October 6, 2025 • 44 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
Advanced Micro Devices Inc. landed a blockbuster deal with OpenAI to build artificial intelligence infrastructure, giving the chipmaker a chance to show it can mount a challenge to Nvidia Corp. in the AI computing industry.
AMD shares soared 24% to $203.71 after the agreement was announced Monday, adding $63.4 billion to the company’s market valuation. It’s now worth $330.6 billion, more than Coca-Cola Co., General Electric Co. or Chevron Corp.
OpenAI will deploy 6 gigawatts’ worth of AMD graphics processing units over multiple years, according to the pact, which is just over half the size of an agreement the AI startup recently reached with Nvidia. It also sets the stage for OpenAI to acquire a large stake in the chipmaker.
The deal represents a high-stakes test for AMD — one that could deliver tens of billions of dollars in new revenue and burnish its status as a serious contender in AI technology. There are also risks: It further ties AMD’s prosperity to an AI market that some worry is in a bubble.
Today’s show features:
Bloomberg Tech Co-Host Ed Ludlow
Bloomberg Intelligence Global Head of Technology Research Mandeep Singh
Rick Welts, CEO of the Dallas Mavericks, and Bloomberg News Texas bureau Chief Julie Fine
Drive to the Close with Lesley Marks, CIO for Equities, Mackenzie Investments
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg business
Week Daily reporting from the magazine that helps global leaders
stay ahead with insight on the people, companies, and trends
shaping today's complex economy. Plus global business finance and tech
(00:23):
news as it happens. The Bloomberg Business Week Daily Podcast
with Carol Masser and Tim Stenebek on Bloomberg Radio and
of course.
Speaker 2 (00:33):
Co host of Bloomberg Tech.
Speaker 3 (00:34):
Joining us now from San Francisco where he is at
open AI's developer Day. Hey, Ed, Huh, feels like we
keep getting these big announcements. We're all getting a bit
wary of them. What feels like this circular finance that
we've talked with you about. Among those involved in the
AI spend and build out, I heard Lisa sussay a
win for AMD.
Speaker 2 (00:53):
A win for open Ai, feels like a win for everybody.
Is it really? Do we know for certain?
Speaker 4 (00:58):
Well?
Speaker 5 (00:58):
She also said that she has confidence in open Ai,
and the reason she said that is I had made
the point to her that open ai still has to
come up with the money for this. The difference between
the open ai and AMD deal compared with the open
Ai and Video deal as the structure, so it's almost
the reverse. AMD will sign over stock to open Ai
(01:23):
only when they've met specific milestones, both operational and financial.
So in the first instance, open a has to fund,
finance and build one gig awad of capacity. If they
do that, AMD will give open Ai some stock, or
rather technically, open ai has the right to buy a
trantras shares at a penny apiece, but the burden is
still on them. And so the point I was making
(01:45):
with Lisa is have you seen into their books? Where
are they going to get the money from to fund
this to bring it online?
Speaker 6 (01:54):
Is it?
Speaker 7 (01:54):
Could this be weird on the circular financing thing that
you know, in Vidia couldn't have this deal that could
be worth up to one hundred billion dollars with open
Ai in videos investment five billion dollars or will invest
five billion dollars in Intel, And now you have what
does that mean that in Vidia, if they have open
(02:15):
Ai equity, then they're kind of an owner or could
be an owner of AMD. Exactly.
Speaker 5 (02:22):
Yeah, it's much more fair to say that the Nvidia
open Ai circumstance is circular financing because in Vidia commits
to making a one hundred billion dollar investment into open Ai.
We actually don't know if that's in the form of
cash or if it would be like chips in lieu
of cash, but they do take open Ai equity. In
(02:43):
this case, AMD passes its own shares to open Ai,
but not capital. And so if you're going to build
six gigawats of capacity over many years, you know that
is like the peak energy demand of like a major
US city. We're talking lots of money up front in
cap to expenditure, and open ay has got to do that. Now,
we pose many questions to both Lisa sou and Open
(03:05):
Eye present Greg Brockman, who was sat next to her,
Will it be debt, will you issue more equity? Will
you do something else? And he basically Greg Brockman said,
we'll look at all those mechanisms and so there are
many more questions still that we don't have answers to.
Speaker 2 (03:18):
Well, that's I guess. My thing is like, why don't
these companies just do deals.
Speaker 3 (03:22):
I'll buy you chips, I'll do my bild, I'll do
this thing the way we do it normally, rather than
all of these big announcements with a lot of questions
that feel like We don't really know that there's anything
there there.
Speaker 5 (03:39):
The market is simply focused, irrespective of the mechanism for financing,
on the revenue growth that comes out the other side,
particularly like software names. And so that was the justification
that Greg Brockman made. He said, the revenue will come.
As you know, we've been writing a lot about the
debt markets underpinning this, and debt investors feel the same way.
(03:59):
All I say is there is also a technology story.
You know, if you're going to build a data center
and one of these providing the chips and the others
is going to use the capacity for software, it does
make sense to partner and work together to make the
engineering make sense.
Speaker 7 (04:12):
If you're watching on Bloomberg TV or on youtubeer Bloomberg
Originals got this great graphic up that kind of helps
us keep up. This is by no means exhaustive, but
shows where some of the money has gone in recent months.
When it comes to the space, again, by no means exhaustive.
There it's kind of like Carol, we're connecting. We're like
out a whiteboard and we're kind of connecting pieces because
(04:33):
to keep these things straight is pretty difficult.
Speaker 3 (04:35):
Well yeah, I mean that's the thing, ed. You know,
we need to all be smart. We are smart, and
you know we keep seeing these deals coming at us.
We hear people saying, well when like a Meta Reports
and some other you know, the big hyperscalers. We do
see the impact of the AI spend, but I do
wonder if it's going to carry through our economy like
everyone expects.
Speaker 4 (04:59):
Well.
Speaker 5 (04:59):
Metas for example, they have a core legacy business that
is advertising, and in most of the most recent quarters
they've demonstrated significant top line growth and to a certain extent,
bottom line growth, which is them saying we invested in AI.
AI made our ads better and more valuable, we're making
more money from it. With chat GPT, it's a lot
(05:19):
harder to see that. But that's why here at develop
a Day, it's really important. So the piece of news
that came out from the keynote was they now have
eight hundred million weekly users active users of chat GPT.
The data point that market participants keep hitting me over
the head with is how many of those free users
are converted to being paid subscribers. Because unless you have
(05:41):
that data, we can't know what the top line growth
for open AI looks like. But look in the markets
right now. I mean, you guys will have to tell me.
I don't have a Bloomberg in front of me, but
I saw a pool of about a dozen stocks that
jumped in the last hour just because they got name
checked by open ai here today. And it's by association.
The idea that if using chat GPT you can access
(06:02):
third party apps or third party company offerings, everyone's going
to make money.
Speaker 3 (06:07):
You know.
Speaker 5 (06:07):
The market has a pretty simple logic in that respect.
Speaker 7 (06:09):
Yeah, for those who do have Bloombergs in front of them,
just type in NI movers into the Bloomberg terminal. Cisco
system shares up to session high during Open Air event.
Figma shares Extend gained to sixteen percent after being mentioned
at Open Ai event. Salesforce shares also jump up two
point six percent during the Open Ai event. HubSpot, Zillo,
Trip Advisor, Carol all moving higher as a result of
(06:32):
what was talked about at the open ai event.
Speaker 3 (06:34):
And this goes back to ed. You know, you were
trying to press we Sue, and you know in your
conversation and I just right, and I just think about, like,
what are the big questions that still remain for you? You
want your you know, you're reporting on these ins and outs.
You're there at this event. We think about open ai
a lot. We talk about chat, GPT a lot. Who's
(06:55):
to say that there isn't some other s, you know,
chat that comes in and takes So I don't know
if there's just a lot going on. What are the
big questions that remain in a day when we get
this big announcement.
Speaker 2 (07:09):
What wasn't answered for you? Still?
Speaker 5 (07:13):
Yeah, I think the financing, you know, I think in
any corner of the Bloomberg newsroom, you've got to understand
the debt markets because look at the role that debt
played in previous financial crisis, the dot com bubble, what
happened with Silicon Valley Bank, what happened in Asia earlier
in the two thousands. I wasn't around then, but debt
(07:36):
is a big underpinning here. And I think the signal
that Greg Brockman gave us was they'll look at all mechanisms,
including debt. So that's one part of it. On the
other hand, this is I'm a technology journalist and technology matters.
Open ai is going to use in AMD chips for inference.
Inference is where you run the model not training, you
are actually running people's queries and workloads. And if you
(07:58):
look at all the movers that Timless did today, what
open ai was basically saying is chat GPT is becoming
an operating system. You use it for a number of functions,
but you can also integrate it with all the other
software you're using. And actually that's a pretty clear answer
to some of the questions about will revenue be generated
from this. People use all of these platforms for hours
(08:19):
each day, and you know, the market seems to buy
that if they can build the capacity of AMD in
the timeline that they've said they will, they can actually
start doing things of use.
Speaker 2 (08:29):
Isn't it wild?
Speaker 6 (08:30):
Though?
Speaker 3 (08:30):
Ryan Blestelica has this great story and the headline on
it is open ai is fast becoming a whale in
the stock market that it is shunned. I mean, open
ai is not a publicly traded company, and yet Tim
put down a bunch of names that are moving as
a result of this this deal. Last week we saw
open ai sending shares of e commerce companies like Shopify
(08:51):
Etsy soaring after unveiling an instant by.
Speaker 2 (08:54):
Option in chat GPT. I mean, it is remarkable.
Speaker 3 (08:59):
Then the market moves that are are evolving around open ai,
which again makes me say, what are we One of
the things.
Speaker 7 (09:07):
That I do each day.
Speaker 5 (09:09):
Yeah, one of the things I do each day, and
I know you guys do it as well. When I
first long onto my Bloomberg, I do NI Globe rap
and I look at the market's wrap because they always
have a pretty good handle on the sentiment of the morning.
And last Wednesday or Thursday, it was equity markets push
higher on open ai enthusiasm. It was the confirmation of
open AI's five hundred billion dollar valuation in the private
(09:32):
markets that was driving sentiment in the public equity markets,
and that was well sourced. It's based on lots of
conversations with market participants. That is again a reflection of
the names that Tim read out today. Open Ai, a
private company, is driving all kinds of markets at the
moment with what it is saying and to an equal extent,
(09:53):
the activity it is doing in both hardware and software.
Speaker 7 (09:57):
Well, there's a lot of activity happening behind you. Ed
at the op ai Developer Day conference. In just about
an hour, we're going to hear from you again. You're
going to be speaking with open Ai COO Brad Lightcap.
