>> since iger came back and nelson peltz trying to rattle the change we were bottoming out around the $90 range. it seems like expectations are building, so they can get a credible plan out there into the public for maybe getting some costs in line, as well >> the blue chip name will be the big one in focus after the bell today you've also got mattel, affirm, robinhood reporting too. that will do it for "squawk on the street". "tech check" starts now. good wednesday morning welcome to "tech check." i'm carl quintanilla with jon fortt. we'll ask chatgpt's first venture investor about all of this hype. vimod khosla will join us later this hour. and uber coming back to art after a pop at open, but some pretty positive territory from dara today >> it did turn negative for a moment there, but i cannot take

my eyes off of alphabet. the ai race continues to play out among tech titans and on wall street today, that is hitting shares of google parent very hard. we're at session lows down nearly 8%. this is amid around an all-around messy rollout of its chat competitor. at its own ai event in paris, there was no ceo, and there was mo public launch date, unlike microsoft's date yesterday, bard played a supporting role to other announcements at the company. wall street certainly took note, some saying the features pale in comparison to microsoft's announcement yesterday and the demos were too niche the ai chat known as bard gave an incorrect answer in an online ad that is makinging the rounds on twird this all gives the impression of a google on the back foot. this has been rushed and reactive, but john, i know you're going to get real here. is this overdone i mean, alphabet is not new to this game. sure, it may be a messy rollout, but you could argue that google was here first >> well, i'm learning.

and here's what i think and what i wonder about the situation i think it is potentially serious for google, because we don't know how quickly they're going to be able to roll out a response not only an integration of ai into their search product, that's difficult, as cramer mentioned this morning, because they've got a lot of adds that are making money for them in that product they don't want to experiment with that too much microsoft, because bing isn't that popular, can afford to do all kinds of things with the interface, relatively quickly. but then i think, more important is, how much infrastructure does google have that is already ai ready and that is prepared for others, for developers, to build on top of it how mature are the tools that google is going to have available to enable that all of that is part what they're going to have to do. and meanwhile, satya nadella, ceo of microsoft telling me

yesterday, hey, we don't have to win the entire space there's a lot of profit to be taken. take a listen. >> here's the interesting thing. the most profitable, large software business is search. so i look at this and say, look, i just have to earn it one user at a time and incremental gm i've never, ever felt this liberated in terms of opportunity, in the days ahead so i'm very excited about innovating, meeting the needs, knowing that the search category is the most profitable and large category, just on bing just on windows. google makes more money on windows than all of microsoft. so that alone should sort of give us the impetus to really go after this >> yeah, with john, it's clear that the google presentation in paris, just as ep polimblematice company that's probably being rushed a bit meantime, wolf today on microsoft, given the hyperbolic

pace of innovation, d., the share shifts could happen quickly. and we also believe by the way that microsoft has already ink incorporated all of the costs into their current framework alphabet getting squeezed on the competitive and the execution side today and as nadella said, search is such an incredible business. alphabet, google leads here, but that business is under fire, not just from chatgpt and this new generative ai trend, we should say, but the regulators as well. and maybe that's starting to be reflected in the stock let's bring in neele patel even if you think that alphabet is eventually going to be a leader in this space, may have stumbled on the rollout, is this indicative of a google that isn't as agile, that we've seen that in different ways a declining operating profit margin and being slow to make some of these changes given the macro backdrop compared to its big cap pierce, it was slow in making those

layoffs and it's still hiring, though at a slower space >> yeah. i think there's a slowness to google that is very much related to the fact that search is its only real business so it can't mess with it too much, while it tries to spin up another business microsoft sees that as an opportunity. google has to be slow. they cannot reduce the margins of every incremental search. they cannot stop sending people to web pages where google's technology serves most of the advertising. so microsoft is saying, hey, we can just answer the question we don't have to send you to a web page we can put links at the bottoms of the answers from chatgpt and fight some minor skirmish on the s side google starts doing that, regulators, copyright lawsuits, and most importantly, their advertising business, which is on the web, which is the revenue architecture of the web at large starts to suffer >> okay, so, advertising, of course, still the main business.

