Latest / Bloomberg Intelligence / Nvidia to Invest $3.5 Billion in Chipmaker MediaTek

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Nvidia to Invest $3.5 Billion in Chipmaker MediaTek · Bloomberg Intelligence

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  Speaker 1: Bloomberg Audio Studios.
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  Speaker 5: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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  Speaker 3: Let's talk about big tech, NVIDIA in particular, because it's
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  Speaker 3: investing $ 3.
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  Speaker 1: 5 billion in media tech.
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  Speaker 3: This is a Taiwanese chip maker, and this agreement broadens
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  Speaker 3: a partnership between the two chip designers. It's part of
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  Speaker 3: NVIDIA's future and effort to ensure that the future of
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  Speaker 3: AI is built around its hardware platform and standards. NVIDIA's CEO,
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  Speaker 3: Jensen Huang, spoke with our Ed Ludlow. Here's what he
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  Speaker 3: had to say on this particular deal.
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  Speaker 6: Well, this is not circular because, obviously, they do their
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  Speaker 6: own business and we do our own business. And MediaTek's
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  Speaker 6: already incredibly profitable, incredibly successful. They are the world's best
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  Speaker 6: SOC maker. They make more SOCs than any company in
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  Speaker 6: the world. It's a great pleasure for us to invest
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  Speaker 6: in a technology company in Taiwan. It's a great pleasure
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  Speaker 6: for us to invest in MediaTek. This is going to
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  Speaker 6: turn out, of course, the investment is grounded on a
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  Speaker 6: deep partnership that's going to be multiple years.
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  Speaker 3: That was NVIDIA CEO Jensen Huang speaking earlier with our
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  Speaker 3: Ed Ludlow.
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  Speaker 1: Let's bring in Mandeep Singh now.
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  Speaker 3: He is our Global Head of Tech Research here at
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  Speaker 3: Bloomberg Intelligence. And Mandeep, I liked how the first thing
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  Speaker 3: Jensen Huang said was, this is not circular. It's kind
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  Speaker 3: of like he has to make that point out front
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  Speaker 3: to everyone because there's so many concerns, maybe accusations, that
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  Speaker 3: a lot of the investments and deals that NVIDIA makes
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  Speaker 3: kind of goes round and round in this small little ecosystem.
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  Speaker 4: Yeah, I mean, it has had an impact on Nvidia's stock.
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  Speaker 4: They're not trading like everyone else in terms of earnings
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  Speaker 4: or free cash flow multiples. So everyone right now is
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  Speaker 4: critical of their circular financing. But look, in this case,
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  Speaker 4: they want to expand the ecosystem. And for a company
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  Speaker 4: that's generating over $ 200 billion in free cash flow, You know,
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  Speaker 4: investing $ 3. 5 billion has changed right now in terms of
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  Speaker 4: just what they could afford to do.
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  Speaker 7: And there are benefits.
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  Speaker 4: They did that with Marvell first, now with MediaTek. I mean, essentially,
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  Speaker 4: anybody who is making an accelerator chip right now, NVIDIA
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  Speaker 4: is saying, we provide the networking technology that can help
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  Speaker 4: you scale up that chip into a much bigger chip.
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  Speaker 4: kind of entity that can run these large inference workloads
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  Speaker 4: that every large hyperscaler is doing. So from that standpoint,
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  Speaker 4: interoperability is a good thing, whether it's Google TPUs or
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  Speaker 4: their own chips, and that's why they are going to
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  Speaker 4: all these suppliers here.
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  Speaker 8: So real quick, just where is the market these days?
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  Speaker 8: When you talk to institutional investors, where is the market
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  Speaker 8: In terms of its view of these circular deals, is
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  Speaker 8: it like it is what it is, we got to
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  Speaker 8: deal with it, or it's a problem, I'm staying away?
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  Speaker 7: What's the market thinking these days?
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  Speaker 4: I mean, NVIDIA has just guided to over $ 650 billion
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  Speaker 4: in annual revenue by next calendar year. So think of
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  Speaker 4: the size of this market. Just one company, which still
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  Speaker 4: has almost 80% share, in that accelerator chip space is
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  Speaker 4: guiding to 650 billion. Then you've got Google GPUs and
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  Speaker 4: AMD and you combine everything, you come up with at
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  Speaker 4: least an $ 800 billion plus market that is growing 70%.
