Microsoft Corp at Goldman Sachs Communacopia & Technology Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Kasthuri Rangan - Goldman Sachs - Analyst : In some part. So tell us a little bit about your background and how you got to be the CTO of Microsoft, and we have some questions to jump into.

Question: Kasthuri Rangan - Goldman Sachs - Analyst : I believe it's a small business. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 10, 2024 / 7:25PM, MSFT.OQ - Microsoft Corp at Goldman Sachs Communacopia & Technology Conference

Question: Kasthuri Rangan - Goldman Sachs - Analyst : That's great. And you ended up as CTO of Microsoft. That's a very unlikely story.

Question: Kasthuri Rangan - Goldman Sachs - Analyst : Yes. For someone who considered a PhD in English Literature at some point in your life, this is quite a fascinating thing. Kevin, can you share with us your view of where we are with generative AI today? How do you see it evolving over time? And is there at all a way to think about how this builds upon old AI that you developed at Google, if that's even a way to think about, building one on top of the other?

Question: Kasthuri Rangan - Goldman Sachs - Analyst : That's where you see the things that we take for a very complicated abilities to become table stake.

Question: Kasthuri Rangan - Goldman Sachs - Analyst : Got it. You've lived through a few tech cycles. How do you compare and contrast this AI cycle that we're going through to Internet mobile cloud?

Question: Kasthuri Rangan - Goldman Sachs - Analyst : Got it. If this question sounds very intelligent, it is because Marco Argenti, our CIO, asked me to ask this question of you. I wish he'd been here sitting on stage with you, but he has another commitment. It goes like this. We have seen exponential improvements in LLM models so far. There's a race for attributes, parameters, modes and data size. Is the rate of change slowing down? Is this generation of models the path to AGI? Or do we need a fundamentally different evolution of the transformer architecture to continue making progress towards that goal? So clearly, that question did not come from me. Marco, thank you, in case you read the transcript of this.

Question: Kasthuri Rangan - Goldman Sachs - Analyst : Got it. There's been a lot of talk about small language models versus large language models and the role and the relative positioning of these two. How do you shake out on this SLM versus LLM? And a follow-up question that I wanted to ask, about open source. Where does open source fit into all this as well?

Question: Kasthuri Rangan - Goldman Sachs - Analyst : Got it. So at Goldman, we have this acronym IPA, infrastructure build-out, then platforms and applications. That's where we've seen other computing cycles more or less evolve. Do you see that as a similar way in which generative AI progresses or am I hallucinating?

Question: Kasthuri Rangan - Goldman Sachs - Analyst : Tomorrow morning, yes. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 10, 2024 / 7:25PM, MSFT.OQ - Microsoft Corp at Goldman Sachs Communacopia & Technology Conference

Question: Kasthuri Rangan - Goldman Sachs - Analyst : Because the science and the technology is moving rapidly or is it -- what is driving that?

Question: Kasthuri Rangan - Goldman Sachs - Analyst : That's what they want to know. Are we going too fast, too quickly, how much --

Question: Kasthuri Rangan - Goldman Sachs - Analyst : Got it. I want to get your views on compute costs. Generally with tech cycles, things -- the underlying inputs become cheaper. You got mass market, standardization, et cetera. How important -- given the high cost of compute here, how important do you think it is to bring down compute costs? And if you think it is, what are the developments that might support that view?

Question: Kasthuri Rangan - Goldman Sachs - Analyst : Kevin, you piqued my interest by saying super good stuff coming. So to the extent that you can share with us, what is the high-level super conceptually maybe the things that are giving you that conviction?

Question: Kasthuri Rangan - Goldman Sachs - Analyst : That's all right. I don't want to create problems. We'll just take that as a granted.

Question: Kasthuri Rangan - Goldman Sachs - Analyst : So [Brett] and [Kendra], would love to, when he's ready to officially announce the good stuff, we'll love to host you back at our Goldman Sachs AI symposium. Just putting it out there. Always putting a plug for the firm. How dependent is your AI strategy on OpenAI? Because you also have your internal AI with the CEO of AI. How do these things work with the -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 10, 2024 / 7:25PM, MSFT.OQ - Microsoft Corp at Goldman Sachs Communacopia & Technology Conference

Question: Kasthuri Rangan - Goldman Sachs - Analyst : And hence, that's why you have your own AI CEO internally and then you have --

Question: Kasthuri Rangan - Goldman Sachs - Analyst : You interned at Microsoft Research.

Question: Kasthuri Rangan - Goldman Sachs - Analyst : Any intern at Goldman Sachs, just take that as an inspiration.

Question: Kasthuri Rangan - Goldman Sachs - Analyst : Good to know that. This, again, I'll preamble this thing, this is a Marc Argenti question, so it's going to sound very erudite. Right, Belinda? We seem to be moving chatbots to agents very quickly. What's the vision with regards to AI performing more and more complex long-running tasks? Do we REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 10, 2024 / 7:25PM, MSFT.OQ - Microsoft Corp at Goldman Sachs Communacopia & Technology Conference see a future where AI-powered agents will be able to perform tasks that require planning, decision-making and execution across multiple environments and systems? This man, what a beautiful question. This is like poetry, right?

Question: Kasthuri Rangan - Goldman Sachs - Analyst : That's why I had to give credit to Marc.

Question: Kasthuri Rangan - Goldman Sachs - Analyst : Yes.

Question: Kasthuri Rangan - Goldman Sachs - Analyst : That's what's next.

Question: Kasthuri Rangan - Goldman Sachs - Analyst : Got it. We have two minutes. I don't have any more questions. Is there a question that you want to create yourself and answer for yourself? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 10, 2024 / 7:25PM, MSFT.OQ - Microsoft Corp at Goldman Sachs Communacopia & Technology Conference

Question: Kasthuri Rangan - Goldman Sachs - Analyst : You're a prompt engineer, right? I mean, so.