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

00:00:00Is the are the productivity gains fromthis going to be as big or bigger thanwhat we saw from personal computers andthe internet?>> Oh, it's far bigger. It's far farbigger. Yeah. I I I feel>> 98% confident.[Music]

00:00:24[Applause][Music]Hey guys, great to see you both. Uh,Bill, maybe I don't know, you're up inTahoe or something and we're thrilled tohave one of our great friends, MichaelDell on to chop it up with us. Happy 4thof July, you guys. Most of you knowMichael. Um, he's built obviously one ofthe most iconic technology companies.Starting in his dorm room, I don't knowwhat, 40 years ago, Michael. I think youjust had your 40th anniversary.>> 41 years ago.>> 41 years ago. and now a major player inAI. You know, you you spun off VMware,of course, and now you're a major ownerof Broadcom and Dell remains a hundredbillion dollar business. I think you ownuh you know, like like Larry Ellison,you own a lot of the business, maybehalf of the business, and it's one ofthe largest builders of AI servers onthe planet. And obviously, in additionto that, you and your incredible wifeSusan have an amazing foundation. You doyou do great work in Texas and aroundthe country. I saw that you justcontributed to uh the disaster relief.What a tragedy in Texas. And so kudos toyou both for all the good work you do onso many issues, but particularly in thestate of Texas. And then, you know, ofcourse, it was great to have you andSusan as partners on Invest America. Iknow we're going to talk about thattoday. And everybody should

00:01:39run out andread your book, Play Nice But Win. Um,I'm actually I would recommend theylisten to it because Michael took what Iunderstand to be a very painful processfor an author to read their entire book,but it's Michael's voice and theinflection and the like you get nuancesI don't think you would get just withthe writing.>> Well, thank you for saying that, Bill,and and uh appreciate the kindintroduction, guys. Look, I mean, Ithink if you're going to take the timeto write a book, which is a majorendeavor if you really do it yourselfand do it right, and I did have somebodyhelping me, by the way, so I'm not goingto take full credit for it. I think youshould take the additional time torecord the audio book because you can uhdisplay emotion, intonation, and reallytell the story in your own voice. andand it's it's a powerfuluh way to convey uh thoughts andemotions at the same time. And uh I loveaudio books. I love I love going outsideand walking, hiking, and turning on agood audio book is a great way to do todo it.>> Totally. Well, in in the spirit ofstorytelling, Michael, do you rememberwhen you first met Gurley?

00:02:54>> Yeah, I do remember when I first metGurley. Uh this was this was in the inthe '9s andBill had written this research reportthat was super thick. And I'm readingthis report and I'm like how the bleepbleep bleep does this guy know moreabout our business than we do. It's likewhat? We must be totally screwing uphere. and and uh he had uncovered awhole bunch of analysis and thoughtsabout our business and we were so busyuh kind of distracted by growth that wehad missed a few things and Bill shineda massive light on that and it was superhelpful. So I I I uh became a faninstantly of his work and I've been afan ever since.>> Brad, that was 32 years ago. Even Eventhough when when I read the report, Iwas like, damn,uh, we we should have figured this out.>> This was 32 years ago. I was 28, Michaelwas 29, and running a public company,and I've always cherished the fact thatMichael's a year older than me, so Ialways have time to catch up.>> Well, it's

00:04:09great to great to be herewith the kids.Bill, what was tell us just a secondabout um because the '9s I think hassome some parallels to the period thatwe're living in now. So you know Dellwas growing incredibly fast obviouslybuilding lowcost highquality computerswhat inspired you to start covering Delland then you know uh was what led you tothese insights like did you just focuson that company? Was it was this a youknow a breakthrough piece of work foryou? Well, Michael's heard this before,so I I'll hopefully won't bore bore him,but um I I had worked in the PCindustry. I spent over two years atCompact in Houston. And you know,interestingly, I think being inside ofCompact, we had a view of Dell thatwasn't as respectful as it should havebeen. Um and once I got outside and wasable to look at the numbers in adifferent way, I was able to see thingsmore clearly. But but the gentleman thatthat made this all click in terms for mewas Michael Moeson who you know of umbut he had taught me to look at returnon invested capital. That's part of whatMichael was referring to. The companyhad insane

00:05:26um you know balance sheetturnover um in a way that that the thecash flow relative to the earnings wasreally high and the ROIC was 10x anyoneelse in the business. Um and um yeah andthen for some reason probably just youthI went and did a strong buy on theinitiation which um Michael made a bunchof his employees rich. I I ended upmaking a bunch of the salespeople richthere at CSFB just as a result of of uhriding on their coattails. But it was itwas quite>> the 90s were fun. The 90s were fun. Imean you know uh yeah stock went up130,000%. We had seven stock splits. Uh,four.>> What was the value of the company whenyou went public?>> What was the total enterprise value ormarket cap when you went public,Michael?>> Was like it was like $150 million orsomething like that.>> I mean, see, that's that's the beautifulthing. That's like I mean that is aseries A in venture capital.>> It went up 100x after this initiationlike in the public markets.>> Yeah. So, Bill, I just need you torecommend our stock one more time andthen>> there was there there there was anelement that I think is is superinteresting like that

00:06:41that was also partof what Michael was referring to, buttheir their inventory turns were so damnhigh compared to the rest of theindustry. So, they were they were, youknow, building to individual customerorder. They weren't building toinventory. They're building to demand.And um because component prices fell somuch, we calculated they got a 200 basispoint gross margin advantage just byhaving the FIFO Q.>> Oh my goodness. Yeah. Exactly.>> Just in time.>> This this was a this was a structuralcompetitive advantage. Uh by the way, itstill is. Um but so so the the point isthat the cost of the materials arealways coming down.And if your competitor has, let's say,90 days of inventory in a series of cueswith distributors and dealers, and youhave six days of inventory, which weactually had for about seven years in arow, six days of inventory, uh, thinkabout that. Um the it's a structuralcompetitive advantage because you're youhave fresher inventory, you have freshercosts,>> and of course you don't have all that

00:07:56capital tied up. And so you're you'rereturn on capital is essentiallyinfinite, especially when you're payingyour suppliersuh on uh a period longer than your yourcustomers pay you. And so you have a anegative uh cash conversion cycle whichwhich we still have typically aroundnegative 50 days cash conversion cycle.>> That's powerful.>> It's a beautiful thing.>> Yes, it is. Well, let's transition fromuh 32 years ago to the present.>> Cash is king. Everything else is anopinion.>> No, no doubt. No doubt. So, so you twojust um had a big win with this InvestAmerica uh program that was justannounced as part of the big bill and Iknow I know that Brad this was your babyand you spent a ton of time on it, butMichael came on board and helped out aswell. So, why don't you tell everyonethe details? We've talked about itbefore, but tell them the details ofwhat landed.>> Yeah. Well, thanks. and and and you knowI remember last Fourth of July we weretalking about this bill and I wassitting right here and honestly Ithought the chance of of getting thispassed into legislation