You're going to have a conversation with him that I'm
sure is going to touch on a lot of these themes.
Before then, though, the reason all of these companies are moving,
can you talk a little bit about this idea of
open Ai, or rather chat GPT becoming an operating system
(10:20):
and how these publicly traded third party companies are starting
to use the technology to make their software to make
whatever they're offering the services better.
Speaker 5 (10:32):
Yeah, for those listening on radio and watching on TV
that are familiar with software, what OpenAI announced was very
simple API access for several third parties to chat GPT,
and they demonstrated it on stage. So you know, I
use chat GPT for hours each day. But the idea
is you link it to say, your Figma platform or
your Spotify account even and you can use some of
(10:55):
the features of those platforms within chat GPT. That was
a sort of direct catalyst to moving. But what they
also spoke about on stage, and Sam Altman did pretty
good job of kind of explaining it, is that chat
GPT is going to basically act much like the App
Store does on OS. Right with Apple, you have a
community of developers, those are all the people that are
(11:17):
here today, the thousands of them that are building applications,
and where will they publish those applications where they'll be
reviewed by open ai and they will be integrated either
as APIs or standalone applications within chat gpt. That is
how the economy around the Android play Store, the Apple
iOS store works. You have people build software, and then
(11:38):
you have a place a library catalog where all of
those things list. In some cases you charge an ad
hoc subscription to use those applications. And that's kind of
what open ai is saying here that chat GPT can
be very interesting, although it's also contingent on the developer
community stepping up and doing it.
Speaker 2 (11:57):
Who needs to be worried? Alphabet? Like, who needs to
be work worried?
Speaker 3 (12:00):
As we watch this unfold and everything seemed to kind
of revolve around chatchypt, open ai and as you said, like,
if this is one of the new big search engines
going forward, I mean Alphabet with its own search engines
and making its own pivot, do they need to be worried?
Speaker 6 (12:17):
Though?
Speaker 5 (12:18):
Right?
Speaker 4 (12:20):
Yeah?
Speaker 5 (12:20):
I mean you guys, I actually should have checked, and
I just didn't, But I don't know what Apple, Microsoft
or Alphabet did during that keynote. I mean, did they
get down or up?
Speaker 3 (12:29):
Alphabets right now up about two percent, so it's near
its highs of the session, and.
Speaker 7 (12:33):
For your Microsoft's up two point four percent. Yeah, so
I had a high of the session.
Speaker 5 (12:37):
All in right, Yeah, yeah, yeah, you know, I don't
know the answer to that about whether they'd be worried.
I mean, we've done a lot of reporting on open
ai going its own way and having more independence from Microsoft.
The original idea was that Microsoft would use open AI's
underlying work in models to improve their own software capabilities.
(12:58):
Of course, one of the recent elements is Microsoft is
using Anthropic for its own in house software applications and
has looked at one of open AI's rivals. But you
are right, it's about open ai wanting to do more
across software.
Speaker 4 (13:12):
You know.
Speaker 5 (13:13):
One of the other beneficiaries in the keynote was I
think Salesforce. You can correct me to him if I'm wrong.
I saw Salesforce as one of the movers service now
as well, you know, it's just another sales channel in
some sense. You can access another person software through chat, GPT,
and you know, the market again its logic is very
(13:33):
simple that it drives use and that's good. You know,
when you have a partnership with open.
Speaker 7 (13:38):
Ai, salesforce shares up three percent right now, up as
much as four point two percent during that keynote, Ed Ludlow,
he's at open AI's Developer Day.
Speaker 2 (13:48):
Stay with us. More from Bloomberg Business Weekdaily coming up
after this.
Speaker 1 (13:57):
You're listening to the Bloomberg Business Week Daily podcast. Catch
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Speaker 7 (14:11):
Let's bring in Mandy Singh, global head of Tech research
at Bloomberg Intelligency, joins us here in the Bloomberg Interactive
Brokers studio. So I just want to start with the
validation or.
Speaker 4 (14:21):
Not of AMD's technology here.
Speaker 7 (14:23):
Ed reminded us that this is an inference deal, not
a training deal. But how should we look at this
in the context of Nvidia being the standout leader when
it comes to this.
Speaker 6 (14:34):
Tech Look, I mean for AMD, there weren't many options
when you look at you know, Nvidia and Broadcom partnering
with all the hyperscalers. AMD clearly has just two percent
market share right now. And what do you do when
Nvidia announces a big investment in open ai to the
two zero hundred billion or multi years. And in this case,
(14:58):
i think AMD had to do some thing. So I'm
sure they gave a very sweet deal to open Ai
in terms of, you know, the margins they're going to
charge open Ai, the level of custom silicon work that
they are willing to do for open Ai. And open
ai has a great advantage that it can, you know,
bargain and really get these sweet deals right now with everyone.
Speaker 7 (15:20):
A sweet deal meaning here's one hundred and sixty million
shares of our company at a penny apiece.
Speaker 6 (15:26):
Maybe, And I look, I mean, I don't know. I
mean this is nobody can look that far out. But
the fact that Nvidia is willing to spend ten billion
dollars you know in open Ai, and AMD gave them
this option that they could buy the shares, you know,
if it hits a certain level, that just goes to
show that open ai wants to show that it has
(15:50):
the power, not the chip makers. And so over time,
if you look at you know, software cycles, the application
is the sticky part. It's never the chips or the architecture,
and that's what open the Eye is saying, look, guys,
we have the best models, right, we have chat cept
the application, so that's the end product, and they want
diversification in terms of the inference capacity.
Speaker 3 (16:12):
Listen, we have this chart and for those who are
on radio, it's just showing all of the deals that
open ai is doing or some different companies are some
of the deal them, whether it's Microsoft, although they've been
pulling back and like lining up other deals. You know,
I want We're trying to so hard be smart about
this because it's easy to get caught up in it,
(16:34):
and it does feel like.
Speaker 2 (16:35):
This has become increasingly a momentum trait.
Speaker 3 (16:37):
I'm not saying people aren't making money out of it,
but how do we make sense because is there a
chance that open ai and chatchept is not ultimately the
big model or the big next generation search engine for everybody?
Speaker 2 (16:51):
Like, how do we be.
Speaker 3 (16:53):
Smart about this spend because some of it potentially a
fluffy fluffy and not going to go anywhere.
Speaker 6 (16:59):
I know there are our references to circular financing and
all that, but the best way to think about this
is the concentration that you see among the players, whether
it's you know, Nvidia being exposed to the hyperscalers, and
now the number of hyperscalers are growing because open ai
was dependent on Microsoft, like you said, now it's trying
(17:20):
to become an independent hyperscale vendor. In fact, they said
they may open their own data centers. They have a
three hundred billion dollar deal with Oracle now, so they
want to be a hyperscaler who does end to end
work like Google does. It had its own chip, right
it processes nine hundred and eighty trillion tokens per month,
and that's what you know. Open ai wants to get
(17:41):
to that they have their own chip. They use chips
from AMD and Nvidia and not just rely on one provider.
Speaker 3 (17:48):
But they are still a private company. What are things
that we might not know in their financials right now.
Speaker 6 (17:56):
That they have negative gross martins and so one of
the way is that they are trying to fix that
is by arbitraging against the semiconductor chip makers who are
giving them the compute capacity. And we know that this stuff,
like one of the things with Generative AI, it's very
compute intensive, right, and it's not changing even though we
have GPT five, Like, there's nothing that has changed in
(18:18):
terms of compute efficiency. It still requires ten times more
compute than your CPUs that were used for you know,
traditional software. So it is an expensive technology.
Speaker 7 (18:29):
Okay, hold on, though, you said, you know, I don't Yeah,
I don't want to push aside the circular financing thing
because this is kind of blowing my mind here. Yeah,
if in Vidia has a deal with or with open Ai,
that's up to one hundred billion dollars. So let's say
in Vidia gets equity in open Ai as a result
of that. Yeah, then open Ai then gets equity in
(18:52):
AMD as a result of this deal. Would that essentially
mean that in Vidia is an owner of AMD?
Speaker 6 (19:00):
No, I think that's too far fair. I mean, think
of companies having minority stakes. So there are instances where
Google has a minority stake in Lift. You know, there's
so many instances because.
Speaker 7 (19:12):
Google Ventures was an investor in it early on. In
that's Google's venture capital army. You can see that within
and in the past, within Google's maps application. It used
to suggest, if it still does, it would suggest Lift rides.
It made sense. Yeah, and so look in these competitors though.
Speaker 6 (19:28):
Because the numbers are getting so big, I mean you
need financing from somewhere right now. It was the Hyperscalers,
the four Hyperscalers were the biggest buyers of AI data
center infrastructure capacity. They were the ones who were building it.
And now it's like Opening Eyes saying we want to
(19:49):
be in the business of building AI data centers because
they look at Google and say they're running their data
centers a lot more efficiently than we are, even though
we haven't an signs with Microsoft. So Opening Eyes big
bet is if I have more compute capacity, one, I
can undercut everyone else in terms of offering my model,
(20:09):
and I'll be more aggressive with pricing, and once I
have the customer on board, I can sell them more services.
But just being a model provider is not a good business.
That's what open ai is suggesting that having the best
model is not a good mode. Ultimately, everyone will catch
up in terms of their model capacity, and then they
(20:30):
will go across different models.
Speaker 2 (20:31):
So they're evolving very quickly.
Speaker 4 (20:33):
They are.
Speaker 6 (20:34):
That's the big bet that they're making is if I
have my own infrastructure and I have my own application,
I'll be aggressive with pricing.
Speaker 3 (20:42):
So who needs to be worried then to the hyperscalers
and their big data center built, Like who needs to
be worried here?
Speaker 2 (20:48):
And Vidia and Vidia, I.
Speaker 6 (20:49):
Mean clearly in Vidia having seventy five percent gross margin,
they really have the best chip out there, they have
the best system. But now that opening eyes saying I
am going to use AMD and I have incentive that
AMD does well, who does it hurt? Ultimately Nvidia has
to lower its pricing. In fact, the ten million dollar
(21:11):
investment is a way for Nvidia to lower its prices
for open AI. They're not doing it directly, but they're
giving a ten billion dollar debate saying, okay, you buy
a certain capacity for one gigabyte data center, will give
you ten billion dollar debate. That's lowering your growth market.
Speaker 7 (21:27):
And video shares down about one percent right now, still
though a four point five trillion dollar company.
Speaker 3 (21:33):
But doesn't that Nvidia open AI feel a little weird
that deal?
Speaker 4 (21:39):
Why what do you mean? What do you mean?
Speaker 3 (21:40):
Well, because it's like they're fueling, right, like the selling
of n video chips and then getting what.
