It's never as bad as they seem. It's never as good as they seem. All right, what's the thing that you learned this week that jumped off the page for you this week? Well. What was the thing you're watching the most of? Because to me, it's the ecosystem and the valley, the startups and the VCs and you're seeing the haves and have nots. The startups that have raised all this capital in 2021 and 2020, those are the companies that are falling out of the sky. And now the capital market's like, oh, it's the Zerp zero interest rate period is over. Yeah. And they didn't make it. They got product market fit that they thought they had. They didn't get it. And then they had all this cash just bleeding out. Other companies on AI Dave are overvalued unbelievably. Again, it's 85 million billion dollar valuation on a name. Yeah. It's like, okay, what does that tell you? It's crazy. I did my predictions this week. And so, you know, obviously looking at the macro spending, obviously spend a lot of time doing that. I think 2024 has got to be the year of AI ROI. And if it's not, then I think we're going to see tech spending is going to still track the Fed's moves and it's going to be a function of the economy. It's not going to be able to see that kind of gain sharing that we'd like to see. I think cybersecurity, I think you're going to continue to see consolidation and at the same time, you're going to continue to see more companies get funded. Right. It was interesting to listen to Eric Bradley who knows a lot of CSOs. And he was saying, CSOs are much more willing to take a risk, which has surprised me on new startups, the new shiny toy, than our CIOs. So CIOs, that doesn't surprise me, they're more conservative. But yeah, consolidation is still a big trend in security. But the consolidators like CrowdStrike and Zscaler and Palo Alto Networks, they can't keep up with all, you know, it's like where the tribbles, the trouble with tribbles, they're coming out faster than you can consolidate them. The Star Trek joke that people might not get by getting a tribble reference. They were these little burbies that would expand like exponentially and they would grow all over the place and they were very harmless, but they were everywhere. I think, so I think the message in cybersecurity is get back to the basics, right? Just worry about your basic hygiene. I think that's the situation. And I think you're going to see, you know, I was asking you before prepping for my predictions more smaller deals, VCs putting in, you know, six figure kind of seed rounds versus doing $2 million seed rounds, $5 million seed rounds and series A round smaller. And so that's, we've seen a shift there. And I think when I look at the inbound, so John, these are the inbound predictions I got. You say you get a zillion too. I print them because I'm old school and I go through every one of them. Dominated of course by AI, we're to the roof, but AI, cyber and data with the three big areas, you know, that everybody's talking about, that everybody's predicting and that's where all the action is. And they're very much interrelated. I mean, the thing that I looked at this week that's interesting in my conversation with Ed Sim and others on the radar on the VC community is the action is high, right? And the deal competitive, the deal competition for AI deals is high, but there's truly also a lack of understanding around some of the nuances around these deals. Like I talked to some founders that I think have the most incredible application and they can't get an audience. They can't even get a meeting with VCs. You think that's incredible, right? But then it's not translating into the pattern match. So what's happening is you just have to see new deals come in where only like 1% of VCs will actually understand what the hell they're talking about. And that's one couple. You have to be an expert on Amazon, Azure and AI and infrastructure to understand what they were doing. Like that's actually a fricking great deal. I know two guys you should talk to right now, but if you're an entrepreneur, you're like, what can, who do I talk to? Okay, and then of course everyone's AI washing and saying, hey, I got AI. And so the VCs are peddling as fast as they can trying to like vet deals. And how do you do due diligence on a deal when you see a kitty script AI wrapper and you got to dig into it takes time. So you're gonna see, I think a productivity shift in VCs and how they think about deals. And Ed Sim talked about that significantly and the idea of having network of a community around it of experts is going to be the best. So that's just something, you know VCs better than I do. Remember the Wall Street Journal thing where they throw the darts at the dartboard to pick stocks and they would consistently or very frequently outperform the best stock pickers. I wonder if this is the same thing with VCs in other words. I'm not saying that they don't add value, but I'm saying you could probably just throw a dart at the companies and it's the VCs with their ecosystem and their connections and their knowledge, their operational knowledge to the extent that exists that is really gonna make or break the company. You're gonna get a Bill Gurley versus