00:09:11was you knowmaybe 10% at best and we had some goodfortune. Um as you know um we thelegislation was called the InvestAmerica Act. It was a bipartisanstandalone bill and it ended up like alot of other pieces of legislationgetting subsumed by the reconciliationbill. Right. So, a lot of these thingsgot packaged together in this one bill.And of course, it was signed into law onJuly 4th down at the White House. Youknow, I've been at this four years. Youknow, I tried to get it done underBiden, but the stars just aligned inthis moment. And and Michael was prettyearly to get on board and support this.joined the CEO council um for InvestAmerica but played a critical role withthe president to help get it into thereconciliation bill over the course ofthe last 60 days. But let's just talkabout exactly what it means now thatit's become law. So I think of this as apretty significant evolution in thesocial contract. It creates privateinvestment savings accounts, privatelyowned for every child at birth, seatedwith a thousand bucks in the S&P 500.So, parents, companies, philanthropistscan add money. Anybody can add money tothese accounts. You can't

00:10:26take the moneyout of the accounts, right? It justcompounds in the S&P 500 until you're 18years old. So, we will spend the nextyear putting the program in place. Ithas to be launched under the terms ofthe legislation by July 4th, 2026, the250th birthday of America. Andbasically, we got it expanded. So allkids under the age of 18, that's 65million kids are eligible. And I give alot of credit to Senator Cruz who foughtto expand the pool of eligibility here.So what that means is that they can openup an account, but only children bornafter January 1, 2025 get the $1,000from Treasury, right?>> The other the others will have anaccount that someone else could putmoney in on their behalf>> and and they can add money to and thereare a lot of advantages for theirparents adding money uh for companiesadding money to it. So it makes a lot ofsense and my for Michael and I I thinkthe key performance indicator here is ifwe're having this conversation a yearfrom now we want to have 50 or 60million kids signed up. Now of course ifyour child is born after July 4th of2026then they're going to automatically

00:11:42getan account set up when they get theirsocial security number and they willautomatically get the $1,000. But wehave this one-time group all kids underthe age of 18. We're going to have a bigcampaign to get all those folks signedup over the course of the next year. Andand I guess for me, I was reflecting onthis um over the course of the last fewdays. And you know, at a time when youhave an avowed socialist like Ma'amDonnie, you know, winning the primary inNew York, it seems like, you know, theInvest America Act is really just theexact opposite, right? You're bothtrying to attack the problem of thewealth gap, but this is by gettingeverybody into the game of capitalism,making everybody actual owners in theupside of America's success rather thanresorting to price controls, attackingbusinesses and success and creatingreally more dependency on government.So, I think we're at this criticalcrossroads in America and I think theInvest America Act comes at an importantpoint in time. I think a lot of peoplethink of it like a 529 account bill, butI think that dramatically underestimateswhat this is.>> This is a lifetime investment account.So, they can compound over the course ofyour life. If you start with $1,000

00:12:57andyou add $750 per year, at 18, that'sworth $50,000. At 30, that's worth$170,000.And at 50, it's worth a million dollar.Right? So, it really is a platform forunlocking dramatic compounding andsavings in the upside of capitalism frombirth. And um it wouldn't have happenedwithout Michael.Well, and Brad, uh look, you deserve uh99.9% of the credit. So, I'm going togive it to you. Uh you you really drovethis thing uh passionately for severalyears, and it's amazing that it gotdone. I do think you'll see manycompaniesprovide uh matching contributions and uyou know a number of companies havealready said they're going to do that uhand it'll be like a benefit you knowcome work at our company and and uh havea kid and your your your child will getthis uh and it's just going to be supereasy for anyone to add to thoseaccounts. I think it's also a chance toteach every child about financialliteracy and about uh capitalism andfree markets anduh you know

00:14:12look up in 15 or 18 yearsand you've got 70 million kids withthese accounts. I also think you'regonna have philanthropists and uh Susanand I will will definitely be a part ofthat that will say hey you know this isa really good way to get money directlyto the next generationin a uh way that is going to compoundand have a difference in in their life.Our foundation has studied it this verycarefully and we believe it's worthy ofa significant contribution and Brad'sbeen working you know with with theTreasury Department and others to setthis up so that you know anyphilanthropist would be able to say heyyou know here's a zip code here's acounty here's a state here's a group ofkids that I'd like to help I don't knowwho they are exactlybut uh I want to help and I want to helptheir future and uh I I think I thinkyou'll see a lot of philanthropists getvery excited about this. I've had adiscussion with a number of them andthis could be a major platform forphilanthropy in our country.

00:15:28And and andjust to put a a sharper lens on that,Michael, they might>> back every kid in a state or everyone inthe nation on a year or just>> adopt the state, adopt uh a series ofzip codes.>> Uh you know, I think again it'll be aplatform for philanthropy.>> Yeah.>> Yeah. I think I think of it, Bill, youknow, in some ways like the givingpledge 2.0. I mean, we we we've hadmassive wealth creation in this country,like unprecedented wealth creation inthis country, right? But one uniquefeature of America that I don't thinkthere's any other civilization inhistory that you can point to, okay,that has this character, which is thesuper wealthy in America by and largewant to give away the vast majority oftheir wealth during their lifetime orshortly after they they die. I certainlyknow that that Michael's in in thatgroup. Okay, think about this. InEurope, right, they invented generationskipping trusts. It was about coming upwith legal mechanisms for creatingdynastic wealth so as to not give any ofyour money away. Okay? And we have aculture in this country where peoplewant to give away large sums of money.The challenge is the charitable

00:16:44infrastructure has not necessarilyscaled to meet the needs of people whowant to give away billions of dollars ata time. And I I I said to I askedMichael and Susan the question over ayear ago. I said, you know, if youwanted to give away a lot of money inthe state of Texas today, like how wouldyou do it directly to kids? And there'snot a good answer, right? Becausethere's not a financial infrastructurein place that has a set of rulesassociated with it, you know, where youcould have somebody like the TreasuryDepartment. We're gonna have a poolledInvest America account at Treasury whereMichael and Susan or otherphilanthropists could give money to thispulled account and it would be dispersedto all these kids accounts subject toall the rules and regulations of use. Sothe kids can't take the money out butthey can see it compound. That simplydoes not exist today. It's impossible todo that at scale today. And at the thethe long end of the curve, if you thinkabout, you know, my family as anexample, we do a lot with the EastPaloAlto school district, um you know,uh some of these lowincome schooldistricts in the state of Californiawhere I can just adopt that school andsay for every kid in that school, I'mgoing to give $1,000 a year to. So thisunlocks, I think, massive

00:17:59creativity,Michael, around philanthropy. And that'swhat I mean. What we know in SiliconValley if you build an open platform amillion applications can bloom. Amillion ideas can be built on top ofthis. I mean we've heard from statesthat want to add $10,000 for every kidborn in the state if they, you know, ifthey graduate from high school in thestate. So, I think we haven't evenscratched the surface of the beautifulcompetition and the beautifulphilanthropy and the long tale ofphilanthropy, churches and parents andfriends that we'll be able to give tothese accounts. And so, our job is tomake sure that we make it asfrictionless as possible that we workand we're we're that's one of the corethings that we're doing.>> And what you're describing thoseaccounts don't don't solely take moneyat the initiation. and they can takemoney all along the way, which is howyou could support a school or somethinglike that.>> Correct. So, the way it works, Bill, isum and all of this, I mean, Michael andI, I think, learned a lot about the thethe act of of legislation going throughthis because, you know, it's one thingto get it put in the reconciliationbill. It's one thing to get high levelbuy in, but just in the last two weeks,we were negotiating the nitty-gritty. Ithink this was 23

