Mad Money 09/15/26 | Audio Only

My mission is simple, to make you money. I'm here to level the playing field for all investors. There's always a market somewhere and I promise to help you find it. Mad Money starts now. Hey, I'm Kramer. Welcome to Mad Money. Coming to you from Dreamforce in San Francisco. Other people make friends. I'm just trying to make a little bit of money. My job not just to entertain, but to do some teaching. Don't call me 1800 743 CMC tweet at Jim Kramer. After another day where oil prices surged, bomb yields slow, they took off again. Stocks of course got with the Dow tumbling 328 points, S&P seeking45% and the Nasdaq losing 78%. We're witnessing a tug of war. It's a tug of war over AI. Anthropic at OpenAI, the two private kingpins want to slow development of AI, but the rest of the food chain wants to keep building at a fast clip. Fortunately, we're in San Francisco this week, so we can figure out things. Maybe a compromise could be in order, no matter. But plenty of money will be spent on technology. No slowdown there, despite what many people on Wall Street think. There's a reason I've been coming to Dream Force for more than a decade. for a few days every year. This becomes the center of the universe. Bringing together the people who are building the future and the company spending billions to make it happen. Billions that you want a piece of it. Today was no exception. We got a very special show for you tonight. I can't believe myself. You're going to hear from Salesforce CEO Mark Beni off fresh off the Dreamforce keynote. You're hear from Sarah Frier, CFO of Open Eye. But first, Nvidia CEO Jensen LONG. HOW COULD WE NOT take a look? >> Jensen, this is a treat. Didn't even know you'd be here, but I guess you wouldn't miss it for the world. >> It's incredible. This is a the world's epicenter of selling. >> Yes. >> Commerce. >> Why not? >> You know, >> well, let me >> creating opportunities for the world. I I before I saw you, I went to my trust and states lawyer and I said, "Look, if I know I'm going to die in 2030, are there some things I can do to help my kids?" You questioned that. Are we all going to die in 2030? Maybe it won't matter. We were not. We're not going to die in 2030. There are so many people in the world who are going to build AI properly. We're going to have all kinds of guardrails, invent all kinds of technology for safety and security. All of that is happening around the world. It's not just two companies building things. There are thousands of companies building things. And so we're gonna we're going to create AI that's incredibly useful. It's going to be incredibly helpful and it'll be incredibly safe. We could have all of that at the same time >> cuz it's an engineering problem. And >> safety is an engineering problem. Testing is an engineering problem. We should create products and properly test them. And if they're not ready to be released, just hold on to it and keep testing it and keep engineering until it's ready. >> It sounds like common sense. I'm I'm I'm a believer. Now, you told me two years ago that companies would be able to buy something from you and make four times what they thought. That was conservative as usual, right? You were underpromising because they're making money right now. They just don't like to talk about it. Well, the part that's really incredible is that in the last 6 months, AI became super useful. And because it's super useful, people are building these compute systems, Nvidia AI factories, like crazy. Each gigawatt of Nvidia AI factories is about 5060 billion. >> Okay. >> However, the rentals of that one gawatt AI factory is about $50 billion per year. Year. >> And so, yeah, the the return on invested capital is about one year right now. And they get to use that because Nvidia's fungeability and durability is so great. They get to use that for many years well beyond five and six. And so the return on that investment capital is incredible. That's why everybody's building it. >> No, it's tough because the uh the close model so to speak, Frontier, they apparently can make three times that. But at the same time, we need both open and close, don't we? >> You should rent and use the best models that are available as a product or service. these closed models. However, every single country, every single company, every single industry must also build their own intelligence. How can you outsource intelligence to somebody else completely? And so that's the reason why all these companies are here is the reason why our partnership with Salesforce, Salesforce is going to use NVIDIA, Neotron, and our agent technology to build their proprietary agents that sit on top of Salesforce. In addition to that, because these agents are going to be so fast and they're going to be so many of them, the data processing layer of Salesforce, it sits on top, it's in Salesforce, it's in uh uh uh data bricks, it's in Snowflake, we accelerate data processing across all of that. And so you're going to have data processing at lightning speeds. You're going to have all these agents helping you do things. And so all of that is based on NVIDIA's Neotron. And so this way Salesforce is an AI company as well. >> Well, then this will be the same as all the other industrial revolutions. At the beginning, everyone said, "Listen, Bloom is going to put a lot of seamstressers out of business." And it was a tough game for them. True. But there were 10 times the number of jobs four years later. >> You know that storytelling is is unfortunate, unnecessary, and quite frankly just wrong. The fact of the matter is when a company becomes more productive and when they're powered by artificial intelligence, they become more ambitious, their ambition allows them to do great imagine greater things, wanting to do greater things, which is the reason why if you take a look at what's going on at Salesforce, they they were a data layer and an application layer. Now they're also an agent layer on top of that. They're much more ambitious today about the future of Salesforce than anytime I've ever seen Mark and he's always enthusiastic about it and today he's fired up and so AI has helped his company elevate their ambition and as a result they'll be able to achieve greater heights. This is going to happen not just at Salesforce but all of Salesforce's customers, every single