Closing Bell - Closing Bell Overtime: An Exclusive Interview With Alphabet CEO Sundar Pichai 5/14/24

Episode Date: May 14, 2024

Alphabet CEO Sundar Pichai talks Google’s new slate of AI offerings including Gemini 1.5, AI Overviews and teased its Project Astra after getting off stage at Google I/O, its developer conference. Plus, GM President Mark Reuss on the company’s EV strategy and Anduril CEO Brian Schimpf on the company’s Disruptor 50 ranking and what’s ahead for the startup.

A record-setting day for the Nasdaq, closed at its highest level ever. The S&P 500, just seven points shy of a record of its own. That is the scorecard on Wall Street, but the action is just getting started. Welcome to Closing Bell Overtime. I'm Morgan Brennan with John Forrest. And we have got a big show coming your way. Alphabet CEO Sundar Pichai is going to join us exclusively following today's IO developer conference. We're going to hear about his AI strategy and how the company plans to stand out from the crowded field of competitors. Plus, we will talk to the president of General Motors about why his company is not backing off of its EV strategy. But first, let's get to the market. We've got green across the screen despite a hot inflation report this morning with PPI and ahead of tomorrow's CPI prints that everybody's waiting for and plans to watch so closely. Joining us now, Vital Knowledge founder

Adam Crisafulli and PICTET Asset Management Chief Strategist Luca Paolini. Luca, you're here on set with us. I'm going to kick this off with you. Welcome. Nice to be here. I mean, it's like April was a distant memory. We've got a record high in the NASDAQ. We've got the S&P closing in on its own record high, even as we had this hotter than expected PPI number. Yes, I know we've had revisions to some of the previous months. But what do you think of stocks here at these levels? Well, let me say that there are very simple facts here. Corporate profits are very strong. The economy is strong. Inflation, yeah, is sticky. But I think the trend is down and the Fed is probably going to cut rates. And add to this that Europe is probably picking up, China as well. That looks like a pretty kind of

solid background for equities for the next few months, I would say. OK. Adam, how do you see this market? And I ask that knowing that it has seemed like the market's path has been more easily higher than lower. And every time we have gotten some data that maybe could throw a wrench into the momentum, investors have shrugged it off, at least for now. Yeah, I think the key with the PPI today, like you said, there was a big revision lower for March, but even the April number, which came in a bit hotter, it's not so much you're seeing a resurgence of inflation. We've had a stalling of the disinflationary process year to date. Markets can cope with that pretty well. In addition to that, you had the Powell remarks today, which I thought were more dovish than they were hawkish. You know, the bar for an incremental rate hike is very, very high,

if you read between the lines. He does not sound all that concerned at all about the year-to-date trend of inflation. He sounds quite confident that you're going to see the rent component of the PCE and the CPI reset lower in the coming months. And he does seem more concerned about labor market conditions

than perhaps the narrative is overall. So his comments were dovish. And then we have this steady stream of really important positive AI announcements, whether it was open AI yesterday, you have Google today launching a slew of new products and upgrades. You have the XAI Oracle news. You have a big Microsoft event next week for AI. You have NVIDIA earnings next week. So those three components, I think, were really just, you know, helped power markets higher today. All right. So Luca, let's get beneath the surface a little bit more on strategy here, despite expecting rate cuts and talking about how healthy growth has been. You're neutral U.S. stocks and looking more globally and into Europe. Now, the U.S. has

outperformed so much people might have forgotten how to move into it. So how would you do it if you have a portfolio that isn't as exposed to global stocks as historically gets recommended? Well, look, the U.S. equity markets have done exceptionally well. But if you look at the last few months, you start to see Europe doing well, even China, Japan. So from one side, there's a number of diversification, especially if you're not based in the US. Basically, the US is an expensive market in an expensive currency. Now, momentum is strong, corporate earnings are booming,

but when you look at valuation, we look also at economic momentum, by the way. Economic momentum is picking up in Europe from an incredibly low level, but that's what matters for market, is the direction, not the level. So we see a positive outlook for Europe, cheap market, good momentum. Probably the ECB is going to cut in June. That doesn't change the fact that over the long term, the place to be is always going to be the U.S. But I think for the next three to six months, I think Europe, Japan can do very well. Okay. It's worth thinking about.