00:19:15pages of tax, youknow, uh changes in the reconciliationbill associated with the Invest AmericaAct. So, families can give um or orrecipients can receive up to $5,000 ayear from family, from f friends, uh uhyou know, etc. Companies can give $2,500a year per recipient tax-free, sopre-tax. Um so Dell Corporation forexample has raised their hand and saidyou know we intend to give uh to thekids of of our employees. So has Uber sohas Nvidia so has Oracle. So hasSalesforce. So has uh T-Mobile. So hasiHeart Media. So you know it's anincredible list that has already cometogether. And we're going to go to thebusiness round table. We're going to goto the largest companies in America andwe're going to ask them all to do it.Now we're not telling them the amountthey need to give. All we're saying isgive an amount that's appropriate toyour company and to your employee base.I just heard from Tony yesterday uh atDoor Dash. He retweeted something aboutthis. Sam Alman I heard from over theweekend once he heard it was passed, youknow, retweeted something about this.So, I think the the the businessenthusiasm is going to be very big andsubstantial. But remember, the mostpowerful givers are moms and dads,

00:20:30grandparents, friends, birthdays, andbar mitzvah. And all of those dollarsultimately like don't really generallyfind a home for savings and compounding.And we're going to make it as easy asVenmoing in this money, Apple payingmoney in. And you know, one of thestudies that we did that was reallyprofound in partnership with the MilkinInstitute. They found a whole host of ofthings. One was that lowincome cohortstend to save at about the same rate ashigher income cohorts. if they have anaccount. The problem is that nobody in alow-inccome cohort has a savings accountor investment account. So, I thinkyou're going to see, you know, a lot ofgiving a lot of contributions by allsorts of folks once we set this up. Wealso learned that once we do this, kidsare more likely to graduate from highschool and college, more likely to starta business, more likely to buy a home,less likely to be incarcerated. So, Ithink the societal ROI of this will bereally large over time. And it soundslike you're going to try and find a waywhere if someone wanted to donate,Michael mentioned zip codes, but someother way that if people wanted to justtarget the the lowincome, most needy,that there'll be

00:21:46a way to do that.>> Yeah, this was really this was a reallyimportant issue to Michael and to myselfand and you know, I'll just, you know,give you a bit of a window into theweeds. you know, we tried to get uhhousehold income as one of the one ofthe targeting mechanisms and we weren'table to get bipartisan agreement onthat, but we were able to get a proxyfor that, which is you can target by uhby zip codes. So, you can target down togroups of 5,000 or more by zip code. Andwe think through that geo targeting, sofor example, Michael could target theRio Grand Valley. I could target, youknow, East Oakland. Um, you know, sothere there there zip codes that youcould target that I think uh certainlyinclude a predominance of lower incomeuh households.>> That's fantastic.>> Hey, Bill, I know you've been involvedin financial literacy and education fora long time. Tell us about theorganization you're partnering with and,you know, perhaps as a you know, kind ofa a a potential partnership for InvestAmerica. Yeah, my wife and I have beengiving to an organization called NextGenPersonal Finance. Um, there's agentleman there named Tim Ranzetta whohas just

00:23:01been pushing for financialliteracy in high schools. So, we can adda link in here, but from 2021 to 2025 inonly a 4-year window, um, we've gonefrom 11 states to 29 states. Um, andTexas just passed this very recently, afew weeks ago. And so the idea, whichsounds obvious, it's actually quiteshocking that it's not true, is just toadd a semester of financial literacy tothe high school curriculum. Um, we sendkids out to get jobs and we haven'ttaught them, you know, how credit cardsmight take advantage of them and how tobuild a monthly budget and how to use acheckbook and, you know, how how to howto plan. And so I think you know thesetwo things u complement each other quitea bit but but that's another movementthat it's nice to see gaining momentumsimultaneously with this one.>> Yeah it's you know I talked to Tim Texasjust became you know like you said 29thstate I think to require a semester offinancial literacy education. Um and youknow some people said you know theTreasury Department, Invest America,they're not going to own the financialliteracy. What

00:24:16what again I think whenyou create a platform of ownership nowit makes all of these financial literacyprograms and organizations across thecountry just way more effective. Right?Because when you're talking to a kid whoactually you say open up your InvestAmerica account on your phone. Let'stalk about how you got 12,000$14,000into that account. Let's look at howit's compounded. Let's talk about whatit means to own the companies that arelisted there. What it means to be ashareholder. I think you just have amuch more engaged student, right?Because today 95% of those studentsdon't own anything and they look attheir parents and their parents don'treally own things. And so it's a lotharder to get motivated to learn aboutsomething when you don't think you'regoing to have the prospect of ownership.There are so many great organizationslike Tim's out there. Um, and I lookforward to seeing how they take thisplatform and run with it to turbochargetheir own efforts.>> Brad, I know you wanted to mention umthe budget deficit and and the fundingfor this program and put it in a littlebit of perspective just with all thetalk and concern about how big thebudget deficit is.>> Yeah. I mean, listen, you know, we'vehad a uh a huge debate among our our ourfriend group um

00:25:32uh about this and youknow, and some of my friends were evencritical that, you know, this is part ofthe problem, if you will. So, you know,to break this down, um the max cost ofthis is 3.7 billion a year. We have a3.7 million kids born every year. If yougive them each $1,000, that's 3.7billion. So just to you know kind of putthat in context 3.7 billion is aboutwhat we contribute we give toAfghanistan and Nigeria in the terms offoreign aid every year. So I think oneof the things as a country we just haveto ask is about priorities. Is it moreimportant to give every kid in America aprivate investment account a little seedfrom birth and get them on the righttrack or to give $3.5 billion toAfghanistan Nigeria? And I think thoseare the type of choices we're going tobe forced to make. And I'm not sayingthat the dollars going to Afghanistan,Nigeria are wasted, but we make thesedecisions every single day in ourbudget. And so for me, this is, youknow, that's one angle. The second angleis just as a percentage of our nationalrevenue. This is 1/100th of 1% of ournational revenue. So it it it's prettyinconsequential in terms of the overallbudget. But the final point on it is, asyou've heard me argue, according to the

00:26:47studies that were done on this, thiswill actually be revenue contributing 20to 30 years out because the taxes youhave to pay when you exit the accountson the capital gains will be more thanwhat the government is contributing onan annual basis into the accounts. Andso among the things we should be worriedabout when it comes to the budget, Idon't think this is one of one of them.However, I would say unquestionably thatum I remain as concerned about thebudget deficit as ever. Um and you knowbeen a supporter of a balanced budgetamendment for a long time. I happen tothink that this is something that isaligned with that, not at odds withthat. Making every kid a capitalist frombirth is going to better align us withthe policies that allow the companycountry to be continue to grow. Um, andI think growth is a critical element tomaking sure that we get our deficit toGDP back in a uh, you know, in in amanageable place. Michael, I know youcare a lot about that issue. Any anyother thoughts on on that particularpoint?>> Yeah, I mean, government's obviouslybeen spending too much and uh, there'sbeen some some renewed attention andfocus on that. That that's a good thing.Uh, it gets priced into to the currency,right? And we see it in all the