industry. It is completely illogical that engineering If we had software coding agents, engineering would no longer be necessary. I grew up in a generation where engineering engineers had no software. We used all kinds of other tools and we built up prototypes and so there was engineering before software. There will be engineering after a >> right. No s doesn't make sense that >> yes I'm watching this all in a popular podcast. You got a phone call in the middle of it. Was a little strange. Was that planned? >> No. >> The president just I was I was on on stage and offstage I saw the corner of my eyes >> my team waving a phone uh you know in the air and and as they they I was trying to figure out what was going on as they walked closer it said Mr. President and of course you can't you can't not pick up the phone call. >> Smart idea when the president calls you pick it up. And so anyhow, he just wanted to talk to me about some of the tweets that he put out and um I told him I happened to be on stage with the besties and he he said put me on let me talk to everybody and so I put them on >> that's what happened. Okay. All right. It was all right. So totally unplanned. Now he used the term hoax that got picked up by a lot of people but the consensus of that panel was there are some things that are made up. You agreed with that term made up. We do don't we how do you stop that stuff? AI safety is a real thing. >> Okay. >> Um engineering products so that they are safe for the world to use. That's a real thing. And companies should innovate as fast as possible, but they should never innovate so fast as to release unsafe products. That is a real thing. However, the fact that we need new laws, new antitrust laws or new regulations so that these companies could do their fundamental engineering and do do it properly before they release products. That is just completely unnecessary. And I think that that's what the president is saying that we don't need new laws. We don't need Yeah. We don't need new We got plenty of laws. We got plenty of regulations that govern the reliability and the functionality of products. And you know there's lots and lots of >> Yesterday was a weird day. I mean your stock opens down five and a half because everyone says open AI won't come public therefore you won't make your quarter blah blah blah. When do we realize that you sell it 14 times fiscal year 28 earnings that which starts in January and that you've got so much going for you and the best investment in the world is what? >> Nvidia. >> Well let's go to work. Let's buy a trillion. >> You know Jim listen this is incredible. Uh we're the only platform that runs every close model. right? Every single closed model and we're growing share in the closed model space. We're the only platform that runs every single open model including Nvidia with our own Neotron models. The token generation demand rate has gone up 25 times in less than a year and the amount of open tokens that are being generated has gone from 30% to almost 70%. And so demand for AI because it's useful now is just growing exponentially. Nothing nothing that happened this week is going to slow that down. In fact, if anything at all, what's likely to happen is we we used to have training systems and inferencing systems, giant systems. We now will have another third system. That third system is basically testing environmental testing labs. And so these testing systems will be extremely large so that we can have products that are functionally functional, capable, safe and secure. And that requires massive data centers to test them. So we just created yet another new demand for AI that that's brilliant. Now how about do we have enough compute and when are we going to get the financial guys in Wall Street to start trading compute? >> Well Jim, this is the the big breakthrough in the last few years. People realize now that Nvidia compute is the only system that is fungeable and durable. The reason why we're funible is because we run everything. We run every single model, close model, open models. We run every single stage of the AI life cycle from data processing to training to post training to inference and of course testing. Every single company uses us and as a result uh this is now the world's first computing system that you could use be that could be assetbacked and so the finance and so you could use the computers as collateral and we're seeing more and more evidence of that. If so this is going to be a huge unlock for all of the companies who don't have the ability to fund this level of scale because the asset itself will be the collateral. So this is a moment in time that we will all remember is when everything who everybody who hired you and bought your stuff went had the inflection and the profitability because the the life of these six seven eight nine years the profitability is going to be extraordinary. Can you help explain people that? I'm tired of saying it. >> You know, the the weird thing is is that so many of the early uh renters signed up for long-term leases, long-term rents, long-term contracts, and now all of these CSPs, they kind of regret that because the spot pricing, the because of demand, the spot pricing, the rental fees are so incredible. You can now rent an Nvidia Grace Blackwell for $16 per GPU hour. Now, some of them were rented away at $5 just a year ago. >> They had no faith. >> And so now, as these as these contracts roll off, everybody is just upping their price. They're upping their revenue forecast. The return on investment capital is coming in. They're buying more gear. They want to put up more infrastructure. And so I think this flywheel is really really flying now. >> Well, I'm going to say something. Maybe you've heard of it. Nvidia, own it, don't trade it. >> Own it, don't trade it. That's what I do. >> Thank you so much, Jensen. Great to see you CEO co-founder >> and everything else. Everybody, Jim Kramer, >> dance one. >> Coming up, Kramer sitting down with the host of Dreamforce himself, Mark Benny off. Next, don't miss a second of MadMoney. Follow Jim Kramer on X. Have a question? Tweet Kramer #madmentions. Send Jim an email to madmoney@cnbc.com or give us a call at 1800743CNBC. Miss something, head to madmoney.cnbc.com. Well, as you can tell, I'm thrilled to be out here at Salesforce's annual Dreamforce