Now, Adam, looking forward to tomorrow and CPI, how relatively important is this print given all of the maybe it means this, maybe it means that, that we've had to do over PPI today? I think it's important. Obviously, the market is very focused on inflation developments. You know, based on the contentious forecast, this is going to be, this should mark the resumption of the disinflationary process. So on a core basis, you're going to see the largest deceleration on a year-on-year basis in several months, which kind of put us back on track to where we were late last year. We had this steady

drift lower of inflation. It's definitely not a make or break number. And I think if anything, an inline to cooler figure is going to help stocks a lot more than a hot number will hurt them. But it's obviously going to be very important, not just for markets, if they'll be watching it closely also. And then labor markets, like I said, I think the labor markets might be where we're seeing the larger inflection point. And we'll get to weekly jobless claims on Thursday. We'll see if that confirms what happened last Thursday. But that, I think, is where you're really seeing a potential shift,

more so than on the inflation front, where, you know, we've stalled for a few months, but I think you're going to see a steady resumption of that disinflationary process in the coming months. Given the fact that it has been a more risk-on sentiment across the markets right now, is there a place for bonds and fixed income in the portfolio near term, long term? I think so. I think when you look at the interest rate, but also look at bond yields in the U.S. and you compare with trend GDP growth, I think the level, I think, is pretty fine. There is a risk of excess supply, but we start to see private investors buying, also foreign investors. So I do believe that there is value in the bond market. In the short term, it's probably a little bit risky, but I do believe that for long-term investors,

especially in the U.S., especially in credit, I would say more than government bond, there is good value right now. All right. Strong case for diversification there from you, Luca, Adam. Thank you both. Well, shares of GameStop ending the day up 60 percent. What year is it? It's up 179 percent this week. AMC and BlackBerry also popping on the renewed meme stock mania. So do these moves reflect something bigger happening in the market or is it just all fun and games? Let's ask Mike Santoli. Hey, Mike. Well, John, I guess it could be fun and games and also be maybe part of something else. I think initially it's just a little bit of an echo effect of that prior boom.

Are we sort of running the same place? But there has been a broader embrace of kind of higher energy trading in the market. Here you have Robinhood. And this is a one year. It's doubled off of a very low base. Robinhood shares have over the last year or so. Hey, pretty close to DraftKings, right? I know they're not the same thing, and investing isn't gambling directly, but it's sort of the same type of app-based scale business.

How many people can you get to do a lot of transactions at once? And then you have Interactor Brokers, obviously a much more mature discount broker, also a bit of an institutional broker, done very well as well. And so the S&P obviously trailing behind even as it's up 27%. So the point is, things have been gathering for a while in this direction that you've seen just a revival of energy and interest as the stock market has made successive new highs over the course of the year to date. Now, take a look at inflows into small cap ETS, because here's where you're not really seeing some kind of a rush into some of the riskier parts of the market.

Of course, small cap indexes have lagged for the most part. So this is from Strategas. It's basically the three month rolling average of inflows, net inflows into small cap ETFs and really nothing to see here. Right. You kind of rolled over recently. And so I would say it's a little more idiosyncratic in terms of the meme stock stuff at this point, even if people are generally feeling more comfortable with trading this market, John. So, Mike, not that history repeats itself, but sometimes it rhymes. What ended the last meme stock rally or at least coincided with it? And is there anything that we might look out for based on that? Honestly, they seem to have this this this life cycle where, you know, it'll push and push and push to extremes. And you've completely gotten all the shorts to cover and scare out of it.

And you have as the high velocity increases in these stocks continues, it becomes increasingly unstable because you have fast money on top of fast money on top of fast money. A price reversal just sort of runs it in reverse. I wouldn't say there was anything. It's not as if it happened when, you know, the Fed raised rates. It was a full year before the Fed raised rates. It's not about monetary policy. So I almost feel as if a lot of these companies start to issue new shares into this strength. Maybe you would see that kind of break that sort of virtuous cycle of higher prices again.

But I think right now it's kind of an extended blip. We'll see if it develops into anything more. Engines revving. Mike Santoli, thank you. Well, after the break, GM's president, speaking of engines, is going to join us in a first on CNBC interview to explain why the company's doubling down on its EV strategy, even as the industry faces slowing EV sales. Plus, we are just moments away from a can't miss interview with Alphabet CEO Sundar Pichai.

