Of innovation. We hear from the microsoft ceo as their conference builds off. Actress Scarlett Johansson back against openai in the eerily similar voice. All of that and so much more ahead. We want to keep the record highs going. The nasdaq turns flats. Pushing forward to whats happening in crypto. We will get back to the major benchmarks in a moment but crypto has been a key story. All i shifting from what we saw was a spot bitcoin etf to potentially a spot eth etf. The nasdaq trading into positive territory. We are at a new record high for the s p. Not so for the stoxx 600 but all eyes focused on fed talk. Raphael bostic still trying to analyze the data. We are seeing whats happening with the 10 year yield. May be a bit of buying into the bond market right now as we push forward to whats happening in earnings. Lets have a look at some of the individual movers. Palo Alto Networks coming off its lows. Cybersecurity company posting revenue that is 11 15 growth on a year on year basis, that is not the 20 to 30 Revenue Growth we are used to. We speak to the ceo later in the show. Nvidia trading flat ahead of its allimportant earnings tomorrow. What is key is the relationship with what theyve been talking about in ai and taiwan, how dependent they are on tsmc to deliver the super chips. And interesting reporting on asml and tsmc. Asml is off by 1. 5 as we see the extrusive reporting showing that an event that china invades taiwan, both tsmc and the chip equipment making company asml could have a kill switch. They can remotely disable their chipmaking machines. We hear about the importance of taiwan from nvidias ceo. Taiwan is at the epicenter of the Worlds Technology supply chain. Without taiwan, it would be very difficult for michael and i to do our jobs. It would be difficult for us to serve. The Technology Industry depends very heavily on taiwan. Caroline the ai juggernaut has spoken and he saying taiwan is really important as if we forgot. We join mike sheppard. This is extraordinary piece of reporting. Companies having to ease u. S. Government concerns here. Mike that is right. This is actually answering this reporting one of the fundamental question surrounding taiwan, one of one of the big what if speed three years, the u. S. Government has warned that china has its eyes on taiwan and might try to reunite with the island using military force. Beijing has said they have no interest in doing so. They would prefer a peaceful reunification but they have not ruled out military intervention at the same time. One of the key questions is what happens if this takes place . One of the Big Questions is what happens to the semiconductor industry. Taiwan is responsible for 90 of the world to supply of the most advanced chips, the site the kind that supply nvidia. It is so essential for the u. S. We saw during the pandemic and most recently with the earthquake in taiwan, the concerns of any sort of supply chain disruption. Caroline what is phenomenal is that asml is the linchpin. Is that has shipped more than 200 of these machines outside of china but still shipped to china but far less technically sophisticated kinds of machines. It looks like china has been making strides with selfsufficiency. Mike it has. We saw a sample of that last year during gina raimondos visit to Mainland China visit to Mainland China. There was a much faster Semiconductor Processing chip that anyone thought they were capable of generating and using in a consumer device. Very small chip. The u. S. Was taken aback by it and it was made in part with older generation asml machines but with technologies that came from other sources. It was a sign that the concern is that china will be able to catch up in terms of technological advances in producing the semiconductors. It requires sensitive equipment like the kind that asml makes. Asml was the only producer of these machines called extreme ultraviolet machines and they harness light waves to create these tiny. Transistors y thate you need a microscope to look at. They do these powerful computations that even military applications require. The sensitivity of this is very clear. What we are talking about also was a maintenance function because these euv machines require a lot of upkeep. And the company, asml, to be able to turn them off remotely just for maintenance purposes. However, they have a geopolitical significance too. Caroline Michael Sheppard weaving it beautifully together for us. It has real effects on companys earnings. Asml has said with the latest export controls, their ability to shipped to china, they could see a revenue impact of 15 this year. We look at nvidia earnings yet to come and we know they have exposure to china too. China is a headwind, record highs across all major benchmarks of the u. S. For his china much of a headwind from your perspective . . There always be geopolitical concerns but markets have a funny way of adding blinders on and focusing on what is most important, fundamentals as well as Monetary Policy in these challenging times and unique times. I think theres a calculus that has gone on that has said yes, there are number of risks out there but we will keep investing and we are going to continue to enjoy the Earnings Growth we have seen. Caroline talking of Earnings Growth, everyone waiting on bated breath on what sort of growth and video posts after the bell tomorrow. There is a market move on the back of reporting coming from other titles today that maybe there will be some sort of pocket, air pocket in between some of the more sophisticated chips that they made from nvidia moving on to grace blackwell and amazon causing the ones on the less sophisticated grace hopper. Does that matter more, the whos buying, whos not then fed policy right now . Kristina for the tech sector perhaps, it is nvidia. When we look at what is likely to help markets move forward, it is rate cuts. The