conference. Today, management was focused on the future, of course, with multiple new products and partnership announcements that were incredible. Let's take a closer look with Mark Betty. He's the co-founder, chairman, CEO of Salesforce, who's a longtime friend of the show. Mr. Betty, thanks again for having us here, and welcome back to >> Sam. Welcome to San Francisco. We always love having you here in our beautiful city. >> And that would be 24 times, right? Isn't that as many dream forces have you had? And this is not a trade show. What is it? I've been calling extravaganza. >> But Jim, we're trying to empower every trailblazer. We're trying to take all these incredible people who are here, and you know, it's tens of thousands of people, about 50,000 in person, but also 10 million online, and we're trying to elevate them in technology. We've been doing that for decades to show them where the tech industry is now, where it's going, and how they can be a part of it. We that's we want to we want them to jump on board and help transform these companies. >> Well, we have been speaking to a parade of people like like Jensen Wong who's got a deal with you. I spoke with you about a partner >> with with Gez, I got to tell you that one was a bit of a shocker with Dario. And then uh I am seeing things Semens. I'm going to give you a wild one though. One of my absolute favorite companies that I cannot believe has taken the country by storm if not the world. It should have been closed by tariffs. I'm talking at Shark Ninja. I want to start THERE JUST BECAUSE THAT'S something people recognize. >> Oh my gosh. Mark at Shark Ninja. Those smoothies are amazing. You know, if you put the Jell-O in the smoothie, it's even better. >> Really? >> Yeah. I'll send you the recipe. No, you got to get the recipe. But here's the thing about Shark Ninja. We have an amazing new search technology called Simulate. And Mark, the CEO of Shark Ninja over the weekend sent me a note that we reduced his kind of no ops, that is people getting on a site trying to find his product and them saying, "I can't find it from 22% to almost zero." And that's what we get excited about. We want to help every shark ninja, every company to have a great experience with technology and especially AI. Well, that's exactly the kind of thing people can understand because they bought the product and they that made it they can make the price even lower because they represent great value and it'll be even lower because of you. By the way, I went to a a cemetery right over there. I saw a gravestone. It said SAS apocalypse. Did but no date. When when did you kill it? Was it maybe your earnings? >> I know. I think there's a lot of people out there in the industry, maybe in your industry and not my industry. >> I don't have an industry who want my industry is my wife's NESCO >> in the financial services industry, in the stock market industry, >> who wants certain things to be true for a little while so they can make a trade. But I think everybody can see that SAS apocalypse was nonsense. And I think you can see it at Dreamforce. There's no s no such thing. It's >> total nonsense, >> you know. I think you're right. I mean software hardware software hardware and yet everybody makes out and we know that. Uh what we saw from your quarter I I thought was the breadth of the partnerships that are making money. A lot of companies they come up with partnerships and even some ones that you and I both know are very good but they're not meaningful. But I think your partnerships uniquely are copied by others and make people a lot of Michael Dell Fed Federal Express. I check on these a year after that I talk with you and they are still, you know, they're making money. That's our greatest joy is for our customers to be successful and also that that we have the trust with them. You know, nothing is more important than the trust we have with our customers, with our trailblazers. But you're right, we want to make sure that this technology is actually making money for people. And look, there's a lot of new pricing models also in the industry and like one is a user pricing, one is the named agent pricing, the usage pricing, the consumption pricing, what they call outcome pricing. So if an a transaction completes, but we're even trying a new model which is >> we're willing to kind of come in, we'll build the system for nothing and we'll take a percentage of your business outcome. So if we make a money, >> you've never done that? >> No, never. >> So listen, people are going to be listening. So what if you have say 10 employees and you start doing well, they maybe 25 and you help them and and you give them they'll take >> Yes. We'll take a percentage of the profit or the revenue or the the amount that we save you >> business outcome. >> I've had a 30% lift every time I used you in my previous life. So people should be listening and they realize that their numbers can go up 30%. >> We have to be more flexible now in our pricing than ever. And so that span of pricing models that I just went through is very important for customers because in AI customers want all of us to have a little more skin in the game and we're willing to do that. >> Okay. So we also have some big customers. The largest company on earth is Salesforce. Now he Jensen didn't come for show. He's got a product KOA. Should I be using that one? What's that? >> KOA is actually a Salesforce model that we have built on Neotron. Neotron is the open- source model that he's built. >> We can now tune it and offer it to our customers. We've always offered models to our customers. You probably know we have a fantastic research team. We've been we've built prompt engineering itself here at Salesforce, but we're going to start offering models too for our customers >> and uh yeah, we'll offer a Neotron model that we call KOA. >> I like that. >> Do you remember KOA, our chief love officer? I think you met him. >> I probably did. My bad. Okay. So, I was looking at uh going over some history, looking over uh what was said when you paid 26 uh billion for Slack. I saw it I you know there were some people who just thought that you had destroyed your company but others who said it was destroyed immediately similar a little similar to SAS. So the 26 billion did it pay off when you bought Slack? >> The greatest acquisition in the history of