That's following the company's AI-packed developers conference in California today. Overtime. GM doubling down on its electric vehicle strategy. The company is rolling out its Chevy Equinox EV and ramping up production of battery cells and battery packs. All this comes as EV sales have seen a slowdown across the industry. Joining us now are CNBC's Phil LeBeau and GM President Mark Royce. Phil? John, thank you very much. Mark standing in front of two vehicles that are going to be rolling out quite a bit here. When you talk about the Equinox,

people are saying, how important is this for General Motors? Give us some perspective in terms of the price point that you were looking at in that mid-$30,000 range. It's a great question and great statement. It's very important to us, but more importantly, it's very important to customers and people who want affordability and electric vehicles. This will start right at the $34,995 part of it, and then you take the tax incentive with that. This is about $27,500 for an over 300-mile range car, which is, you know, that is right in the heart of everything. And there's not many choices there. No, there's not many choices there. I've been driving one all winter, so I'm hooked on it. So it's an awesome vehicle. In terms of the Silverado EV, the electric pickup truck market

has not developed the way I think a lot of people thought it would. I think people thought it would be heavier, heavier demand, and it just hasn't been there. Why are you convinced that you'll still do strong demand with an electric pickup truck? Well, first of all, you know, the Silverado that you see here is not a trend. It's a truck. And so that's a big difference. And if you look at 440 miles of range, 10,000 pounds of towing, a deployable mid-gate, take the glass out. It's a beautiful truck that, four-wheel steering, air ride, it goes on and on. This is one of the most refined pickup trucks ever.

And we make a lot of really good pickup trucks. So General Motors itself is close to 46% of the market, the total pickup truck market. So we know how to do trucks, and this is a real truck, and it's a beautiful truck, and it's satisfying every day. And I don't think there's been anything in market that's had this type of value and type of design. Look at the design, I mean, it's just gorgeous. So it's everything, it's got everything.

So I don't think we've seen an entry come into the electric truck market like it. I'm curious, how much automation and differentiated battery technology, just how much is it going to take to keep costs low enough for you to get an unfair sort of share of this entry-level EV market it's going to take to justify this ramp when others are pulling back? I think, you know, if you look four years ago, we made the decision to start, you know, ahead of the competition and the transition to electric vehicles. We took a lot of hard decisions and, you know, we weren't first to market with some of these entries

and some of these segments, but we decided to do was really take the company and vertically integrate a lot of this. So, you know, this is not easy stuff to vertically integrate and automate. It starts with our cell production, which we've just brought online in Lordstown, Tennessee at our plant there, Altium plant, and then our plant in Spring Hill, Tennessee, which is now coming online. So those cells get made into modules where, you know, automating modules to make into packs for Ultium is not easy. And so we knew that when we started. We're just now being able to supply all the cells and packs in modules to make these vehicles. And so now here we come. So we're very excited about that.

And, you know, it's automation, but it's also skilled people at Factory Zero, skilled people at any of our plants that make our vehicles, that really put together the craftsmanship that our buyers deserve and expect. Mark, it's Morgan. How does trade factor into all this? I mean, this is the day where the Biden administration has just levied higher tariffs or the announcement of higher tariffs on Chinese-made EVs, but also battery packs, also aluminum and steel that's coming from China to this country as well. How does that impact or how are you gaming out the impact of that on your business, not only here in the U.S., but also in China where you do have a JV and where you are making and selling cars?

Well, there's two separate businesses there. You know, what we do for China in China is for China. So, you know, that's not very much impacted from that because we use the cells, the packs, the electric vehicles, the ice vehicles that we sell there. That's all for, again, for China, made in China. So that's fine. The piece of this, though, that we decided a long time ago was that we were going to make our footprint and our capacity for ourselves, our battery packs, and vertically integrate that along with the raw materials right here in North America and the United States. So we've done that. We've made the investment to do that. Look, all we're looking for is

a fair playing field and it's all about the product at the end of the day and the desirability of the product and we feel like we're in a really good place for that from a price standpoint as phil mentioned on the equinox but also capability standpoint on the silverado and desirability so we think we're in a very good place from a product standpoint and you know that's where we run the business mark in terms of the pure evs that you're rolling out you don't have a plug-in hybrid yet but you're working on them are you convinced people will say yeah i'll skip the hybrid and I'll go straight to the EV when so much of the market has pivoted to hybrids? Yeah, you look at the market, it's like, you know, let's talk about the facts on EV and the percent of the market. You know,

