January 22, 2025 • 57 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg Technology Co-Host Caroline Hyde interviews Arm CEO Rene Haas on the AI pact unveiled by President Trump. Bloomberg News AI Reporter Rachel Metz shares her thoughts on the AI infrastructure news. Najat Khan, Chief Commercial and R&D Officer at Recursion, talks about partnering with Nvidia to use machine learning to discover new medicines. Ben Harburg, Founder and Portfolio Manager at Core Values Alpha, discusses investing in China under a new Trump regime. Rich Greenfield, Partner and Analyst at Lightshed Partners, shares his thoughts on Netflix outlook post earnings. And we Drive to the Close with Alexis Browne Roberts, COO at Alexis Investment Partners.
Hosts: Carol Massar and Tim Stenovec. Producer: Paul Brennan.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2 (00:08):
This is Bloomberg Business Week Insight from the reporters and
editors that bring you America's most trusted business magazine, plus
global business finance and tech news the Bloomberg Business Week
Podcast with Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 3 (00:26):
Well, a bunch of names are rallying in the tech
sector today and then include some stocks affirms that power
and equipment data centers. Those are names that we are
seeing movie and this has to do with some of
the news that we got yesterday from President Trump when
he announced a one hundred billion dollar joint venture to
fund artificial intelligence infrastructure. And so we're talking about some
(00:47):
big spend maybe over the next few years. It is
a joint venture tip that brings together some well known
companies in the tech space.
Speaker 4 (00:53):
Includes Oracle, soft Bank, and open Ai to work on
artificial intelligence infrastructure. Armholdings, Microsoft and Nvidia will provide technology
as well. And that brings us to our first interview
Bloomberg Technology co host Caroline Hyde with the CEO of Armholdings,
Renee Has.
Speaker 5 (01:10):
Tim, Carol, thank you so much and Renee Has. It
is a joy to welcome you, CEO of ARM, who
is indeed a technology partner on what is initially a
one hundred billion dollar investment can scale to five hundred
billion dollars.
Speaker 6 (01:23):
In the next few years. What exactly is Arm's role here?
Speaker 7 (01:29):
Good morning, Kroen. Yeah, it's an exciting day for sure,
such a significant investment infrastructure. So ARM will be the
CPU of choice, if you will. Inside these AI data centers.
We power Grace Blackwell, which is the Nvidia product that
will be used. But lots of opportunity for all kinds
of armed technology, but most importantly the CPUs that power Stargate,
(01:52):
they'll be armed.
Speaker 5 (01:54):
So already, as you say, integrated into Grace Blackwell, what
sort of innovations could this stir on your side? What
way will we see your designs progress into this supercomputer
and more to come.
Speaker 7 (02:05):
Maybe five hundred billion dollars of investment and multiple gigawatts
of energy require incredibly efficient processor solutions. So I think
as we go forward, as these plans get more and
more defined, I think there'll be more and more opportunity.
But right now we're super excited to be involved with
Nvidia and Grace Blackwell.
Speaker 5 (02:25):
I think that's so key as these plans get more
and more defined. These are at the moment pretty new
announcements coming, but people questioning how new the ultimate decision
to spend has been because we already had massive Of course,
this leader of soft Bank, which in many ways owns
a large part of ARM, talking about this one hundred
billion dollar investment in infrastructure in the US.
Speaker 6 (02:45):
But a few weeks ago, how has this been in
the making.
Speaker 7 (02:49):
These discussions have been going on for many months. Something
like this does not happen overnight. I think the world
is seen that to reach AGI or ASI or some
of the the capabilities of artificial intelligence, a tremendous amount
of capital is going to be required. Obviously, a lot
of power is going to be required, a lot of
compute is going to be required. MASA has been looking
(03:10):
at this for quite some time. We've been talking to
the open ayfolks and Oracle and MGX and Microsoft and Nvidia.
So I think what you're seeing that just came together
was the culmination of all those conversations. But it didn't
happen overnight.
Speaker 6 (03:23):
For sure, does it have the money.
Speaker 5 (03:25):
I'm afraid some shade being thrown on this project by
one in a musque.
Speaker 6 (03:29):
Do you have anything to provide?
Speaker 5 (03:31):
I know you're the technology partner, but what about the capital.
Speaker 7 (03:35):
Yeah, I haven't seen Elon's tweet, although I certainly certainly
have heard about it. There is a lot of backing
for this, Caroline. Believe me, it was not taken lightly
to make the announcement yesterday at the White House with
President Trump. So I think it can feel pretty good
that the financial backing behind.
Speaker 6 (03:54):
This is quite solid and open.
Speaker 5 (03:56):
AI itself saying one hundred billion dollars is going to
be deployed in me comgiately, we understand already ground broken
in Texas.
Speaker 6 (04:04):
How big could this scale?
Speaker 5 (04:06):
How large a supercomputer on this particular time, and where
does the rest of the four hundred billion dollars go?
Speaker 8 (04:11):
Do you think?
Speaker 7 (04:12):
Well, just by way of if you look at the
dollars and the power the largest data center today or
data centers for AI or in the hundreds of megawatts,
five hundred billion dollars, which is just a gigantic amount,
buys you multiple gigawatts of energy, so you're talking orders
of magnitude of scale. The complexity required with that, though, Karen,
(04:34):
is enormous when you think about logistics, when you think
about materials, when you think about moving all those things around.