software Jim is Slack and we said that when we bought the company we knew we would trade once >> and we we paid you know what we paid but here we are 6 years later it's the fastest growing product we have. It had triple digit growth last quarter in bookings, >> but the innovation happening in Slack, Jim, is incredible. You mentioned Nvidia. You know what? They're a big customer of >> Slack. Slack. >> So, you mentioned Enthropic. You know what they run their company on? >> Slack. >> Open AI. >> So, Open AI. Slack. Slack. >> So, if companies haven't looked at Slack, you have this incredible Slack CRM you can run Salesforce from. We have Slack bot you can run your AI from. We even have Slack Force which is a new user interface built in Slack using Enthropic. So you can frontend your whole company. But Slack is amazing and we can even code from Slack. So you can have a multi-player multi-channel environment in Slack coding with all your coding agents. Amazing. >> Well, look, I I I we use it too. I mean, everybody uses it and it's just a universal change because the other product isn't that good, too. We know that. We don't have to >> we work with that product too by the way. Of course. >> Good for them. Good for the nice throw them above. Of course we have to work with that. Why not? So anyway, when your stock got down to nine times earnings, it was a curious time because that's kind of where it was a I don't know bought some at that point. >> Well, yeah. You bought about what 252 billion, >> you know. And you know what was said to me by people? You better get away from that benny off cuz he just wrecked the balance sheet. And I said I think he has probably 25 billion in anthropic. >> I think I do at least. So it's still only at 15 times. Now I remember >> that was kind of an amazing thing. Well, what I saw to myself was, wow, the stock is so low. We'll come in by 25 billion of Salesforce. We know we're going to have to we're not going to hold the anthropic for long. We're not, you know, that's not our business. So when we invest in these companies, we have this very good venture capital. >> Your record in Salesforce ventures is among the top 10 companies >> better than anyone else in the industry. But this anthropic will be a huge win for us. Well, that's a great way then just to cancel the debt. >> That's a very smart that's a very smart idea. Uh I often think that it that I remember the days of 28 29 times earnings because of your of how fast you're growing. There was a second half acceleration. Is that is that me able to continue? >> Well, I mean we're going to have it. We're having an incredible year as you saw. >> I know you are. >> We just raised our guidance. I think it was300 or $400 million. I mean, >> we've had an enormous headwind from foreign exchange, like 300 something million dollars, >> but this is going to be another amazing year and we're only going to spend two years in the 40s. You can see that now, right? >> Absolutely. >> Next year, we're going to be talking about the 50s. >> Absolutely. >> So, we spent three years in the 30s. >> 2030 goal is good. At the at the at the analyst meeting, you reaffirmed the 2030 goal. >> Well, you saw we spent three years in the 30s, >> right? and we're going to spend two years in the 40s and now we're going to go right into the 50s. >> Well, okay. So, you know, people got a little negative about AI. Uh, >> oh, by the way, no enterprise software has grown at that speed. >> Not Oracle. >> I mean, that's amazing. >> Applications company. Amazing. >> All right. Look on Pacing the frontier. >> Larger than SAP. >> Dario says X on his What? What? What is Benab saying X about about what we should be scared of? >> I think that you know the number one thing that we've seen Jim and we've talked about this exhaustively for maybe eight years is social media that we were both so disappointed with how the social media companies were not really taking care of themselves. A lot of kids got hurt. We saw that. >> It's now well understood, isn't it? >> Yes, it is. >> A lot of companies got hurt. A lot of individuals got hurt through social media. We don't want that to happen in AI, do we? >> No, we don't. >> We want AI to take care of these things and be held responsible and take care of these actions and be ethical. And the heart of ethics is responsibility. You know, Salesforce is a company that's been regarded by ethosphere as one of the most or the most ethical company in the world for 14 years. That's very important to us. But we really look at a light on our brethren here in San Francisco and all over the world and say we want you to be ethical in your actions and how you take care of your communities and the world because this technology is very powerful. >> Well, I think I I think you've got to keep pushing. Well, I don't have to tell you to do it because other you you never lose sight of it. Uh and I know that people should understand when you follow a company uh there's Mark's company and then everybody else and what Yes. I mean, I always say at the beginning, it's not it's not about friends, it's about money. But no, with some people, it's friends. And I think the reason why I think so much of you is because how you got me involved in in children's charities. >> Well, you built a playground at our new children's hospital here >> in San Francisco. Nobody knows that. Amazing what you've done all over the world. You don't talk about your own >> children. I don't do it for that. I don't do it because that means it's it's you're doing it for to you're taking care of the children. I have tremendous gratitude that you have. >> If we're not focused on our kids, education and healthcare, what are we focused on? >> Well, let's hope that AI, the people in charge of AI are doing what you say, maybe we could make a tremendous amount of money and make a difference for families, make a difference for hospitals, make a difference for children. Is it capable? Is it capable? Can >> we're giving another $18 million today to our local San Francisco and Oakland public schools. 