IBM (IBM), like many other tech giants, is investing heavily in AI. IBM Chairman and CEO Arvind Krishna speaks with Yahoo Finance’s Brian Sozzi and Akiko Fujita at the Milken Global Institute Conference to discuss the company’s performance, AI investments, and more. , and how the rest of the world views AI.
Mr. Krishna talks about AI regulations in the US: “I’m not worried about the U.S. falling behind. What I’m worried about is that regulators shouldn’t regulate technology. They should regulate use case risk. Can you do that?” Imagine back in 1995. Let’s regulate the internet. Let’s also regulate dial-up modems. How useful would that be today?”
He continued: “Don’t regulate technology. All you do is let it go overseas. These are digital technologies, but you regulate the use cases. So we want to make sure it’s used responsibly. And one of the things I’m talking about is that holding people who develop models accountable for what they can do with them is a classic policy tool. I think it’s a wonderfully applicable tool.”
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This post was written by Nicholas Jacobino
video transcript
You’re talking about me, but you also have to talk about IBM. Welcome to IB MC, Arvind Krishna to the Milken Conference, it’s good to see you again. It’s great to be here talking to Yahoo Finance and Water Energy and being talked about.a I’m at the Milken conference. Okay, well, let’s drop this topic, Irvin. How is IBM reinventing itself for this?A. I look at the times. I is a fundamental technological change. We believe it will add a total value of $4 trillion to the industry. Not all of that falls on the tech industry, but across industries. All of our clients want to take advantage of it. That would cause problems such as: Increase productivity. resulting in increased revenue. It allows companies to have more snack companies. So what we’re doing is building AI. This is beneficial for businesses and enables efficient open sourcing in a way that allows the client to control her IP. That is our true purpose. You talked a lot about the productivity gains you would get from I. Can you talk specifically about how your clients are deploying it, at least in these early stages?A. I think there are three use cases that are really energizing us. If you think about contact centers, you can usually help people be much more productive when they’re in the customer experience. You may need to move between three or four screens. When you call your bank, you may notice that the person on the other end is hesitant. The bank asks, “Can you wait 30 seconds?” Something happens. Could a generative AI step in and retrieve information by simply querying a myriad of underlying systems? Could it make that person significantly more productive? By the way, what is productive? , which means getting the query as an end user. Please answer faster. “I’m happier. I’m more likely to get the right answer. A. I’m not as tired or angry or alert. I think that’s a great use case. I don’t think it will become endemic.” Everybody uses it.” The second quote is quota productivity. Everyone has technical debt. Will it help you get rid of technical debt faster? That means increasing the functionality every company offers to end users and their employees. I wonder about these two, the third. We are seeing many phenomena. We call it digital labor. These demographic trends indicate that the working-age population is shrinking even further as the job market tightens. Can we have digital labor to augment our human workforce? I think these are three great use cases. All of our clients are interested in these. We ourselves use them as our first clients and offer them all their benefits. “The genie’s out of the bottle,” Warren Buffett said at the annual meeting. Okay. Are you worried about me having too much power? And what? Because there’s really no such fear? Make sure it’s black or not. I think there are a lot of people who hypothesize that, as we’ve seen with many technologies, we think the rate of progress has been rapid. The 100-fold increase over the next three or four years means that it will further increase by 100 to 1,000 times. However, even with current AI alone, we need this much infrastructure and power to increase it 100 to 1000 times. How much infrastructure and power do you need? That’s a little. I use the term fantastic to continue to predict that the exponential curve will continue. I think this will be widely adopted. I think millions of people will use it across hundreds of processes. It happens. But imagining it would get us to this point of superintelligence. I’m a little skeptical about that topic. One of the big debates happening within industry giants is open source vs. closed source. I know you’re shaking your head. Because you’re an alliance leader and you’re pushing open source for people who don’t necessarily follow closed source. We’re talking about open AI and things like Microsoft Google. What are the risks of closed source?A. I agree. For technology to become truly ubiquitous, we need the technology to achieve that escape velocity. There needs to be a balance between three things. competition. As we all know, walled gardens generally tend to have very little, so competition is necessary. Innovation. Therefore, competitive innovation is necessary. But you also need some level of safety. When I think about these three things, I think open source is a great way to achieve a balance between all three. That way, open source becomes visible. everyone can see it. You can red team if you want. Do it yourself. No need to cross vendors to do all the red teaming. By the way, as we all know, I’m built on data. So, essentially, the IP that you’re capturing is the data that you’re bringing into open source. This