makes up some 80% of revenue but google has been able to diversify. i mean, you take a look at the android business and the market share that that has captured around the world in terms of its operating system, is there doubt in your mind that google can hunker down and make waves with this, produce a really good consumer product? >> the share price swings today are short-term reaction to google feeling panicked, having a rushed, minor event in paris, got overhyped. but i don't think it's overdone in the sense that, you know, a few years from now, we might look back on this set of weeks as the end of google like, an existential threat to google, being created and google having to figure out now, it's a smart company. a great ceo, full of great people but you talk about android, android itself is not really a revenue-generating product, right? it is a portal to search it is a portal to the web. it is the portal to an app store

that is not as profitable as apple's app store and does not have as good of apps in it as apple's app store. they have not built another layer of insulation that has allowed them to disrupt or cannibalize their own business in search. android is additive to search. it was a brilliant play at the time, but at the end of the day, google makes its money on android from search. >> i guess the question would be, and by the way, verge has a great piece this morning about the demo today i mean, clearly, this is not their intended timeline. how much longer do you think it would have taken them, ex-microsoft action? >> quite a long time they have been demoing this transformer technology for years now. you have to wave in the direction of mountainview, and a google comes person will show up and tell you that the "t" in transformer was invented by google this is their technology and they feel proprietary about it and a sense of frustration

they're not getting credit for having made it but they've been demoing it in very safe ways, because they have trust and safety concerns, this concern about fake answers which came true in the worst possible way today with their ad they have these concerns about the regulatory reaction, about the publisher reaction they've got just ae to go slow microsoft, i asked nadella about this do you feel less constrained and he said, no, no, no, i just -- if steve ballmer is still here, he would look at the gross margin opportunity in front of me and he would light up like, we should go take it, because it's a category that can move the needle. >> he said he feels liberated, right, byquite the opposite of constrained. rare to see him quite this excited. thanks as alwaysfor your insights we'll talk to you soon >> now let's bring in mark mahaney, head of internet research with a buy on a $125 target on alphabet mark, i don't want to get too far down the road here about

what this bing move from microsoft will or won't do to google's core business but this is the first credible, full frontal assault on the core search business that i can remember seeing. and there's the potential, it seems to me, that this is google's equivalent of facebook's ios 14 moment a major disruption to that core flow into their core business. am i wrong >> i like the set-up i also find all of this ironic we're about to have the department of justice legal case against google from search monopoly take place right when this news is breaking out. there's a guy named eric schmidt a long time ago, the first ceo of google said that competition is always a click away we're going to find out. i think google was caught flat-footed here i think they've been investing aggressively in ai and machine learning since 2018. maybe even a little before them. but that's when you saw the capex really jump up but we've been kind of waiting,

waiting, waiting for where's the product that comes out of this and they just kind of got beaten to market by microsoft here. i think the google is going to be able to figure this out my guess is that we're going to see, at google io in may, i bet you we'll see a really interesting, really impressive product. but there's no question that they got caught flat-footed here, and it's an issue for google why, because practically all of their products come from search. they have a dominant market share with dominant profitability. and now you have a really interesting challenger coming in that can play havoc with the economics. >> here's the problem i see. google has been boworking on ai for a long time, but been working on it mainly as feature enhancements here's what we can do in our pixel phone using ai here's what we can do through maps, et cetera, to make that more efficient for you they haven't really been fundamentally disrupting other people's business models or perhaps more important, their own using ai, but that's what microsoft is trying to do here

how can google respond without screwing up its revenue at a time they can't afford to. >> they may have to screw up their revenue, and i think they would be willing to take that near-term hit, maybe show fewer ad links the advantage, the huge advantage that google has is consumer behaviors take a long time to change i would be shocked if there was a dramatic market share shift. but, you know, the microsoft people have figured this out you know, every point of market share gain is $2 billion and maybe even more in revenue so it's just nothing but goodness for them. and for google's stock, it's all negative that said, i do think it's -- google's got this entrenched position, because i don't think a lot of people are going to notice or even know of any differences in google's search queries or google search engines versus bing. i think bing will have a lot of problems really gaining material market share this is not the first time that microsoft has come after and tried to gain share from google. they tried this ten years ago, no luck. >> it's not the first time we've heard of bing's revenge.