Speaker 7 (21:45):
Ya feels, here's money, here's money that you are then
going to pay back to it.
Speaker 6 (21:50):
And look the biggest constraint right now is powerating.
Speaker 2 (21:53):
Almost false dem which makes me a little nervous.
Speaker 6 (21:56):
No, so I want to concede. Nvidia has by far
the best chip when it comes to power constraints. That
are I think the biggest limiting factor when it comes
to build out. You like we talk about lead times.
Power has the longest lead time out there out of
all the supply chains that we have seen, it's just
not fathomable to add more gigabytt capacity takes time. It's
(22:20):
very long lead time. And so from that perspective, and
Vidia chips are the most performant when it comes to
the power that's available. That's why everyone buys Nvidia, and
that is a mode. But now what Opening Eye is
saying is we will help AMD customize their chip to
the extent that they can offer us a viable alternative
for inferencing. Not for training, We'll still train our models
(22:43):
using Nvidia because it's the best chip, but for inferencing,
we will help handhold AMD and customize their silicon so
that we can use it for inferencing.
Speaker 4 (22:52):
Are you done?
Speaker 7 (22:53):
Because I want to change the subject, but I want
to make sure you're But it's just satisfied.
Speaker 2 (22:58):
It's just I am.
Speaker 3 (22:58):
Satisfied, but it just makes I think this market is evolving.
Speaker 7 (23:01):
So Carol asked man Deep, like you should be worried
it's yours, And I thought Man Deep was going to
say all of us, all of you, everybody, because I've
been seeing what open Ai is doing with Sora over
the last few days. Have you guys seen these videos?
So in some cases you have people who are able
to use this making videos of Sam Altman going on
(23:24):
ice raids or Sam Altman stealing GPUs from somewhere, or
you have somebody in Hollywood showing the effect that it
could have on Hollywood. And he put like a main
character from a Netflix show copyrighted certainly in a video.
Speaker 4 (23:38):
I think maybe it was with Shrek. I don't even remember.
Speaker 7 (23:41):
Like the stuff looks not quite it's not quite there.
It's not quite there, but it does look like a
friend of mine can jump off a building like Superman
or Stephen Hawking in a famous case now the last
few days is in a half halfpipe at the X Games.
I mean this stuff is pretty incredible.
Speaker 6 (23:59):
Yeah, I mean the number of creators I think will grow.
You can become a creator. You don't need a camera
or you know, a professional setup to do that.
Speaker 4 (24:08):
Scary.
Speaker 6 (24:08):
It is scary. But with that being said, everyone out
there is competing for engagement time. That's what all of
these companies are doing, whether it's meta or alphabet with
YouTube and look for Meta or TikTok, it's all about
keeping people on their platform. Now, if Sora is able
to generate good content that people are engaging with, suddenly
(24:31):
that attention time span shifts from Meta to Zora.
Speaker 7 (24:35):
Okay, I want to paint a bleak future for us
because this.
Speaker 2 (24:38):
Is what's going through my head.
Speaker 3 (24:39):
Because are we engaging with stuff that we should be
engaging with is kind of my thing.
Speaker 7 (24:43):
Let's say it gets the point where the people are
getting so good at creating this stuff without actually doing
it with skills. Okay, so we're already in a low higher,
low fire environment right now. The concern is that AI
is just going to decimate some white collar jobs. Wh
meta platforms, advertisers going to be if none of us
have jobs and can afford to spend any money on
(25:05):
anything because AI has just displaced us.
Speaker 6 (25:08):
Well, I mean, look, I think, like anything else right now,
the biggest use case out there for generative AI is
coding agent.
Speaker 7 (25:17):
I mean imagine the developer.
Speaker 6 (25:19):
Community has always been highly sought after and they will
have to you know, transform in terms of their jobs
changing and how they use these tools. So to my mind,
you know, customer service coding agent, these are the type
of profiles that are illustrative of the power of you know,
generative AI in terms of bringing productivity around what is
(25:44):
the current workflow and everyone seems to be adjusting and evolving,
and I mean everyone talks about how productive the developers are.
There every hyperscaler has said their developers are thirty to
thirty five percent more productive because of generative AI.
Speaker 7 (26:00):
I mean, so that's one side of it. He's the optimist, he's.
Speaker 2 (26:03):
Always the optimis space here.
Speaker 7 (26:05):
You and I are just thinking, okay, well, no one's
going to be working and everyone's going to be convinced
by deep fakes. I know you're concerned about the political
implications of something. I'm just concerned about You've seen these videos.
They're insane.
Speaker 3 (26:15):
Yeah, I'm not happy about the political videos, and I
am concerned about a society where we're just glued to
our phones watching stupid stuff. And I forgive me, Yeah,
I don't know if I can say this, but I'm
going to go there, and I just I wonder at
what point is it just too much or is that
just a small percentage.
Speaker 2 (26:34):
Of where all of this is going?
Speaker 3 (26:37):
And I mean Tim and I have used chacchipeet for
work and we see the productive element of it. So
I just I wonder is all the silly videos just
a small portion?
Speaker 6 (26:48):
So I want to go back to the cost comment
that I made earlier. This technology is expensive to generate
that type of video. You are spending a pretty decent
chunk of compute and it's costing you a lot. So
now I think at some point who.
Speaker 2 (27:04):
Who's paying exactly.
Speaker 6 (27:06):
Right subsidize electric electric Bell, Yes, you are paying true power,
They're absolutely right.
Speaker 7 (27:13):
And also open AI is subsidizing.
Speaker 6 (27:16):
There will be a point when they will be under
pressure to show profitability. And then you have to figure
out what are the solid use cases that you want
to continue with, right and what are the ones where
you're spending compute for an output that is not even
as good as you know, an average human produce output.
And so that's where the cost benefit analysis, I think
will weed out a lot of the use cases where
(27:38):
you're just throwing compute and the output may not improve,
or the curve is just too steep, right, and you
just can't keep spending more compute and consuming more power.
That is inflating a lot of things that you don't
want to see.
Speaker 2 (27:52):
No, you're absolutely right. That makes a lot of sense.
Speaker 3 (27:54):
I've already said to my husband, you know why our
power bills are high.
Speaker 2 (27:56):
Blame AI. It's not my.
Speaker 7 (27:58):
Fault because I love turn the light off, which.
Speaker 2 (28:02):
He does say man deep, saying oh, thank you.
Speaker 4 (28:05):
We go everywhere with them, I know what. We go
everywhere with that.
Speaker 2 (28:08):
I know, I know. I mean, you're just the best.
Thank you.
Speaker 1 (28:12):
As always, you're listening to the Bloomberg Business Week Daily Podcast.
Catch us live weekday afternoons from two to five eas
during Listen on Applecarplay and Android Otto with the Bloomberg
Business app, or watch us live on YouTube.
Speaker 3 (28:27):
All right, as you know, obviously talking a lot about finance,
as we do here regularly at Bloomberg, which also means
the intersection of finance.
Speaker 2 (28:34):
Investors and sports in a big way.
Speaker 3 (28:36):
Rick Welts has been in the job as chief executive
officer of the Dallas Mavericks for a little more than
nine months. Took over as CEO of the NBA franchise
that was on January first of this year, calling sint
Marshall's nearly seven year tenure, his career spans nearly fifty.
Speaker 2 (28:52):
Years in sports and entertainment.
Speaker 3 (28:54):
He has held roles as president and CEO of the
Golden State Warriors, president of the NBA's Phoenix Suns, the
WNBA's Phoenix Mercury, and the NBA's Senior Vice president, Chief
Marketing Officer, and also president of NBA Properties. To say
he has seen a lot is not even fair. Let's
head to the Bloomberg News bureau in Dallas with us
is Rick Welds, CEO of the Dallas Mavericks and Bloomberg
(29:16):
News Texas buer chief Julie Fine, who watches and reports
and talks about this base so much. Rick is great
to have you there in Dallas with Julie. I just
want to start with that intersection of business and sports
investors in sports. Twenty minutes ago, we were talking with
Jim Esposito, president of Citadel Securities. Every day, it seems
ore every week we have a story about Apollo Ares,
(29:39):
different investment.
Speaker 2 (29:40):
Firms, the money in sports.
Speaker 3 (29:43):
You've been in the world for a long time, seen
the rise of money in sports and the rise of
financial firms in sports.
Speaker 2 (29:49):
Is this a good thing in your view?
Speaker 8 (29:52):
Well, it's not only a good thing. I think it's
an essential thing.
Speaker 7 (29:55):
Really.
Speaker 8 (29:56):
When you look at the valuations of franchises today, there's
really a smaller and smaller universe of individuals who would
either choose to or have the ability to purchase a
major league sports franchise today.
Speaker 2 (30:10):
So private equities.
Speaker 8 (30:12):
Involvement is going to be something that's going to be
absolutely essential going forward.
Speaker 9 (30:17):
You know, Rick, when you talk about the future of sports,
I do want to get in with you the streaming rights.
You know, Dallas Mavericks, they have MAVs Television and you
actually are one of the few that also have a
local deals.
Speaker 2 (30:28):
You can see all the games here as well.
Speaker 9 (30:29):
But what do you see as the future of how
we watch sports?
Speaker 2 (30:33):
Well, it's unfolding right now.
Speaker 5 (30:36):
The NBA's.
Speaker 8 (30:38):
Entering into a brand new set of broadcast agreements for
this season. So we're adding Peacock and NBC, We're adding
Amazon Prime, and we have to go where our viewers
are watching us, right and especially our younger viewers today
who are just accustomed to using streaming as their primary
platform and consuming sports.
Speaker 9 (30:59):
You know, let's talk a little bit about your viewers
and your fans. They had quite a shock last year
with the trade of Luka Danchik. You start tonight, you
kick off your preseason. Do you feel that you really
managed to bridge that gap with them?
Speaker 8 (31:12):
Well, you know, this is my favorite time of year,
right because there's optimism. As I checked the standings this morning,
we're undefeated. We haven't played a game, and every team,
every every team feels the same way. Right. But we had,
you know, that trade on February first, and then this
is such a crazy industry, right, one hundred days later,
on May twelfth, with a one point eight percent chance
(31:35):
of winning the NBA Draft lottery, somehow we came away
with the number one pick and with that Cooper flag.
And that's that's what's starting tonight, a new era of
Dallas Mavericks basketball.
Speaker 9 (31:46):
Will you talk about the finances of sports last year,
you did lose some sponsors and there were some season
ticket holders that were very upset about this trade.
Speaker 2 (31:55):
But where did you land now?