24 million including Indianapolis and New York where we have huge communities. We've given now more than $150 million to our local public schools, $300 million just to our local San Francisco schools, hospitals and parks. We feel that business is the greatest platform for change that we have to give back. And you know, we've done more than a billion dollars in grants. You know, we've done 11 million hours of volunteerism. You know also that we run 65,000 nonprofits and NOS's for free on our service. Jim, this is what business is all about. Look, I usually that's what makes us really happy. >> Bring it up. And maybe it's cuz I'm actually looking at Jamal right there who you know I love. But I had my >> 87y old mother sitting right here, but I had to do it. It's your big day. It's your big >> I usually think it's Billy Jean King for some reason. They look so doppelg anyway. Look, great to have you Dream. Thank you. Thank you for inviting us. Thank you for a great great great partnership and we're thrilled to have CNBC here and everybody. >> Thank you. >> Mark Beni, CEO of Salesforce coming from the 24th Dream Force. Great to see you. Van Money's back in a break. >> Coming up at a pivotal moment for artificial intelligence. Kramer's asking the big questions when Open AI's CFO joins him next. Tomorrow, kick off the trading day with Squawk on the Street >> live from Post 9 at the NYSC. >> I'm not saying it's a good thing, Jim. I'm just saying it seems unlikely that the slowdown is coming. >> All right, >> as we said yesterday, David, >> open source ain't going to pace. That's that's the >> line, right? I mean, Dave, if you want to adopt the attitude of a three-year-old, go ahead. It all starts at 9:00 a.m. Eastern. This weekend, the two leading frontier artificial intelligence labs, Open AI and Anthropic, both back calls to slow down the pace of development for the most powerful AI models so that safety protocols can catch up. We know OpenAI, the company behind Chat GPT, is a heavy hitter in this industry, wants to come public at some point next year. But opening high's been spending fortunes on the great data center buildout. A deliberate slowdown in frontier AI development. Well, maybe it could save the money. Could it hurt the great data center buildout? So, what's really going on here? Earlier today, we had a chance to speak with Sarah Frier, the chief financial officer of Open AI to find out. Take a look. >> Sarah, I've been doing it for a long time. It's great that you're here. And it's terrific, by the way, that in the middle of things, you're not afraid to talk. >> Never afraid to talk. Particularly not to you, Jim. >> No. Well, I appreciate that. Then I'm going to ask you directly. Are you scared of dying in 4 years from a rogue actor manipulating agents to misalign weapons of mass destruction? >> No, I'm not. However, we do need to take safety seriously. And if it means we have to pace the frontier and slow down, absolutely, we're going to listen to our researchers and do that. But as the CFO, I need to then make business decisions around it. But no, I think that we are doing what we do well at OpenAI. We're pacing that frontier and taking that safety and alignment really seriously. >> I know you did mention as CFO you have to figure out the resources. Uh you also I know think it's your boss is called that boss says it's ill advised to do an IPO now and I understand that not a shock. Uh but what would you cut back on? What would you spend less on if you wanted to pace things? So let's talk about that pacing because actually what I'm excited about is even if we stop today the amount of intelligence that's available in the world is massive. So Astra as you know is now the frontier most intelligent most aligned model selling let me ask you it's $100 >> and the fastest selling that we have seen certainly in our Yeah. And so what does that mean? It means there's intelligence available for folks like Boston Children's Hospital. 40 undiagnosed, unresolved diseases now diagnosed with clinicians there. If you're a parent of a child with a disease like that, that is life-changing. Um, if you're in the investment business, Bali asset management has a central banker analyst that can quickly take all the inputs from folks like our dear friend Kevin Worsh um, and go from a 2hour synthesis down to minutes. So these things make a difference in people's lives all over and that's what's available to us today. So back to your question absolutely if we have to pace things we will always make investment decisions based on a strong ROI but from where I sit today there is so much opportunity to drive growth that I'm still highly focused on getting more compute to keep that flywheel going. That's what I wanted to know whether it was less compute or more compute because I there may not be I need you to go to Brigham and women's I need you to go to Dana Far we went all these places to have Astra. >> Yes absolutely. So on the compute front remember that when we have more compute we can build the best models and the best doesn't always need need to be the most most intelligent like when you have the frontier model it's able to actually train what I think of as the child models right the mini and the nano. So what we saw with Saul, it trained Luna which is the cheapest model. We dropped the pricing there 80%. And we took demand up 10x. It's the number one model on open router right now. And why is that? It's because what customers really want is the right intelligence for the right task at the right price. And that's what we're giving them by having a whole series of models on that paro frontier. And so when I think about investing in compute, it's how do I invest in compute to create those frontier models to create the best products to create the cash flow that help me spend on compute to create the best models. >> Well, you mentioned cash flow. I mean, I have to think if I gave you, let's say I were Broadcom and I gave you 10 billion, is it possible that per gigawatt, is it possible that you could make 30 billion with the 10 billion? Theoretically, >> theoretically, yes. I mean when you absolutely look at the output of models today the gross margin on our core businesses so remember we're a very diversified revenue stream we have a consumer business and then we trend into small businesses all the way up to the biggest businesses and governments around the world. >> Those businesses are actually very good gross margins. The return on those gigawatts is high. We also balance that with our mission which is AGI for the benefit of all of humanity not just people who pay. And so we have about 90% of our consumers