Google's New Devices, Thoma Bravo Buying Dayforce | Bloomberg Tech 8/21/2025

Key Concepts:

• AI Valuations: Assessing the financial worth of companies involved in artificial intelligence.
• Generative AI: AI models that can generate new content, such as text, images, or code.
• AI Agents: Autonomous AI systems that can perform tasks without direct human intervention.
• Human Capital Management (HCM): Software and practices for managing employees.
• Data Centers: Facilities housing computer systems and associated components.
• AI Infrastructure: The hardware and software needed to develop and deploy AI applications.
• Database Market: The market for database management systems.
• AI Pilots: Experimental AI projects within companies.
• Starlink: SpaceX's satellite internet service.
• Valuation Multiples: Ratios used to determine the relative value of a company's stock.

1. Market Overview and AI Valuation Concerns

• Tech stocks are experiencing volatility after a losing streak, with AI valuations under scrutiny.
• The NASDAQ 100 is down for three straight days, the longest losing streak since April.
• NVIDIA is trying to pull the market higher, while Palantir has seen a significant market cap erosion (around $73 billion) over six days.
• Denny Fish, Portfolio Manager, emphasizes that AI represents a significant long-term shift, potentially larger than the cloud, social, and mobile booms of the past 25 years.
• Fish acknowledges speculative pockets in the market, citing Palantir as a company with great fundamentals but an "extremely high valuation."
• He contrasts this with companies like Taiwan Semiconductor or NVIDIA, which trade at more reasonable multiples given their earnings growth rates.
• Fish's firm launched an AI ETF, aiming for broad exposure across sectors like tech, financial services, consumer, healthcare, and industrials, reflecting AI's potential impact on the entire economy.

2. AI Applications and Challenges

• AI's application extends beyond tech to infrastructure, real estate, financial services, and healthcare.
• Power availability is identified as a major constraint to deploying data centers at scale.
• An M.I.T. research report suggests a high failure rate (90-95%) for AI pilots, which Fish attributes to the early stages of AI adoption, similar to the early days of the commercial internet.
• He notes that while there will be failures, successful applications like ChatGPT, Deep Research, and Copilot are already delivering value.
• The key is to learn from initial failures, improve technology, and refine deployment strategies.

3. Intel's Valuation and Softbank's Investment

• Intel's high valuation multiples are attributed to collapsed earnings rather than market enthusiasm.
• Softbank's investment in Intel is seen as curious, given their ownership in ARM and participation in Stargate.
• Softbank's behavior of selling down traditional holdings (e.g., T-Mobile) to redeploy capital into AI infrastructure is noted.
• The U.S. government's involvement in Intel is questioned, given Taiwan Semiconductor's leadership and competencies.

4. Apple TV+ Price Increase

• Apple TV+ prices are set to increase to $13 a month starting August 20th.

5. Thoma Bravo's Acquisition of Dayforce

• Thoma Bravo is acquiring Dayforce for $12.3 billion, marking their largest deal ever.
• Holden Spaht, Thoma Bravo Managing Partner, highlights Dayforce's unique unified platform for core HR, payroll, and workforce management.
• Dayforce's original thesis was to combine these systems into one database, offering a unified platform for the entire employee lifecycle.
• Spaht notes Dayforce's strong performance, with 40% year-over-year bookings growth in the first half of the year and re-accelerating recurring revenue.
• Thoma Bravo aims to accelerate Dayforce's software transformation in a private context.

6. Generative AI in Human Capital Management

• Generative AI is a significant part of Thoma Bravo's investment thesis for Dayforce.
• Companies are exploring how to reorganize and infuse AI into their organizations, creating opportunities for HCM.
• Spaht acknowledges the M.I.T. study on AI pilot failures but emphasizes a measured approach, focusing on ROI and customer needs.
• He identifies call centers and product development as areas where AI has generated positive ROI.

7. Databricks' New Funding and AI Agents

• Databricks secured new funding at a 60% valuation increase since its last raise in December.
• CEO Ali Ghodsi plans to invest in AI agents and revolutionize databases.
• Agentbricks is a product aimed at automating tasks with agents at enterprises.
• Ghodsi emphasizes the need for faster and lower-cost infrastructure to support AI agents, comparing them to "100 interns unleashed."
• Databricks is increasing its headcount by 50%, facing intense competition for talent and the need to maintain equity among employees.