Speaker 8 (31:57):
You know, sports is such a wondering because it can
change on a dime. And it did on May twelfth
with the drafting of Cooper Flag, you know, the most
decorated eighteen year old player in the history of basketball,
who plays his first game for the Mavericks tonight, and
really everything changes. The optimism going into this season changed
(32:18):
the business environment completely. We're third in the league and
new season ticket sales will finish this year ahead in
revenue and season ticket sales, which you know, I wasn't
quite sure was going to happen on February first.
Speaker 7 (32:30):
So ahead of the year with season ticket sales now.
But on the business question and on the sponsors returning
to the organization, can you give us some numbers behind
sponsorships or how Flag has affected the way that companies
are interested in partnering with the mass.
Speaker 8 (32:45):
Well, your second point is really spot on, because the
interest around Cooper Flag and his potential All Star career
in the NBA, but here in Dallas, it's combined with
the optimism and energy around building a new arena and
entertainment district to replace American Airlines Center, where we've played
for the past twenty five years. So it's a wonderful
(33:08):
combination from a business standpoint because we have the optimism
of the team, but also a really exciting prospect about
what we're going to be building in Dallas, which will
be the future of our franchise.
Speaker 2 (33:18):
Well, that's where we want to go to. In terms
of what you are building.
Speaker 3 (33:21):
In terms of a new arena, mads Lise is up
in twenty thirty thirty one. Rick, you share an arena
with the Dallas Stars, but you've made it clear that
the next arena that you have will be a basketball venue.
Speaker 2 (33:33):
I think the last time that we all caught.
Speaker 3 (33:35):
Up with you at Bloomberg, you said you had narrawed
it down to several sites. So what can you tell
us our feel free to announce where you guys are going.
Speaker 7 (33:42):
To do it, and we love to know.
Speaker 8 (33:45):
I really really wish I could do that. We're hoping
by the end of the first quarter of twenty six
that we're going to have identified a site. Listen our commitment.
Speaker 2 (33:54):
We've been very clear we want.
Speaker 8 (33:56):
To be in the city of Dallas, and the city
has been a great wardner to this point and helping
us identify sites. Not easy to do because we're looking
for a minimum of fifty acres to build the arena
and an entertainment district. So not a lot of fifty
acre parcels that you can even consider in Dallas. But
we have narrowed down and we're doing our due diligence
(34:17):
on those very complicated project. These are very complicated things
to get done. But again we're hoping by the end
of the first quarter the next year to be able
to announce where we're going to be.
Speaker 9 (34:27):
Of course, the team owners, the Adolson family, they've made
no secret they would like to see casino gambling in Texas.
You follow the Texas legislature. I followed Texas legislature that
did not get anywhere this year. Does that affect really
the plans and what's going to be next for the stadium.
Speaker 8 (34:43):
No, as we look forward, we don't think the prospects
for that happening in Texas anytime soon or very likely.
So the project that we're going to build has no
casino component to it. We're talking about hotels, we're talking
about retail, we're talking about restaurants, we're talking about big
gathering places in an arena. So there's no casino component.
Speaker 9 (35:03):
Something you don't see that often as a team opening
their preseason, not in their arena. You will be playing
tonight in Dickey's in Fort Worth, a much smaller arena,
and that's really where people will get their first vision
of Cooper flag. You know, can you talk about that
decision and what you're hoping comes out of the evening?
Speaker 8 (35:20):
Yeah, well, it was really in COVID when the commitment
was made to play this game. The fact that it's
going to be Cooper's first game in a Mavericks uniform
in our home market, and we think of Dallas Fort
Worth as our home market. I think Fort Worth looks
at the Mavericks as their NBA team. So I think
it's going to be a super exciting night. It's gonna
be the first time we'll get to see Cooper, and
(35:41):
I think there's a big, big, big buzz about that.
Speaker 9 (35:44):
I think there's people that are interested in seeing Cooper. Globally,
speaking of global sports, the World Cup will be holding
nine matches in Dallas. That's the most in any city
in North America. You know, what does that do for
this city in terms, this whole area, in terms of
being and really a sports town.
Speaker 8 (36:01):
I don't think people yet realize the impact this is
going to have. This is the whole world is going
to be focused on this, and I'm I'm a huge
soccer fan, you know, maybe this far behind India basketball.
I own an ownership interest in a couple soccer clubs,
So I think what's going to unfold here is really
going to put Dallas on the map as a soccer mecha.
Speaker 7 (36:22):
Hey, I want to ask a little bit of Julie
asked about gambling on site and the potential for that.
Obviously that's not going to happen anytime soon. What about
those sports gaming and the way that gaming and the
ability for people to actually wager on these games has
attracted or increased viewership, has attracted or increased engagement? How
do you measure that at the MAPS organization?
Speaker 8 (36:44):
Well, you know, I think we're all tracking it and
watching this unfold in real time because you know the argument.
You know, Adam Silver was really the first of the
commissioners to come out in favor of it and really
talking about the level of engagement that it does provide
and how how people want to consume our games now.
So I think it's been nothing but positive at this point. Listen,
(37:05):
it's not the story hasn't been written yet on how
this will completely play out. But I think it's been
nothing but additive in terms of people's interest in watching
games and staying and watching more than they have historically
in the past.
Speaker 3 (37:19):
You mentioned Adam Silver CBS News reporting last week. As
the NBA continues to grow its presence, over sees rich
Silver outlining a vision aboud vision for the future that
could see teams from other continents playing US based franchises
in the regular season or postseason.
Speaker 2 (37:35):
What do you think of that.
Speaker 8 (37:38):
I think it's the most exciting time in NBA history,
and I think the prospect of that for me, I
was hired in nineteen eighty two by David Stern, who
was commissioner for the NBA for thirty years. There's a
thirty fifth employee of the NBA League Office and he's
not with us anymore. But this would really be the
culmination of that dream, the path that we went on
to really understand basketball is the only other sport played
(38:01):
worldwide other than soccer, and the NBA is a very
unique league where all the best basketball players in the
world play in one league. The idea that we could
have another league in Europe. What we're doing in Africa
today with our league in Africa I think it's really
the most exciting time ever for the globalization of our sport.
Speaker 3 (38:21):
Ricky seconds, are you having more fun today or are
back in nineteen sixty nine when you began as a
ball ball ball boy with the SuperSonics.
Speaker 8 (38:31):
I think I have the same level of excitement going
into tonight's game as I probably did that first day
I walked into a cl SuperSonics locker room.
Speaker 2 (38:38):
That's a good place to be.
Speaker 3 (38:39):
Thank you so much, Really appreciate your time always that
you give to Bloomberg. Then, of course was Rick Wald,
CEO of the Dallas Mavericks, and of course our thanks
as well to Julie finci Is, Texas bure chief for
Bloomberg News.
Speaker 7 (38:52):
Stay with us more from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (39:00):
You're listening to the Bloomberg Business Week Daily podcast. Catch
us live weekday afternoons from two to five eastering. Listen
on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 7 (39:14):
Right now, we want to bring in Leslie Marx. She's
joining us this afternoon. Really appreciate her taking the time.
She's CIO for Equities at Mackenzie investments. The firm has
two hundred twenty eight billion dollars in assets under management.
She joins us from Toronto. Leslie, good to have you
with us on the program. Thanks for your patients for
juggling a lot of live interviews all over the country
(39:36):
right now, so appreciate it. Look, the story that we've
been covering today has to do with everything with regard
to AMD open AI OEMD shares up twenty five percent
right now, the environment with regard to the investments that
are being made in private companies and public companies.
Speaker 4 (39:53):
How are you looking at it with AI?
Speaker 10 (39:56):
Well, exactly, I mean, AI is definitely the dominant thematic
is driving public equity markets today. And I think that
people are looking at equities and you're hearing people talk
about you know, and I heard you and Carol both
talking about the comparisons between today and the nineteen ninety
nine two thousand era, as well as people inferring that,
(40:18):
you know, are we in bubble conditions here based on
some of the deals.
Speaker 2 (40:23):
I don't think so.
Speaker 10 (40:24):
I mean, I think that the people that talk about
us being in a bubble right now are those that
maybe aren't long equities or you know, or underweight equities,
and so there's some you know, speaking their own book.
You know, I just go back to, as an equity person,
fundamentals and the two primary fundamentals that an equity investor
(40:45):
needs to focus on our earnings and what do we
pay for those earnings. And that really comes a lot
of which comes from of course sentiment, which is extremely
bullish right now, but also the outlook for interest rates.
And I think your listeners have a very good understanding
that a lower interest rate environment is generally good for multiples.
(41:06):
So let's spend a minute here just to talk about earnings,
because earnings has been the big surprise or upside surprise
in twenty twenty five. When you look at the factors
that are driving equities, it's been primarily, of course, price momentum.
The things that are going higher are what people want,
of course, but also earnings momentum has been a top factor.
(41:29):
And earnings momentum is a very strong fundamental that we
can really anchor ourselves on and say that actually, with
these companies reporting strong earnings, we can feel comfortable with
the higher valuations that they're trading at today.
Speaker 2 (41:43):
All right, So is that you saying you are comfortable
with the valuations that we're seeing today.
Speaker 10 (41:49):
Yes, And I think when you look at valuations, what
people point to mostly when they say that valuations are
stretched is evaluations today versus historical. But what you have
to think about is today the margin profile of the
S and P five hundred is much higher than it
has been historically. Ten years ago, the net margin for
(42:11):
the S and P five hundred was about ten percent.
Today it's thirteen to fourteen percent. So you actually should
be paying more for equities today than you have historically.
Speaker 7 (42:22):
That's so interesting to hear because I think there's a
lot of people who are looking around right now saying
this doesn't necessarily feel like a comfortable environment to buy.
And you said that, Okay, Well, people who might feel
that way maybe aren't long equities. But what would you
say to somebody who does have cash deployed in markets
right now? How do you do it with valuations like this?
Speaker 10 (42:43):
Well, I would say the most important thing for someone looking,
you know, to get into the market where you know,
I totally understand the bias and the anchoring. If you're
not there right now, why you would feel uncomfortable investing
at these levels? But there are lots of opportunities and
you have to be thinking about diversification. You know, when
you look at what happened in Japan overnight, to see
(43:05):
that market up over four and a half percent overnight,
that's incredible and it just highlights that there are opportunities
that go beyond the top ten names in the S
and P five hundred, and that's where investors should be looking.
They should be looking to diversify their holdings. You mentioned
that I'm sitting here in Toronto right now. In Canada,
the SMPTSX it's been an outperformer when compared with the
(43:27):
S and P five hundred. That might surprise people, but
gold has been a big driver of that market. When
you think about gold being at record highs, it's been
a big driver of the S and P TSX, both
on a price basis and earnings growth. So when investors
are looking at, you know, where should I invest or
should I invest today, we would say to them look
(43:48):
at diversifying your opportunities, because there are opportunities globally. I mean,
China is going through a very exciting time here around
their technology, electric vehicles, robotics. You're seeing a lot of
interest building in China, So I think that.