means that someone can take advantage of the models we provide. If they add their own data to it, they can keep it. We do not request it back. If it’s proprietary, you can effectively take it back. So I think it will allow for faster adoption while bringing transparency back to those who want to scrutinize it. Regarding the issue of transparency, there is a discussion about I regulations. The United States has executive orders in place, but not necessarily a federal regulatory framework. Europe is in the lead. Japanese leaders also emerged with their own frameworks. Are you worried about American pop falling behind in that conversation? I’m not worried about America falling behind. My concern is that regulators shouldn’t regulate technology. What regulators should regulate are risks and use cases. Can you imagine going back to 1995? Let’s regulate the Internet. So let’s regulate dial-up modems. How useful has it been to this day? I may not know how to use a computer, so I think this is just like Warren Buffett saying, “The genie is out of the bottle.” . There is no need to regulate technology. Because it just flows offshore. These are digital technologies, but they regulate use cases, so ensure they are used responsibly. Also, one of the things I talk about is holding the people who develop the models accountable for the models. Models can do things. I think these are classic policy tools and wonderfully applicable tools. Black box. Once we open the box, we ask people to innovate as quickly as possible and see the amount of innovation over the last 18 months. has arrived. I had an open I. Then there was a mistake. Now we have IBM. An 8 billion parameter model can do what a 200 billion parameter model can do. Let go of innovation. Technology becomes cheaper and ubiquitous. Marvin, it looks like you’re just listening here. IBM is working on something really cool about I. Why do you think IBM’s reputation is not on par with, or on par with, other AI companies? Well then, let’s go. It was helpful. Then answer the question directly. First of all, I think we’ve done pretty well over the last four years. If you look at the last four years, I think we’ve added probably $60 to $80 billion worth of capital. , uh, total corporate value. So I think that’s good. This does not fulfill our one desire. So, let me acknowledge that point. But as we start to progress, I think we need to grow more. Overall revenue and cash flow performance has been consistent. I think the cash flow performance has been pretty consistent, but perhaps the revenue performance needs to be a little more consistent. I think you’ll get both results if you do that. It has received multiple reratings, but the underlying growth along with its cash flow and earnings growth is also important. So I think those are the two elements. We are very confident that our strategy is in the right place. Our company is under construction. Our company remains the same. Our future focus is on enterprise hybrid cloud AI and Quantum. By the way, I don’t believe that quantum or AI is actually fully priced out and where it is today. But I will give credit to Quantum. is still three to five years away, but I is like an early innings. I’ll use a baseball analogy. A. I feel like it’s the first inning of a game. I don’t really know what’s going to happen, but it’s like five or six times. So you have a pretty good idea. It’s not finished yet, but it’s a pretty good idea. We like the sports analogy here, right? Let’s talk a little bit more about the big picture at the end. You talked about some kind of exit and discretionary power in your recent earnings call, and you got a good sense of where the economics are just by the size of your customer base. “It’s spending. How is it pausing? Is it depleting? How do you characterize where it is? So, I’m not an economist. I’m a businessman and an engineer. Let me admit that. But I can see what I’m spending and what I’m not spending. So I think what’s happening is actually due to one reason. In fact, I’m very optimistic about both the US economy and the global economy. So, back to that. Our interest rates have been higher for longer than most people expected in the middle of last year. So, given that, if the interest rates are 2 3% higher for five and 10 years, then people think that means there’s an extra cost to all the debt. So I think CFOs are tightening up against that now. It’s not systematic. It’s not really a long-term thing, but it’s a trend that’s going to be there for a year or two. If that makes sense. I think that’s a tightening factor. Look at the people who are carrying tens of billions in debt. An additional 2-3 points can cost hundreds of millions of dollars more per year. OK, let’s take a look at what the Treasury has spent. Stop being catastrophic. Avoid making long-term decisions. Would you like to take strict action on urgent projects currently underway? Next, if we look at demographic trends, we also look at inflation trends and supply. Chain, cyber. All of that leads to something like this: Spend more money on technology. So you can see that. I want more software. I want more infrastructure. I want more I. I want more clouds. But if I can, I’m going to ramp up my labor-based services a little bit. I think these are the two speeds we’re looking at. Software grew less than 6% in the first quarter and Consulting is down 2% in C currency flat at act. In other words, you can see that: I think it’s the same in our own business, and it reflects this macroeconomic framework. I wish we could spend some more time together, but we don’t. You are a busy person. This conference is in high demand. IB MC, O Arvin Krisher Thank you for taking the time to help us with your finances. Thank you very much. I’m glad to be here with you all.