last year the market ran about 7%. It's now running at about 10% here in 24. That's 400,000 units more than it did last year. So while the growth may have slowed a little bit at the rate, this is still growing. And the P-HEV piece of this, look, we've made P-HEVs. We are some of the first people with P-HEVs if you go back in time here. We know how to do it. We've got those in different markets worldwide. We just don't have in the United States. We'll have a few here. No doubt about that. But, you know, at the end of the day, P-HEVs probably are pretty good for people who run, you know,

less than 10 miles on 80% of their trips or something like that. Great. But for the full experience of electric vehicles and what they bring and the joy in driving, but also the convenience, the comfort, you know, you drive one and 80% of the people driving an EV don't ever come back. And so that's the data. And so we know that's where we are, and that's our strategy. We'll have some here. All right.

Thank you. Morgan? Phil LeBeau, our thanks to you and our thanks to Mark Royce of GM. Well, CNBC's annual Disruptor 50 list is out this morning and coming in at number two, Andral Industries, the defense tech company supplying the Pentagon with AI-powered drones and more. We're going to talk to Andral's CEO next. Plus, the man at the helm of $2 trillion tech giant Alphabet is going to join us following Google's I.O. developer conference where the company highlighted new AI features and demos.

Our Deirdre Bosa has an exclusive interview with Sundar Pichai that's coming right up. Welcome back to Overtime. The CNBC 2024 Disruptor 50 list unveiled today. OpenAI topping the list. Coming in at number two, though, Andrel Industries. It's an AI-powered defense tech startup, which added 1,400 employees last year, has a $10 billion valuation in the private market. Andrel CEO Brian Schimpf joins us now from their headquarters. Brian, it's great to have you on. Congrats on the list. Thank you very much. I'm very appreciative for being on the list and appreciative for having me here today. Thank you.

Yeah, well, overtime viewers are familiar with the company, but if we do just take a step back here, I mean, call it 10 years ago before SpaceX, before Palantir, which is I know where you cut your teeth. I mean, nobody was talking about defense tech. Nobody was talking about disrupting the aerospace and defense industry. And now it is very much a hot topic in the investor world, in part because of Andral. Walk me through the business model and how you're shaking things up when we talk about the military industrial complex. Yeah. So, you know, when we started out, you know, I think so. A lot of people believe we're in this time of peace and that working on defense tech wasn't a critical problem to solve. But then Ukraine was invaded and Putin, as well as all the other hostilities that have occurred, reminded the world that peace and security are not assured.

So since that time, defense has become incredibly popular. And I think it's a fantastic thing for national security that there is so much interest in bringing new and innovative solutions to how we can actually use technology to deter conflict. From our perspective, what has made us successful is we first and foremost focus on understanding our customers' problems. We really partner with them where we often say they deeply understand their problems, but they don't often understand what is possible to solve with technology today. And then we use our own capital to actually invest in those technologies and get them fielded faster than what has historically been done on defense timelines. A great example of this is a capability we worked on called Roadrunner. This is a counter drone missile that we went from napkin sketch to fielding in about 24 months.

And it was really designed around how do we solve a pressing and urgent need that the Department of Defense had. And that is a different business model, just to make it clear, in terms of putting your own money forward to develop the technology to then bring it to, for example, the Pentagon and say, here, here's what we've developed. Here's what you can deploy to the battlefield much more quickly. So in light of that, when I think about Andral, I think about a company that is a software company and is basically building the hardware to house the software and enable the software. So where do you see the greatest opportunity to sell into the Pentagon, to sell into other militaries, allies across the world right now? What's growing the fastest? Well, one area we were recently won a competition on was this collaborative combat aircraft program. It's a loyal wingman program is what it's commonly known as. And the idea here is kind of fighter jet, autonomous fighter jets that go alongside

manned aircraft like F-35s. They go out in front, they can sense, they can keep the pilots back out of harm's way, and they can do this for a tenth the price of the equivalent manned fighter. Huge credit to the Air Force. This is the largest investment the department is making into autonomous technologies. We went through an extensive competition where we were selected as one of the providers that has the best performance and price and able to meet the schedule and a very aggressive schedule that they want to roll out. And I think it's a huge watershed moment, not just for us and our ability to demonstrate that we can solve complex high-end defense problems, but that the department believes there's something really novel to be had from new entrants, bringing new approaches

