Former Azure Lead on Microsoft Earnings

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Watch Former Azure Lead on Microsoft Earnings - Bloomberg on Dailymotion

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00:00I want to draw on your current investments and your more importantly I guess your current outlook

00:04for AI but I want you to draw a thread kind of back to kind of the evolution not just with Azure

00:09but really just of cloud computing overall because it really has now basically become central to this

00:14AI theme that's playing out. Well cloud computing enabled this new AI revolution and I'll tell you

00:22for those out there there's obviously some overpricing in the market but I actually don't

00:27think that we're in an AI bubble from the point of view of this is a vast societal change in the way

00:33that the world will work in general and frankly we had the same concerns in the cloud computing era

00:39right we thought we were maybe doing a race to zero margin business and when you're a company

00:44like Microsoft you have the ability to have platform benefits both as a great business in its own right

00:51Azure but then concurrent with that the upstack functionality that Office and Office 365

00:57and all the co-pilot success that you're seeing with Microsoft is enjoying right now you have

01:03benefits at multiple layers of the stack so that company will benefit tremendously. At Tola Capital

01:09we invest in the really fast high product velocity AI startups that are delivering incredible value to

01:16business end users. Give me a sense though of what they're delivering or I guess maybe what the

01:20potential of what they will deliver because that's been as you know a big question mark right now

01:25as to where the follow-through is in this AI trade beyond just buying chips and server space.

01:32Well I think that people are confused about this market and so one of the things that a lot of people

01:37will see you see very quickly the efficiency and the automation that comes from AI. What people don't

01:43spend as much time on which is where I think the greater innovation will lie is this top line how are we

01:49changing revenue. When we first launched the cloud you know people were concerned that there was not

01:55going to be adoption of this new technology. Well it turned out companies loved to focus on what their

02:01core competency was right they didn't have to buy their own servers and hire engineers to manage them

02:06and it's even bigger in the new AI era. People don't completely understand the TAM in the sense that the TAM

02:13is delivering full solutions and full new ways of doing things and that then encompasses both your

02:20old kind of IT TAM which has been an amazing and growing TAM but also the labor market commensurate

02:27with that and so when you think about a new way of doing things writ large a lot of people are not

02:32understanding how large that addressable market potential is. And I'm curious to get your thoughts as an

02:38investor on how you're viewing some of the capex going into AI infrastructure how that looks right

02:43now because just to read through some of the numbers Meta now sees full year capital expenditure

02:48expenditure between 70 billion dollars to 72 billion dollars. That's an increase from their previous

02:54range. Then you take a look at Microsoft for example their fourth quarter rather capex also above

03:01expectations coming in there. So I just wonder I mean how much weight do you put in some of the concerns

03:06that okay yes maybe AI is going to change the world and how businesses function but maybe there's a risk

03:12that we're over building here? Well this is being driven by end user and enterprise demand in the

03:18case of Microsoft and by individual and advertising demand in the case of Meta. So both companies are

03:23investing mightily in capex. Both companies are seeing incredible growth in the businesses that benefit from

03:30that both directly in their own assets and then in the platform and ecosystem assets that they

03:35work with. That sort of ecosystem of companies that builds on top of their platforms. One other thing

03:41to note that both companies are being very very intelligent on is they're pulling AI and therefore

03:46programmability and software down into their capex. So they're making their infrastructure AI intelligent

03:52and aware. Meta is making huge investments in this and that is a way to further take your competitive

03:59advantage which is software AI algorithmic understanding and pull it down closer and closer to the

04:05physical data center assets that you're building. That's a genius strategy.

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