Speaker 9 (04:41):
This is what's going to drive a lot of jobs.
Speaker 7 (04:43):
By the way, our role at ARM is going to
be all around power efficiency. When you're at that scale,
every milliwat counts in terms of saving power. So that's
what our focus is going to largely be on.
Speaker 5 (04:56):
Talking of jobs, have you got the talent for this
KILO project?
Speaker 6 (05:00):
Where do you need to be allocating to it at
the moment? Is it talent?
Speaker 5 (05:03):
Is it bringing in yet more technology? Is it even
making acquisitions.
Speaker 7 (05:09):
We've been very, very aggressive in hiring folks. The ARM
has grown a lot since I became CEO in twenty
twenty two. We're about five thousand people or so. Then
we're now north of eight thousand. We've got lots of
open job rex, We're working with lots of partners. It
will take a lot of talent to pull this off,
but that's why we have a lot of partners involved
in this as well, whether it's Microsoft and Video Oracle,
(05:31):
Open AI. It's going to take a village, but we're
so excited about the opportunity and just the benefits I
think it's going to bring to humanity.
Speaker 6 (05:39):
What about benefits to others than open Ai?
Speaker 5 (05:42):
Is this going to remain only compute for open ai
right now?
Speaker 7 (05:47):
That's all we're talking about is open ai as the
primary partner. And again, our role at ARM is really
going to be providing the efficient processors. I'm super focused
on that. It's a big problem to undertake, but we're
thrilled that we're going to be the CPU of choice
inside these data centers.
Speaker 5 (06:04):
I remember a little while ago, in about May of
last year, having a conversation with another person in chips
is all about efficiency on energy who actually is also
called Renee.
Speaker 6 (06:14):
And I'm talking about Amper here.
Speaker 5 (06:15):
They have a close relationship with Oracle and soft Bank
has potentially been interested. How do you feel about the
relationship you're doing with that Oracle right now? And could
there be some sort of working relationship with ampere.
Speaker 7 (06:26):
Renee James is a great friend. Ampier uses arm CPUs.
Oracle is a big user of Ampier CPUs, so I imagine
in some way, shape or form, Yeah, I think Ampier
will be involved in this.
Speaker 5 (06:37):
Do you think they'll ever become part of the soft
Bank conglomerates of chip expertise?
Speaker 10 (06:43):
Yeah?
Speaker 11 (06:44):
That part.
Speaker 7 (06:45):
I can't go too far on, but I think you know,
ARM being the center of this is probably one of
the key data points from this announcement.
Speaker 5 (06:51):
Just on ultimately the laser focus that you have on
this energy side of things and the efficiency side of things,
but also that dovetailing with Mass's.
Speaker 6 (07:01):
Vision, your own vision to be ever more relevant in
data centers. Is this the project? Is this the fruition
that we'll get.
Speaker 7 (07:09):
I think what you're seeing is a culmination of continued
efforts in this space. We've been at the data center
problem for quite some time. We understand it better and
better each day, each week, each month, each year. You've
got major deployments now for ARM compute. I would look
at this as sort of the next phase of that evolution.
Some of the problems that need to be solved around
(07:31):
these AI data centers are very, very innovative, whether it's
at the blade.
Speaker 9 (07:35):
Level or at the ract level.
Speaker 7 (07:37):
Every ounce of power counts, and we think we've got
an amazing ip and solutions to go off and address that.
Speaker 5 (07:45):
Every ounce of power counts, every bit of capital counts,
but also it counts to have relationships at the top
of government. It feels like and from a bystander, here
there's friction. There's friction with eat on musk and some moment,
How difficult is that for you to navigate? How hard
is it for the US to win in this circumstance
If we've got two KEI players going head to head, well, you.
Speaker 7 (08:10):
Know, there's always going to be competition, Caroline, no matter
what market we're talking about. I was in Washington the
last few days around the ignageration activities. One of the
things I was just really struck with in talking to
many of the new officials who are coming on board,
is just the amount of pace that wants to be
applied to solving some of these problems. You know, again,
(08:32):
to put up these large data centers is not only
a huge task in terms of capital and compute, but
you need permits and regulatory clearances and a number of
different things that need to get done to pave the way.
And I really get the sense that with this new
administration they're very much on board to make this happen
and make it happen inside the United States.
Speaker 5 (08:54):
Is there a risk though, that we're going too fast
because suddenly we're potentially getting rules of the road, the
regulation and indeed, some of the governance will just torn
down in favor of pace.
Speaker 7 (09:08):
You know, I'm an AI optimist. You and I have
chatted about this a number of times. I think the
benefits that are going to come from this work are
going to outweigh it with the negatives.
Speaker 12 (09:16):
You know.
Speaker 7 (09:17):
One of the areas I continue to be the most
excited about is medicine drug research. When you think about
the fact that today it takes ten to fifteen years,
twenty years to develop a new drug. From the start
of the molecular science, ninety five percent of those drugs fail.
They never see the light of day. And then you
get into the testing, whether it's on animals and humans
and focus groups, shrinking all of those things down, finding
(09:40):
ways to cure cancer, finding ways to have drugs that
are specifically your genome, your DNA. This is all possible
with AI, and I think AIS be require to have
the breakthrough to cure some of these horrible diseases that
we've never been able to solve.
Speaker 6 (09:54):
And this is a private effort.
Speaker 5 (09:55):
This is money and capital coming from foreign entities, but private.