Speaker 3 (44:07):
Yeah, forgive, forgive, but we've got a Ryan, We've got
a closing belt just coming at us. But we really
appreciate your input. Leslie Marx over at Mackenzie Investment.
Speaker 1 (44:16):
This is the Bloomberg Business Weekdaily podcast, available on Apple, Spotify,
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(44:37):
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(00:23):
news as it happens. The Bloomberg Business Week Daily Podcast
with Carol Masser and Tim Stenebek on Bloomberg Radio and
of course.
Speaker 2 (00:33):
Co host of Bloomberg Tech.
Speaker 3 (00:34):
Joining us now from San Francisco where he is at
open AI's developer Day. Hey, Ed, Huh, feels like we
keep getting these big announcements. We're all getting a bit
wary of them. What feels like this circular finance that
we've talked with you about. Among those involved in the
AI spend and build out, I heard Lisa sussay a
win for AMD.
Speaker 2 (00:53):
A win for open Ai, feels like a win for everybody.
Is it really? Do we know for certain?
Speaker 4 (00:58):
Well?
Speaker 5 (00:58):
She also said that she has confidence in open Ai,
and the reason she said that is I had made
the point to her that open ai still has to
come up with the money for this. The difference between
the open ai and AMD deal compared with the open
Ai and Video deal as the structure, so it's almost
the reverse. AMD will sign over stock to open Ai
(01:23):
only when they've met specific milestones, both operational and financial.
So in the first instance, open a has to fund,
finance and build one gig awad of capacity. If they
do that, AMD will give open Ai some stock, or
rather technically, open ai has the right to buy a
trantras shares at a penny apiece, but the burden is
still on them. And so the point I was making
(01:45):
with Lisa is have you seen into their books? Where
are they going to get the money from to fund
this to bring it online?
Speaker 6 (01:54):
Is it?
Speaker 7 (01:54):
Could this be weird on the circular financing thing that
you know, in Vidia couldn't have this deal that could
be worth up to one hundred billion dollars with open
Ai in videos investment five billion dollars or will invest
five billion dollars in Intel, And now you have what
does that mean that in Vidia, if they have open
(02:15):
Ai equity, then they're kind of an owner or could
be an owner of AMD. Exactly.
Speaker 5 (02:22):
Yeah, it's much more fair to say that the Nvidia
open Ai circumstance is circular financing because in Vidia commits
to making a one hundred billion dollar investment into open Ai.
We actually don't know if that's in the form of
cash or if it would be like chips in lieu
of cash, but they do take open Ai equity. In
(02:43):
this case, AMD passes its own shares to open Ai,
but not capital. And so if you're going to build
six gigawats of capacity over many years, you know that
is like the peak energy demand of like a major
US city. We're talking lots of money up front in
cap to expenditure, and open ay has got to do that. Now,
we pose many questions to both Lisa sou and Open
(03:05):
Eye present Greg Brockman, who was sat next to her,
Will it be debt, will you issue more equity? Will
you do something else? And he basically Greg Brockman said,
we'll look at all those mechanisms and so there are
many more questions still that we don't have answers to.
Speaker 2 (03:18):
Well, that's I guess. My thing is like, why don't
these companies just do deals.
Speaker 3 (03:22):
I'll buy you chips, I'll do my bild, I'll do
this thing the way we do it normally, rather than
all of these big announcements with a lot of questions
that feel like We don't really know that there's anything
there there.
Speaker 5 (03:39):
The market is simply focused, irrespective of the mechanism for financing,
on the revenue growth that comes out the other side,
particularly like software names. And so that was the justification
that Greg Brockman made. He said, the revenue will come.
As you know, we've been writing a lot about the
debt markets underpinning this, and debt investors feel the same way.
(03:59):
All I say is there is also a technology story.
You know, if you're going to build a data center
and one of these providing the chips and the others
is going to use the capacity for software, it does
make sense to partner and work together to make the
engineering make sense.
Speaker 7 (04:12):
If you're watching on Bloomberg TV or on youtubeer Bloomberg
Originals got this great graphic up that kind of helps
us keep up. This is by no means exhaustive, but
shows where some of the money has gone in recent months.
When it comes to the space, again, by no means exhaustive.
There it's kind of like Carol, we're connecting. We're like
out a whiteboard and we're kind of connecting pieces because
(04:33):
to keep these things straight is pretty difficult.
Speaker 3 (04:35):
Well yeah, I mean that's the thing, ed. You know,
we need to all be smart. We are smart, and
you know we keep seeing these deals coming at us.
We hear people saying, well when like a Meta Reports
and some other you know, the big hyperscalers. We do
see the impact of the AI spend, but I do
wonder if it's going to carry through our economy like
everyone expects.
Speaker 4 (04:59):
Well.
Speaker 5 (04:59):
Metas for example, they have a core legacy business that
is advertising, and in most of the most recent quarters
they've demonstrated significant top line growth and to a certain extent,
bottom line growth, which is them saying we invested in AI.
AI made our ads better and more valuable, we're making
more money from it. With chat GPT, it's a lot
(05:19):
harder to see that. But that's why here at develop
a Day, it's really important. So the piece of news
that came out from the keynote was they now have
eight hundred million weekly users active users of chat GPT.
The data point that market participants keep hitting me over
the head with is how many of those free users
are converted to being paid subscribers. Because unless you have
(05:41):
that data, we can't know what the top line growth
for open AI looks like. But look in the markets
right now. I mean, you guys will have to tell me.
I don't have a Bloomberg in front of me, but
I saw a pool of about a dozen stocks that
jumped in the last hour just because they got name
checked by open ai here today. And it's by association.
The idea that if using chat GPT you can access
(06:02):
third party apps or third party company offerings, everyone's going
to make money.
Speaker 3 (06:07):
You know.
Speaker 5 (06:07):
The market has a pretty simple logic in that respect.
Speaker 7 (06:09):
Yeah, for those who do have Bloombergs in front of them,
just type in NI movers into the Bloomberg terminal. Cisco
system shares up to session high during Open Air event.
Figma shares Extend gained to sixteen percent after being mentioned
at Open Ai event. Salesforce shares also jump up two
point six percent during the Open Ai event. HubSpot, Zillo,
Trip Advisor, Carol all moving higher as a result of
(06:32):
what was talked about at the open ai event.
Speaker 3 (06:34):
And this goes back to ed. You know, you were
trying to press we Sue, and you know in your
conversation and I just right, and I just think about, like,
what are the big questions that still remain for you? You
want your you know, you're reporting on these ins and outs.
You're there at this event. We think about open ai
a lot. We talk about chat, GPT a lot. Who's
(06:55):
to say that there isn't some other s, you know,
chat that comes in and takes So I don't know
if there's just a lot going on. What are the
big questions that remain in a day when we get
this big announcement.
Speaker 2 (07:09):
What wasn't answered for you? Still?
Speaker 5 (07:13):
Yeah, I think the financing, you know, I think in
any corner of the Bloomberg newsroom, you've got to understand
the debt markets because look at the role that debt
played in previous financial crisis, the dot com bubble, what
happened with Silicon Valley Bank, what happened in Asia earlier
in the two thousands. I wasn't around then, but debt
(07:36):
is a big underpinning here. And I think the signal
that Greg Brockman gave us was they'll look at all mechanisms,
including debt. So that's one part of it. On the
other hand, this is I'm a technology journalist and technology matters.
Open ai is going to use in AMD chips for inference.
Inference is where you run the model not training, you
are actually running people's queries and workloads. And if you
(07:58):
look at all the movers that Timless did today, what
open ai was basically saying is chat GPT is becoming
an operating system. You use it for a number of functions,
but you can also integrate it with all the other
software you're using. And actually that's a pretty clear answer
to some of the questions about will revenue be generated
from this. People use all of these platforms for hours
(08:19):
each day, and you know, the market seems to buy
that if they can build the capacity of AMD in
the timeline that they've said they will, they can actually
start doing things of use.
Speaker 2 (08:29):
Isn't it wild?
Speaker 6 (08:30):
Though?
Speaker 3 (08:30):
Ryan Blestelica has this great story and the headline on
it is open ai is fast becoming a whale in
the stock market that it is shunned. I mean, open
ai is not a publicly traded company, and yet Tim
put down a bunch of names that are moving as
a result of this this deal. Last week we saw
open ai sending shares of e commerce companies like Shopify
(08:51):
Etsy soaring after unveiling an instant by.
Speaker 2 (08:54):
Option in chat GPT. I mean, it is remarkable.
Speaker 3 (08:59):
Then the market moves that are are evolving around open ai,
which again makes me say, what are we One of
the things.
Speaker 7 (09:07):
That I do each day.
Speaker 5 (09:09):
Yeah, one of the things I do each day, and
I know you guys do it as well. When I
first long onto my Bloomberg, I do NI Globe rap
and I look at the market's wrap because they always
have a pretty good handle on the sentiment of the morning.
And last Wednesday or Thursday, it was equity markets push
higher on open ai enthusiasm. It was the confirmation of
open AI's five hundred billion dollar valuation in the private
(09:32):
markets that was driving sentiment in the public equity markets,
and that was well sourced. It's based on lots of
conversations with market participants. That is again a reflection of
the names that Tim read out today. Open Ai, a
private company, is driving all kinds of markets at the
moment with what it is saying and to an equal extent,
(09:53):
the activity it is doing in both hardware and software.
Speaker 7 (09:57):
Well, there's a lot of activity happening behind you. Ed
at the op ai Developer Day conference. In just about
an hour, we're going to hear from you again. You're
going to be speaking with open Ai COO Brad Lightcap.
You're going to have a conversation with him that I'm
sure is going to touch on a lot of these themes.
Before then, though, the reason all of these companies are moving,
can you talk a little bit about this idea of
open Ai, or rather chat GPT becoming an operating system
(10:20):
and how these publicly traded third party companies are starting
to use the technology to make their software to make
whatever they're offering the services better.