8. M&A Strategy for Databricks

• Databricks is interested in acquiring companies with talent and channel distribution, particularly in AI.
• Ghodsi acknowledges the high valuations of some AI companies but suggests that those lacking distribution channels may be acquired at a reasonable price.
• He remains bullish on AI agents but cautions that they are in the early innings and require improved quality to reduce errors.
• Ghodsi stresses the importance of pacing expectations and timelines for AI's impact.

9. Google's AI-Powered Devices

• Google introduced new consumer gadgets, including phones and smartwatches, powered by Gemini AI.
• Gemini is central to Google's strategy, transforming phone functionality and enabling AI-driven assistance.
• Partnerships, such as with Stephen Curry, aim to apply AI to personal coaching.
• Future applications include Gemini in cars, televisions, and smart glasses.
• Carolina Milanesi notes the breadth of Google's target audience and the focus on AI-driven features like photography and editing.
• She suggests that the camera will be a standout feature, enabling users to easily integrate Gemini AI through spoken word.
• Milanesi believes that the time is ticking for Apple to demonstrate its AI capabilities.
• Google's strategy involves leveraging the Android ecosystem and positioning Pixel as the answer to Apple within that ecosystem.
• The timing of the product launches is strategic, aiming to get ahead of Apple's expected iPhone release.

10. AI in Game Creation with Runway

• Runway, an AI startup, is developing tools for real-time game creation.
• CEO Cristobal Venezuela compares AI's impact on gaming to its earlier disruption of Hollywood.
• He notes that the gaming industry is in a similar phase to where Hollywood was a year ago, with studios starting to embrace AI.
• Venezuela emphasizes that Runway's tools are not fully automated but require users to rewire their brains and retrain their mental models.
• Runway works alongside companies to help them understand how AI can fit into their workflows.
• He acknowledges the challenge of proving AI's value, given the high failure rate of AI pilots.
• Venezuela wants to remain independent and continue building Runway, citing an inflection point in AI adoption.

11. OpenAI's Infrastructure and Financial Strategy

• DeepSeek unveiled an update to an older model with faster queries, marking a move towards creating an AI agent.
• OpenAI CFO Sarah Friar told Bloomberg that the company could follow an approach and that AI could in the future use data centers and infrastructure needed for AI.
• OpenAI is considering expanding its data center infrastructure and potentially capitalizing on that expertise.
• The company has raised more than anticipated, reaching $11 billion due to excess investor interest.
• OpenAI is also exploring debt financing and has been approached by banks and private equity firms.
• Friar's job involves raising funds, allocating compute power to customers, and balancing customer and consumer satisfaction.
• OpenAI faced challenges with the rollout of GPT-4, including user attachment to older models.

12. SpaceX's Starlink Expansion

• SpaceX is expanding its Starlink Wi-Fi services for airlines, including those in the Middle East.
• This could be a significant revenue opportunity for Starlink, SpaceX's most profitable unit.
• Starlink aims to displace legacy providers like Viasat and Hughes, which rely on geostationary satellites.
• Starlink offers faster Wi-Fi speeds due to its satellites being closer to Earth.
• SpaceX requires airlines to equip their entire fleet and offer free Wi-Fi to all passengers.

13. Market Recap and Palantir's Valuation

• The NASDAQ 100 is under pressure, down for three straight days.
• Palantir's valuation multiple is considered extraordinary, trading at approximately 200 times future profits.
• Palantir's stock is down 14% in the last five days, continuing a selloff since March 2023.

Conclusion:

The broadcast covers a range of topics related to technology and finance, with a strong emphasis on artificial intelligence. Key themes include the valuation of AI companies, the practical applications and challenges of AI adoption, and the infrastructure required to support AI development. The acquisition of Dayforce by Thoma Bravo highlights the continued interest in human capital management software, while Google's new AI-powered devices showcase the integration of AI into consumer products. The discussion also touches on the financial strategies of companies like OpenAI and the expansion of SpaceX's Starlink service. Overall, the broadcast provides a snapshot of the current state of the tech industry, with AI as a central driving force.