get chat GPT for free. They get access to that intelligence for free. So now we're starting to build an ad model for example. So our ad business just hit a billion dollars in 7 months. The fastest growing ad platform ever, the fastest growing product for us. And that's a good example of where we continue to improve the margins because now we're bringing high margin add-ons into that overall business model. >> Okay. You know, let let's go back to this issue uh which I guess is we can call the hugging face issue. I can call it the open a hugging face issue. But you know, president said yesterday fears from AI taking over the world are a hoax. That's what the mainstream media picked up. But at the same time at at the actual event that he called in allin Jensen Wong said the doom stories are made up. The whole panel seemed to think that there must be some sort of ulterior motive by what Sam might be saying along with Dario. Is there an ulterior motive? Do you see it? Would you shoot it down? >> So, I would say first of all, I'm a tech optimist. So, I'm not a doomer. So, I've already talked about just some of the ways these technologies get used. But I think it's also important to align around safety and take it at the right pace for the frontier. You mentioned the hugging face incident. I am absolutely on a mission right now on cyber. We have a moment. We've calling it the defender moment. These models, Astra scored 100% on the cyber bench, which is effectively the benchmark that says it can find just about every vulnerability in lines of source code. So what does that actually mean? So if you're running a company, it means you take our model and you point it at all of your software. It's going to find all of these vulnerabilities. all that you all that were mentioned in the hugging face incident including the uh the sandbox and and the bolton board that they all congregated it's going to spot them and was this done with George >> curse it's going to find those vulnerabilities okay >> and then you need to patch at machine speed because you don't have the luxury of keeping a list of all the things that need to be fixed at some point >> it's going to with codeex which is our coding tool you can do that at the speed of a machine and suddenly you have this very positive of software life cycle going on where you're building code that hopefully is safer, better quality tested, but when there are issues, you're finding it fast and you're patching it. What's happening is the defenders need access to those tools today. Hugging face should be an absolute clarion cry. How's that for a phrase? >> Absolutely. started I don't know if I read this thing because it was a little dense but yeah >> I started my career as you know um writing equity research around security actually cyber was when viruses first started coming about the world >> real good you were like 12 >> I think I think we're at that moment in time and so this is why I want to get that message out people like you are getting that message out and so I think cyber is an incredibly big deal and that's why I wouldn't call it you know that we don't need to be worried about safety and alignment but I think we need to do it the right to be kind of moderate and pragmatic about it. Keep the optimism which Jensen has, but also be pragmatic about the fact there are real risks here. >> Can you train the bad the misaligned agents to give up unauthorized communications adopting goals from one another? Can you take down the message boards where they found each other? Can you make them less of a swarm? Can you destroy the agent ecosystem if they're misaligned? um you need alignment and that's what we're doing as we roll out these ever more intelligent models. We're also working on how do we create safety and alignment and guard rails around them so that they are doing what we what the human in the loop want them to do >> and it can be done. It >> absolutely. >> Can you know that the hugging face incident and the road ahead as you describe it is to some doomsday? >> I you know again I don't want to lose sight of the positives. Look, I was in Texas this week at a small business event for women starting, running, growing their own businesses. And I spent time with one woman talking about health deserts. And what she means by that, so she's a qualified doctor. She started in Alaska, moved to West Texas. What she sees is that if you live in a health desert, your life expectancy is 30% less than someone who's got active access to health care. So what's she doing with our technology? Number one, she's utilizing the fact that 330 million people every week ask Chat GPT a question about their health. We have a clinician tool now. So, we're enabling doctors to quickly use AI. And then we work with hospital systems like HCA, Boston Children's, Stanford Children's to be able to put that all together. She steps in as an entrepreneur and says, I am going to build a business that's going to bring healthc care teddocing to places like West Texas. That's what I'm focused on in terms of where are we going with technology and great outcomes. There have always been risks to technology. We should take them seriously, but we shouldn't allow it to stop the progress that we're making. >> Now, I just uh I hear that and I say to myself, those who think that there will be jobs taken away don't understand that is a creator of West Texas jobs that would not be there. More jobs, not fewer. that and I mean that's what we've seen so far right when you look at the impact of AI on the economy at large our our economic research team's done a great job on this what we see is that people are actually starting to make their jobs more interesting and broader so it's not just the work that you know if you look at someone's title like a finance person >> okay >> if you look at all of the calls into chatbt from people's whose title is finance only about a quarter of what they ask chatbt is finance You know what the rest is? Another quarter is engineering. So my tax team is learning how to program so that instead of waiting for an IT person to come along and help them, they're doing it themselves. So they're faster, quicker, better, the work that couldn't be done before. >> They're also, interestingly, spending 25% of their time asking marketing questions. >> So I'm I'm less sure what's going on