00:28:02effectsuhyou know whether it's inflation or thevalue of the currency>> and uh you can't really uh escape that.I I think the the the spending has tocome under control. Uh now maybe we getthis incredible uh productivity lift.I'm sure we're going to talk about thatas we get to the AI fund portion here.Um, but we shouldn't be spending uh somuch more than than we're taking in asas a government. We, you know, we I'vesort of stepped back from the hystericsand you say we don't have a loan tovalue problem as a country. Um, we wehave a spending problem.>> Talk to us about the I want to dig intothat because it's a really importantpoint. Talked about loan to value. Whenyou say loan to value, what do you meanby that?>> Yeah, what what I mean is the value thethe you know loan to value is a commonterm and phraseology used in banking andcredit markets and essentially refers toyou know the theuh amount of a of a loan relative

00:29:17to thevalue that it's it's being borrowedupon. If you think about the deficituh you know as against the value of allthe assets in the United States,we don't have a loan to value problem.>> And of course,>> so the total value of all the assets inthe United States are a couple hundredtrillion. Our annual deficit is 2trillion. So you would look at that andsay as a loan to value, that's not anissue at all.>> Well, I I would look at the totaldeficit as against the the the totalvalue of the assets. All right. Now youhave>> so 36 billion 36 trillion of debtagainst 200 plus trillion of assets.>> Right? Now you have to take into accountuh private uh assets and private debtalso. So it would be a differentequation there. But also the governmenthas taxing authority and so it could youknow increase the taxes but net it allout. Uh the government shouldn't bespendingwhat it's spending relative to what ittakes in. And there's many ways toaddress that, but umwe we should we should be worried aboutwhere the deficit is and the rate ofincrease.>> Let me ask a question about that. Umwell,

00:30:32first maybe to level set. So theargument out of the White House is thatthe reconciliation bill cuts thedeficit. So the deficit was about 1.9trillion. Their argument um is that itcuts the deficit by about 150 billion ayear. So 1.5 trillion over 10. Okay. Andthen they also argue you get another$250 billion in tariff revenueincremental from the start of the year.Right? We saw that in the run raterevenue in the month of May. So you addthose two things together, now you're at400 billion. So if you were at 1.9trillion deficit, now you're down toabout $1.5 trillion deficit. By my math,that drops it to about 5% deficit toGDP. Bessant has said he will get it to3% deficit to GDP, which is what mostpeople say is, you know, reasonablyhealthy. Um, I think people would liketo, you know, not have any at all, but Ithink most people view 2 to 3% as as asreasonable. He thinks he can get thereby 27 or 28 through the two things Ijust mentioned, right? tariff revenueand the deficit reduction in thereconciliation bill plus an incremental100 to 200 basis points of growth in thecountry

00:31:48caused by you know lower taxesless regulation AI productivity etc. Umso you know are is your view that wejust have to wait and see you know likedoes that show up or does it not showup?Well, obviously we have to wait and seesee. Uh I think on the on the on thetrade and tariffs front,I think this is this is very tricky,right? Uh we have uh products flowingback and forth and we have uh servicesflowing back and forth. And if you thinkabout you know the market cap of the UScompanies versus the rest of the worlduh hey guys uh US is doing really wellrelative to the rest of the world inmarket cap and the reason is that wehavea substantial lead in the most valuableindustries in the world.>> Correct.And and so the the issue there is thatif you if you think aboutum you know uh the the trade inproducts, you also have to think

00:33:03aboutthe trade in services and you know howthat's going to be dealt with in anegotiation. I don't know how that'llall get sorted out, but I I I don'tthink it's a I don't think it's a simpleone uh line item fix.>> Right. Right. No, I think it's, youknow, I it's all relevant right now.Elon's talking about forming a thirdparty, the American party, really inresponse what appears to be frustrationover uh Doge and the budget deficit andthe concerns by folks like Ray Dallioabout, you know, a debt spiral in theUnited States. Um, you know, you gotguys like Scott Bessant saying, youknow, Elon, you catch rockets, leave thefinances to me. Um, Bessant seems veryconfident that he's going to get thisback down to two to 3% deficit to GDP. II actually like the the uh suggestion,Bill, by Dantis. Um, you know, ratherthan forming a third party, which seemsto me just chaotic and a lot of overheadand has not historically been thatsuccessful. I would love to see Elon,you know, like if this is his his mainissue, if it's if if it's the budgetdeficit and debt, which I would love tosee him take on,

00:34:18right? He could do aseries of things. Number one, he couldreally sponsor a balanced budgetamendment to the Constitution of theUnited States under article 5. If he put$10 billion against that effort, itwould be the single largestconstitutional effort in the history ofthe country. I think there's broadbipartisan support uh for a balancedbudget amendment. We have 30 32 statesthat have supported this in the past. Ithink you only need 34 to get it uh uhconstitutional convention called. 38states to get it ratified. You know, itwould it hasn't happened. Um, you know,the founders made it hard to amend theConstitution for a reason, but Iactually think if he put those type ofdollars and that type of focus behindit, we could get it done. And then ontop of that, he could targetboth Democrats and Republicans inprimaries around this issue. And to me,it just seems like that targetedapproach, that very focused approach uhto balancing the budget would have allsorts of positive impacts. Number one,it keeps the country focused on thisissue. It keeps this administrationfocused on this issue. And, you know, Ithink you have an outside chance atgetting a constitutional amendment, andyou certainly are going to have a lot ofof Republicans and Democrats who willrun on that issue if they think

00:35:33they'llget, you know, Elon support. So, I'm notsure how this will all evolve, whetherthere's going to be a third politicalparty or not, but I would love to seethis issue get dealt with. I rememberRoss Perau tackling it. 1992, 1991,Michael, um I I know you know you youknew Ross and um you know, to me thatthat type of attention is the type ofattention that that we're going to need.>> Why don't we why don't we shift gearshere for a second? Um, this one I, youknow, I've been dying to ask you bothabout. There's this really unprecedentedwar for AI talent going on. Um, and itit was kicked off by by Zuckerberg andMeta. They made the Aqua hire of ofscale for $15 billion. Um, they broughton board uh, Alexander Wang, you know,to help lead that effort. Then theybrought on board Nat Friedman and DanielGross. They've poached a bunch of peoplefrom OpenAI, a bunch of people fromGoogle, and now today another, you know,announcement of somebody from fromApple. The talk is 75 to$100 millionannual pay packages, massive signingbonus, really dollar amounts. Michaeland Bill, I don't I've never heard of

00:36:49uhyou know, in the tech industry. So,Bill, given that recent set of facts,like what is this isIs this a good thing? Is this a badthing? What do you think the downstreamimplications of this are?>> Well, I mean, I would I would back up alittle bit. I don't think it startedwith Meta. I mean, I think it startedwith the cycle that we've been under inthe private funding market. you know, wesaw some of this stuff during Zer, butum you know, we've moved to a world, andI I talk about this in detail on onOshanessy's podcast if someone wants togo listen to it from a few weeks back,but we've evolved to a place where whenthere's a successful company, thelatestage private market at large triesto shovel feed cash into them. And so wehave private companies that have raisednot just a hundred million but a billionor more. And we have a handful ofprivate companies um including OpenAIwho are um voracious and audaciousenough to burn two, three, four, fivebillion dollars a year. And so you startdoing that and you create a situationwhere private companies