They held businesses here in the US and indeed the
capital markets.
Speaker 6 (10:03):
Does no one need to come from government, because actually
that's what we saw in the previous administration, was.
Speaker 5 (10:07):
Real money coming from the government for chips. Will that
come from this next administration?
Speaker 7 (10:12):
Do you think, Yeah, that's not part of this announcement.
This announcement has nothing to do with the government in
terms of putting money into it. I think though, the
government has a role to play, as I mentioned, in
terms of just clearing some of the regulatory hurdles, which
is not small. So having the government on your side
as you're trying to accelerate these efforts is only a
good thing.
Speaker 5 (10:31):
Rene Has has been nothing but a good thing having
you on the show. We appreciate it, CEO of and
sending it back to you, Tim and Carol.
Speaker 3 (10:38):
All right, so appreciate it our Caroline Hi there with
the CEO of Armholdings, Renee Has. We are staying though,
with the world of artificial intelligence because there is so
much going on.
Speaker 11 (10:47):
It really is top of mind.
Speaker 3 (10:48):
And this is coming after the first twenty four hours
back in Washington, we did see President Trump send a
different message to the AI community. He basically was just saying,
just build and that is kind of teeing off what
we just heard from the Arm Holdings CEO that one
hundred billion dollar AI spending spree led by SoftBank, Open
Ai and Oracle with a focus on that physical infrastructure.
Speaker 11 (11:10):
And there's a lot more than that going on. Tim.
Speaker 10 (11:13):
Yeah.
Speaker 4 (11:13):
At the same time President Trump were sending Biden sweeping
executive order on AI. The move immediately haulted the implementation
of key safety and transparency requirements for AI developers. And
then another headline alphabet Google's latest one billion dollars into
one of the most promising rivals to open a We're
talking about the AI developer anthropic. So here with our
(11:34):
AI roundup. Back with us, as Bloomberg News AI reporter
Rachel Metz joins us live from San Francisco. Rachel, I
do want to start with what we just heard from
Renee has and Caroline Hyde about this stargate project at
one hundred billion dollars five hundred billion dollars. Help us
read through the numbers here and read through the press releases.
Give us an understanding of how you're interpreting this announcement.
(11:57):
Now that the dust has settled just about twenty four
hours after.
Speaker 13 (11:59):
This announcement, so, as Renee said, this has been in
the works for a while, and we've reported on various
talks related to infrastructure plans. As we all know at
this point, AI is extremely expensive, so if you're going
to do anything really impactful, you're going to have to
spend a lot of money. So it does make sense
(12:20):
that there are some really big price tags connected to this,
and the names that are involved make a lot of sense.
I think it's important to keep in mind that this
is really meant to be beneficial to open AI. Open
Ai is an equity holder in this, and also, as
they said, this is to build infrastructure for that company.
Speaker 3 (12:39):
Well, and that's what I was curious about Rachel's We
kind of went through the list of companies, those companies
that are part of this, including ARM and others. Does
it mean that they are at an advantage and those
that are not at a disadvantage?
Speaker 13 (12:54):
You mean, are these companies that are involved at more
of an advantage than other companies that are not involved.
Speaker 3 (12:58):
Yeah, in this particular bill in terms of infrastructure and
then kind of working with the government directly.
Speaker 14 (13:05):
I mean, you.
Speaker 13 (13:06):
Could say that they're at an advantage because they are
market leaders working with a market leader, but it sort
of remains to be seen like right now, some buildout
is underway in Texas, as they said. Larry Ellison indicated
last night in an interview on Fox News that the
Texas buildout will be used to train an upcoming.
Speaker 15 (13:26):
Model from open AI.
Speaker 13 (13:28):
But other than that, we don't really know much about
what's going to happen here. We don't even know who's
putting in how much money for the most.
Speaker 15 (13:34):
Part, so a lot of this tool is a TBD,
I would say.
Speaker 4 (13:37):
Well, speaking of that, we're already hearing from Elon Musk,
your close advisor to the president and of course overseeing DOGE.
He openly questioned whether companies that joined this announcement promising
hundreds of billions of dollars in AI infrastructure could actually
follow through on their promise. How do you look at
Elon Musk's role in all this, considering his history with
(13:57):
Sam Altman at open AI, what he's doing at XAI,
and his close proximity to the president, how do you
make sense of that?
Speaker 13 (14:06):
I think you've got to answered your own question a
little bit right there. I mean, it sounds Elon Musk
clearly has a long history with Sam Altman and with
open AI, and Elon is also involved in his own company,
he's involved with now the federal government.
Speaker 15 (14:20):
So he's got a lot going on.
Speaker 13 (14:22):
I think he made a really fair observation, though, like, hey,
where where is this money coming from? Because as we
were just talking about, they are saying, here, we're going
to be using this much money, but it isn't clear
at this point where exactly all that money is coming from,
and that money hasn't all been spent yet. So I
do think that questioning where it's going to come from
(14:43):
is fair. I think it's a fair question to ask.
Speaker 4 (14:45):
But is it surprising to you, Rachel, not to see
an Elon Musk company front and center in this announcement
given his influence on President Trump?
Speaker 13 (14:55):
Hmm, you know, I'm really not sure, because again, this
has been in the works for for a long time,
so it would be difficult, I would think for Xai
or another of Elon Musk's companies to sort of swoop in.