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  Speaker 4: That's what Nvidia said. And it would have grown faster
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  Speaker 4: if they had more supply. So that's what I think
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  Speaker 4: everyone is focused on is at the end of the day,
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  Speaker 4: there could be some pull forward because of this circular financing,
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  Speaker 4: because Nvidia is giving them the money. But in the end,
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  Speaker 4: this is still a very large market with a very
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  Speaker 4: high growth rate. And I think everyone wants to cater
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  Speaker 4: to that market. Okay.
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  Speaker 3: So as much as it might look like Nvidia is
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  Speaker 3: dominating everything with the deal making within its ecosystem, it's actually...
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  Speaker 3: there's a lot of room for other companies to come in.
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  Speaker 3: Having said that, NVIDIA's investment with MediaTek, who does that hurt?
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  Speaker 1: What companies are kind of left out as a result
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  Speaker 1: of this?
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  Speaker 4: Not left out, but Google was planning to ramp up
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  Speaker 4: beyond Broadcom with MediaTek. And so this is kind of
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  Speaker 4: front-running Google to say, hey, Google, we will make sure
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  Speaker 4: we lock every capacity that's out there, whether it's with
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  Speaker 4: TSMC or with MediaTek or any FAB provider. And I
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  Speaker 4: think this is NVIDIA flexing its balance sheet to say,
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  Speaker 4: we can lock in any supplier that's out there that
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  Speaker 4: could help Google to ramp up capacity.
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  Speaker 7: Stay with us.
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  Speaker 2: More from Bloomberg Intelligence coming up after this.
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  Speaker 5: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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  Speaker 5: weekdays at 10 a.m. Eastern on Apple CarPlay and Android
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  Speaker 5: Auto with the Bloomberg Business App. Listen on demand wherever
• 5:16
  Speaker 5: you get your podcasts or watch us live on YouTube.
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  Speaker 3: Anthropic is going to be the big IPO that everyone's
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  Speaker 3: waiting for sometime in the fall. We're thinking September, we're
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  Speaker 3: thinking October. That's what Bailey Lipschultz has told us. He
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  Speaker 3: is our senior equities reporter. He covers the capital markets
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  Speaker 3: and he joins us now on the upcoming IPO.
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  Speaker 1: So we're still thinking September, October?
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  Speaker 9: Still thinking September, October, but if you just- understand how
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  Speaker 9: IPOs work. For the company to price and debut in September,
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  Speaker 9: it needs to publicly be on file by the Tuesday
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  Speaker 9: after Labor Day. So that's like kind of a best
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  Speaker 9: case scenario. If we believe our understanding when we talk
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  Speaker 9: to bankers and people around the steel to be true,
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  Speaker 9: they still haven't finalized their revolving credit facility.
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  Speaker 7: That's a big step.
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  Speaker 9: Bringing the other banks outside of the big four that
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  Speaker 9: we've broken a lot of news around under the tent
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  Speaker 9: is a big step.
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  Speaker 7: And they also have to have.
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  Speaker 9: An analyst day so the analysts can model out what
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  Speaker 9: they're expecting with Anthropic. When you're at Goldman Sachs, if
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  Speaker 9: you call up your sales desk and say, hey, I
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  Speaker 9: want to talk to the analyst.
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  Speaker 7: He has to have a model to be able to share.
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  Speaker 9: So if you put all of those kind of pieces
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  Speaker 9: into formation, you look at it and say, the fastest
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  Speaker 9: probably is Thursday or Friday. But in reality, they've been
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  Speaker 9: kind of dragging their heels with piecing together this revolving
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  Speaker 9: credit facility. But once that takes place, it should move
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  Speaker 9: pretty darn quickly.
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  Speaker 2: Is there going to be a crowding out effect for
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  Speaker 2: other deals, do you think?
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  Speaker 8: Good question. I mean, it's going to take all the
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  Speaker 8: oxygen and including a lot of the dollars out of
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  Speaker 8: the marketplace. How's the street kind of thinking about this?