some kid out of college. You're gonna have a better chance of succeeding because he or she has seen it before. And so I don't know how they do it. I mean they get- What's the question? So is it more just sort of lock of which company and it's really all about the execution and the ecosystem and the experience or is it really just about figuring out, connecting the dots and figuring out where that opportunity is? You know, I haven't opinion on this. I think a lot of luck plays into it, but it's also access. So in the old days, it's being networked. What's the scuttlebutt pattern match? People talk about that pattern match being negative thing. In some cases, VCs like to talk to each other and they signal and there's a lot of signaling going on. Now with the networks, it's the higher signaling. So it's all online, a lot more digital. But if you look at guys like Pete Sanci and he used to work with NEA, he's starting his own fund. He's a Cal guy. So he's got all access to the Cal network. Ed Sim, who I talked to started bold, start V.VC, the workbench guys in New York and we're going to meet with next week. They all have networks, right? And think about how theCUBE has our 18,000 experts in our network. I think you're going to start to see a new digital kind of communication where the formation of these trusted networks will be sharing information high-velocity. So I think the idea of a VC sitting there saying, okay, where's the business plan and going through the slog of the linear path of how they vet. It's going to be what's hot, go to a person real quick in real-time, text them, look at a deal. You got to have a network and it does take a village, as Ed said. But I think more importantly, you got to have experts. And you go, that guy's full of shit. She's great. Let's go with her. She's got the real deal. Okay, he's okay, but he needs a CTO. So like, you're going to start to see highly accelerated decision making. And that's why this idea was solo general partner. And we talked about before is hot because the decision making is data-driven, but also intuition. So I think that's what I see now. And all the success I see are not incubators per se, but this idea of getting in and helping founders. And getting to a yes decision and a no decision as fast as possible, being transparent about it. But I think this is why the VCs always say, well, it's size of market, yes. That's okay, there's some intuition and knowledge there. But it's also, they always say, I start with a team, right? Because if you've got a good team, it's like picking horses, right? I mean, if you're trying to buy a yearling at the Saratoga sale or the Keeneland sale, yeah, maybe there's a secretary in there that anybody could train, but you can get some good horses that bad trainers ruin or mediocre horses that good trainers take to the next level and good jockeys take the next level. I think the team is really important. You think about Snowflake, I mean, Muglia, I love Bob Muglia, awesome, got the company and took way beyond the point where they had product market fit. Slupin came in and goes, oh my God, you guys are way beyond the point, we got the product market fit, we got to scale, go to market. And Spicer obviously orchestrated that. If that didn't happen, who knows? If they would have achieved the escape velocity that they achieved, I don't know, maybe. I tell you this idea of helping companies, that's added value stuff, and I think that's gonna be more of the secret, less of the pedigree firm. By the way, pedigree firms usually have a network like Sequoia has a deep network, NEA has still got a deep network. And if companies don't keep that network going, they're gonna lose out for the solo and the smaller firms, speeds everything. If you look at all the hot young talent coming into the investment market, they're either got pedigree from a founding themselves or huge domain expertise, and then they put the networks together. And that's the ones, and they're also doing their own content. I just saw Bill Gurley and Brad Gerstner from the perimeter trying to do a podcast, like they were trying to experiment, edge in case it doesn't fail. But those guys should do great. They're like big guns. And then you got the- They're doing their own podcast? Yeah, they're doing their own podcast. But I want to hear, I think- They're probably got the FOMO. No, this is- Because they're like, they're like the subs from the all in. This is- They're the BT. They're the BT. But they're probably like, you know what? We're just as good as those guys. By the way, they are. They're the BT. They platoon in. But hey, why don't we? We'll start J. and J. varsity podcast. Is it just themselves or they have a moderator? I don't think they'll be like to hear that they're the JV- Maybe you should be their moderator. I'm a bit of a moderator than Jason Calcanus, but I don't want to compete with him. He's already good. I'm only kidding. Jason's better. Yeah, but I think that's a good sign. The idea that Brad Gerstner, who saw, who got the crack probably from the access to all in, and Gurley who's, by the way, has been prolific blogger. He had a blog called Above the Crowd that was pre-blogging. He always post-publishing. They're