00:38:04and we saw thisa lot during Zer but private companieshave an odd advantage against publiccompanies in that their the theinvestors are more willing to let themlose a lot of money than the publicinvestment you know investors may bewilling to. And so they get bold andthey get audacious and you knowOpenai, Anthropic, they were all payingpeople tons of money before Meta didthis. Um they were paying them 10million a year. You know maybe smallerthan what you were talking about butthey were doing it. Um and they wereproviding liquidity earlier like 2 yearsin instead of waiting for four andliquidity is a private company and allof these things which in some cases mayhave let these people leave because theydidn't have any lock in. So that maythat part may have backfired. Um but inZuck you know you have someone who's hadhis back against the wall a couple timesand gotten bold and changed what he wasdoing and succeeded again. And so he hasconviction that he's willing to take abig bet. I think he's very willing tolook at cost as a percentage of hismarket cap and to view risk as spendingagainst

00:39:19a percentage of his market cap.Not everyone's capable of doing that. Ithink it may be the right math actually.>> Um in terms of you know how how big abet he wants to make. Um but yeah, it'san what he has done here in the pastthree weeks is is an experiment that'snever been tried before. But there'sunlimited free agency in business unlikesports. And he just went and bought the,you know, 27 Yankees, you know, of AI.>> Yeah. I mean, and and I think your pointis a great one. And listen, we'reshareholders in Meta. We're shareholdersin Open AI. I wouldn't be a shareholderin in in Meta if I didn't think, youknow, in fact, I remember back in 22when um you know, when we took our bigposition there and people said to me,"Oh, what are you what are you doing?this is a founder controlled company.He's never going to become moreefficient. He's never going to do thesethings. I said the whole reason I wantto be all in on this company is it'sfounder controlled. I think it is amassive advantage that he has today,right? And he's talking about risking 1%of his company, right? In order toreboot around AI, that seems to me to bea very very rational economic decision.And there's no and this is just a talentwar. He's got to, you know, Llama 4 wasnot where it needed

00:40:34to be to competeheads up, but he has one advantage noneof those other companies have. He hasthe world's biggest printing pressshooting out billion dollar bills,right? He's not relying on thebeneficence of venture capitalists. Theguy has a business model that isgenerating the cash to fund all this.And so, he's leveraging that cash as asource of competitive advantage, whichseems to me to make a lot of sense. Ithink it's going to make it verydifficult and I'm, you know, that's whyI was asking about the downstreamimplications, Bill. If you're a companythat's trying to compete against that, Idon't think many venture companies cancompete against that on a on a durablelong-term basis.>> Certainly not the real startups.>> Yeah. Yeah. I was having a discussionwith a real AI startup uh founder thisweekend and, you know, he was askingabout talent and like I I don't knowwhat you do. I mean, I don't think youhire anyone that's top thousand in theBay Area. Um, you won't be able toafford them. But, but I do think thereis a fundamental question because it'seasy to and I want to get Michael'sopinion on this. It's easy to say thepercentage of market cap and make thatbold decision. But there are culturalimplications, right, of bringing inemployees that

00:41:49make radically differentamounts of money than the other employeebase. How how do you think that will be?How difficult will that be to manage?I think it'll be a challenge culturallyfor sure. Um,you know, uh, he could have a long lineoutside of his door, uh, w with people,uh, you know, wanting this orcomplaining about that and that could bea distraction. So, you know, I thinkpeople uh, generally have a sense offairness, right? and they they want tobe treated fairlyum relative to others and relative tothe the opportunities that they have outthere in in the overall market. And ifthey feel that they're not being treatedfairly, uh that's going to be a problem.So, I don't know how that I don't knowhow that gets sorted out. I do think themath could work for them given giveneverything you guys just talked about.Uh and and obviously if you uh reducethis down to a race to superintelligence or something along thoselines, the size of the prize is istremendous. And they do have anincredible business that

00:43:04is aided bythese advancements uh in a in a big way.And there aren't a whole ton ofcompanies that can go do this.>> Yeah. And by the way, Brad, youmentioned that they have the this unfairadvantage of this huge printing press,but Apple and Google have the same exactprinting press and chose not to do this.>> Yeah. I But but but neither of them arecontrolled by founders.And you know, that's what I was thepoint I was trying to make. These arethe type of bets that I think it's veryvery difficult for a Google or an Appleto make um for the reasons youmentioned, Bill. you know, can they sellit to the public markets? You know, dothey have the type of decision-making inthe boardroom that allows this to occur?I mean, at the end of the day, I thinkat Meta, if Zuckerberg wants to do it,that's what's happening. And that board,you know, gets on board. In fact, he'sreshaped the board over the course ofthe last couple years with folks whoare, I think, signed up for this uh forthis mission with him. Michael, to yourpoint, that's why I think he reorganizedthis into the kind of super intelligencedivision. I think the way they'll try tomanage this culturally is to say,listen, there's going to

00:44:20be an eliteSEAL team 6 group, which is called superintelligence, and we're going to paythem elite pay because it's good for theentire business. That doesn't mean we'regoing to inflate everybody else. And infact, what I think that Meta will do isuh you know, you'll probably see themrolling back like you see withMicrosoft, like you see with Amazon. Mysense is that companies are generallygoing to get smaller, right, on thebacks of the productivity gains from AI,but they'll redeploy some of thoseprofits into these areas. If you're inthe model business and you want to be onthe frontier competing in the front, youknow, for super intelligence and thereonly whatever 5 to seven companies thatreally are in that game, then I thinkyou're going to have to have somethingsimilar. Now, in the case of Open AI,it's only 2,800 employees and they'reall part of that division effectively.But you have to really get scale quicklybecause if you're not bringing in 10,20, 30, $40 billion of annual revenue, Idon't think you can stay in this game.Um, and so the question is whether ornot Anthropic and X and OpenAI have asufficient escape velocity, right, thatthey can take on this frontal assault by

00:45:35uh by Meta and and and still compete. UmI my sense is OpenAI does my sense isboth of those companies do but it's nota long list uh that can compete withthat.>> And by the way the the Nat Freiedmanedition was particularly interestingjust with his GitHub background. Youknow we had talked in the past that Metahad made a couple of hires on theenterprise side and we had heard rumorsof you know certain payments when theypassed through the the cap on the openmodels. Um but you know you have towonder with Nat coming on board if thereare more aspirations on the enterpriseside.>> Yeah I I it's a great point andcertainly one of it creates someoptionality there. Hey Michael, questionfor you. You know on this related topicof productivity gains from leveraging AIand kind of what you're seeing at Dell.Um we've talked on this podcast what wecall the golden age of margin expansion.you know, this idea that you're seeingAI is uh certainly reacelerated your topline in a pretty dramatic way. Um, butdoing that at a lot of companies at thesame time, you're able to do more withless. Um, is that overstated or do youthink that we're in this phase over thenext 3, four, 5 years where generally asan economy

00:46:50and certainly within a lot ofcompanies that they're going to be ableto, you know, have their top lines growfaster than their operating costs?because of AI.>> It's it's absolutely real, Brad, and weare doing it. We know of other companiesthat are doing it. And I think, youknow, maybe only 10% of companies, largecompanies have figured this out and theother 90% are sort of a bit confused atthis point. But you know if I step backand look at this you know 10%productivity improvements pretty easy20%uh you know reasonably common sightingsof 30% or 40%. Those are massivenumbers. If you sort of step back andyou think about this, you know, you gota $114 trillion global economy, right?In 2025and services economy is twothirds ofthat. You know, if we believe that a 10%improvement is possible in productivity,if you just keep it simple and you say10% improvement,uh, that's worth 10 trillion dollars,right?And so