Speaker 5 (10:32):
Yeah, for those listening on radio and watching on TV
that are familiar with software, what OpenAI announced was very
simple API access for several third parties to chat GPT,
and they demonstrated it on stage. So you know, I
use chat GPT for hours each day. But the idea
is you link it to say, your Figma platform or
your Spotify account even and you can use some of
(10:55):
the features of those platforms within chat GPT. That was
a sort of direct catalyst to moving. But what they
also spoke about on stage, and Sam Altman did pretty
good job of kind of explaining it, is that chat
GPT is going to basically act much like the App
Store does on OS. Right with Apple, you have a
community of developers, those are all the people that are
(11:17):
here today, the thousands of them that are building applications,
and where will they publish those applications where they'll be
reviewed by open ai and they will be integrated either
as APIs or standalone applications within chat gpt. That is
how the economy around the Android play Store, the Apple
iOS store works. You have people build software, and then
(11:38):
you have a place a library catalog where all of
those things list. In some cases you charge an ad
hoc subscription to use those applications. And that's kind of
what open ai is saying here that chat GPT can
be very interesting, although it's also contingent on the developer
community stepping up and doing it.
Speaker 2 (11:57):
Who needs to be worried? Alphabet? Like, who needs to
be work worried?
Speaker 3 (12:00):
As we watch this unfold and everything seemed to kind
of revolve around chatchypt, open ai and as you said, like,
if this is one of the new big search engines
going forward, I mean Alphabet with its own search engines
and making its own pivot, do they need to be worried?
Speaker 6 (12:17):
Though?
Speaker 5 (12:18):
Right?
Speaker 4 (12:20):
Yeah?
Speaker 5 (12:20):
I mean you guys, I actually should have checked, and
I just didn't, But I don't know what Apple, Microsoft
or Alphabet did during that keynote. I mean, did they
get down or up?
Speaker 3 (12:29):
Alphabets right now up about two percent, so it's near
its highs of the session, and.
Speaker 7 (12:33):
For your Microsoft's up two point four percent. Yeah, so
I had a high of the session.
Speaker 5 (12:37):
All in right, Yeah, yeah, yeah, you know, I don't
know the answer to that about whether they'd be worried.
I mean, we've done a lot of reporting on open
ai going its own way and having more independence from Microsoft.
The original idea was that Microsoft would use open AI's
underlying work in models to improve their own software capabilities.
(12:58):
Of course, one of the recent elements is Microsoft is
using Anthropic for its own in house software applications and
has looked at one of open AI's rivals. But you
are right, it's about open ai wanting to do more
across software.
Speaker 4 (13:12):
You know.
Speaker 5 (13:13):
One of the other beneficiaries in the keynote was I
think Salesforce. You can correct me to him if I'm wrong.
I saw Salesforce as one of the movers service now
as well, you know, it's just another sales channel in
some sense. You can access another person software through chat, GPT,
and you know, the market again its logic is very
(13:33):
simple that it drives use and that's good. You know,
when you have a partnership with open.
Speaker 7 (13:38):
Ai, salesforce shares up three percent right now, up as
much as four point two percent during that keynote, Ed Ludlow,
he's at open AI's Developer Day.
Speaker 2 (13:48):
Stay with us. More from Bloomberg Business Weekdaily coming up
after this.
Speaker 1 (13:57):
You're listening to the Bloomberg Business Week Daily podcast. Catch
us live weekday afternoons from two to five eastering. Listen
on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 7 (14:11):
Let's bring in Mandy Singh, global head of Tech research
at Bloomberg Intelligency, joins us here in the Bloomberg Interactive
Brokers studio. So I just want to start with the
validation or.
Speaker 4 (14:21):
Not of AMD's technology here.
Speaker 7 (14:23):
Ed reminded us that this is an inference deal, not
a training deal. But how should we look at this
in the context of Nvidia being the standout leader when
it comes to this.
Speaker 6 (14:34):
Tech Look, I mean for AMD, there weren't many options
when you look at you know, Nvidia and Broadcom partnering
with all the hyperscalers. AMD clearly has just two percent
market share right now. And what do you do when
Nvidia announces a big investment in open ai to the
two zero hundred billion or multi years. And in this case,
(14:58):
i think AMD had to do some thing. So I'm
sure they gave a very sweet deal to open Ai
in terms of, you know, the margins they're going to
charge open Ai, the level of custom silicon work that
they are willing to do for open Ai. And open
ai has a great advantage that it can, you know,
bargain and really get these sweet deals right now with everyone.
Speaker 7 (15:20):
A sweet deal meaning here's one hundred and sixty million
shares of our company at a penny apiece.
Speaker 6 (15:26):
Maybe, And I look, I mean, I don't know. I
mean this is nobody can look that far out. But
the fact that Nvidia is willing to spend ten billion
dollars you know in open Ai, and AMD gave them
this option that they could buy the shares, you know,
if it hits a certain level, that just goes to
show that open ai wants to show that it has
(15:50):
the power, not the chip makers. And so over time,
if you look at you know, software cycles, the application
is the sticky part. It's never the chips or the architecture,
and that's what open the Eye is saying, look, guys,
we have the best models, right, we have chat cept
the application, so that's the end product, and they want
diversification in terms of the inference capacity.
Speaker 3 (16:12):
Listen, we have this chart and for those who are
on radio, it's just showing all of the deals that
open ai is doing or some different companies are some
of the deal them, whether it's Microsoft, although they've been
pulling back and like lining up other deals. You know,
I want We're trying to so hard be smart about
this because it's easy to get caught up in it,
(16:34):
and it does feel like.
Speaker 2 (16:35):
This has become increasingly a momentum trait.
Speaker 3 (16:37):
I'm not saying people aren't making money out of it,
but how do we make sense because is there a
chance that open ai and chatchept is not ultimately the
big model or the big next generation search engine for everybody?
Speaker 2 (16:51):
Like, how do we be.
Speaker 3 (16:53):
Smart about this spend because some of it potentially a
fluffy fluffy and not going to go anywhere.
Speaker 6 (16:59):
I know there are our references to circular financing and
all that, but the best way to think about this
is the concentration that you see among the players, whether
it's you know, Nvidia being exposed to the hyperscalers, and
now the number of hyperscalers are growing because open ai
was dependent on Microsoft, like you said, now it's trying
(17:20):
to become an independent hyperscale vendor. In fact, they said
they may open their own data centers. They have a
three hundred billion dollar deal with Oracle now, so they
want to be a hyperscaler who does end to end
work like Google does. It had its own chip, right
it processes nine hundred and eighty trillion tokens per month,
and that's what you know. Open ai wants to get
(17:41):
to that they have their own chip. They use chips
from AMD and Nvidia and not just rely on one provider.
Speaker 3 (17:48):
But they are still a private company. What are things
that we might not know in their financials right now.
Speaker 6 (17:56):
That they have negative gross martins and so one of
the way is that they are trying to fix that
is by arbitraging against the semiconductor chip makers who are
giving them the compute capacity. And we know that this stuff,
like one of the things with Generative AI, it's very
compute intensive, right, and it's not changing even though we
have GPT five, Like, there's nothing that has changed in
(18:18):
terms of compute efficiency. It still requires ten times more
compute than your CPUs that were used for you know,
traditional software. So it is an expensive technology.
Speaker 7 (18:29):
Okay, hold on, though, you said, you know, I don't Yeah,
I don't want to push aside the circular financing thing
because this is kind of blowing my mind here. Yeah,
if in Vidia has a deal with or with open Ai,
that's up to one hundred billion dollars. So let's say
in Vidia gets equity in open Ai as a result
of that. Yeah, then open Ai then gets equity in
(18:52):
AMD as a result of this deal. Would that essentially
mean that in Vidia is an owner of AMD?
Speaker 6 (19:00):
No, I think that's too far fair. I mean, think
of companies having minority stakes. So there are instances where
Google has a minority stake in Lift. You know, there's
so many instances because.
Speaker 7 (19:12):
Google Ventures was an investor in it early on. In
that's Google's venture capital army. You can see that within
and in the past, within Google's maps application. It used
to suggest, if it still does, it would suggest Lift rides.
It made sense. Yeah, and so look in these competitors though.
Speaker 6 (19:28):
Because the numbers are getting so big, I mean you
need financing from somewhere right now. It was the Hyperscalers,
the four Hyperscalers were the biggest buyers of AI data
center infrastructure capacity. They were the ones who were building it.
And now it's like Opening Eyes saying we want to
(19:49):
be in the business of building AI data centers because
they look at Google and say they're running their data
centers a lot more efficiently than we are, even though
we haven't an signs with Microsoft. So Opening Eyes big
bet is if I have more compute capacity, one, I
can undercut everyone else in terms of offering my model,
(20:09):
and I'll be more aggressive with pricing, and once I
have the customer on board, I can sell them more services.
But just being a model provider is not a good business.
That's what open ai is suggesting that having the best
model is not a good mode. Ultimately, everyone will catch
up in terms of their model capacity, and then they
(20:30):
will go across different models.
Speaker 2 (20:31):
So they're evolving very quickly.
Speaker 4 (20:33):
They are.
Speaker 6 (20:34):
That's the big bet that they're making is if I
have my own infrastructure and I have my own application,
I'll be aggressive with pricing.
Speaker 3 (20:42):
So who needs to be worried then to the hyperscalers
and their big data center built, Like who needs to
be worried here?
Speaker 2 (20:48):
And Vidia and Vidia, I.
Speaker 6 (20:49):
Mean clearly in Vidia having seventy five percent gross margin,
they really have the best chip out there, they have
the best system. But now that opening eyes saying I
am going to use AMD and I have incentive that
AMD does well, who does it hurt? Ultimately Nvidia has
to lower its pricing. In fact, the ten million dollar
(21:11):
investment is a way for Nvidia to lower its prices
for open AI. They're not doing it directly, but they're
giving a ten billion dollar debate saying, okay, you buy
a certain capacity for one gigabyte data center, will give
you ten billion dollar debate. That's lowering your growth market.
Speaker 7 (21:27):
And video shares down about one percent right now, still
though a four point five trillion dollar company.
Speaker 3 (21:33):
But doesn't that Nvidia open AI feel a little weird
that deal?
Speaker 4 (21:39):
Why what do you mean? What do you mean?
Speaker 3 (21:40):
Well, because it's like they're fueling, right, like the selling
of n video chips and then getting what.
Speaker 7 (21:45):
Ya feels, here's money, here's money that you are then
going to pay back to it.
Speaker 6 (21:50):
And look the biggest constraint right now is powerating.
Speaker 2 (21:53):
Almost false dem which makes me a little nervous.
Speaker 6 (21:56):
No, so I want to concede. Nvidia has by far
the best chip when it comes to power constraints. That
are I think the biggest limiting factor when it comes
to build out. You like we talk about lead times.