to the problem set. Brian, tell me more about that novelty to help me understand the modern battlefield. What's the equivalent of high ground in a drone and AI-influenced, you know, threat space and battlefield? Well, a lot of the way we've approached the problem is to look at how can I have more systems that are smarter in the environment? And this is an area where we believe that AI can be incredibly effective, which is just the sheer number of systems and fights that you see happening in Ukraine is overwhelming. Understanding what is happening, dealing with all the jamming, these things become a really critical, hard to understand problem. And the ability to have large quantities of systems that can actually respond to those problems and enable fewer and fewer soldiers to be effective, we believe that is going to be some

of the critical technologies for the future of warfare. And that's really where we're pushing it, is these lower cost, higher volume, smarter systems. We believe that's going to be the turn of the nations that are successful going forward. Yeah. And of course, you did just recently unveil Polestar when we start talking about electronic warfare and jamming as well. Brian Schiff, CEO of Andrel, thanks for joining us. Real pleasure. Thank you very much. Well, more coming. Don't miss the CEO of Elevate Bio, number eight on the Disruptor 50 list, coming up on Fast Money. And later, the CEOs of Chime and Gecko Robotics are going to be on Mad Money and Last Call, respectively. Tomorrow on Overtime, we're going to speak to the co-CEO of Brex.

That is number four on the Disruptor 50 list. Well, we've got an earnings alert to tell you about. Check out shares of Boot Barn. They are moving lower in overtime. The retailer, which sells cowboy boots and western wear, topping estimates on EPS and revenue, but first quarter and full year earnings guidance came in below expectations.

Well, Alphabet CEO Sundar Pichai taking the stage at Google I.O., the developer conference today, laying out the company's big picture strategy for AI. We are in the very early days of the AI platform shift. We see so much opportunity ahead for creators, for developers, for startups, for everyone. Up next, Sundar Pichai is going to join us exclusively with more on the company's

AI efforts and how he plans to stand out from the competition. Overtime. Mike Santoli returns with a look at the current market setup as we wait for tomorrow's inflation numbers for April. Mike. Yeah, Morgan, the market's not really acting as if it's sort of riddled with anxiety about tomorrow's number. You obviously got the broad indexes higher today. Here's another couple of indicators of how we're pricing the inflation outlook. This is an ETF of inflation beneficiary companies. And you can see here it's near its highs.

This is a three-year chart, but it's really not any higher than it was a couple of years ago. So it's suggesting that it's kind of holding its facts. A lot of real estate, a lot of commodity-based companies, real assets. And so not really the service inflation plays that you would expect to see really represent the current thinking about the path of CPI. So this is, I would say, a neutral reading. And then if you look at the Treasury market's implied inflation outlook for the next five years, that's known as the break-even inflation rate. It has also come down off of a recent bump, right? So this is also a three year chart.

And you see it's kind of run this two point three area, really unremarkable relative to where we've been in the past. Even when we've gotten nervous about exactly where inflation was going to break next. The five year outlook only here a couple of years ago in 2022 was really out of hand. Since then, it's been in the historical range. So maybe net good news, John. All right. We'll see if it stays in range. Mike, thanks. After the break, a rare and exclusive interview with Alphabet CEO Sundar Pichai live from the company's Mountain View, California headquarters as that company lays out its AI strategy to the world. We'll be right back. Welcome back to Overtime.

Google closing higher today as investors digest its slate of new AI offerings that were unveiled at the developer conference. The company showing off a new AI search tool or new AI search tools and a new Gemini model while testing what it calls Project Astra, what Google hopes will eventually become a universal assistant. Our dear Drabosa joins us now with Google CEO Sundar Pichai in an exclusive interview. Hi, D. Morgan, thank you very much. And Sundar, thank you so much for making the time after that fantastic keynote. So great to be here. Thank you.

So this is pretty much the biggest overhaul of search that we've seen in, what, two decades? This new experience will be available to over a billion users by the end of the year. Why did you wait until now? In some ways, we've been evolving it continuously. The good thing about Search is people comfortably use it. They take it for granted. We've been answering questions for a while. But with generative AI, we can do it a lot better.

We've been testing it for a while, and we now feel it's the right moment to roll it out broadly. And feedback has been good, right, from the users? User engagement has been positive. The feedback has been great. I think it makes the product much better, and so it's a great direction. What about advertisers? Because this will change the business model.

In some cases, you're going to get links from a traditional search. In some cases, you're going to get a generative AI answer, which would move those links lower down on the page. Are they ready for this moment? What are you telling them about their ability to reach your users? You know, the great thing is users still value commercial information.