If these other companies, let's say, we're talking about this
for a long time, that might be a little more surprising.
Speaker 2 (15:14):
Rachel.
Speaker 3 (15:15):
So wait, if this has been in the talks for
a long time, are you saying since President Trump was elected?
Speaker 11 (15:20):
So this is.
Speaker 3 (15:20):
Definitely, you know, an initiative that Donald Trump the president
started or would this be also have or have been
announced potentially under if we had seen Kamala Harris in
the White House.
Speaker 13 (15:33):
I mean, this is not the government is not doing this.
This is something that's been.
Speaker 15 (15:37):
In the works.
Speaker 13 (15:38):
This is a private sector investment that's been in the
works for a long time. I mean, we've reported on
various talks and possibilities for this sort of arrangement over
the past year.
Speaker 4 (15:49):
It's interesting to hear that because at the same time,
speaking of government, as I mentioned, President Trump resented biden
sweeping executive order on AI, so it halted the implementation
of key safety and transparent and see requirements for AI developers.
How do you analyze a move like that in terms
of regulation and certainly the calls that we've seen from
some folks in the community that say, hey, this is
(16:11):
technology that needs to have some oversight.
Speaker 3 (16:13):
Yeah, and where's Elon's kind of stamp in this where
he has raised those concerns.
Speaker 15 (16:19):
Yeah, No, those are some really good questions.
Speaker 13 (16:21):
I feel like what we're seeing now is sort of
what one would expect. You'd expect to see, less oversight,
less regulation, with this administration, But there are also a
lot of valid questions about how these AI models are
going to be used or being used now, how powerful
they will be, all those kinds of things. Even AI
(16:43):
companies themselves have said that they support various forms of regulation.
So I'm not really sure what's going to happen from
here on out in this administration, but it is clear
that there will certainly be less regulation, less emphasis on
openness on the parts of the tech company.
Speaker 11 (16:58):
And is it safe to say Rachel.
Speaker 3 (16:59):
At the same time time, when we think about officials
overseas or over in Europe, where they have often been ahead,
I feel like when it comes to privacy, consumer privacy,
with social media and the digital world, that they're going
to keep moving ahead. In terms of AI oversight, AI transparency.
Speaker 15 (17:17):
It's possible, it is possible that we'll see that.
Speaker 13 (17:20):
I think the next I would say the next like
four months, six months is going to be really instructive
as to what's going to happen over the next year
or two.
Speaker 4 (17:26):
Okay, we said this would be like, you know, a
round of quick questions or fire questions when it comes
to AI. So we're kind of going all over the
places promised Rachel. I'm wondering about this recent funding and
more recent funding for Anthropic. This is a company that's
a competitor to open AI, Google putting in the latest
(17:47):
billion dollars into the company. Is this a company that
does hold a candle to open AI, especially given the
announcements yesterday.
Speaker 8 (17:55):
Yeah.
Speaker 13 (17:55):
I think certain models that they make are super competitive.
I know that program in particular, really love using some
of their models. Anthropic has really prided itself as a
company that focuses on safety. I think that resonates with
a lot of their customers, and they have a lot
of smart people working there. As we said before, AI
extremely expensive to build, so they're going to have to
(18:17):
keep bringing in money to get their systems to where
they want them to be and get them out to
their customers.
Speaker 11 (18:23):
You know, I am curious.
Speaker 3 (18:25):
As we said, there's a lot kind of coming at
at the space, and I'm not surprised, right, I mean,
I feel like so many of our conversations revolve around some.
Speaker 11 (18:32):
Kind of aspect of AI.
Speaker 3 (18:33):
We're going to have more about drug development a little
bit later on this hour, so there's just so much
going on.
Speaker 11 (18:38):
But how are you I don't.
Speaker 3 (18:40):
Know, thinking about kind of the world right now when
it comes to AI and what's top of mind for you.
Speaker 15 (18:48):
Ooh, that's a tricky one.
Speaker 13 (18:50):
I mean, I feel like we're entering a phase where
a lot of companies are working on agents AI systems
that can carry out more complicated tasks.
Speaker 15 (18:59):
But it's still very very early days in that.
Speaker 13 (19:01):
I mean, companies have been trying to build that sort
of thing for a while now, and we're just starting
to see some real products go out over these past
several months, and we'll see also in the future.
Speaker 15 (19:11):
So I think that's.
Speaker 13 (19:11):
Something I'm going to be keeping a close eye on
and seeing just how capable these things are. I mean,
there are so many promises and so many bombastic figures
in AI, but I think it really comes down to like,
how do these things actually work for people? How are
they built? And also I'll be paying more and more
attention on the environmental impacts, which I think a lot
of people are paying more attention to as well. As
(19:33):
these systems get bigger and more powerful, they consume more resources,
and that's also something I know a lot of people
are interested in.
Speaker 3 (19:39):
All Right, great perspective, As always, there's as we said,
so many headlines, so many different stories, and Rachel mets
just making sense of it all.
Speaker 11 (19:45):
Rachel Metz is Bloomberg News AI reporter.
Speaker 2 (19:48):
You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 3 (20:02):
As you know, we are all in on AI today,
as seems to be the case in Washington, President Trump, Davos,
a lot of tech companies, Google and more. As you
heard earlier, one area we increasingly are talking about when
it comes to artificial intelligence is healthcare and specifically drug discovery.