mark, we're talking about the search in consumer applications of this new regenerative ai that's taking over the mainstream but back to sort of what john was talking about earlier, a lot of this is going to be in the licensing, in the applications for developers, and google has been working on that for a very long time. that's not immediately obvious to us, because that happens more behind the scenes. do you think they have a leg up on microsoft here? >> yeah, sure they do. they have a leg up, but again, every little bit of market share gain is going to hurt dpogoogles stock, because people realize how profitable this. if google did $75 billion in operating profit last year, almost all of it came from search a little bit from youtube. it's a real issue for the stock. my guess is that they'll stabilize this and have a huge developer community around them. by the way, we'll all have to catch ourselves here people saw the mistake this morning. you can find mistakes in chatgpt. it's not that hard ai search will be oversold and

people will look through that and find some errors but all in, there are sol wonderful innovations and we as consumers are all going to benefit from this. >> it's a fair point and it makes me wonder why they use this particular example fo their demo instead of a riddle, for example, that one of our reporters was being test ed internally that showed the strength of bard over chatgpt. it turned negative, now up about 1% ceo dara khosrowshahi offering a closer look in an interview with "squawk box" this morning. have a listen. >> we're not seeing any signs of consumer weakness at this point. now, we may be benefiting from the shift of retail spend to services spend, but we've looked at different consumer dmemos based on where they live, et cetera we've looked at eats orders are more eaters are going to two-star or one-star restaurants. and we're seeing no signs at all of consumer spend weakness

>> this is a company that's still lost some $9 billion in gap losses last year and the take rate in particular stood out to me. that's a percentage that uber makes as rider delivery rose on both fronts. part of the mobility increase was due to those labor changes in the uk. mark, doesn't that sort of tell you what the impact of regulation is on consumers it's going to make this a lot more expensive and that is certainly something that could happen here in the u.s., where the business is much larger >> it could. i'm going to lean in heavily on this one i think uber is a great buy, great stock. i really like the business here. dara's right this was a record quarter for them if you look at their overall free cash flow generation, $400 million, if you take out a one-time item. so they talked about being able to get $5 billion in ebitda, $4 billion in free cash flow in 2024 every investor should be asking themselves after this, are you more or less confident in their ability to get there i'm more confident in their ability to get there

they're doing $1 billion in free cash flow just this year and it's ramping up aggressively that's also in their guidance. you want to buy uber because it's at a free cash flow inflection point it's doing 20% year over year growth off of a bookings space that's like $90 billion. it's rare air you see a company like that. >> you've got to let their stock base comp, though. >> yes, you do no question about it free cash flow is free cash flow and they are telling they're going to keep head count flattish this next year. you'll see a lot of leverage in the business model, including against stock-based competition. i really like uber here. they're gaining market share in both of their segments, at least globally so i think it's a really nicely diversified business when these companies start ramping up free cash flow is when stocks outperform i like uber. >> good to see you here. >> good to see you, too, jon >> mark mahaney, thank you all right. coming up next, guys, disney gearing up for earnings. we'll take a look at what to expect with bob iger now back at the helm one media name that's already jumping this morning, though, is fox, projected record ad revenue from the super bowl as part of

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disney reports earnings after the bell tonight it's the first since ceo bob iger returned to the helm. stocks up 27% so far this year will the results justify that rally? our julia boorstin is here with the latest good morning, julia. >> well, carl, when disney

reports, the focus won't just be on how the media giant fared amid concerns about an ad recession and a pullback in consumer spending, but even more so what ceo bob iger says about his plan to reorganize the company and cut costs with a proxy battle with activist nelson peltz as soon as iger took the reins in november, he appointed a team of executives to determine the best way to restructure the company and the clock has been ticking since then some other key questions to watch, whether we'll see any commentary about content spending and streams costs that's a sticking point for peltz. we're also watching to hear if he says anything about plans for hulu and also espn now, this quarter disney's revenue is projected to grow by 7%, bolstered in part by the parks, while earnings per share are expected to climb by 26% now, disney's streaming subscriber base is actually expected to fall slightly on price hikes that went into effect in december as disney plus also launched its ad-supported tier then now, analysts are looking for

161 million disney plus subscribers, down 3 million from the prior quarter, while total subscribers are expected to fall by about 1 million to $234.5 million. now, back in august, bob chapek lowered guidance for subscribers and said disney plus would be profitable by 2024 so we'll have to see what kind of update iger gives on that outlook, especially when it comes, carl, to this new focus on profitability in the streaming space. >> yeah, you mentioned the parks today. diwa reiterates a buy. they say that parks can punch above their weight they look at some of the throughput at orlando's airport. some aaa destinations, are orlando's most profitable. but it's a question of whether or not the street will give them credit for that, right >> also this question of how long this pent-up demand for the parks last and if you look at the spending in the parks, the spending and attendance has been robust over the past several quarters. and i think this question is especially as they've