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  Speaker 8: Because presumably after Labor Day.
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  Speaker 7: There's a lot of companies that will want to go public. Yeah, no,
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  Speaker 7: and we've already seen a few that have flipped publicly.
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  Speaker 9: So smaller, lesser known deals, Agreco, Covault Power, obviously they're
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  Speaker 9: both private equity. They're both kind of playing the AI angle.
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  Speaker 9: But the big thing is if you're trying to schedule
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  Speaker 9: a meeting with a long only, or if you're trying
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  Speaker 9: to schedule a meeting with the sovereign wealth fund, these
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  Speaker 9: aren't huge teams. They're not the millennium IPO pods that
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  Speaker 9: are really playing all of these deals. So I've talked
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  Speaker 9: to some sponsors, I've talked to some bankers, And that's
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  Speaker 9: kind of been consternation. When you look at SpaceX, which
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  Speaker 9: we saw back in June, we crunched the numbers, the
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  Speaker 9: 14 notable deals to go public in the month before SpaceX,
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  Speaker 9: so kind of racing to hit that pre-SpaceX window. Weighted
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  Speaker 9: average loss is almost 10% from the offer price. You're
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  Speaker 9: supposed to buy IPOs to make money, not lose money.
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  Speaker 9: So when you look at the calendar, we have seen
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  Speaker 9: companies flip public. We expect some to flip public this week.
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  Speaker 9: That should open the opportunity to beat Anthropic out the door.
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  Speaker 9: But you don't want to be on the road at
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  Speaker 9: the same time. You don't want to be calling Wellington
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  Speaker 9: asking for them to take time to talk to your
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  Speaker 9: company if Dario is trying to make a visit. Yeah.
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  Speaker 7: They'll be like, we'll get back to you.
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  Speaker 10: Exactly.
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  Speaker 3: Let's talk about another company, which a couple of years
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  Speaker 3: ago was a big, big deal for young people.
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  Speaker 1: Shein, kind of like fast fashion.
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  Speaker 3: Shein Global Holdings, the shares fell as much as 14%
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  Speaker 3: in Hong Kong gray market trading.
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  Speaker 1: This is before the stock makes its debut in Hong.
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  Speaker 11: Kong, right?
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  Speaker 7: It'll make its debut tomorrow.
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  Speaker 9: And again, this is a company that sold almost $ 2
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  Speaker 9: billion worth of shares in the IPO last Market cap's
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  Speaker 9: 26 billion. You mentioned just a few years ago, 2022,
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  Speaker 9: they raised a private round around $ 100 billion.
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  Speaker 7: So that is a huge drop off.
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  Speaker 9: When you talk to investors who've met with the company,
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  Speaker 9: the critique is, I'm paying a similar multiple for a
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  Speaker 9: Zara or an H & M that I'm paying for
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  Speaker 9: a company that hasn't seen growth, that has a lot
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  Speaker 9: of political uncertainty and a lot of headwinds. There were
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  Speaker 9: reports that they wanted to go public in the US,
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  Speaker 9: then London, now they're listing in Hong Kong. There's just
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  Speaker 9: so much uncertainty around the company. And again, it'll be
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  Speaker 9: interesting to see when we see that formal trading. But
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  Speaker 9: we've been really using over the last few weeks and
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  Speaker 9: months this gray market to better inform what's going to
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  Speaker 9: happen actually on exchange. And even if you just go
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  Speaker 9: one to one or even half two to one, you're
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  Speaker 9: still saying this is going to be something that trades
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  Speaker 9: down pretty sharply.
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  Speaker 7: So just real quick, 30 seconds.
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  Speaker 8: Are we expecting a flood of deals to be filed
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  Speaker 8: or hit the road in the next several weeks?
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  Speaker 3: Definitely.
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  Speaker 9: We expect potentially a couple this week. And then I
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  Speaker 9: think after Labor Day, you'll see people back in the seats.
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  Speaker 9: You'll see filings being put public. You'll see companies starting
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  Speaker 9: those formal roadshows. And we should expect a pretty darn
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  Speaker 9: packed September into October. Again, though, we do have a
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  Speaker 9: live September meeting for the Fed. So that has a
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  Speaker 9: bit of a concern for some of these bankers. And
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  Speaker 9: then obviously all eyes will shortly after pivot to the
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  Speaker 9: election in the midterms and what that does or doesn't
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  Speaker 9: mean for risk.