prolific. And that is going to be more the same. So of course they're stepping up to the plate. They can do it. They got the data. And Jammin Ball, who's the son of Ben Ball, who I coached Little League with. He's the one of the stars over there. He's got a great blog called Clouded Judgment. And this is the new normal. And this is what I'm talking about earlier about reputation. In these communities, if you're publishing and you're on camera, I mean, you can see who's got the knowledge. I mean, I see some people on camera in our space and you just hear them talking. You go, wow, they've got no substance. They're just parroting vendor speak. And so when you look at people's commentary, you say, wow, they have no substance. They're just getting paid. That's not gonna play long on a long game. So guys that are coming in that are pros, you're gonna start to see these networks form. And that's gonna be the tell sign of real influence, Dave, is what's their engagement look like? Do they have a following? And you can see them talk on camera. And they don't really say anything. And so, you know, you and I did a podcast, hey, bestie, you know, and we just talked to each other. That's not gonna fly. So, you know, it's gonna be interesting to see how this market works. You know, I feel about it, John. You just gotta bring the data, you gotta bring the analysis and serve your audience. And that's how you get organic. Yeah, but you're gonna start to see groups of people like for instance, those guys go on the thread and Bill Gurley, they go on the all in. The all in has three pods. Now, Jason does three pods. They got, he's got a startup incubator. That's just the new formation. If you're not putting media out, then you're not gonna attract it. And then ultimately, if your game's good, you're gonna have good, good communities. It's not only who you know, it's who knows you. All right, Dave, let's wrap this up. It gets late here on the East Coast. Usually when I'm on the West Coast, it's like two o'clock. I know it gets dark early here in the winters. And it's kinda like it was like, ah, gotta go home. All right, so final thing, playoffs. Niners, Detroit, Ravens you're thinking of. And Chiefs, what's your take? Tough one. So I think the Niners played very poorly last week against Green Bay, but I liked Green Bay. I think Green Bay was better than most people realized. And I had Green Bay's QB in my fantasy. So I was kind of watching them all year and I thought he could do some damage. It was just one of those improving. But I think the Niners go to the Super Bowl. I mean, kind of rooting for the Niners. I gotta say, I don't know, Detroit, nah, I don't think they're gonna get there. I'm wondering, could this be Lamar's year? I've always said he's not a Super Bowl guy. He's never gonna get there, not never. I think this year, I think he proves the criticism beats Kansas City down. But you know, you got two good coaches there. You got Harbaugh, the brother of Jim Harbaugh. I think John Harbaugh. I think the Ravens defense is gonna be the difference maker. I do. I think they're gonna be able to shut down Kansas City to the point where they can really score enough points to win. I think Lamar's gonna score a touchdown. I would make that bet. I think it's... I was gonna bet that McCaffrey scored two touchdowns and then got 100 yards. Turns out it was actually 99 yards last game. But I'd like to see a San Fran Ravens. I don't know. I don't really wanna see San Fran KC. You know why? Actually, I kind of always root, I almost always root against KC unless I'm betting on him because I don't wanna see Mahomes break Brady's records. In fact, Mahomes just broke Brady and Gronk's record last game. Yeah, I saw that with the... So, okay, so I'm voting for the Niners against the Chiefs in an epic matchup. That's what you wanna see. I mean, that's probably a better Super Bowl. But I like defense against a good offense. So, Dave, six years ago this weekend, you and I were at the AFC Championship game. Oh yeah, in New England. When it was like sub-zero, Caroline, my daughter and I had pictures. I saw that come up on my Facebook memories. Was my brother at that? Yes, we had that big shrimp. We had the nice meal. My friend Dave Ilson had the tickets for all those years. He would always invite us. I had, you know. Yes, we bet you'll put, but I'll be here in my sister's place for the weekend. So, I'll be watching the Niners here in the Bay Area. I mean, not in the Bay Area, but I'll be here. So, great. Yeah, this is good. Because, well, actually, during Sundays, you have football at 10 a.m., right? Obviously, the playoffs are later. Next week, I'm gonna do the podcast from Pebble Beach. You golfing? No, the Pro Am's there. So, I'll be there, Curtis. Oh, you're not playing? No, I'm not playing. I'll be doing a podcast there. Like I said, remote pod from Pebble Beach, 18th green. I might be a little bit sauced up there, maybe, Dave. Nice. So, disclosure. All right, great pod. If you're watching, hey, thanks for listening, episode 45. Go to SiliconANGLE.com. That's where all of our traffic is. We get over 4 million users hit that site every year. 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