Our ads work based on intent and quality and relevant at the right time. We've been able to test that in the context of AI overviews, and it's working well as we expected it to. So I think it'll be a smooth transition, and that's what we are seeing. I think I heard Liz Reed say that it's leading to more searches, but the generative AI or AI overview, as you're calling it,

is it leading to more or less clicks? In general, we find it's both overall increasing usage. And when we look at it year on year, we've been able to grow traffic to the ecosystem. So compared to most other players, we are prioritizing approaches which will generate traffic as well. So we are working hard on that.

Does it change the business model? How are you thinking about that? I think about a year ago, people had questions on whether this would cost too much to serve. We've brought down costs 80%. I don't think that would be a concern. I think the way we've been at work and the way we are rolling it out, I feel like we are set up in a

pretty good way and we can build on from here. Right. Let's talk about costs. You brought it up. Semi-analysis estimates that a single chat with a chat GPT could cost up to a thousand times as much as a simple search. As you said, you've brought that cost down, but bringing out AI overviews to everyone in America, to over a billion users by the end of the year, that has to raise the cost on your side. You know, it's still, you know, maybe more expensive than a traditional query, but not by much. You know, just in the last year, we've made our models maybe overall about 80 times more efficient. And so this is what Google was set up for. You know, for 25 years, we've built our own infrastructure from the ground up. is more efficient. And so this is what Google was set up for.

For 25 years, we've built our own infrastructure from the ground up. And it's an area I feel super comfortable that we can actually do it well. STEPHANIE WONG, Is that because you're using your own in-house custom TPUs, or do you still use GPUs for the AI overviews, the search searches? VIKRAM KUMAR, I mean, we are a close partner of NVIDIA's

and we definitely use both GPUs as well as our own in-house hardware. But it's more about it. It's the entire end-to-end, what we call as AI hypercomputer, how we put it all together and run it super efficiently. Right, so not material costs that go up from this form of searching.

That's right. Critics have said for some time that search has become more cluttered over the years. With AI overviews, you're kind of adding more onto that and competitors like Perplexity, to name one, have sprung up that have rethought the entire user interface, the whole entire user experience to a lot of fanfare, why not use this moment to completely overhaul the search experience instead of adding new layers on top? Oh, in some ways, that's what we are doing. You know, when you say AI overviews, we're kind of organizing it for you. It has links in it. So it's not like something that just goes

on top alone. You know, today we showed good examples where it almost organizes the page for you. And so I actually viewed as we are simplifying the experience over time. I mean, our feedback has been very positive as we tested. People actually find the experience getting better. So, you know, I think it's an exciting direction. Would simplifying it the most be just putting it straight to Gemini?

I mean, especially as users get used to other chatbots and going directly to them. Why not just kind of go all in with a Gemini, which was such a huge focus of the keynote in the last year? You know, what what search does is unique in the sense that it takes the intelligence of Gemini and be grounded with what search knows about the world. You know, what people really value is accurate, trustworthy information. And I think that's part of even in this moment, I think people find Google Search very valuable. And they also care about what's out there on the web.

So sometimes they're looking for a quick answer. Sometimes they actually want to go out and learn more. So getting that balance right is also what search does well, I think. And now you're letting technology make that judgment, whether to get links directly to other websites or give a generative AI answer. How are you explaining that, again, to like your advertisers and merchants?

You know, I mean, they see it in their data, right? Their advertisers who are part of this AI overview as we are rolling it out. I think they'll see it in their performance. Every time we have these transitions, people are a bit uncertain. I think we have done this from desktop to mobile, you know, when local and social content became much more available, we integrated it seamlessly in search. We are doing the same with AI and we've been doing it for a decade. So I view it as we'll be able to build upon it. I want to get to Project Astra because that was certainly one of the most exciting parts of the keynotes technology that we haven't really seen before.

We saw a little bit of it yesterday from OpenAI and its new ChatGPT 4.0, but it feels like broadly we're moving out of the era of chatbots and into the era of an AI agent. How do you make sure that Google wins that sort of next phase of generative AI that users are going to be increasingly using? I think you started seeing examples today across our keynote of what we think of as agentic capabilities. Project Astra itself is one, right,

to be able to process the real world in front of you and constantly process it and answer it intelligently. We are building, you know, you can go to Gemini and ask it to plan a trip. In search, we announced multi-step reasoning. You can write a very, very complex queries. Behind the scenes, we are breaking it into multiple parts and composing that answer for you. So these are all agentic directions.