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  Speaker 3: So I'm just looking at POTS bull tickers for Anthropic.
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  Speaker 3: ANTH is already taken by Anthra Pharmaceuticals. So what, ANTR? No,
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  Speaker 3: like you still have to have the like thethropic part
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  Speaker 3: of it in the ticker. Do we have any idea
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  Speaker 3: what they're going.
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  Speaker 1: To use as their ticker?
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  Speaker 7: No, that's a good question though.
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  Speaker 6: All right.
• 9:55
  Speaker 7: I'm sure you could probably bet on it on Calgary. Oh,
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  Speaker 7: I'm sure. There's a market for that.
• 9:59
  Speaker 1: There's a market for everything.
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  Speaker 7: Stay with us.
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  Speaker 2: More from Bloomberg Intelligence coming up after this.
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  Speaker 5: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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  Speaker 5: weekdays at 10 a.m. Eastern on Apple CarPlay and Android
• 10:15
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  Speaker 5: you get your podcasts or watch us live on YouTube.
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  Speaker 8: Well, it's Monday, which means it's Merger Monday, which means
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  Speaker 8: a pharmaceutical company is out there buying another healthcare pharmaceutical
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  Speaker 8: slash biotech company. And today it's Eli Lilly buying Merida Biosciences,
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  Speaker 8: $ 2. 88 billion in cash. Michelle Cortez joins us. She's the
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  Speaker 8: Senior Editor for Global Business for Bloomberg News. She's based
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  Speaker 8: down there in D.C. Michelle, talk to us about Eli
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  Speaker 8: Lilly and Merida Biosciences. What's going on here?
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  Speaker 10: Well, Lilly has been making a bet on this particular
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  Speaker 10: space on immunology products for the last several years. It
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  Speaker 10: does have a number of products here as well. But
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  Speaker 10: the bigger story is that Lilly is looking to actually
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  Speaker 10: put some of this power that it's getting from selling
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  Speaker 10: diabetes shots and weight loss shots that have become so
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  Speaker 10: ubiquitous in the United States and the rest of the world.
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  Speaker 10: They're trying to put that to use so that when
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  Speaker 10: they do eventually lose some of that protection, some of
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  Speaker 10: that patent protection, they'll be able to have future income streams.
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  Speaker 10: It's hard to look at now because they do make
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  Speaker 10: so much money from those. But immunology is a huge
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  Speaker 10: and growing area. And that's one of the areas where
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  Speaker 10: Lilly is really staking its claim.
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  Speaker 3: Michelle, I go to the BUYP buyer profile or intent
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  Speaker 3: profile page on the Bloomberg Terminal, and Lilly has made
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  Speaker 3: a number of acquisitions in recent weeks and months. Merida
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  Speaker 3: is just the latest for $ 2. 9 billion, but in August,
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  Speaker 3: there were two purchases with some other companies, Indupro and
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  Speaker 3: Amplifica Holdings. In July, there was Ratio Therapeutics. Do any
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  Speaker 3: of these get the attention of regulators?
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  Speaker 10: You know, these acquisitions aren't really getting the attentions of regulators.
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  Speaker 10: It's getting a lot of attention from investors. Lilly is
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  Speaker 10: really taking a very different approach. They're buying things at
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  Speaker 10: a very early stage. It's a great question, actually. I
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  Speaker 10: don't know if they're somehow, you know, hovering up an
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  Speaker 10: awful lot of early stage products in the same category
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  Speaker 10: so that they could be kind of cornering the market
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  Speaker 10: on some new technology that's just emerging. It's so early
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  Speaker 10: what they're doing, though. I think that it's probably unlikely
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  Speaker 10: and others would follow quickly along. It's interesting, all of
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  Speaker 10: those things that you're citing, the numbers, they've told us
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  Speaker 10: that they look at 10 different acquisitions every single week.
