00:00 Brian
We look forward to talking about Kash Rangan, co-head of TMT and Managing Director at UH Goldman Sachs, AI and all the technology. Kash, I'm happy to meet you. I feel like I met you here last year. Now we are here again.
00:09 Kash Langan
Brian, I'm happy to meet you. Thank you for taking me.
00:11 Brian
You cover many stocks that I really, really enjoy talking about. Figma, Snowflake, Microsoft, Core Wave, Oracle. Well, one story I've heard so far in the meeting is the real concern that AI just circumvents software companies. What do you say?
00:23 Kash Langan
Yeah. Yeah. I don't think that will happen. Well, for some reason uhai uses software, uh, it's a multiplier of the software's power. And it's easy to imagine a future where we don't know exactly how this technology will unfold. So the temptation is that the AI is going to do this and not. We tend to overestimate what we can do and underestimate the power of legacy. Well, I like it and remember the birth of a web browser, Netscape, 95, 99 time frames. Everyone thought that a web browser would change enterprise software. It eventually became a front-end, causing redesign, research and transformation of the software industry. Today, everything is running in a web browser.
01:10 Kash Langan
I see AI in the same way. People at the time meant that web browsers would mean that companies like Netscape, Yahoo and others would become new destroyers of software. But the reason why software is a great asset class, the business of doing business, and the logic behind doing business remains the same. And it's all illustrated in the backend. The front end may change. There will be a new LLM interface that will streamline the way you interact with the software. It can be natural language, etc.
01:46 Brian
Well, considering this story in AI, what should Salesforce's Mark Benioff do to remove overhangs in his stock rating?
01:58 Kash Langan
Well, a lot. I'm going to interview him. I plan to interview him again tomorrow. So hopefully we will be in a better position. But look, I think if you see the stocks working in software, you'll interview Sridar from Snowflake. Well, rearrelation. So there is a story, there is a number. The numbers last one, but the story is not adjustable and not helpful. But in their case, the business was once again promoted.
02:22 Kash Langan
In Salesforce, they may be 9 at the bottom of this growth rate, 10% ISH, data cloud and agent power, about 1.2 billion businesses. Let's say that growth starts to burn and they're 12,000, 14,000 from 8,000 Agent Force customers.
03:00 Brian
So, do you buy a name like Salesforce?
03:05 Kash Langan
i will do it. I'm a big believer. So, I'm not allowed to buy my own compensation stocks, but I have a great belief in companies run by CEOs who feel urgent. So what I like about Mark is that he wakes up every day and he always thinks about AI. He wants the company to succeed and he works very hard. We want to see that our founder CEOs are passionately digging into the right bets, taking full ownership and working very hard.
03:36 Brian
Where do you fall in the discussion? Well, it was Open's Sam Altman who really advanced this story. Does the AI bubble exist?
03:47 Kash Langan
Yeah. Luckily, my stock is not in the bubble, right? They have depression. Many of them are in a. If you are application software, if you are experiencing a bit of depression, is that so? If you are platform software, it's under 1 level like Snowflake, Mango DB, they feel they're in a ok position, right? Um, when you look at the infrastructure, um, um, these stocks are public market stocks and aren't hilarious in terms of valuation. If the bubble is where you should, we have a venture capital panel panel on 425 today.
04:22 Kash Langan
That's the question I'm going to ask VCS, are you in the bubble? Because the bubbles you can make cases are more relevant to private markets, VC funds, and private companies' evaluations.
04:36 Brian
So is Openai worth hundreds of billions of dollars?
04:39 Kash Langan
who knows? In other words, history determines what the true value of these companies is. Ultimately, SAS business is a great way to think about what a company should be worth. Repeated returns at high profit margins can be very useful to generate meaningful cash flows that do not require much reinvestment. When you reach that point and these model companies, whether it's open AI or humanity, they're still in the big investment stage, right? And we just don't know about the economic model of end-use levels.
05:14 Brian
Well, it's one of the other names I follow closely and I know that what you follow is at the core. How worried are you about the debt level on this company's balance sheet? And what will Core Weve's finances be when the Fed starts cutting fees?
05:25 Kash Langan
Yeah. First of all, um, you um, I think, I'm going to interview you on stage too. I think it's tomorrow or the next day. This is a high leverage bet on the subject of AI infrastructure. They are the only hyperschool of pure AI in the public market. Well, if the costs of funds go down, I think it will be positive for the company. So they could line up debt financing at lower and lower rates. One thing about what these people do is that they are absolute experts in building GPU clusters and helping the company to go to the market very quickly. If they can continue to maintain the advantages of the market, we are experts. This data center deploys very quickly, with the cost of funding falling over a period of time. Then, I think it's a model you can see AWS, no one expected AWS 15 or 20 years ago. It started with storage and computing, products, absolute products, right? And how was it done?
06:17 Kash Langan
Business giants, differentiation, value added. I think there is great hope that CoreWeave can do that. But you know, um, we're hiring people for innovative products and developing a market that relies on businesses. All these things they need to do to realize the possibilities
06:44 Brian
Kash really quickly before I let you go. You think some of your coverage stocks, uh, what, I think, the rating is down. Is there a name that says that you will climb from that depression at the end of the year?
06:54 Kash Langan
Well, I'm betting on the application software layer. So there are companies like Intuit, Salesforce, UH Adobe, and more. They don't have a perfect story, but they have enough stories. And the other company in that bucket is ServiceNow. ServiceNow can be called an application software company or a platform company. I love that business. Bill McDermott, another CEO with energy. Yeah. He is amazing. He'll introduce you, I think on Wednesday. Such stocks have the highest growth, long-term durability of their business models, and profitability and AI. I mean, I love such a company.
07:44 Brian
Well, it's always great to spend time with you. Kash Rangan. Co-head of Goldman Sachs and Managing Director UH TMT. nice to meet you. You can take a little rest. Tomorrow has been a busy day. appreciate.
