AI Hustle: News on Open AI, ChatGPT, Midjourney, NVIDIA, Anthropic, Open Source LLMs: Splunk AI Security Sale to Cisco for $28B: A Game-Changer

Welcome to the OpenAI podcast, the podcast that opens up the world of AI in a quick and

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Tune in daily to hear the latest news and breakthroughs in the rapidly evolving world

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If you've been following the podcast for a while, you'll know that over the last six

months I've been working on a stealth AI startup.

Of the hundreds of projects I've covered, this is the one that I believe has the greatest

potential.

So today I'm excited to announce AIBOX.

AIBOX is a no-code AI app building platform paired with the App Store for AI that lets

you monetize your AI tools.

The platform lets you build apps by linking together AI models like chatGPT, mid-journey

and 11Labs, eventually will integrate with software like Gmail, Trello and Salesforce

so you can use AI to automate every function in your organization.

To get notified when we launch and be one of the first to build on the platform, you

can join the wait list at AIBOX.AI, the link is in the show notes.

We are currently raising a seed round of funding.

If you're an investor that is focused on disruptive tech, I'd love to tell you more

about the platform.

You can reach out to me at jaden at AIBOX.AI, I'll leave that email in the show notes.

In a remarkable stride towards advancing AI-driven security and observability, Cisco, the of

course Silicon Valley networking giant has announced its acquisition of the very famous

cybersecurity firm Splunk Incorporated.

This is a $28 billion deal and Splunk shareholders are super thrilled over the moon with this

right now.

I think Cisco has committed to paying $157 per Splunk share, which is really good if

you are a Splunk investor, you'll be doing great on this deal.

Cisco's chair and CEO is Chuck Robbins and he kind of emphasized the potential of this

synergy in a statement saying, quote, our combined capabilities will drive the next generation

of AI-enabled security and observability from threat detection and response to threat prediction

and prevention.

We aim to fortify organizations of all size, ensuring they remain both secure and resilient.

This is really interesting because they're doing a couple things here.

Of course, there's threat detection.

This is a big thing for cybersecurity right now.

Using AI for threat detection is valuable, but more importantly, I think what people

see a lot of value in AI is what they said here, which is threat prediction and prevention.

Recently on the podcast, we had someone from Square and they were talking about the way

that Square uses AI to predict if someone is going to churn, if they're about to lose

a customer and they take some preemptive measures to try to retain those customers.

It's really interesting using AI to predict churn and I think we're seeing the same kind

of thing in a different field in a different area here, but we're using AI to predict threats,

to predict where you might see vulnerabilities and weaknesses in your cybersecurity and then

being able to help mitigate those.

I think AI's predictive ability, you give all of the data about your company and then

it can predict where you're vulnerable is a really, really powerful use case.

John Ives of Wedbush views this as a strategic step for Cisco in a note to clients.

He said, Cisco's sharp focus on the next gen AI-enabled security coupled with Splunk's

distinct platform marks us as a astute move.

This sends a clear message to competitors like Palo Alto, Checkpoint, CrowdStrike, Microsoft

and Zscaler that Cisco remains a formidable force in the market, striving to further its

market share in the imminent years.

I think while both companies boards have given their approval to this acquisition, Splunk

shareholder approval is still pending.

If everything goes according to plan, the deal is projected to finish by the end of Q3

next year.

As you know with these really big mergers or acquisitions, these deals tend to take a

long time for this all to actually finalize.

We're looking for the end of next year or Q3.

This time next year we should be seeing this deal close.

A big deal of course, $28 billion and so that's going to take a full year to get this whole

thing wrapped up.

Interestingly, the market reacted very quickly.

Cisco Systems shares actually dropped about 4% after this announcement and we saw of course

Splunk had over 20% increase in their shares, which is kind of interesting to see.

You kind of see this from a couple different angles, but perhaps people, perhaps Cisco

is dipping just because they know that they're going to have to pay that $28 billion.

Perhaps it is dipping because people see this as a sign of weakness, right?

Cisco couldn't do this internally so that to acquire someone.

Of course Splunk is getting premium on the share price so it's going to go up.

One thing I'll say is I do believe that this is probably a good move from Cisco.

It's going to help bolster their company.

Historically, Cisco has grown through kind of strategic acquisitions and it's of course

been steering clear of some of these huge deals like it's looking at now, but this acquisition

of Splunk valued at $28 billion, I think kind of shows a pretty big shift in their strategy

that they've used to date.

Splunk's acclaimed observability platform promises to complement Cisco's security vertical,

helping clients in deciphering security threats and analyzing vast log data for troubleshooting

across diverse enterprise systems.

This recent valuation was slightly above $20 billion, right?

I think considering its share price range over the last year, the acquisition premium

appears very, very generous.

This has led to speculations that there might have been other potential companies looking

to buy Splunk, right?

If their valuation's $20 billion and Cisco's willing to pay $28 billion, that's almost

a 30% premium on the share price.

Only a generous offer and I'm curious if there was other suitors looking to acquire Splunk.

Gary Steele, who's Splunk's president and CEO, expressed a lot of optimism in this partnership

saying, quote, merging with Cisco propels Splunk's growth journey, amplifying our commitment

to bolstering global organizations while delivering exceptional value to our shareholders.

Industry expert Ray Wang and founder and principal analyst at Constellation Research also kind

of waited on this saying the amalgamation of Cisco's network telemetry with Splunk's

observability platform offers clients a panoramic view of data enhancing network security.

So I think in the M&A landscape, this acquisition is definitely the most substantial enterprise

software deal this year.

This is kind of overshadowing Silver Lake Partners $12 billion move with Qualtrics.

And I think with all major deals, regulatory approval is going to be a hurdle here, especially

given the kind of heightened global scrutiny around these huge transactions.

However, both parties remain very hopeful for a smooth closure by the timeline which they've

kind of designated which is next year.

So very interesting to see from my end how this plays out, how this affects Splunk's foray

into AI if, you know, before the acquisition, they're going to start pumping out a bunch

of AI, new AI features to help in this whole cybersecurity area, or if they're going to

say, look, we already have a purchase price on us, and they're just going to kind of coast

with the current features they have.

I hope it's the former, but we will have to see definitely a very interesting acquisition,

probably one of the biggest we've seen this year.

And so definitely something we'll be following very closely as, you know, these kind of high

profile acquisitions that are so closely tied to AI play a big role in the market.

And in, you know, the valuations and prices of AI companies, I think this really shows

that the demand for AI right now is not slowing down if anything, it's accelerating and,

you know, people are willing to pay some really massive sums to close these kind of deals.

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Machine-generated transcript that may contain inaccuracies.