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  Speaker 10: And so they're pulling the trigger a lot, but they're
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  Speaker 10: pulling it at a very low rate, right? All of
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  Speaker 10: those ones that you're talking about. I think the biggest
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  Speaker 10: deal that Lilly has ever done is sub $ 8 billion,
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  Speaker 10: you know, like.
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  Speaker 10: It is comparatively to the size of the company. It's
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  Speaker 10: very small potatoes. They are just chucking a lot of potatoes,
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  Speaker 10: in all honesty.
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  Speaker 7: It's interesting.
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  Speaker 8: Well, I've been at Bloomberg 17 years, and I just
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  Speaker 8: learned another function today, the BYP function.
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  Speaker 10: Yeah, yeah.
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  Speaker 7: Very cool. I like that.
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  Speaker 8: Michelle, what does Eli Lilly prefer to do? Do they
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  Speaker 8: prefer to develop stuff in their lab or just go
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  Speaker 8: out and buy it, like with this deal?
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  Speaker 6: Right.
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  Speaker 10: Well, I mean... It's got to be a hard decision, right?
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  Speaker 10: Lilly paid the price of this a long time ago
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  Speaker 10: with Prozac. Of course, they were dominant in that particular space.
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  Speaker 10: And then when they lost the patent protection on Prozac,
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  Speaker 10: they really had to scramble. And then the GLP-1s, they
• 13:41
  Speaker 10: did that themselves. Like this is a huge market. Obviously,
• 13:44
  Speaker 10: they weren't first movers. That was Novo Nordisk. But they
• 13:48
  Speaker 10: developed their weight loss and obesity drugs in-house, and they
• 13:52
  Speaker 10: have really reaped the benefits there. And they want to
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  Speaker 10: do that again. And the problem is, is that it
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  Speaker 10: just can't be an expert everywhere. So they're bringing in
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  Speaker 10: stuff early stage. They're trying to develop it in-house and
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  Speaker 10: then create it long-term. We'll see what happens. A lot
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  Speaker 10: of other companies in this particular situation, when they've had
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  Speaker 10: huge products that are losing patent protection, they go out
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  Speaker 10: and do $ 25 billion, $ 30 billion, $ 50 billion. I mean,
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  Speaker 10: not a lot because there's not a lot of companies
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  Speaker 10: that can pony up that kind of money. But we
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  Speaker 10: do see massive M & A. They're doing massive numbers
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  Speaker 10: in terms of deals, not massive size of the deals themselves.
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  Speaker 3: I'm fascinated by the fact that Eli Lilly is kind
• 14:35
  Speaker 3: of scouring for deals on such a frequent basis. And yes,
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  Speaker 3: pulls the trigger on a couple of them, but doesn't
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  Speaker 3: necessarily take a bite out of all of them. What
• 14:44
  Speaker 3: does that mean in terms of their willing? I mean,
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  Speaker 3: do they have like a goal of how many companies
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  Speaker 3: or investments they want to make, you know, that they
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  Speaker 3: feel that they need to execute on?
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  Speaker 10: I don't think that they have a number that they
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  Speaker 10: need to execute on at this point. And to be fair,
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  Speaker 10: they don't have an awful lot of pressure at the moment, right?
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  Speaker 10: The patents that they have on these GLP-1 drugs, the shots,
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  Speaker 10: they have those for at least another decade. So that's
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  Speaker 10: not going to be hit too hard. And they are
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  Speaker 10: innovating in that particular space. Like we see some pills
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  Speaker 10: and whatnot that are coming along, even more effective, more
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  Speaker 10: potent medicines. They will face a little bit of pressure because...
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  Speaker 10: Novonar discs drugs are older and they are coming off patent,
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  Speaker 10: but Lilly's to this point have been a little bit
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  Speaker 10: more effective. So we'll see if that creates pressure, but
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  Speaker 10: it won't be, I think, for another five to eight
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  Speaker 10: years that Lilly will actually start having to show how
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  Speaker 10: they're going to replace this medicine. You only have to
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  Speaker 10: look at Pfizer and the struggles that they've had post-pandemic, right,
• 15:47
  Speaker 10: when they've lost their covid vaccines and their covid treatments
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  Speaker 10: they just do not want.