reality is that impacts the tech sector in particular because typically when we see higher yield, that exerts downward pressure on Technology Stocks and vice versa. The higher valuation names are more sensitive. I think that right now is important. Nvidia is important for semiconductors, for the tech sector, but right now, there is a wait on for Central Banks to start cutting. Weve gotten a few little cuts so far the Swiss National bank but now we are ready for more. I look at it this way. As a parent of teenagers, a son who went through the College Process a couple years ago, he got into school off the waitlist. Some got in early decision. We all wound up graduating at the same time with the same degree. We will probably see the first mover being ecb, maybe the bank of canada but the fed will be a long as well. We will all end up pretty much in the same place but we will see others start the ball rolling, other majors start the ball rolling before the fed. Caroline in a way, be patient, but should you buy into tech on the basis of that macro policy . Kristina i am not a believer in market timing because it is so hard to do but i think starting to increase exposure now as we wait for rate cuts to begin the is arguably a very sensible strategy. Many investors, retail and institutional, are overweight to cash. Certainly, they should be taking some money off the sidelines and moving into fixed income. Locking in rates on the long and but they should be also moving into equities. Tech is very attractive but for valuation reasons, european equities, u. K. Equities, emerging markets equities, there are a lot of opportunities out there. Caroline utilities doing very well but also because people think that is an ai play. Kristina that is not on my bingo card for this year but it is absolutely an ai play. Caroline you think we should stop spreading her wings from a geographical . Perspective kristina absolutely. A lot of the Significant Growth is coming from the tech sector. When we look at the industries within tech, three of them are delivering double digit Earnings Growth. We have to recognize that valuations are higher. Caroline thank you for coming up, we will be breaking down some other key earnings metrics we just got. Zoom company cfo Kelly Steckelberg is here. Lets take a look at how some companies are still trying to whether the need to cut costs. Disney up. 4 . They are cutting 175 jobs at pixar. Toy story, finding nemo 14 left to go. This is bloomberg technology. Im thinking. speaking to self about our honeymoon. What about africa . Safari . Hot air balloon ride . Swim with elephants . Wait, can we afford a safari . Great question. Like everything, it takes a little planning. Or, put the money towards a downpayment. On a ranch. In montana. With horses lets take a look at those scenarios. J. P. Morgan Wealth Management has advisors in chase branches and tools, like wealth plan to keep you on track. When youre planning for it all. The answer is j. P. Morgan Wealth Management. Caroline lets talk zoom video for a moment. Reporting firstquarter results, beating expectations on the prior quarter. The Sales Forecast have people trying to understand where the conservative elements are lying and where the opportunities are. Lets talk with Kelly Steckelberg, zoom cfo pete great to have you with us. There is some concern about more cautious forecast. Can you talk us through how you see small, mediumsized enterprise demand for your products . Kelly we were very pleased with our q1 results. We beat analyst expectations across revenue, profitability and free cash flow. We reported q1 revenue of 1. 14 billion, up 3 yearoveryear. We did see growth in our enterprise which was up 5 yearoveryear. In terms of smb, which weve gotten a lot of questions about, we support that segment of our business mostly through our online segment. That actually did better than we expected this quarter. Very pleased with the results across all of our segments. Caroline you are a numbers person. We saw the number of enterprise customers declined slightly but there was a reshuffling, accounting for the difference of how you count customers. Why are they declining . How do we digest that decline . Kelly what i want to point out is we did transition some customers from the directly segment online just to promote better selfservice. These are typically much smaller customers where we continue to see growth is the upmarket. When you look at customers that contribute more than 100,000 of revenue, that was actually up 8 yearoveryear. That is the segment of the business that is really helping us drive growth and where we are really focused. On the smaller end, those customers, we give them a lot of flex ability. They sometimes turn the service off while they take a break with the kids and then come back when it serves them well. Caroline lets talk about the areas you have been pushing into. Workforce engagement management, ai. Citigroup analysts say they find it hard to find of durable pathway to reaccelerating growth. Paint that picture. Kelly we talked about this a lot on the call yesterday. We said we expect growth in the second have to start to reaccelerating. We announced yesterday that we have over 90 customers and our Contact Center that are contributing more than 100,000 of trailing 12 month revenue which highlights these are sophisticated buyers. Our products are now competing with the top four in the quadrant that you probably know all the names of. That combined with the strength with zoom phone, work vivo, where meta is discontinuing its workplace and we have been named the preferred partner for that transition which opens up a whole new opportunity for us. Those are all the components that will lead to reacceleration in the back half of the year and into 2025. 