there, but I do, as I always say to my finance team, we're all in sales, whether you know it or not. You might not be selling to an external customer, but you've got to go sell your point of view to your customer internally. And so, if they're using some marketing techniques to be heard, to punch through, that's only good because you go from being a historian of the business to actually moving the business forward. >> I like this positive note. This is a good moment to uh pause. We'll be right back with more. Thank you. >> Stick around. We'll have more of Kramer's critical conversation with OpenAI CFO Sarah Frier next. Before the break, you saw the first part of our discussion with Sarah Fire, the CFO of Open AI, which is at the heart of so many issues facing the artificial intelligence complex. But we have much more ground to cover. Here's the rest of that conversation. All right. So let let's talk about the possibility of the impact of a pause. I think you've correctly talked about how it is something that is prudent. We like that. But this endless uh drum beat that we could fall behind China reminds me of when we were might have fallen behind Russia in 1959 to 63 and it turned out to be a false construct. What is it about China that could make it so that maybe it's open models? I don't know that they own us or somehow our defense will be compromised and do you believe it? I absolutely believe that we're in a very competitive landscape right now and absolutely customers come and talk about open-source open weights and many of those models are Chinese models but let's talk about what they're saying when they say that number one it's cost and so it's incumbent on us to keep driving down cost so we do that with things like I already talked about frontier models training mini models it's our own chip being able to inference at a much cheaper price the fact that we can be cheaper Today if you buy Luna it's cheaper than taking a Chinese model like GLM3.5 on Cloudflare. So number one is we need to be on the para curve the customer can get the right cost for the right task. Number two they want an ability to effectively go deeper often like take off some of the less guard rails but they want to tweak the the wing tips of the model and have more of their own say on it. So again we need to find ways to work with customers. So that's where verticalization starts to get interesting. Right? Today we've gone vertical in areas like chip design because we had to do it for ourselves. So now we work with customers on it. Healthcare with GPT Rosaland. The third thing is data sovereignty. This has always been a thing since technology started. Where is my data? Is it safe? Is my intellectual property safe? I don't know if Chinese models are helping you on that front either. But I do know that we need to hear customers particularly outside the US. I'm about to fly to the UK tonight where people worry about what happens if I can't access that model or that data. And I think there's work to be done on that front. >> Okay. You know, when I read, look, your papers are incredible. You put out amazing things. They're done in English, too. I mean, people can read the jalapeno first result. And I was thinking when I read the hugging face, I said, "Oh my, if the Chinese hat, it's the blueprint. It's the blueprint for the people who don't take the cyber security. Can't they can't they send swarms to whoever doesn't do the cyber security get in and shut the company down if it's a a utility if it's a chemical plant can't they do it? >> I mean this goes back to why we think the defender window is closing and why there is a limit of time frankly to really harden our infrastructure. Um, at OpenAI three weeks ago, we took Astra, pointed it at ourselves, and I think what we learned is number one, massive empathy for our customers, right? >> Um, number two, we took 25% of all of our engineers off of, you know, production level tasks and said, "Your job now is to run alongside the model and fix as it finds. Number three, we've built some tooling now that we can go out in the world and help customers protect themselves from things like an agentic swarm." And then finally, we created playbooks. And by the way, we're not going to go by ourselves, right? I love that phrase. If you want to go fast, go alone. If you want to go far, go together. We are working with the whole cyber landscape. We put out the letter. Over a hundred other companies signed on. And we think it's really important we do this as a larger cyber community. >> When we were all afraid of uh mass destruction from from atomic weapons, we did come up with an international agency for to try to regulate these things. Do we need an international agency? And by the way, that wasn't bad. No one thought that stopped the pace of Hbombs if we wanted to build them. But do we need it? Do we need it for what you do? >> So, we have some very good agencies today. I would say the UK AISC is one. Um, and I think even here, Cassie here in the United States, um, are two groups that are very good at looking at models before they launch. And as you know um post the kind of myth us moment from anthropic which I felt like was good and that it kind of created a blast out in the world that said hey we all need to pay attention but it suggested that one way to control the issue was to keep it in a box and not let people to use to see it and use it. We are open AI because we are more open in our approach. We think security and safety comes from a broader sharing in the world so that more eyes are on things. I think you get a better result. But again, we are looking to agencies like UKIC to Cassie and so on to be able to help us do that well and in a trusted way. We need to make sure that we bring folks along so that they trust that the outcome is something that the world wants. >> Right. Let's talk money. I I look at what you're really doing. I think when they talk about the idea of no IPO, immediately people said, "Oh my god, it's going to be horrible for Broadcom. They can't be broad." Actually, I think it's quite the opposite. I think you guys are making so much money that it's kind of uh if you were public I would be looking at that annual recurring revenue. I say that's got to be one or two versus anthropic. You're so much more lucrative than any of the hyperscalers once you get this thing