00:48:05uh the amount of investment thatis occurring today in AI could be uhquite a bit less than is reallyjustified. I mean if if if if if we ifwe believe in a 10 to 20% improvementand I don't say that lightly becausethat's like that's like an enormousthing if if it were to occur. But let'sjust stick with this for a second. If wehad a 20 10 to 20% improvement, theinvestment in AI should be more on theorder of two to four trillion dollarsper year.>> Yeah. Yeah. And and that's not that'snot where we are.>> Uh it's a lot less than that. So, uh,you know, uh, I don't want to get tooahead of myself here, but but I I I dothink there is a big change that isoccurring and we're just at thebeginning of it and it's going to affectevery part of uh our our world.>> Well, you you you have particularstanding here, Michael, right? You sawthe productivity gain that came from acomputer on every desktop. You saw theproductivity.>> That was the '9s. That we were talkingabout that the '9s. That was fun.>> You saw the productivity gain from

00:49:20theinternet. And now you're two years intoobserving this. Is the are theproductivity gains from this going to beas big or bigger than what we saw frompersonal computers in the internet?>> Oh, it's far bigger. It's far bigger.Yeah. I I I feel 98% confident that it'sfar bigger than than than the PC.>> Uh the internet.>> What about the internet?>> Yeah. I mean, so of course all thesebuild on each other, right? Yes,>> it's compounding but this is this isthis is bigger because it is essentiallyall knowledge workand uh I think I think it's an expansionof the pie right it's it's really easyto figure out what will be moreefficient and how you can reduce costsuh but you know if you go back 20 yearsago it was very hard to see where thenew jobs would be. I think we're in asimilar situation here as well. Uh I doI do think it will be expansionary forthe overall economy and for prosperityand for well-being

00:50:35and human potentialbroadly across all domains whether it'sin education, health, societal outcomesetc.Uh but yeah, this feels this feelsbigger.>> I remember in 2001 2002, Michael, somecompanies that were early to, forexample, Google, they figured out how togain, you know, like I think abooking.com, right? They figured out howto arbitrage the internet and Google tobuild this giant business, right? And soI would say like they figured outproductivity gains before the nextperson and and and that was hugelyadvantageous. And when you say that only10% of companies are are leveraging thistoday, it kind of sounds like the samething, like the early companies arereally there, but there's a huge amountyet to come.>> Well, you know, I think I think a Ithink about the big companies in theworld. I'm talking like, you know, 10billion plus revenue companies, uh, youknow, uh, 50 billion, 100 billion plusrevenue companies.These companies havean incumbency of sorts, right? They havedata, they have customers, they havebrands, they have IP, etc. But if

00:51:50theydon't move quickly to reimagine theirbusinesses given all this technology,they will be destroyed by new companiesthat come in with a totally clean slate.And you know, that's you can already seesigns of that happening. So uh I thinkthis is all going to play out you knowin the next 3 to 5 yearsuh and it will become sort of an urgentpriorityfor companies to re reimagine themselvesanduh you know what what we've done at atDell is is uh you know our our teamknows this because we we talk about itall the time internallyum youThat was I think it was almost two yearsago. I stood up in front of a group ofour leaders and I said that five yearsfrom then, that would be three yearsfrom now, we're going to have a newcompetitor and that new competitor isgoing to be in every business that we'rein except they're going to be faster andmore efficient and more capable andthey're going to put us out of business.>> And the only way we're going to preventthat is we're going to become thatcompany. And and this is how we're goingto do

00:53:06it. and I sort of laid out ourbest guess as to how to do that, youknow, two years ago. Uh we're prettyfar, you know, uh into that path andwell on our way and it's working, butit's not an easy thing to do, right?This is a this is sort of gut-wrenchingstuff to reinvent, reimagine. We've hadto do it many times. If you don't do it,you just go out of business. So,>> and that's no fun. So, we're not doingthat. and and and not everybody wants todo it, you know, it's it's uh true. It'shard.>> Yeah. You're you're I was wondering ifyou could expand on that a little bit.So, your server division is your fastestgrowing division. You've you know, we'vetalked about on this podcast some of thebig wins you've had as part of large AIclusters. How did how did you get Dellin a position to be part of that nextwave? And what are the key what's thekey value ad from your products in thoselarge deployments?>> Yeah, so last year our server networkingbusiness grew 58%uh year-over-year.Um in the first quarter we had uh wereceived 12.1

00:54:21billion in AI orders. Uhand by the way, our shipmentsuh for all of last year in AI serverswere about $10 billion. So So we Soiontwo years ago were two billion.>> Yeah, it was it was it was not very muchtwo years ago. So we we took orders inthe first quarter for over 12 billionand last year we shipped about 10billion. So this is growing super fast.And now we have a backlog of of uh alittle over 14 billion. So whathappened? Well, um you know, we we we'realready the leader in servers. Um we wekind of saw the GPU thingandit's a it's a combination of things. Imean, when when Nvidia releases areference design,um it it's kind of a reference design.It doesn't really work.You know, we love Nvidia, but but uh youknow, somebody's got to make all thisstuff. And so we uh tons of tons ofengineering

00:55:37and obviously there's a logistics thesupply chain building these 100,000 plusGPU clusters and making them workreliably is super complex. So it's acombination ofengineeringuh operationsum you know we we often will help withthe financing of these with our uh Dellfinancial servicesand uh you know this the scale of thesethings is enormous. me right we talkedabout this at Deltech world right nowwe're deploying these systems that willproduce uh you know deliver more than 50trillion tokens per month and if you putthat in the context of Google statementsor Microsoft statements I mean this ismassive scale uh systemsand uh yeah I don't think there are aton of companies that that are able toto to do this and have them workreliably.>> And Jensen has said, you know, you guyshave distinguished yourself against yourcompetitors, um, other ODMs like Foxconor Quanta, etc. Um, you know, you'vebeen first to market. You're

00:56:52launchingthe GB300's right now. You're partner.>> Yeah, we delivered the first GB300'suh, a couple days ago to uh, CoreWeeave. We announced that we actuallyhave delivered another GP00 GP300 systemto another customer. Uh I don't thinkwe've disclosed who that is yet, but uminformed listeners of this podcast willprobably guess. So, so the the thingthat I'm, you know, a year ago, we wereall sitting around and talking about theups and downs of the overbuild in 2000,right, around the internet. And youknow, and and and yet when I look at thetrajectory that we're on, right, I sawMike Intrur on, you know, CNBC today andhe said, "Listen, we're stillunderestimating the amount of demandthat's out there in the world." And whenwhen he says it or when you say it orwhen Jensen says it, in some ways peoplewould argue it's self- serving. Ofcourse, you guys are going to say that.That's your business. You're going toyou're going to tell everybody yourbusiness is great. But you're known as avery sober guy who tells it like it is.And what I want you to do is reflect alittle bit on the comparison betweenthis and the period in early

00:58:082000 whenwe did get overbuilt, right? And youknow the as the saying goes, everyshortage ends up in a glut. Why are wenot near that point yet today uh in thismarket?>> Well, I mean you you guys as students ofthe market can go back and you know uhsort of review what the multiples wereon earnings and cash flow you knowaround that time. We're nowhere nearthat for the most part. Right.>> U but if we go back to theuh underlying activity here uh it's allabout the tokens, right? And as we gofrom basic queries to uh test timecompute to deep reasoning to agents andmulti- aent systems, the number oftokens just explodes. And what are wetalking about in token? When we'retalking about tokens, we're talkingabout knowledge, right?And>> exactly>> um you know I don't know about you butI'm using these tools like 50 times aday as my thought partner>> to solve problems