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  Speaker 2: To do that stay with us more from bloomberg intelligence
• 15:54
  Speaker 2: coming up after.
• 15:55
  Speaker 5: This you're listening to the bloomberg intelligence podcast catch us
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• 16:12
  Speaker 8: Youtube merger monday full force here today kkr our friends
• 16:17
  Speaker 8: over there They are selling USI Insurance Services to Aon
• 16:23
  Speaker 8: for $ 17 billion, and KKR is set to reap a
• 16:28
  Speaker 8: $ 3. 3 billion windfall for the deal.
• 16:30
  Speaker 7: Pretty good for our.
• 16:31
  Speaker 8: Friends over there. Matt Palazzolo joins us here, Senior Analyst.
• 16:34
  Speaker 8: He covers the property and casualty insurance space. Talk to
• 16:37
  Speaker 8: us about what Aon is buying.
• 16:39
  Speaker 7: Here for $ 17 billion.
• 16:40
  Speaker 6: Yep.
• 16:42
  Speaker 12: They are buying another insurance broker. This is not an
• 16:45
  Speaker 12: insurance company. USI doesn't take on risk. They're a middleman.
• 16:51
  Speaker 12: What's been happening is the big global brokers like Aon
• 16:55
  Speaker 12: and Marsh, they have historically operated in the large account market,
• 16:59
  Speaker 12: like Fortune 500 companies. For many years now, they have
• 17:03
  Speaker 12: been battling over the middle market in the US and
• 17:06
  Speaker 12: trying to grow there. Marsh has an organic way of growing,
• 17:10
  Speaker 12: and they do some bolt-on deals. Aon has really done
• 17:13
  Speaker 12: it through big deals. So the purpose here for Aon
• 17:18
  Speaker 12: is to grow in the U.S.
• 17:20
  Speaker 11: Middle market. KKR owned it. I believe they have.
• 17:24
  Speaker 12: To monetize these things over time anyway, so I think
• 17:27
  Speaker 12: it seemed like a good time for.
• 17:28
  Speaker 11: Both of them.
• 17:29
  Speaker 8: It says here in Bloomberg News reporting, the sale is
• 17:31
  Speaker 8: expected to generate a 3.4 times return. On KKR's balance sheet,
• 17:36
  Speaker 8: capital invested pretty solid there.
• 17:38
  Speaker 7: So why go after the middle market?
• 17:41
  Speaker 8: Is the middle market more or less profitable than doing
• 17:43
  Speaker 8: the corporate, the Fortune 500 type thing?
• 17:46
  Speaker 11: It's more profitable.
• 17:47
  Speaker 12: The prices are more sticky. So these guys will get paid.
• 17:51
  Speaker 12: The brokers will get paid on a commission on the business, right?
• 17:54
  Speaker 12: And if you're doing a bigger company, you might get
• 17:56
  Speaker 12: paid on a fee. So if they're organizing all of whoever,
• 17:59
  Speaker 12: Google's insurance or something, Google's not going to say, look,
• 18:03
  Speaker 12: We're going to pay you 10% to 15% of it all.
• 18:05
  Speaker 12: We'll pay you a fixed fee. In the middle market,
• 18:08
  Speaker 12: there's more commission business, and the prices are more sticky.
• 18:12
  Speaker 11: It is more attractive, but it can be smaller.
• 18:15
  Speaker 2: It seems like this insurance brokerage business is a pretty
• 18:18
  Speaker 2: good business.
• 18:19
  Speaker 11: It is a good business.
• 18:20
  Speaker 12: This is why private equity loves this business. It generates
• 18:24
  Speaker 12: a lot of cash. They buy these companies. Some of
• 18:29
  Speaker 12: the companies they buy continue to roll up smaller companies.
• 18:33
  Speaker 12: They throw off a lot of cash, and then they
• 18:34
  Speaker 12: can turn around and sell them. The space as a
• 18:39
  Speaker 12: whole was trading at peak PE or EV to EBITDA
• 18:43
  Speaker 12: multiples over the past couple of years because growth was
• 18:46
  Speaker 12: really good. Margin expansion was really good. Those margins have
• 18:49
  Speaker 12: come down a significant amount. This deal was still kind
• 18:53
  Speaker 12: of struck. on an unadjusted basis at those higher levels.