And our next guest can shed some light on that
with us is najat Con. She is chief Commercial and
(20:22):
R and D Officer at the publicly traded three billion
dollar market cap biotech and drug discovery company Recursion. It
is headquartered in Salt Lake City. She joins us here
at our New York studio. So great to have you here.
It does feel like we have this theme. First of all,
tell us.
Speaker 11 (20:37):
About your company and what you guys are working on.
Speaker 14 (20:40):
Absolutely, you know, Recursion is really focused on founded on
the intersection of AI and bio coming together. And one
of the main reasons for that is today if you
look in the healthcare industry making medicines, ninety percent of
those drugs fail in the clinic, so only a ten
percent success story time and cost is too long and
patients for waiting. So what Recursions is doing is leveraging
(21:01):
AI and high quality data sets that are actually generated
in our own labs at scale automated web labs in
order to build fit for purpose AI algorithms that are
then used to decode biology to really understand what's driving
the disease, use generative AI to design molecules, designing molecules
that somebody who's a PhD Organic chemist never considered before,
(21:24):
and then using that to make medicines in the clinic.
So today we have ten clinical stage and preclinical programs
in the clinic across oncology and rare diseases, and over
ten programs in discovery and ten additional programs with partners
like Roach and Santa Fe. So real powerhouse in terms
of not just the idea of using AI, but applying
(21:47):
it to make medicines that are different shaded for is.
Speaker 4 (21:49):
It's actually being used right now as we speak absolutely
explain exactly how that's happening.
Speaker 8 (21:54):
So I'll give some success stories.
Speaker 14 (21:56):
Maybe I'll share an example because it just makes it
more real. Nine is a program. It's in solid tumors,
that's in the clinic. It's recruiting patients today. The concept
that this protein, this target could be important in cancer
came from these maps of biology that recursion creates. You're
taking images of cells, applying computer vision and AI, and
(22:19):
then actually you can discern what compounds take diseased cells
back to healthy cells. So from that's where the insight
came from. Second, we actually use generative AI active learning
to design the molecule. One of the biggest challenges when
you're actually trying to design the molecule is ensuring that
it doesn't just work well from an efficacy perspective, but
(22:41):
it's also safe. So that's the other thing, and here's
the beauty of it.
Speaker 11 (22:45):
Wait, so it's being put to use though already, like.
Speaker 3 (22:47):
On actionity, we're seeing what you guys are doing, we're
seeing it on patients.
Speaker 14 (22:52):
Absolutely all of the programs in the clinic or in
pre clinical is using AI, and as an example, just
the RBM thirty nine program which is in solid tumors.
It takes usually about forty two to almost fifty months
to get into the clinic from an idea to get
into the clinic, this took eighteen months two hundred less
(23:12):
than two hundred molecules synthesize usually in industry, and I
come from large pharma before you're making three four five
thousand compounds, so you're doing things better faster, And the
insight is a first in class molecule, which means nobody's
come up with this before. The idea came from leveraging
AI to create these maps of biology coupled with precision
(23:33):
AI chemistry design to make new molecules.
Speaker 3 (23:36):
But as we've talked about Nazade, like the AI or
the outcome is only as good as the data going
in and app So some say that we're still kind
of early in. I know there's a lot of data
out there, but I would in the healthcare community, how
do you ensure the kind of the purity of your
data sets that your outcomes are really productive.
Speaker 14 (23:55):
That's such an excellent question. Look, I think even before
we talk about AI data is the different shader and
fit for purpose data sets. So at recursion we have
about sixty petabytes of data that we have generated both
internally and also partnering with partners such as Tempest and others.
This is the difference. It's having a wet lab and
(24:17):
a dry lab. So essentially you're generating the data, using
that data to train your algorithms, and you're going back
in those algorithms as they get better. Are actually than
predicting what experiments you should make. We call it the
real world and the world model and so forth. That
is a different shader because then you can have your
algorithms be best in class. And a lot of this
is proprietary data sets in Salt Lake in our headquarters
(24:38):
that we are generating, and then on top of that,
you're applying it around problems that really matter. This is
the other thing that's really important. We don't just use
AA for the sake of AI, but we use it
based on the pain points that leading to the ninety
percent failure rate today. Right, So what are those number
one understanding was driving the disease? It sounds really simple,
(24:59):
but it's usually not one protein. Is multiple things that
are happening in our body. Maps of biology give you
not just the pinpoint of what's driving the disease, but
everything else that is connected to think about it as
the highways that connect across our different cells and organs.
The other is also using AI and machine learning to
think about ten to the sixtieth permutation is what you
can have in terms of the compounds you can make.
(25:19):
No human can actually think through that. So you're using
AI to design the molecules all in a computer and
only make the ones that you've convictioned it.
Speaker 4 (25:26):
We heard Larry Elison say yesterday that we could see
a cancer vaccine, an mRNA based cancer vaccine as a
result of investment in AI. You're talking about tumors being targeted.
What are the other conditions now that you think could
be targeted as a result of AI and pharmaceuticals within
our lifetime? Like, what's the world that we should be
(25:47):
imagining for our kids.
Speaker 8 (25:48):
And for our grandkids?
Speaker 4 (25:49):
Yeah, I think for us maybe in a few years.