implemented more price hikes at the parks, how that could start to impact things if we see an economic downturn this year, really impact consumer spending. i think that's an area to watch. so far, the parks business, as we've seen of our own parent company, comcast with the universal parks, that park's business has been robust as well we have cord cutting, this fear of cord cutting and the ad market and to watch that kind of ad contraction, both in the ad business for the streamers at the likes of hulu, but also in the linear networks. >> so julia, two years goes fast of course, that's how long iger has to find a successor. what clues are you looking out for on the call? he has reportedly appointed this team, the fab four, that includes people like christine mccarthy and dana walden to plot out this new plan. could there be any clues as to how much or how little we hear from them? >> iger was very clear, very explicit we have appointed this team to figure out the restructuring i don't know if we can pull back

up this wall here, but i think it's important to watch what we learn about this restructuring and see if any of those people that he put in charge of the restructuring have an evaluated position a sort of coo position, where some sort of additional experience that could position any of these people, including dana walden, who currently runs the tv studio or jimmy pitaro, to see if any of them could be position in a position to learn more, get more experience, which would then position them to be a successor to iger. >> iger and the fabulous four. julia boorstin, thank you very much still to come this morning, ftx and their exorbitant lawyer fees we're going to break down some of these astounding numbers ahead of this afternoon's hearing. plus, zoom and ebay investors, a bit bearish today following yesterday's layoff announcements. zoom cutting 15% of global staff. ebay slashing about 4% as these macro headwinds continue to hit some tech firms. don't go away. (vo) with verizon, you can now get a private 5g network. so you can do more than connect your business,

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welcome back to "tech check. there's been one big winner so far from the ftx collapse, and that would be the lawyers. our eamon javers has some math and that story, which is eye popping, eamon >> deirdre, good morning we just got some filings in the ftx bankruptcy case and it's shedding light on how much the lawyers are raking in. five law firms are requesting an estimate $20 million in the work they conducted between ftx's bankruptcy and the end of 2022 that number is probably an understatement, because more legal spending in that time frame is likely to be disclosed in some of these future filings. sullivan cromwell, the lead law firm for ftx is billing $9.6 million just for work between november 12th and november 30th. ftx ceo john ray billed $674,000 between november 11th and the end of the year. to put those numbers in some perspective, the enron

bankruptcy, it didn't break the $1 billion mark in fees, but the collapse of lehman brothers was the most expensive bankruptcy in history, with lawyers and other professionals charging an astonishing $6 billion in fees in the lehman mess and guys, we'll see the ftx lawyers in court today bankruptcy hearing gets underway in delaware at 1:00 p.m. we're expecting a decision from the judge on whether or not to appoint an examiner to investigate the collapse of ftx. but new ftx ceo john ray, he's opposed to that. arguing that the examiner in the enron case that he worked on wasted creditor money, spending $90 million investigating enron, but only producing what he called very shallow results. so maybe an eye on the expenses there, guys. back over to you >> eamon, thanks still to come, markets whipsawed yesterday as investors reacted to fed chair powell comments what is the action telling us about what's ahead for the tech sector but in today's market, investors are bullish on cybersecurity fortnet smashing fourth quarter

earnings, bringing other names along for the ride, including palo alto networks, crowdstrike, some non-security names in there, as well we will be back in just a couple moments. the first time your sales reached 100k was also the first time you hit this note...

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two hours into trade, stocks are lower, the nasdaq the weakest. it is down 1.6% and google, of course, having a big impact there. chipotle shares, they're also down after a miss on earnings

revenue, same-store sales. ceo brent nichols says there's been no backlash to its higher prices the company also saying it would hire 15,000 workers for the upcoming burrito season. enphase also higher after a huge beat on revenue and earnings also a catalyst there, let's get over to kristina partsinevelos for a cnbc news update >> thank you, deirdre. here's what's happening at this hour britain is now considering sending fighter planes to ukraine. prime minister sunak made the statement after meeting with ukrainian president zelenskyy earlier today. until now, uk officials had said it is not practical to arm ukraine with british war planes. zelenskyy has also met with king charles at buckingham palace he made another plea for more advanced weapons and noted that the british monarchy flew military planes for the royal air force. zelenskyy now heads to paris for meetings with leaders of france and germany. and smoke is billowing over new york city right now from a pair of large fires in new jersey