• 18:57
  Speaker 12: So I think good business, good strategic piece for Aon,
• 19:04
  Speaker 12: more compelling strategically than financially, I think, for Aon.
• 19:07
  Speaker 8: I used to look around and I said, this insurance
• 19:10
  Speaker 8: brokerage business, I was looking at my buddies, solid C
• 19:14
  Speaker 8: players coming out of school making a boatload of dough
• 19:16
  Speaker 8: in the insurance business.
• 19:18
  Speaker 7: And I remember, that's a good business.
• 19:20
  Speaker 8: Now, in the investment brokerage business, my business, the competition
• 19:25
  Speaker 8: has cut the margins to like nothing practically. You know,
• 19:29
  Speaker 8: I used to make three quarters of a bid trading
• 19:32
  Speaker 8: stocks back in the day.
• 19:33
  Speaker 7: Now I get a penny or two. Has that happened
• 19:34
  Speaker 7: in the insurance business?
• 19:35
  Speaker 11: It has not.
• 19:36
  Speaker 12: So the commissions in this business have been historically pretty resilient.
• 19:41
  Speaker 12: I remember back when, you know, I don't want to
• 19:44
  Speaker 12: say when the internet, but you know, when the internet
• 19:46
  Speaker 12: was becoming kind of wider spread, people thought, okay, this
• 19:49
  Speaker 12: is going to democratize. this, uh, process and it's going
• 19:53
  Speaker 12: to cut into margins.
• 19:54
  Speaker 11: Didn't really do it.
• 19:55
  Speaker 12: Um, earlier this year, we had a whole panic about
• 19:58
  Speaker 12: AI and AI was going to cut into the broker
• 20:00
  Speaker 12: margins still to be determined, but I don't think so.
• 20:05
  Speaker 8: So why hasn't some kid in the garage come up
• 20:08
  Speaker 8: with a cheap way to to price and trade insurance policies,
• 20:14
  Speaker 8: just like they have for stocks and bonds?
• 20:17
  Speaker 11: I mean, it's a good question. I think.
• 20:21
  Speaker 12: This is a relationship business, and that's kind of.
• 20:23
  Speaker 11: The stock answer. It's a relationship business.
• 20:27
  Speaker 12: I think it's very complex. I think the way I
• 20:29
  Speaker 12: break it down is, think about this. So you have
• 20:32
  Speaker 12: your car, you have your house, right? Maybe you're comfortable
• 20:35
  Speaker 12: buying your car insurance online, right?
• 20:38
  Speaker 6: Yep.
• 20:38
  Speaker 12: When you have to protect your house, especially your shore house,
• 20:41
  Speaker 12: you want to know, am I covered for this? Am
• 20:45
  Speaker 12: I not covered for that? Am I covered for wind?
• 20:47
  Speaker 12: Am I covered for flood? What does it pay in
• 20:49
  Speaker 12: these situations? So it's a more complex transaction. Now, scale
• 20:54
  Speaker 12: that up to, I'm a corporation. I've got liability.
• 20:58
  Speaker 11: I've got this. I've got that.
• 20:59
  Speaker 12: So that tech, the kid in the can't duplicate necessarily
• 21:05
  Speaker 12: yet that kind of knowledge base.
• 21:07
  Speaker 11: So hopefully that makes sense.
• 21:11
  Speaker 8: But AI seems like, I mean, again, AI just seems
• 21:15
  Speaker 8: to me it's searching around for inefficiencies in the market
• 21:17
  Speaker 8: writ large. You know, the securities market's already been squished
• 21:22
  Speaker 8: to a penny.
• 21:23
  Speaker 11: Agreed. I think so. I think there's two things.
• 21:25
  Speaker 12: I think, one, if you're a sophisticated risk manager, you
• 21:28
  Speaker 12: may be able to use AI to assess your risk
• 21:32
  Speaker 12: landscape a little bit better than you were in the past.
• 21:35
  Speaker 11: So you might need.
• 21:36
  Speaker 12: Less of the services from these companies, but I think
• 21:38
  Speaker 12: you still need the relationship.
• 21:40
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