Power has the longest lead time out there out of
all the supply chains that we have seen, it's just
not fathomable to add more gigabytt capacity takes time. It's
(22:20):
very long lead time. And so from that perspective, and
Vidia chips are the most performant when it comes to
the power that's available. That's why everyone buys Nvidia, and
that is a mode. But now what Opening Eye is
saying is we will help AMD customize their chip to
the extent that they can offer us a viable alternative
for inferencing. Not for training, We'll still train our models
(22:43):
using Nvidia because it's the best chip, but for inferencing,
we will help handhold AMD and customize their silicon so
that we can use it for inferencing.
Speaker 4 (22:52):
Are you done?
Speaker 7 (22:53):
Because I want to change the subject, but I want
to make sure you're But it's just satisfied.
Speaker 2 (22:58):
It's just I am.
Speaker 3 (22:58):
Satisfied, but it just makes I think this market is evolving.
Speaker 7 (23:01):
So Carol asked man Deep, like you should be worried
it's yours, And I thought Man Deep was going to
say all of us, all of you, everybody, because I've
been seeing what open Ai is doing with Sora over
the last few days. Have you guys seen these videos?
So in some cases you have people who are able
to use this making videos of Sam Altman going on
(23:24):
ice raids or Sam Altman stealing GPUs from somewhere, or
you have somebody in Hollywood showing the effect that it
could have on Hollywood. And he put like a main
character from a Netflix show copyrighted certainly in a video.
Speaker 4 (23:38):
I think maybe it was with Shrek. I don't even remember.
Speaker 7 (23:41):
Like the stuff looks not quite it's not quite there.
It's not quite there, but it does look like a
friend of mine can jump off a building like Superman
or Stephen Hawking in a famous case now the last
few days is in a half halfpipe at the X Games.
I mean this stuff is pretty incredible.
Speaker 6 (23:59):
Yeah, I mean the number of creators I think will grow.
You can become a creator. You don't need a camera
or you know, a professional setup to do that.
Speaker 4 (24:08):
Scary.
Speaker 6 (24:08):
It is scary. But with that being said, everyone out
there is competing for engagement time. That's what all of
these companies are doing, whether it's meta or alphabet with
YouTube and look for Meta or TikTok, it's all about
keeping people on their platform. Now, if Sora is able
to generate good content that people are engaging with, suddenly
(24:31):
that attention time span shifts from Meta to Zora.
Speaker 7 (24:35):
Okay, I want to paint a bleak future for us
because this.
Speaker 2 (24:38):
Is what's going through my head.
Speaker 3 (24:39):
Because are we engaging with stuff that we should be
engaging with is kind of my thing.
Speaker 7 (24:43):
Let's say it gets the point where the people are
getting so good at creating this stuff without actually doing
it with skills. Okay, so we're already in a low higher,
low fire environment right now. The concern is that AI
is just going to decimate some white collar jobs. Wh
meta platforms, advertisers going to be if none of us
have jobs and can afford to spend any money on
(25:05):
anything because AI has just displaced us.
Speaker 6 (25:08):
Well, I mean, look, I think, like anything else right now,
the biggest use case out there for generative AI is
coding agent.
Speaker 7 (25:17):
I mean imagine the developer.
Speaker 6 (25:19):
Community has always been highly sought after and they will
have to you know, transform in terms of their jobs
changing and how they use these tools. So to my mind,
you know, customer service coding agent, these are the type
of profiles that are illustrative of the power of you know,
generative AI in terms of bringing productivity around what is
(25:44):
the current workflow and everyone seems to be adjusting and evolving,
and I mean everyone talks about how productive the developers are.
There every hyperscaler has said their developers are thirty to
thirty five percent more productive because of generative AI.
Speaker 7 (26:00):
I mean, so that's one side of it. He's the optimist, he's.
Speaker 2 (26:03):
Always the optimis space here.
Speaker 7 (26:05):
You and I are just thinking, okay, well, no one's
going to be working and everyone's going to be convinced
by deep fakes. I know you're concerned about the political
implications of something. I'm just concerned about You've seen these videos.
They're insane.
Speaker 3 (26:15):
Yeah, I'm not happy about the political videos, and I
am concerned about a society where we're just glued to
our phones watching stupid stuff. And I forgive me, Yeah,
I don't know if I can say this, but I'm
going to go there, and I just I wonder at
what point is it just too much or is that
just a small percentage.
Speaker 2 (26:34):
Of where all of this is going?
Speaker 3 (26:37):
And I mean Tim and I have used chacchipeet for
work and we see the productive element of it. So
I just I wonder is all the silly videos just
a small portion?
Speaker 6 (26:48):
So I want to go back to the cost comment
that I made earlier. This technology is expensive to generate
that type of video. You are spending a pretty decent
chunk of compute and it's costing you a lot. So
now I think at some point who.
Speaker 2 (27:04):
Who's paying exactly.
Speaker 6 (27:06):
Right subsidize electric electric Bell, Yes, you are paying true power,
They're absolutely right.
Speaker 7 (27:13):
And also open AI is subsidizing.
Speaker 6 (27:16):
There will be a point when they will be under
pressure to show profitability. And then you have to figure
out what are the solid use cases that you want
to continue with, right and what are the ones where
you're spending compute for an output that is not even
as good as you know, an average human produce output.
And so that's where the cost benefit analysis, I think
will weed out a lot of the use cases where
(27:38):
you're just throwing compute and the output may not improve,
or the curve is just too steep, right, and you
just can't keep spending more compute and consuming more power.
That is inflating a lot of things that you don't
want to see.
Speaker 2 (27:52):
No, you're absolutely right. That makes a lot of sense.
Speaker 3 (27:54):
I've already said to my husband, you know why our
power bills are high.
Speaker 2 (27:56):
Blame AI. It's not my.
Speaker 7 (27:58):
Fault because I love turn the light off, which.
Speaker 2 (28:02):
He does say man deep, saying oh, thank you.
Speaker 4 (28:05):
We go everywhere with them, I know what. We go
everywhere with that.
Speaker 2 (28:08):
I know, I know. I mean, you're just the best.
Thank you.
Speaker 1 (28:12):
As always, you're listening to the Bloomberg Business Week Daily Podcast.
Catch us live weekday afternoons from two to five eas
during Listen on Applecarplay and Android Otto with the Bloomberg
Business app, or watch us live on YouTube.
Speaker 3 (28:27):
All right, as you know, obviously talking a lot about finance,
as we do here regularly at Bloomberg, which also means
the intersection of finance.
Speaker 2 (28:34):
Investors and sports in a big way.
Speaker 3 (28:36):
Rick Welts has been in the job as chief executive
officer of the Dallas Mavericks for a little more than
nine months. Took over as CEO of the NBA franchise
that was on January first of this year, calling sint
Marshall's nearly seven year tenure, his career spans nearly fifty.
Speaker 2 (28:52):
Years in sports and entertainment.
Speaker 3 (28:54):
He has held roles as president and CEO of the
Golden State Warriors, president of the NBA's Phoenix Suns, the
WNBA's Phoenix Mercury, and the NBA's Senior Vice president, Chief
Marketing Officer, and also president of NBA Properties. To say
he has seen a lot is not even fair. Let's
head to the Bloomberg News bureau in Dallas with us
is Rick Welds, CEO of the Dallas Mavericks and Bloomberg
(29:16):
News Texas buer chief Julie Fine, who watches and reports
and talks about this base so much. Rick is great
to have you there in Dallas with Julie. I just
want to start with that intersection of business and sports
investors in sports. Twenty minutes ago, we were talking with
Jim Esposito, president of Citadel Securities. Every day, it seems
ore every week we have a story about Apollo Ares,
(29:39):
different investment.
Speaker 2 (29:40):
Firms, the money in sports.
Speaker 3 (29:43):
You've been in the world for a long time, seen
the rise of money in sports and the rise of
financial firms in sports.
Speaker 2 (29:49):
Is this a good thing in your view?
Speaker 8 (29:52):
Well, it's not only a good thing. I think it's
an essential thing.
Speaker 7 (29:55):
Really.
Speaker 8 (29:56):
When you look at the valuations of franchises today, there's
really a smaller and smaller universe of individuals who would
either choose to or have the ability to purchase a
major league sports franchise today.
Speaker 2 (30:10):
So private equities.
Speaker 8 (30:12):
Involvement is going to be something that's going to be
absolutely essential going forward.
Speaker 9 (30:17):
You know, Rick, when you talk about the future of sports,
I do want to get in with you the streaming rights.
You know, Dallas Mavericks, they have MAVs Television and you
actually are one of the few that also have a
local deals.
Speaker 2 (30:28):
You can see all the games here as well.
Speaker 9 (30:29):
But what do you see as the future of how
we watch sports?
Speaker 2 (30:33):
Well, it's unfolding right now.
Speaker 5 (30:36):
The NBA's.
Speaker 8 (30:38):
Entering into a brand new set of broadcast agreements for
this season. So we're adding Peacock and NBC, We're adding
Amazon Prime, and we have to go where our viewers
are watching us, right and especially our younger viewers today
who are just accustomed to using streaming as their primary
platform and consuming sports.
Speaker 9 (30:59):
You know, let's talk a little bit about your viewers
and your fans. They had quite a shock last year
with the trade of Luka Danchik. You start tonight, you
kick off your preseason. Do you feel that you really
managed to bridge that gap with them?
Speaker 8 (31:12):
Well, you know, this is my favorite time of year,
right because there's optimism. As I checked the standings this morning,
we're undefeated. We haven't played a game, and every team,
every every team feels the same way. Right. But we had,
you know, that trade on February first, and then this
is such a crazy industry, right, one hundred days later,
on May twelfth, with a one point eight percent chance
(31:35):
of winning the NBA Draft lottery, somehow we came away
with the number one pick and with that Cooper flag.
And that's that's what's starting tonight, a new era of
Dallas Mavericks basketball.
Speaker 9 (31:46):
Will you talk about the finances of sports last year,
you did lose some sponsors and there were some season
ticket holders that were very upset about this trade.
Speaker 2 (31:55):
But where did you land now?
Speaker 8 (31:57):
You know, sports is such a wondering because it can
change on a dime. And it did on May twelfth
with the drafting of Cooper Flag, you know, the most
decorated eighteen year old player in the history of basketball,
who plays his first game for the Mavericks tonight, and
really everything changes. The optimism going into this season changed
(32:18):
the business environment completely. We're third in the league and
new season ticket sales will finish this year ahead in
revenue and season ticket sales, which you know, I wasn't
quite sure was going to happen on February first.
Speaker 7 (32:30):
So ahead of the year with season ticket sales now.
But on the business question and on the sponsors returning
to the organization, can you give us some numbers behind
sponsorships or how Flag has affected the way that companies
are interested in partnering with the mass.