Speaker 14 (25:51):
Well, that's the goal because patients are waiting, and that's
the reason why the BET and what we're doing. Here's
what I would say oncology. Absolutely, rare disease is we
also have programs and rare diseases, whether the underpinning of
it is genetic mutations or other aspects. And this is
and also immunology. That's the next arc. And I want
to emphasize immunology because the immunom is what connects all
(26:12):
of the different diseases, whether it's oncology, neuro and so forth.
The trick to it is the following though. It's not
enough to just have one data layer. You need to
have multiple data layers. So what do I mean. You
want to have genetics, You want to have transcryptomic, which
is how are the proteins, how is mRNA being transcribed?
You want to have protein data, You want to have
patient data like eachr the claims. You have to connect
(26:36):
across all of those data system That's what we're doing.
So what Recursion has is a multi O mix, multi
modal data layer that we have generated the petabies that
I mentioned. That is quite unique because you need that
to be able to address biology from all of those
different angles oncology, immunology, neuroscience.
Speaker 3 (26:54):
We only have about a minute or so left here.
I know we could probably go on for at least
an hour to write to talk a.
Speaker 11 (26:58):
Little bit more about this.
Speaker 3 (27:01):
Your stock surge back in the summer of twenty twenty
three with a record rally following news of the investment
from Nvidia that was more than one and a half
years ago.
Speaker 11 (27:09):
What's Nvidia's role in all of this?
Speaker 14 (27:11):
Great question.
Speaker 3 (27:12):
It's a big investment, and again only got about forty
five fifty seconds.
Speaker 14 (27:15):
We talked about how data is really important and high
quality data and AI algorithms that sit on top of that.
Everything that underpins developing these AI algorithms and finding insights
from the data is that you have to have exceptional
supercomputer capabilities. And by the way, the one that we've built,
Biohi two with recursion and collaborate with the Nvidia and collaboration,
(27:35):
is the fastest supercomputer in the life sciences industry, thirty
fifth in the world, fastest in life sciences. Without that,
we can do these things at scale.
Speaker 3 (27:44):
So do you ultimately again just got about ten fifteen seconds.
Do you ultimately hook up with the big drug makers?
Do they access your technology or how does this?
Speaker 14 (27:51):
Yeah, we have partnerships with four pharma companies large Sanofee,
Roschenantec buyer, MARCGA with multiple programs across oncology, immunology, and
neuroscience that we're partnering on well.
Speaker 3 (28:02):
Stay in touch, love to hear more as you guys
build out and continue your build out. NA dot Com
Chief Commercial and R and D officer at the publicly
traded three billion dollar market cap biotech company Recursion. Joining
us right here in studio.
Speaker 1 (28:17):
You're listening to the Bloomberg Business Week podcast. Catch us
live weekday afternoons from two to five these during listen
on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 4 (28:31):
President Donald Trump widened his tariff threats to include China
and the EU on a second day back in office,
after day ones on Canada and Mexico and his sits Carol.
Here's what he said. We're talking about a tariff of
ten percent on China based on the fact that they're
sending fetanol to Mexico and Canada. He said that during
an event at the White House on Tuesday, and he
(28:51):
specified February first as a possible date.
Speaker 3 (28:54):
We've seen some reaction to at the NASDAK Golden Dragon
China Index, which tracks companies Chinese companies that trade here
in the United States that do business in China but
are traded. As we said in the US. It's down
about half a percent right now, so we keep an
eye on it. For some sensitivity about US China and
terrists between the two, well, for.
Speaker 4 (29:11):
An idea of what Chinese companies faced over the next
four years. We bring back Ben Harberg. He's founder and
portfolio manager of Core Values Alpha. He manages the CVA
Great China Growth ETF ticker cg RO. It's got a
market cap about seven and a half million dollars. It's
biggest holdings include shall Me, PDD, ten Cent, Trip, dot Com, Buid,
and more. Ben usually joining us from China, but today
(29:33):
he's stateside in Washington, d C. Ben, you were in
d C for the inauguration. Why did you make the trip?
Speaker 8 (29:42):
I think this is done in America.
Speaker 10 (29:44):
I think this is the new really is a new
era for business, for regulation, for education reform.
Speaker 8 (29:52):
I wanted to see the personalities.
Speaker 10 (29:53):
I wanted to spend time with the cabinet members and
really get a sense of where things are headed, and
meet the MAGA faithful of course as well, but really
really to be here at the presspice if I think
something really exciting for our country.
Speaker 4 (30:08):
It's interesting to hear you say that because you run
a portfolio that is made up of companies that do
business in China, and China is certainly in the crosshairs
of the Trump administration. It happened during the first term,
it's no doubt happening already right now. So surprised to
hear from you that you would be optimistic about the
Trump administration given your holdings.
Speaker 10 (30:32):
Well, we have pretty diversified holdings. As we discussed last time.
We have much bigger on the private side.
Speaker 8 (30:36):
Much of that is in the United States.
Speaker 10 (30:38):
Some of our biggest holdings are US defense names as well.
So the segro ETF is part of a diversified portfolio.
Is I think we think is exciting given the kind
of undervalued nature of the Chinese market, But it's by
no means our principal vehicle and one that shapes our policy.
Speaker 8 (30:53):
But I don't think that.
Speaker 10 (30:54):
I don't think the two are necessarily independent of one another.
A strong US economy also benefits China. And at the
end of the day, I think Trump is a businessman.