2026. Caroline Microsoft Teams is a strong competitor. We understand that has been some regulatory conversations coming from zoom about unfair competition. How is that going . Kelly theres a lot going on in the eu. They unbundled it there. Until they get to a competitive pricing for their products, it is not really a level Playing Field. That is what would serve everyone in this industry. We believe the best, including customers, because having a level Playing Field for the two strongest competitors which is zoom and microsoft we think is the best approach. Caroline are regulators listening . Kelly we will wait and see how it continues to evolve. Caroline europe is usually quite quick on the regulatory decisionmaking. We are still waiting for this real gavin is a test read gavin is a ship this real gavins galvanization. Talk about strategic m a. Any news for the Investor Base there . Kelly reaccelerating and topline growth is our number one priority. In the meantime, while we are focused on investing there, we are focused on giving returns back to our shareholders. Last quarter, we announced a 1. 5 billion Share Buyback program. Q1, we did buyback 2. 1 million shares and we will continue to execute that. Continuing to look for opportunities to deploy cash if we see strategic opportunities. Those of the two areas we keep front and center. Caroline kelly, it is great to have you here. Coming in from texas. Zoom cfo Kelly Steckelberg. Coming up, we have to talk about crypto for a moment. Ether surging on momentum for the etf approval. Well it come . We have a keep an eye on was happening with tencent because there has been pressure, there has been a big new game, a blockbuster game everyone has been waiting for. Within an hour, they had to put the game on ice because the servers were overloaded. Dungeons and fighter mobile has everyone clearly excited but some server fluctuations have hurt in the interim. Analysts say this will not be a longterm impact. This is bloomberg technology. When you automate sales tax with avalara, you dont have to worry about things like changing tax rates, exemption certificates or filing returns. AvalarAhhh Ahhh Ahhh ahhh caroline lets talk about this rally in cryptocurrencies. It is underway amid signs of a momentum for approval of another spot etf but this time linked to eth. Joining us is james from bloomberg intelligence. Up 23 the last couple of days. We are used to volatility but what of the tea leaves you are reading this . James weve had these filings for months now since the fall even peter nothing over the last couple of months signified there was any sort of approval. If you talk to the issuers, exchanges, no one thought it would happen. We started hearing from different people yesterday that the sec reached out with comments and requesting immediate responses and updates the filings. The deadline for this was thursday. It is may 23. The sec was basically silent, not interacting with anyone on these topics until yesterday. Basically, the sec decided as of monday, we dont know when it started, maybe late morning, early afternoon, but the sec basically started saying we are going to likely approve these things. And basically took the approval odds out. Caroline therefore, you moved your spot ether likelihood probability to 75 . Is this typical to have a sudden resurgence in the drama, shall we call it . James no. We were thinking about lowering our odds last week. We only went to 90 for the spot bitcoin etf even though everything was pointing it would get approved. We left that 10 because we heard rumblings the Biden White House was considering stepping into stop the approvals, which sounds a little crazy on its face but it seems like the exact opposite might have happened. It seems like the sec was likely planning to approve, there might have denial letters drafted up. It might be that the biden admin came in and said you need to improve these approve these things. Caroline interesting perspective. I am interested what it means in terms of institutional demand. What we saw was the bitcoin etf, a whole host of new etfs were launched. Suddenly, a whole wave of money came in. Is the same thing going to happen for smart contract focus . James i do think there will be a wave of Ethereum Etfs that launch. The bitcoin etf was planned out for months. There are whole bunch of other filings we are now expecting. There needs to be approval on the s1s as well. We do think there will be significant demand for these things but it would probably some fraction of the bitcoin etf demand. If you look at the market cap of bitcoin, a theory him is about one third ethereum is about a third of the market cap. If these etfs cannot stake, that should diminish them of the demand. If you take the demand in the native Crypto Market and say it is about 30 of bitcoin a discount that a little bit, i think there will be demand. Maybe 25 of the demand for bitcoin etfs over the longterm. That is still billions of dollars. 13 billion of inflows to spot bitcoin etfs in four months. Even if we get 25 of that, that is a pretty significant chunk of change going into new etfs that will potentially launch. Caroline all eyes on the may 23 spot ether etf application. James raising those probabilities. Thank you. We will hear from none other than the microsoft ceo on how to Work Together with Artificial Intelligence. That is coming up next. Talking of Artificial Intelligence and how people are using it, a bit of a price war potentially in china. Alibaba sparking at this time. An ai price war. Really deep discounts, to the tune of 97 for its ai services. Baidus immediately responded. Bytedance also announcing pricing for its ai services, essentially 99 lower than the china industry norms. Theres a whole wave of desire to get people to using the products. From new york, this is bloomberg technology. Caroline welcome back to bloomberg technology. I am caroline hyde. Lets check the markets. Since the markets. Sensitivity right n