going. Did you guys pick the right side in doing the models and they did the wrong side in doing the pipes? >> So I certainly like our position and I think we can build a really strong durable business. Um, on the IPO front on we're built we I would say we probably have actually. Thank you. Um, on the IPO front, look, you got to run your own game as you know with an IPO. I've been on many a show with you where I've said an IPO is just a milestone in the journey and I'm going to keep reiterating that. Look, we raised 122 billion in Q1 of this year to give ourselves maximum flexibility. >> How much you've gone through it? Um, we still have an incredible balance sheet actually of just cold hard cash sitting there to be able to do like fund our partners as we buy product from them. Um, but you're right about the business too, right? It's a very diversified set of revenue streams, consumer, small business, large enterprise. Very good margins particularly when you get into the productization of that things like cyber codeex chat GBT work. I hope you're using agents now in the morning gym to get ready. Um, and then from there, of course, there's more coming. Like, look out for Dev Day coming at the end of this month. Um, September 29th, you'll see a lot of new announcements from us, okay? >> Because we're learning how to build on top of those models into what the customer really needs. So, it could be in chat, GPT, things like healthcare or personal finance. In the enterprise, it's how do we do more verticalization or even just office of the CFO, right? This morning I was on I won't name the company but a very well-known car company talking to the CFO. We were nerding out on zeroday closes. Um but CFOs are saying how do I deploy this? CRO CMOs >> but I'm not hearing people are saying this is how people this is how they can cut 20% of the workforce. I'm not hearing that. >> It's it's le I mean efficiency is key. There is no doubt we are doing things with our own products inside of finance for example that do limit the number of people we need but in many cases it's for jobs that I don't think of as like great jobs frankly right who wants to in procurement >> we do 2800 credit checks we were that was our run rate last year that credit check is a pretty mundane piece of work like do you want a junior analyst doing that or can we get a very intelligent model to do it for us and the cost difference. It went from $200 a check to about 17. That is a great ROI for a CFO. But there are also very intelligent things we want too, right? In I'll stay in my world, technical accounting, super complex, right? When we go to the SEC for pre-clarance on things, right? You got to write pretty intense memos. That is a great place to bring raw intelligence to bear, too. So, it's not fewer people. I think it's actually enabling people to do more work at the edge, more work where intelligence is needed and then you get a lot of the rote stuff done by the model and actually done at probably better scale and with more accuracy frankly. >> Okay. CFO are you the one who decides I know you put together the deal with AMD which was a terrific deal and stock AMD went up a great deal and of course you got warrants but before that you had a hundred billion dollar Nvidia deal which seems to be scaled back to 30 billion. You do a huge amount of work with Broadcom Jalapenños written about here. We had Hawk Tan talk about yesterday. How do you divvy things out? How do you decide, you know what, this is the time to go to Broadcom. We can't keep slighting AMD. You know what, Jensen's terrific. Is it just totally on the basis of they have the best at that moment or don't you feel like you got a need to spread around because those companies going to be around for a long time? >> Yeah. So we need just as we have a strategy for diversifying out our revenue streams, we also have a strategy for diversifying our supply chain and that is just good CFO risk mitigation. First and foremost, you never know when someone's supply chain is going to get gummed up. So you need to have multiple providers. You're right, there are better chips for different places in what we are doing. Nvidia is still an incredible platform of accelerators for training, right? Astra 100,000 GPUs in Stargate, Texas. But in Jalapenño's case, that is a chip very focused on inferencing because it is set up exactly for our models. So therefore, it is very >> for you by Broadcom. Thank you, Hawk and team. Um, in the case of AMD, right, MI455s have become a very viable alternative in many cases. We're working with partners like Cerebrus and so on. So our goal is to really as much um diversification as possible that allows for better outcomes for customers, better lower latency, better reliability, better pricing because now I have some leverage with my supply chain. Um and then also just the risk mitigation of like what happens if TSMC can't provide all the wafers. So it sounds like you're spending a lot of money that the you may be slowing down the pace of one aspect or two aspects but it sounds like you're spending a ton of money where you can make big dollars. >> That is exactly it and in the end I'm a CFO so it has to come back to an ROI. The the landscape is very dynamic. So we might have to shift our judgment on where to invest and when to invest but we do that in a very dynamic way based on where we see the demand coming from at any point in time. If you think there's a demand coming from in some places to make money, then I know you are the right place, then come public so we can all have a piece of it. Sarah Frier, CFO of Open AI. Sarah, it's just so good that you came. >> It's such a pleasure. >> What a day. That's a wrap from Dreamforce. Like I said, there's always more market somewhere. I promise I'll find it just for you right here on Mad Money. I'm Jim Kmer. I'll see you tomorrow. All opinions expressed by Jim Kramer on this podcast are solely Kramer's opinions and do not reflect the opinions of CNBC or its parent company or affiliates and may have been previously disseminated by Kramer on television, radio, internet, or another medium. You should not treat any opinion expressed by Kramer as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Kramer's opinions are based upon information he considers reliable. 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