He wants to see you, As you said publicly, both
economies do well. You think both economies together can solve
many of the world's problems. And I think what's critical
now is that we lay the foundations for a actionable,
(31:17):
pragmatic trade deal, kind of a two point zero trade
deal that actually could I think i've filled you guys
before benefit Chinese stocks in the long term because a
lot of those tensions would.
Speaker 8 (31:28):
Be taken off the table in the name of pragmatism.
Speaker 3 (31:31):
So what's more interesting to you than Ben because we
often talk to you about what's going on with Chinese companies,
in particular amid US China relations and other news developments.
Having said that, as you said, you guys across your
portfolio can go to other places.
Speaker 11 (31:45):
What's more exciting to you right now?
Speaker 3 (31:47):
Is it trading in US companies, buying investing in US
companies at this point as a result of a Trump
White House, a second Trump White House, or are there
opportunities in China as well?
Speaker 13 (31:59):
Well?
Speaker 10 (31:59):
Again exclusive, I think the Chinese companies are massively undervalued,
but we have held the viewpoint for over a year
that were Trump to come into office, it could lead
to a binary, significantly improved outcome for Chinese companies. And
if they're already trading at historic lows and against all fundamentals,
that means that investing the Chinese market today. If a
(32:20):
trade deal is struck, and I think it will be
because because Trump wants to get things done, could lead
to four or five x returns on the current kind
of valuations of today's Chinese companies that we see it.
With TikTok for instance, I mean, TikTok is probably worth
about five times greater than what it's trading on the
private secondary market once some kind of you know, kind
(32:44):
of concrete outcome is determined about its future. We were
of the viewpoint, for instance, that it would not be banned,
and everything has played out exactly as expected. So I'm
also very much excited about America. My kind of personal
passion is the reindustrial relation of the United States. Thinking
about ways that we also build our supply chain independents,
(33:05):
reinvigorate our manufacturing, think about all the key technology areas,
be it quantum, AI, drones, and next generation defense, and
so there's going to be a lot of really exciting
investment into that space as well. One of our biggest
holdings historically was Palan. Here we've invested in a lot
of the other next generation defense technology companies in the
United States, and I think all of them are going
to boom with this administration coming in.
Speaker 4 (33:26):
But to be clear, the only fund you managed, at
least according to the Bloomberg terminal, is the Core Values
Alpha Greater China ATF correct.
Speaker 8 (33:33):
I know.
Speaker 10 (33:34):
I'm also a managing partner on all of our private
funds as well.
Speaker 4 (33:37):
Okay, but public public funds as far as like portfolio.
Speaker 8 (33:40):
None of these are public. Yeah, these are the private Okay.
Speaker 4 (33:42):
So the public fund, the public fund that you have though,
is exclusively China.
Speaker 8 (33:45):
And we're adding in more. Okay, we're adding in more
to that.
Speaker 4 (33:49):
What are you adding in?
Speaker 8 (33:51):
So we're adding in.
Speaker 10 (33:52):
If you look at the website, we really we describe
ourselves as America First Equities Investing, and we'll be launching
several We'll be launching a defense related fund, We'll be
launching a US reshoring related fund, We'll be launching several
other products that that I think will benefit from the
current dynamic. And our thesis on the China Fund from
the offset was we're competing against other fund managers like
(34:14):
k web that are CCP owned. The ic C is
the owner of k WEB, which is a state owned
asset manager from China. And our view was we could
differentiate from them and outperform them, as we did last
year by doing a screen of all those China names
to en sure they weren't infringing upon US national security
interests or values.
Speaker 8 (34:32):
So that was our differentiator in launching this product from
day one. It's kind of America first, China investing.
Speaker 4 (34:37):
Given what I'm hearing from you, and given what we've
talked about in the past, it's it's you know, you're
talking a lot about the US. Our focus int of
interviews with you over the past couple of years have
been in China. You've joined us from China. Oftentimes, do
you see yourself staying in China over the next four
years or do you move to the United States.
Speaker 8 (34:53):
We've always been multipolar.
Speaker 10 (34:54):
We have had we have our offices in China, but
we've I've also based myself based myself most of the
time in out of the Middle East the last couple
of years, and then we have homes in Boston and
San Francisco, so I've always been multipleler moving between those.
But I think that over the coming year or two,
you'll see me spending a lot more time here in
the US because this is really where decisions are being
(35:15):
taken that will ripple.
Speaker 8 (35:16):
Through the rest of the world, and I want to
be on board for it.
Speaker 11 (35:20):
Totally get it, hey, Ben, So remind us how much
you guys.
Speaker 3 (35:22):
Have in assets under management and what you are seeing
in terms of flows coming in or going out.
Speaker 10 (35:28):
We're about two and a half billion dollars across all
of our products, and again most.
Speaker 8 (35:32):
Of that is private.
Speaker 10 (35:35):
We have been effective at it again taking on board
capital from from the Middle East, from Europe and the
United States and depulling that again into really strong names.
On the US side, China's obviously seen a dearth of
Western capital flowing into it, as probably is relatable and
understandable under the kind of conditions that have been going.
Speaker 8 (35:57):
On for the last five six years.
Speaker 10 (35:59):
But we've found a way to find products that match
kind of the requirements of different institutional limited partners depending
on the type of capital explore controls they face.
Speaker 3 (36:09):
What are you seeing in terms of Middle Eastern investors?
I do feel like it's almost a new day in
Washington when it comes to investments perhaps coming from that
region of the world into the United States. What are
you seeing and hearing only got about thirty seconds here.