Very early days. We're going to be able to do a lot more. I think that's what makes this moment one of the most exciting I've seen in my life. And the demo captured a lot of people's imaginations. Are those products, those features, available right now? When are they available? Project Astra is something we are working to bring to Gemini.

But we'll do it sometime this year. It will be quality driven, just like with Google Lens. We are going to test it out, give it to more people, but then roll it out widely. That's what we did with Search. And so we know how to do it and scale it up. Is that fast enough when ChatGPT shows the demo, or OpenAI shows a demo a day before I.O. and now some of

those features are being used right now. Can you guys move faster? I don't think they've shipped the demo to their users yet too. I don't think it's available in the product. So I think all of us are, you know, we are working at the cutting edge technology and bringing it as fast to our products as possible. I think it's good to be in that moment. But we have a clear sense of how to approach it, and we'll get it right. You said before that Google's competitive advantage in Gen AI is the quality of your data, not just the quantity of it. There was a report that OpenAI trained GPT

for on millions of hours of YouTube videos. Would you sue OpenAI for violating your terms? I think it's a question for them to answer. You know, I don't have anything to add. We do have clear terms of service. And so, you know, I think normally in these things, we engage with companies and make sure they understand our terms of service and we'll sort it out.

Are you doing anything to determine if they broke your terms? We, you know, we have processes to do that. I'm not exactly familiar. Okay. Back to the Astra demo. The experience was better through glasses than through the phone. I think that was, you know, obvious everyone could see.

What phone was that and what kind, or what kind of glasses were those? And what kind of leap in hardware do we need to really integrate AI agents into our lives? You know, what we are showcasing is, we build Gemini to be multimodal because we see use cases like that. What kind of leap in hardware do we need to really integrate AI agents into our lives? What we are showcasing is we build Gemini to be multimodal because we see use cases like that. Project Astra shines when you have a form factor like glasses.

So we are working on prototypes. But through Android, we've always had plans to work on AR with multiple partners. And so over time, they'll bring products based on it as well. A lot of anticipation over how Apple is going to integrate OpenAI, or sorry, generative AI into its phones. What are you doing to make sure that you're in pole position in generative AI on the iPhone, like you have been in search on the iPhone? Throughout both, we've had a great partnership with Apple for the years. Over the years, we have focused on delivering great experiences for the Apple ecosystem. It is something we take very seriously,

and I'm confident we have many ways to make sure our products are accessible. We see that today, AI overviews have been a popular feature on iOS when we have tested. And so we'll continue, including Gemini, we'll continue working to bring that there. We last spoke at I.O. about two years ago. Do you expect to be in the same position at I.O. in 2025?

Look, I feel we are at an inflection point. Things seem to be happening faster. So by 2025, I think we'll make a lot of progress. A year from now, what do you hope to accomplish? You know, things like Project Astra would be something you take for granted when you use Google. And it'll be able to see the world around you. STEPHANIE WONG, A wide rollout of Project Astra?

VIKRAM SAINI, By this time, yeah, absolutely. STEPHANIE WONG, Across the US and even more, would you be at the same space as you are, your same stage as you are in search, rolling it out to over a billion users? VIKR I obviously will be quality driven, but that's the kind of aspiration we are working towards. Okay. Well, Sundar, thank you so much for taking the time. Thank you. Appreciate it. Guys, hand it back over to you. All right. Deirdre Bosa, thank you very much. Quite a lot to get into there and joining us now to react to that great interview and all of Google's announcements

today. Patrick Moorhead, More Insights and Strategy CEO, here with us on set. Let's just start right there. Not all those questions easy to answer. And, you know, so what's your takeaway? Yeah, those are definitely not softballs. They were good questions, though. And, you know, my overall takeaway from watching OpenAI yesterday and Google today is that Google, when it comes to the flash

features, let's say this AI assistant, they look to be behind. But Google is solving for something different. First of all, they have to be planet scale, billions of users. OK, that's one. Second thing is they have access to all of this data, your photos, your emails, where you are through Google Maps. And I feel like their strategy first is to let's intersperse that AI into those services before we get into this general AI assistant that we saw with OpenAI yesterday. Oh, and they need to be profitable, too. Give me your take on the broad impact to the whole technology ecosystem. I've got to ask this because you have a really broad remit. It's one of the reasons why you're a top-ranked analyst. I don't see any knockout punches yet that are AI-related, like we saw