Speaker 8 (32:45):
Well, your second point is really spot on, because the
interest around Cooper Flag and his potential All Star career
in the NBA, but here in Dallas, it's combined with
the optimism and energy around building a new arena and
entertainment district to replace American Airlines Center, where we've played
for the past twenty five years. So it's a wonderful
(33:08):
combination from a business standpoint because we have the optimism
of the team, but also a really exciting prospect about
what we're going to be building in Dallas, which will
be the future of our franchise.
Speaker 2 (33:18):
Well, that's where we want to go to. In terms
of what you are building.
Speaker 3 (33:21):
In terms of a new arena, mads Lise is up
in twenty thirty thirty one. Rick, you share an arena
with the Dallas Stars, but you've made it clear that
the next arena that you have will be a basketball venue.
Speaker 2 (33:33):
I think the last time that we all caught.
Speaker 3 (33:35):
Up with you at Bloomberg, you said you had narrawed
it down to several sites. So what can you tell
us our feel free to announce where you guys are going.
Speaker 7 (33:42):
To do it, and we love to know.
Speaker 8 (33:45):
I really really wish I could do that. We're hoping
by the end of the first quarter of twenty six
that we're going to have identified a site. Listen our commitment.
Speaker 2 (33:54):
We've been very clear we want.
Speaker 8 (33:56):
To be in the city of Dallas, and the city
has been a great wardner to this point and helping
us identify sites. Not easy to do because we're looking
for a minimum of fifty acres to build the arena
and an entertainment district. So not a lot of fifty
acre parcels that you can even consider in Dallas. But
we have narrowed down and we're doing our due diligence
(34:17):
on those very complicated project. These are very complicated things
to get done. But again we're hoping by the end
of the first quarter the next year to be able
to announce where we're going to be.
Speaker 9 (34:27):
Of course, the team owners, the Adolson family, they've made
no secret they would like to see casino gambling in Texas.
You follow the Texas legislature. I followed Texas legislature that
did not get anywhere this year. Does that affect really
the plans and what's going to be next for the stadium.
Speaker 8 (34:43):
No, as we look forward, we don't think the prospects
for that happening in Texas anytime soon or very likely.
So the project that we're going to build has no
casino component to it. We're talking about hotels, we're talking
about retail, we're talking about restaurants, we're talking about big
gathering places in an arena. So there's no casino component.
Speaker 9 (35:03):
Something you don't see that often as a team opening
their preseason, not in their arena. You will be playing
tonight in Dickey's in Fort Worth, a much smaller arena,
and that's really where people will get their first vision
of Cooper flag. You know, can you talk about that
decision and what you're hoping comes out of the evening?
Speaker 8 (35:20):
Yeah, well, it was really in COVID when the commitment
was made to play this game. The fact that it's
going to be Cooper's first game in a Mavericks uniform
in our home market, and we think of Dallas Fort
Worth as our home market. I think Fort Worth looks
at the Mavericks as their NBA team. So I think
it's going to be a super exciting night. It's gonna
be the first time we'll get to see Cooper, and
(35:41):
I think there's a big, big, big buzz about that.
Speaker 9 (35:44):
I think there's people that are interested in seeing Cooper. Globally,
speaking of global sports, the World Cup will be holding
nine matches in Dallas. That's the most in any city
in North America. You know, what does that do for
this city in terms, this whole area, in terms of
being and really a sports town.
Speaker 8 (36:01):
I don't think people yet realize the impact this is
going to have. This is the whole world is going
to be focused on this, and I'm I'm a huge
soccer fan, you know, maybe this far behind India basketball.
I own an ownership interest in a couple soccer clubs,
So I think what's going to unfold here is really
going to put Dallas on the map as a soccer mecha.
Speaker 7 (36:22):
Hey, I want to ask a little bit of Julie
asked about gambling on site and the potential for that.
Obviously that's not going to happen anytime soon. What about
those sports gaming and the way that gaming and the
ability for people to actually wager on these games has
attracted or increased viewership, has attracted or increased engagement? How
do you measure that at the MAPS organization?
Speaker 8 (36:44):
Well, you know, I think we're all tracking it and
watching this unfold in real time because you know the argument.
You know, Adam Silver was really the first of the
commissioners to come out in favor of it and really
talking about the level of engagement that it does provide
and how how people want to consume our games now.
So I think it's been nothing but positive at this point. Listen,
(37:05):
it's not the story hasn't been written yet on how
this will completely play out. But I think it's been
nothing but additive in terms of people's interest in watching
games and staying and watching more than they have historically
in the past.
Speaker 3 (37:19):
You mentioned Adam Silver CBS News reporting last week. As
the NBA continues to grow its presence, over sees rich
Silver outlining a vision aboud vision for the future that
could see teams from other continents playing US based franchises
in the regular season or postseason.
Speaker 2 (37:35):
What do you think of that.
Speaker 8 (37:38):
I think it's the most exciting time in NBA history,
and I think the prospect of that for me, I
was hired in nineteen eighty two by David Stern, who
was commissioner for the NBA for thirty years. There's a
thirty fifth employee of the NBA League Office and he's
not with us anymore. But this would really be the
culmination of that dream, the path that we went on
to really understand basketball is the only other sport played
(38:01):
worldwide other than soccer, and the NBA is a very
unique league where all the best basketball players in the
world play in one league. The idea that we could
have another league in Europe. What we're doing in Africa
today with our league in Africa I think it's really
the most exciting time ever for the globalization of our sport.
Speaker 3 (38:21):
Ricky seconds, are you having more fun today or are
back in nineteen sixty nine when you began as a
ball ball ball boy with the SuperSonics.
Speaker 8 (38:31):
I think I have the same level of excitement going
into tonight's game as I probably did that first day
I walked into a cl SuperSonics locker room.
Speaker 2 (38:38):
That's a good place to be.
Speaker 3 (38:39):
Thank you so much, Really appreciate your time always that
you give to Bloomberg. Then, of course was Rick Wald,
CEO of the Dallas Mavericks, and of course our thanks
as well to Julie finci Is, Texas bure chief for
Bloomberg News.
Speaker 7 (38:52):
Stay with us more from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (39:00):
You're listening to the Bloomberg Business Week Daily podcast. Catch
us live weekday afternoons from two to five eastering. Listen
on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 7 (39:14):
Right now, we want to bring in Leslie Marx. She's
joining us this afternoon. Really appreciate her taking the time.
She's CIO for Equities at Mackenzie investments. The firm has
two hundred twenty eight billion dollars in assets under management.
She joins us from Toronto. Leslie, good to have you
with us on the program. Thanks for your patients for
juggling a lot of live interviews all over the country
(39:36):
right now, so appreciate it. Look, the story that we've
been covering today has to do with everything with regard
to AMD open AI OEMD shares up twenty five percent
right now, the environment with regard to the investments that
are being made in private companies and public companies.
Speaker 4 (39:53):
How are you looking at it with AI?
Speaker 10 (39:56):
Well, exactly, I mean, AI is definitely the dominant thematic
is driving public equity markets today. And I think that
people are looking at equities and you're hearing people talk
about you know, and I heard you and Carol both
talking about the comparisons between today and the nineteen ninety
nine two thousand era, as well as people inferring that,
(40:18):
you know, are we in bubble conditions here based on
some of the deals.
Speaker 2 (40:23):
I don't think so.
Speaker 10 (40:24):
I mean, I think that the people that talk about
us being in a bubble right now are those that
maybe aren't long equities or you know, or underweight equities,
and so there's some you know, speaking their own book.
You know, I just go back to, as an equity person,
fundamentals and the two primary fundamentals that an equity investor
(40:45):
needs to focus on our earnings and what do we
pay for those earnings. And that really comes a lot
of which comes from of course sentiment, which is extremely
bullish right now, but also the outlook for interest rates.
And I think your listeners have a very good understanding
that a lower interest rate environment is generally good for multiples.
(41:06):
So let's spend a minute here just to talk about earnings,
because earnings has been the big surprise or upside surprise
in twenty twenty five. When you look at the factors
that are driving equities, it's been primarily, of course, price momentum.
The things that are going higher are what people want,
of course, but also earnings momentum has been a top factor.
(41:29):
And earnings momentum is a very strong fundamental that we
can really anchor ourselves on and say that actually, with
these companies reporting strong earnings, we can feel comfortable with
the higher valuations that they're trading at today.
Speaker 2 (41:43):
All right, So is that you saying you are comfortable
with the valuations that we're seeing today.
Speaker 10 (41:49):
Yes, And I think when you look at valuations, what
people point to mostly when they say that valuations are
stretched is evaluations today versus historical. But what you have
to think about is today the margin profile of the
S and P five hundred is much higher than it
has been historically. Ten years ago, the net margin for
(42:11):
the S and P five hundred was about ten percent.
Today it's thirteen to fourteen percent. So you actually should
be paying more for equities today than you have historically.
Speaker 7 (42:22):
That's so interesting to hear because I think there's a
lot of people who are looking around right now saying
this doesn't necessarily feel like a comfortable environment to buy.
And you said that, Okay, Well, people who might feel
that way maybe aren't long equities. But what would you
say to somebody who does have cash deployed in markets
right now? How do you do it with valuations like this?
Speaker 10 (42:43):
Well, I would say the most important thing for someone looking,
you know, to get into the market where you know,
I totally understand the bias and the anchoring. If you're
not there right now, why you would feel uncomfortable investing
at these levels? But there are lots of opportunities and
you have to be thinking about diversification. You know, when
you look at what happened in Japan overnight, to see
(43:05):
that market up over four and a half percent overnight,
that's incredible and it just highlights that there are opportunities
that go beyond the top ten names in the S
and P five hundred, and that's where investors should be looking.
They should be looking to diversify their holdings. You mentioned
that I'm sitting here in Toronto right now. In Canada,
the SMPTSX it's been an outperformer when compared with the
(43:27):
S and P five hundred. That might surprise people, but
gold has been a big driver of that market. When
you think about gold being at record highs, it's been
a big driver of the S and P TSX, both
on a price basis and earnings growth. So when investors
are looking at, you know, where should I invest or
should I invest today, we would say to them look
(43:48):
at diversifying your opportunities, because there are opportunities globally. I mean,
China is going through a very exciting time here around
their technology, electric vehicles, robotics. You're seeing a lot of
interest building in China, So I think that.
Speaker 3 (44:07):
Yeah, forgive, forgive, but we've got a Ryan, We've got
a closing belt just coming at us. But we really
appreciate your input. Leslie Marx over at Mackenzie Investment.
Speaker 1 (44:16):
This is the Bloomberg Business Weekdaily podcast, available on Apple, Spotify,
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afternoons from two to five pm Eastern on Bloomberg dot Com,
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You can also watch us live every weekday on YouTube
(44:37):
and always on the Bloomberg terminal
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