a fire-alarm blaze collapsed roofs before it was brought under control. hours later, a second fire erupted just a few miles away. no word yet on the cause of the fires or whether they are connected in any way look at those images carl >> all right, kristina, thank you very much. let's get back to the broader markets and the fed today. as you know, the fed chair powell taking the nasdaq on a bit of a ride yesterday. the etf leapt up nearly 2% as powell told him he found the beginnings of disinflation, sending the trust down 2.5%. and shot up into the green when he said that the central bank will just, quote, react to the data will the nasdaq see its best start to the year since '19 secure this bull market rally? joining us today, goldman sachs portfolio manager brook dean is here on set. there's been so much hand wringing on the set of

expansion. what is the thinking on stek speci tech specifically. >> as we talk with our clients and investors, we want people to be balanced. you have seen stocks move up pretty dramatically. my boss likes to say, we've had a good year in january, for the whole year but on the other hand, when you look at the opportunities ahead of us and where clothes are and where estimates are. it's actually very reasonable right now. we're talking to people about keeping their exposures up, but big cognizant of where things have moved and be balanced >> is the sense that, okay, we've seen a return to cost discipline and some head count reduction, and even some capex trimming, but that there's more to go in that department >> we think broadly, most of that is probably behind us what we are focused on is companies that you're seeing this inflection in cash flow growth as they move forward. we want management teams that are being disciplined and focused on driving not only topline growth, but operating margin growth as well. and there's really some interesting companies that are doing both and set up very well

as we sit here today >> either names or sectors >> sure. one of the areas that we're probably most excited about, as we look across the balance of this year into next year is the digital advertising space. it's an area that's been under extreme pressure, as they were the first into the muck between the changes in idfa and what you've seen from slowing economic growth. but we actually think that sets them up to actually have a pretty good back half of the year into next year. name specifically that we really like is snap the stock has been under some pressure they're doing -- they were one of the first to take cost actions and to rationalize their business we think that they have a potential to generate close to $1 billion of free cash flow next year and and the market is missing that from a product standpoint, they're doing all the right things and we feel pretty encouraged about that >> that's interesting. some of the agencies are at all-time highs today, but that should be a shift. >> and the direct response side, too. >> another name we like a lot is the trade desk, which is essentially the bloomberg or the operating system for advertisers and really, you know, have a great exposure to the growth in

that market place. it's a space that we're actively excited about as we sit here today. >> software. you mentioned names like hub spot what do those kind of companies have going for them? >> the discussion today has been around a lot of the chatgpt and what's happening in ai the thing that has me most excited is how these technologies are going to influence software companies in the app space specifically over the coming years you can see lots of optionality about how they can use these technologies to improve their retention rates, to drive up arpus and things like that with this class of growth software names hub spot would be one, ui path, they're all growing reasonably well their margins are all turning up and moving in a positive direction. and we feel good about the sustainability of growth and where the absolute valuations are. sure, they're a turn or two higher than they were in the depths of things back in october, but still well below historical means and averages. >> finally, let's turn to semis. this is like the most puzzling of all there is a school of thought that says, we're anticipating peak inventory, we're

anticipating trough price. you think it's safe to buy some of the semi-caps >> i do. and the thing with semi-caps, you've seen the big reductions because of memory moving in, as we look ahead, you start to thinking what's going to happen with that, and there's an incredible need to build more capacity and onshore capacity. we think that benefits the big vendors. kla would be one we specifically call out as having really attractive opportunities in front of us. >> and restrictions on china we can deal with it? >> it's interesting. we've long been believers in china as an opportunity, as an investment space second largest economy growing fast they will be able to deal with the increased scrutiny and regulations around that. we think there's real opportunities there to invest in china and to take advantage of that market, with companies that are exposed and focused on the domestic expansion in china. so a bunch of software there that we really like. >> and we'll hear more about domestic production here pretty soon >> yes >> brook, thanks so much

john >> yeah, i want to check on alphabet it's just off the session lows it was down nearly 9%. it's off about 8.5%. of course, this comes the day after what we've been talking about, microsoft's announcement of ai integration into bing. and ceo's satya nadella telling me very unabashedly, almost rubbing his hands together about the profitability, if they can take a little bit of search share away from google google alphabet has about a $1.27 trillion market cap, at nearly 9%, 8.5%. we've got to be talking nearly 100 billion worth of market share impact at this point of course, we're not quite halfway into the trading day >> it is just such a giant move for a company worth $1.27 trillion it's notable, too. they're giving up this late. i just tried to log on to open ai to use chatgpt and it's at