with smartphones in various areas. A year ago, Microsoft tried with search and Google parried. They've been trying with smartphones for a long time. Pixel hasn't gained any share. Where might we see people using, some company using AI to really grab share? Yeah, there's two areas. So first of all, I think OpenAI does have a genuine opportunity. They have more users signed up for their service than Google does today. That's the first thing. And once you get that user base hooked, like we saw this with the early days of Facebook, right? Once you get tens of millions of users coming in and they're all telling their friends about it, once you get those eyeballs, you can start monetizing that. So Project Astra needs to get out quickly. And like Sundar said, it has to be out within the year en masse. The second part,

sometimes we forget, is on the commercial side, right? Google Cloud has a, they're the number three revenue for cloud provider for businesses. There is an element that a company, Microsoft, and by the way, AWS can get a bigger move on the company if Google gets caught up in the consumer game and loses sight of the commercial game. Okay. So in light of that, I mean, you can make the argument that there have been some missteps by Google, by Alphabet, as it has unveiled some of its different capabilities on the Gen AI front. Right. What does today do? Does it reset the narrative for Alphabet? And I guess just as importantly, should we be looking at this as a direct competition or is this an ecosystem in which

different folks, different companies are going to be addressing different needs and challenges? So the way that I look at this is Google had to be just not late, too late. They don't have to be first to market. They're a very different type of company. But if I felt that they were getting a year behind, it would be an issue. Google has an entire ecosystem and so does AI, so does Microsoft, and so does AWS. I mean, that is just the world of technology. I don't see an incremental move that, let's say, OpenAI has on an ecosystem basis that gives them some differential advantage. Okay, we just talked about Google Cloud. I know John's probably going to want to jump in on this one, too. But Adam Salipsky leaving in the next month from AWS.

Your thoughts? So had he left and they didn't have this amazing blowout quarter with this incredible growth, I think there would be a lot of questions. But he's leaving on good terms, right? They had a big, long blog that had all three of them involved, and that's always a positive sign on why he's leaving. And they had this blowout quarter with growth that I know investors were looking for. Now, Matt Garvin is a product person, right? Hardcore, one of the first product managers that came into AWS. He ran all of EC2, which is their compute. So it could mean a product-focused culture, more of a product-focused

culture going forward. All right. Patrick Moorhead, thanks for being here on set with us for this big interview with Sundar Pichai and get your reaction. Thank you. Well, Cisco is the big name on tomorrow's earnings calendar as we stick with tech. Up next, we'll run through all of the other potential market-moving data that needs to be on your radar. Stay with us.

Graduates, do not limit yourself to your own narrow vision of what your life should be. What the universe has in store will be bigger and better than anything you could have imagined for yourself. Career paths are not always linear. I interview some of the most successful, powerful people in the world, entrepreneurs, senior government officials, CEOs of Fortune 100 companies. Here's the repeated takeaway. Many leaders do not climb a straight path up the career ladder. There are key people and key moments that alter the course of life along the way. Well, Morgan, congratulations on that convocation address yesterday at NYU's School of Professional Studies, where you also received the Distinguished Alumni Award. That's awesome.

Thank you. It was a real honor and a privilege to celebrate with the 2024 graduates of NYU's SPS. All 234 of them. I have to tell you, we talk into these boxes, these cameras all day, and it reaches a lot of people. But to actually be standing there live in front of an audience of 1,500, I had butterflies. Yeah, because it's a big moment for them, right? So you want to be profound. I know you did an awesome job. Well, inflation's going to be on the minds of investors again tomorrow when the April Consumer Price Index is released

and economists expecting the CPI to increase 3.4% from a year ago. It's excluding food and energy prices. The core rate is seen rising 3.6 percent year on year. We'll also get the April retail sales report and the latest homebuilder sentiment survey. If that's not enough, we're also going to get earnings from luxury retailer Burberry and Dow component Cisco. That's a lot. Yeah. Meantime, we did get a record close for the Nasdaq composite. We're about seven points away from a new record close for the S&P as well. So we're going to have to see what we get tomorrow,

especially on the heels of that CPI report in the morning. We'll see what those meme stocks do. That too. That does it for us here at Overtime.