00:59:23and>> uh you know quelch my curiosity>> and uh you know my usage is skyrocketingand uh you know often multiple modelsand it's going out there and queryingall these websites doing calculationsfor me and helping me solve problems youknow faster than I ever could in in thepast anduh you know the this this I think it'sjust at the beginning right and uh thesubstrate for all of this of course iscompute and data right so we love thatat Dell Technologies because that's whatwe do>> and so there is a there's just a ton of>> growth here I think It will also be umhighly distributed. I think it will beuh you know it'll occur in devices.It'll occur in the edge. It'll occur uhyou know in all sorts of places and itit does does feel like we're we're stilla lot closer to the beginning here.>> What can you share about onprim AIdeployments? Michael, are you seeinganything interesting there?Yeah. So, we we in in the last year

01:00:38umyou know delivered a little over 3,000of these Dell AI factories and you knowthose are increasingly to enterprise andcommercial customersthat want to bring the AI to their datanot the data to the AI.>> Yeah. And you know there's just a ton ofdata that uh is still on prem and beinggenerated on prem. And it turns out youknow these large models are fantasticbut you don't always need the largestmodel to solve every problem. A lot ofthe corporate use cases are perfectly uhdone with smaller models and open sourcemodels. And so you see this enormousproliferation and hugging face of modelsof all shapes and sizes, tons ofcascading innovations.And so I think this is going to behighly distributed.Uh and we're definitely seeing growth inonrem and and coloss are also a bigdeal. uh you knowbecause many customers don't want tohave the data center themselves and sothey'll they'll put it in a collocationfacility and we've

01:01:53also adopted theconsumption type model so you can pay ona you know usage type basis.what is your you know when you look atjust kind of the relative distributionbetween you know kind of the custom AS6world what you see happening across youknow folks like AMD and Nvidia um youknow there's obviously a lot of chatteryou have an interesting perspective bothas a consumer of these products also asa builder and distributor of theproducts um is is there are there anyyou know pending big changes or as youlook ahead over the course of the nextyear or two that's probably as far aheadas you and see does it look like therelative landscape is stable or arethere big breakthroughs coming that mayunseat somebody like like Nvidiayou know Nvidia is in a great spot Imean to your question I think uh for thelarger um model companies andhyperscalersuh certainly custom AS6 are gaining alot of share and when you have controlover the workload and you can uh youknow take the time to optimize your

01:03:09workload.Um you know that's certainly going to bea part of what occurs in theinfrastructure but it's a it's not alarge number of customers you weretalking about the number of companiesdeveloping models. It's sort of thatnumber of customers but they're largeright as you've seen with Google andMeta and others.uh who are who are deploying the AS6,>> you know, maybe just in the to berespectful of time, Bill, um I couldtalk to Michael for uh you know, forhours about this particular subject, butmaybe do you know, one of the people Italked to when the market's going wildis is is Michael. Um you know, wecertainly saw that earlier this year.Um, you know, it's pretty incredible tosee the snapback that we've seen out ofthe NASDAQ, the S&P. I think the NASDAQis now up 32% off of its bottom uh 2months ago. Just as a data point, Ithink I think Dowell got as low as Idon't know 75 72 bucks. It's back at 120bucks now. That is an incredible bounceoff the bottom, but it's still basicallyup I don't know 5 or 10% on the year.It's not like it's in this astronomicalrange when you look at kind

01:04:24of year-todate or over the course of the last 12months. And and so when I look at themarkets and I want to get both, youknow, your read on this is as well,Michael.Here we are. We have the the NASDAQ andthe Q the Q's and the S&P on an all-timehighs. Bitcoin Bitcoin's near anall-time high. The VIX is back to 15 or16, basically where it was in February.uh despite you know uh all of the thingsaround uh tariffs the 10-year everybodytalks about this you know the great debtspiral that we have in the country butthe 10ear has been between 3.7 and 4.7for the last two years it's at 4.2 tokind of smack dab in the middle if notat the lower end of that range. Um, youknow, and then you see companies likeTSM and Nvidia and Microsoft, Oracle,Booking.com, Uber, Dash, they're atall-time highs, but notwithstanding thefact that they're at all-time highs. Youhave Tesla down over 20% on the year,Apple down 15% on the year, Google'sdown on the year, um, Amazon's basicallyflat on the year. So you have a lot ofdispersion in the market when you lookat the at at the market. Um you knowdoes it feel to

01:05:39you again like we're inthis bubble territory? Does it feel uhas uh a company that is that it's kindof accurately reflecting set aside yourstock. I don't want you to comment onyour stock. I'm just talking about themar market at large. Are the US marketshigher in three to five years or arethey are you know or are they not givengiven where we sit today? I would betthey're higher. I would bet that moreand more companies figure out how to,you know, grow their businesses. Youknow, I talked earlier about theproductivity and efficiency. I think theultimate benefit is going to come fromthe speed at which companies transformand the growth that they're able tocreate. That's certainly how we see itin our business. Andum yeah, I think I think you know a lotof these companies will be able tocompound their earnings on adouble-digit basis and the marketlargely you know overall indices willwill become more valuable.>> Yeah, it's a you know I do think thatthis moment in time we're seeing a lotof dispersion. And I mentioned it,right? Some companies being down thisyear, some companies up a lot.

01:06:54I reallythink the companies that are leveragingAI that are in a position to leverage itand to capture that margin expansion,we're going to see a reaceleration. Andwe've heard this out of folks likeMcDermott and Shredar and Jensen, youknow, at all these companies, howthey're reacelerating topline, butthey're not adding people, right? That,you know, it's kind of net flat. We seethis out of Uber. We see it out of Dell>> when the markets dipped down. Uh, ourshare buyback program went into wentinto high gear, you know,>> right? And>> we bought back 22 we bought back 22million shares. So, you know, stock>> worked out well for you.>> As I look at this flight path, we justwe just landed,>> you know, the reconciliation bill. So,there was a lot of uncertainty in theworld to start the year. One was whatwas going to happen? Was thisreconciliation bill going to pass? Now,it's passed. So we have taxpredictability, right? You have anextension of the existing tax regime andthen you have the no tax on tips, the notax on overtime. So you have thisincremental stimulus now coming from thereconciliation bill. On top of that, youknow, tariffs while still up in the air,the market kind of is digested thetariff stuff, right? and absent some bigblow up between us and China

01:08:09um you knowif we follow the Besson accords thatthey reached in Switzerland um and thenreiterated in London it seems like thebig pieces of the tariff puzzle arefalling in place and then on the ratefront the market is estimating that thenext move is down whether we're going tohave one or two rate cuts you know atthe end of the year um is is thequestion some people the Fed is sayingwe're on hold we're going to wait andsee whether or not inflationreacelerates this summer due to tariffs.So, that's what everybody's eyes are onover the course of the next 6 to 8weeks. Does core PCE tick up, you know,due to those tariffs? I'm taking the theunder on that, but we're going to haveto wait and see. And then onfundamentals, I think what we're hearingfrom companies, and this is where therubber meets the road, earnings, I thinkwe had 85% of companies beat in the S&P500 in the quarter. And if you just gothrough and look at keywords, it wasaccelerating, it was AI, it wasreinventing our business. There is areal growth um you know feeling in themarket and among these companies. And sofrom our perspective and we try to uhgive people an indication of where weare. I mean, I was as negative, as youwell know, Michael, um, early in theyear, I was as