capacity that's a message i'm getting more frequently these days which you think that consumers could be turning to bard, but it's not yet ready for consumption. so more evidence of it sort of losing this lead but this move, 8.5% for a company like alphabet does seem overdone, maybe, like a snap reaction >> well, a reaction that we've seen from the stock of snap, perhaps. but we just had market mahaney talking about, maybe they do have to give up some page space in order to experiment, which means for alphabet, it would mean revenue, but we'll have to see how that plays out, of course just ahead, we heard from the big credit card names. now we're getting ready for the fintech names. we're going to take a look at what to expect from robinhood and affirm ahead of their results. and during february, we are celebrating black heritage here are the stories of some of our cnbc contributors, teammates, and leaders in business here's 15% pledge founder oauroa

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robinhood and affirm earnings coming after the pel tonight with rates and payment for order flow build top of mind for investors. kate rooney has the breakdown. kate, volatile stocks to say the least, but part of this unprofitable tech area that's had a resurgence >> they're having a great year, but there's a lot to watch let's start with robinhood it's all about revenue diversification and that path to profitability. wall street is looking for robinhood to move away from just those trading fees or payment for order flow, which accounts for more than half of income look for any details around those savings and retirement products they've talked about. the street is also closely watching account growth. as user numbers slow down last quarter, revenue per user also

dropped. interest rates have been sort of a cache-22 for robinhood they helped net interest income, and hit some of the risk stocks which are the among the most actively traded. and they do think directionally the return of americameme stockd bath and beyond, and crypto prices as well should bode well for robinhood in the current quarter. we'll see what that does to any sort of guidance and commentary. it's gone through layoffs and they're doing belt tightening recently so you're likely to hear a lot of that on the call. over to affirm, different type of fintech a key metric for the buy now, pay later. the take rate. that's revenue, less traction cost, also watch loan loss provisions and ddelinquencies. gross merchandise volume, that's really a way to measure how much people are buying and using in terms of those affirm loans. that's always a key number to watch. any sort of guidance around

that watch for commentary as well around amazon. it had this exclusive partnership that expired a couple of weeks ago. kp competition is a big theme to listen to. finally, partnerships. slower growth at peloton has been a big drag on revenue should start backing off and slowing down in the back half of this year. and then higher rates, of course, do tend to increase the funding cost for "afaffirm that might show up in guidance, but a lot to watch >> and guidance will be key to see how they're feeling about the consumer kate rooney, thanks very much. meantime after the break, vi vinodkhosla will join us with his expectations for the tlng as some of these megacap players dive in. dow's down 240, session lows - "best thing i've ever done." - it was the best thing i've ever done, and- - really? - yes, without a doubt! - i don't have any anxiety about money anymore.

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welcome back to "tech check. shares of google parent alphabet really taking a fall this morning following the messy rollout of its chatgpt competitor bard today in paris that's one day after microsoft announced it would integrate chatgpt into its bing search engine with more open ai enhancements across its product line to come steve kovach joins us now on this brewing ai arms race, along with open ai's first venture, vinod khosla >> he's an early investor in

open ai, $50 million investment back in 2013 thanks for joining us. >> happy to be here. >> first off, vinod, i want to get your reaction to yesterday's microsoft bing announcement and how they're using openai to really super charge this bing business what did you think of that >> well, the ai innovations really afford a new opportunity to re-cast that experience from search engines to what i call answer engines they can actually get you answers for bing and google have great opportunities. i think they have access to great technology, bing, of course, from open ai >> so let's talk about -- let's rerun the clock a little bit and talk about 2019. when you first invested in open ai what did you see there versus the competition, and especially big tech companies, like what google was doing in ai that made you want to place that $50 million bet on this company, in

particular what did you see here there? >> ai technologies are probably the most critical technology for the planet in the next 20 years. and google was doing a great job of it, but we felt that there was another center of excellence that was needed. especially in our battle against china in this area so, both open ai and google have great, great technology. they've put a lot in open domain, also but i saw an explosion of opportunities if there was enough progress. so and the progress has been great. much faster than frankly what i expected it was back in 2018 when we mastered there had been such rapid progress, far beyond my expectations and it's having a great impact >> i want to talk to you next vinod, about competition, as we're watching alphabet shares

fall more than 8% here and, you know, off of that failed demo pretty much at their paris event, what competitive advantage, besides being first, do you think open ai and microsoft have, what competitive motes have they built around this technology? as we've been saying all day, a lot of this technology the sam transformer technology from google what can open ai and microsoft do to protect their first mover advantage here >> the first thing i would say is open ai is between needing the large resources microsoft had, so it's been a great partnership. they're a fast, nimble organization that's to their advantage. google has a lot of research talent and good technology, also i have no doubt they will get it right. i think the market is very large or larger than most would project today and so there's massive opportunity in many,

many areas every area you can think of is really open for innovation i could give you a few examples if you are interested. >> vinod, i really want to know your take. how much do the network effects matter right now in ai and, therefore, the first mover advantage of microsoft with open ai satya nadella was making the case the infrastructure work on azure with open ai over the years matters, that the tools they're going to be able to roll out to developers so people can start building on top of this matter is google going to be able to catch up >> google is a well resourced organization with a lot of resources. this is going to be a horse race in an open field and such large

opportunities. i suspect it will dwarf google and microsoft's current market 20 years from now. both have really good infrastructure, the resources to compete and i think this will become a tool in the marketplace. one will have nimble open ai, the other will have a lot of deep talent. microsoft will have a great partner in open ai i do think it's an open race everybody has to work hard and perform and respond to the developers in the marketplace. there is no question we are seeing the cambrian opportunity of resources here. it's so large from re-inventing medicine to mental health to personal computers for every kid. my wife's nonprofit, music, splash is completely ai-driven

music. customer support, almost everything possibly even reporters. >> vinod, you mentioned china before the ai arms race was taking place between microsoft and google it was very much geopolitical and companies like alibaba are products, perhaps more data to draw on. what is the opportunity and do you think it's potentially bigger with the chinese companies, and could they ever gain any traction? the west >> well, whether they gain traction in the west, i don't know they will clearly dominate china. there is no question we're in a large technology war with china, and whoever wins this, especially in ai and a few other technologies, will have dominant political influence in other parts of the world in southeast

asia and latin america because these technologies will drive the economy which will follow political influence so i do believe it's imperative the west have more than one effort, and that was part of my interest in getting involved with open ai and seeing google successful >> vinod, one final question for you. i was curious when do you think we will see open ai? we know they have this deep partnership with microsoft, but they're their own company, their own separate startup when are we going to start seeing their technology influence other startups that might want to take over this next wave of computing that everyone believes is coming? >> so they are the platform on which a lot of developers today are developing applications using these large language markets. so if you imagine the mobile phone, the iphone, becoming a platform or the internet

becoming a platform in 1996 or so and i was involved in both of those, this will be a much larger platform. lots of developers flocking to ai today and using it to draw up their own application. my son is developing a primary care physician app based on the open ai platform my advice to personal computer k-12 for nonprofit use for every kid, that depends on open ai there are lots and lots of examples of hundreds, literally thousands of startups just in the last eight weeks -- >> well, we'll continue to look out for that more and more announcing they're building on top of that. vinod khosla and steve kovach, thank you. that was fantastic up next, microsoft's gaming problem.

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one more thing and that is the uk's competition and market authority targeting microsoft's

activision deal saying it would be harmful to gamers shares of atvi down 3% on that news i asked microsoft's cto satya nadella about this regulatory hurdle >> at the end of the day the regulators around the world have to make the choices and i would only submit to them if they're seriously thinking about competition, they have to really reflect on is this going to be helpful to bring more competition. so i hope the regulators take an approach that is going to truly be beneficial to gamers, it's going to be beneficial to all publishers and make all of gaming more competitive. >> now have to literally submit that to those authorities and see if by april they're convinced. >> jon, i have to ask what you think of microsoft's ability to sort of frame themselves as these sort of humble underdogs in this innovation race? >> it is something we couldn't have imagined 20 years ago, carl

satya nadella in his kind of professorial and compassionate, not quite sports coachy approach, departure has really managed to personify that. >> chatgpt making it harder perhaps to fly under the radar of regulators, though. >> amazing a 24 hours in tech coverage a lot more to get to tonight let's get to the judge carl, thanks so much welcome to "the halftime report." i'm scott wapner three big stocks we are watching today. uber beats alphabet. look at that it's sinking today and now all eyes on what disney delivers tonight in "overtime." we're trading all of that with the investment committee we'll talk about the markets, too. joining us for the hour, joe terr terranova, let's see what we have hawkish commentary what else is new the stock is pretty much hanging in there