01:09:24negative as I' I've beenin 10 years because I thought if we weregoing down the path of Navaro and $2trillion of tariffs that it was all, youknow, every all bets were off. That wasa scary path, you know, and and youknow, we talked about how>> if they went down that path, I thoughtthey would reverse course>> because it wouldn't work,>> you know. And this I think this is avery>> iterative team that will experiment, laysome stuff out there. Not all of it'sgoing to work. There'll be some badideas and then they'll reverse course.>> Yeah. I hope we don't>> we did do that.I hope we don't snatch uh defeat fromthe jaws of victory here with withpolicy though. You know, I think youknow going back into the tariff game umsome type of bold confrontation withChina um and you know our AI policy. Imean, one thing we didn't talk about inthis past week, the the AI moratorum gotremoved from the bill and we're going tohave 70 state laws in the United States,which is not great for AI startups. So,anyway, I hope we don't I hope we don'tI hope we don't I hope bad policydoesn't upset what would

01:10:40be an otherwiseuh very potent landscape based on AI.>> Yeah, fully agree. I I think it's onething that the three of us are inviolent agreement on. One of the thingsthat's moved this country forward forthe last three decades is we've ledglobally in technology. And we've ledglobally in technology because we'veallowed our best technologies to movefreely around the world and to competeand to win. This is the first time sinceI've been in this business that we'retalking about export controls and AIdiffusion laws that are restricting theability of our technology to go competeand win. Right. And there's both thequestion mark as it relates to inside ofChina, but also the question markoutside of China. And while we've seenthe repeal of the Biden diffusion um uhrule, what I'm told is that no newlicenses have been granted for uh youknow for distribution of AI technologiesaround the world despite all of thediscussion around this. So, it'scritical that Washington follows throughand that we accelerate diffusion aroundthe world of the entire American AIstack that we don't regulate that out ofWashington. And then I think there aresome legitimate regulations that you canhave as

01:11:55it pertains to China. But eventhere, I would much rather let ourdeprecated chips out of Nvidia gocompete against Huawei in China. keepthe developer mind share in Chinabecause it's going to make it easier forus to win globally and elsewhere aroundthe world. Um, and I think it'simportant that that Michael, myself,everybody else, Bill, you are thosevoices are being heard. We're not out ofthe woods on this by a long shot.>> By the way, you you reminded me of oneother thing I'd just like to harp on,which is the skilled immigration piece.So uh someone highlighted to me thatthey made like the huge wanted poster ofall the people that Meta has borrowedfrom other companies like like 60 or 70%of them were were of Chinese origin. Andas I understand it right now, you know,there are PhD students or are candidatesin China that can't get visas and get inum to the United States right now. Andwe go back to what Trump said on Allinthat he wanted to staple a visa to everydiploma. I'd really like to get, notthat we're in charge, but I'd love toget that conversation going again. Um,it would be very powerful for thecountry to increase skilled immigration.Um,

01:13:10and it feels like we might bedecreasing it.>> Yeah, absolutely agree. And and to yourpoint, Brad, I mean, if if we don'taggressivelywork to, you know, sell our technologiesaround the world, uh, other countriesare going to do that. And you knowreminded of uhstory long time ago. The defensedepartment had this thing called MTOPSand it was a it was a uh Bill mightremember this but it was it was like arestriction on how fast the computer wasthat you know you had to get approvalfrom the government and to sell it. Anduh I was in this group of technologyCEOs and we we went we went to thePentagon to talk to the generals and uhand before we went we went to Toys R Usstore and we bought a PlayStation[Laughter]and we took it out of the box and webrought it to the the Pentagon, youknow, this big room and we, you know,set the PlayStation down on there and wesaid, you know, this exceeds the MTOP uhrestriction,>> right?>> Uh but unfortunately,

01:14:25you know, it's notit's made by a Japanese company and so,you know, it doesn't follow under therules, so anybody can buy it. It's it'salso $399, right? So, uh, you guys thinkyou're going to control the access tothis thing or little things that, youknow, move easily,uh, you're kind of fooling yourselves.>> Yeah.>> And so, we have to come up with moreintelligent ways to restrict access tothe most advanced technologies.And umoften times you just get all kinds ofunintended consequences with these rulesthat are createdand it doesn't create the outcome thatthat uh the government was originallylooking for.>> Well, and and I think that's a a goodway to wrap. Um Michael, it's awesomehaving you here. I I I wanted to say,you know, Michael and myself, DarasherShahi, David Solomon from Goldman, ReneeHos from ARM, uh, you know, uh, BillMcDermott from, uh, uh, Service Now, andand a group of us were at the WhiteHouse, uh, a few weeks ago to testify

01:15:41onthe Invest America Act, and Michaelkicked it off, and, uh, if you haven'tseen the video of it, we'll include ithere. you should watch it. But hereminded everybody, captivated theentire room.>> We view this initiative as a powerfulplatform for philanthropic innovationaimed at helping children thrivewherever they come from, particularlythose families who have beenhistorically left behind. Mr. President,you articulated it perfectly. TheseInvest America accounts will give everynew American child a genuine opportunityto participate in history's greatestengine of economic growth, the Americaneconomy. These in the funds in theseaccounts invested in American enterpriseand innovation will grow over time intosubstantial nest eggs providing supportfor education, home ownership, andstarting families. The ability offamilies, friends, benefactors, andemployers to match the government'sgenerosity amplifies the life-changingpotential of this initiative. Thank you,Mr. President, for your visionaryleadership on this critical issue. TheseInvest America accounts will profoundlyimpact countless young Americans,ensuring they truly benefit from whatAbraham Lincoln

01:16:56described as the rightof every American, the right to rise. AsI sit here on on the Fourth of Julyweekend, you know, I'm just I'm I'msuper grateful to you, Michael. You dida huge service to the country by helpingus get the Invest America Act passed.And I think everything that we justtalked about here, including allowingAmerican technologies to go compete.Remember, these Invest America accountsare only worth something if America doesgreat, right? And the fact of the matteris Warren Buff Warren Buffett has saidWarren Buffett has said the smartestthing he did was just bet on America.He bet on America. And I'm I'm bettingthat the next 50 years, next hundredyears are going to be an Americancentury again. But we can't get in theway of the innovation and theentrepreneurshipuh you know and um the the creativedestruction frankly that has allowedAmerica to be so great. And uh findingthat balance between between governmentand Silicon Valley has always been uhyou know challenging. you know, as youjust related, Michael, with MTOPS, butyou know, we have to show up. We have tohave a voice. We have to, you know,continue to push in that direction. Um,I think if we're allowed to compete, ourbest days lie ahead. If we get in theway, Bill, like

01:18:11you talk about, then Ithink we can upend our advantage. Thanksfor joining us, though. Notice, Michael,great to see you.>> Appreciate it.>> Great to see you. Byebye.>> We'll talk soon. Take care.[Music][Applause][Music]As a reminder to everybody, just ouropinions, not investment advice.