Speaker 10 (36:26):
They were always very overweight towards the West, but more
so towards Western Europe.
Speaker 8 (36:30):
I think they recognized today that's a.
Speaker 10 (36:31):
No go and unattractive, and so a lot of them
I bumped into a lot of them over the course
of the past weekend who are wanting to scale up
their investments in the United States, across energy, the energy
necessary for this AI revolution, into defense technology, into things
that will be benefiting from Trump's very business friendly, deregulatory
(36:52):
and tax friendly regime.
Speaker 11 (36:54):
All right, going to leave it on that note. Good
to catch up with you. I'm so appreciate it.
Speaker 3 (36:57):
Ben Harberg, He's founder and portfolio manager of Core Values Alpha,
joining us on this Wednesday from Washington, DC.
Speaker 2 (37:06):
This is the Bloomberg Business Week Podcast. Listen live each
weekday starting at two pm Eastern up on applecar Play
and Android Auto with the Bloomberg Business App. You can
also listen live on Amazon Alexa from our flagship New
York station, Just Say Alexa played Bloomberg eleven thirty.
Speaker 4 (37:24):
Netflix shares at a record today app nine and a
half percent as we speak. The company reported its biggest
quarterly subscriber gain in history. It was buoyed by its
first major live sporting events and the return of squid game.
Rich Greenfield is partner in a media technology analysts at
Lightshed Partners. He joins us from New York City.
Speaker 8 (37:43):
Rich.
Speaker 4 (37:43):
There are good quarters and then there are good quarters
such as this one. What specifically, in your view, led
to this blowout quarter.
Speaker 16 (37:52):
Look, it's all about investing in content, right, I mean,
this is a company that has despite all of the
competitive landscape. You know, you think about over the last
five or six years, You've seen things like Disney Plus
and Paramount Plus and Peacock, all of the you know,
(38:12):
all of these big legacy media companies have ramped up
streaming services.
Speaker 9 (38:17):
They've each lost billions of dollars.
Speaker 16 (38:20):
They're all now scaling back, you know, cutting back their spend,
desperately trying to get to profitability and to eke out
some you know, positive contribution from years of losing money
in sort of a black hole. Meanwhile, Netflix has just
continued to persevere build more content, create more content that
(38:40):
consumers love, and really focus with a real global focus
on making sure that there's constantly new content for you
to watch.
Speaker 17 (38:50):
And I think that focus on time spent.
Speaker 16 (38:53):
You know, most of the other media companies out there
that have streaming platforms. You know there's one show maybe
a quarter that you watch once a week, get best
for like forty five minutes, maybe even twenty or thirty minutes,
Like they're not optimizing for time spent. Netflix never wants
you leaving, Like literally, they are trying to put as
much great new content on every single day, every week
(39:15):
there's something fresh, like they don't want you leaving, and
that time spent is obviously bearing fruit. You see it
in how much share they have of TV time spent
versus all of their peers, dwarfing the Disney pluses, the Hulus,
the Peacocks, the Paramount pluses. But it's also giving them
importantly the ability to raise price, because you see price
going up pretty meaningfully yesterday, and I don't think there's
(39:38):
gonna be any meaningful consumer pushback.
Speaker 3 (39:40):
All right, So that's true, whether it's Squid Games or
Beyonce or something I'm binging on which will remain I'm
not gonna tell you what I I just.
Speaker 16 (39:50):
Watched Black Doves. I just watched Black Doves. Like there's
just lots of content from all over the world, right
vice versa, Like there's you WWE Raw, which they took
from you know, essentially what was on USA network now
it's on Netflix. It's not just being watched domestically. I
think the beauty of Netflix is it's being watched globally.
It was the fourth largest programming last week. So if
(40:12):
you look at sort of like how they're building global viewership,
squid Game was the opposite, right, that was international programming
coming to the US. Like, they're just doing an incredible
job globalizing content and building audience.
Speaker 11 (40:26):
Well, okay, so rich.
Speaker 3 (40:27):
If it's so obvious, why aren't the others doing it?
Or is it just that Netflix is doing it so
well and they keep making so much money that their
pockets just kind of are swelling with money that they
can spend on even more content which the others don't
kind of have.
Speaker 11 (40:43):
I mean to help me understand.
Speaker 16 (40:46):
I got a text message from an investor last night
and they were just like, why does everyone just not
copy them?
Speaker 9 (40:52):
I don't understand.
Speaker 11 (40:53):
Yeah, that's my question.
Speaker 16 (40:56):
One is you know, and Netflix sort of hooked fun.
You know, it was almost trolling in their press release
if you're read through it, they were like, we don't
have to worry about declining legacy businesses. Right like all
of these traditional media companies, they're trying to balance right there,
their core cash generation comes from linear television. That business
(41:20):
is in decline. You know, you're seeing cord cutting getting worse.
You're seeing ad dollars shifting from linear TV to streaming
TV and even to mobile platforms, and so they're facing
all of these pressures. And so it's very hard when
your core business is in secular decline investing heavily in
the future and telling investors don't worry about making money now,
(41:41):
will make money in the future.
Speaker 17 (41:43):
They tried that.
Speaker 16 (41:44):
I think they ran out of leash pretty quickly because
investors didn't believe there was a pot of gold at
the end. And so the bottom line is, I think
the answer to your question is they don't have the
stomach to build a massively scaled global platform. And it
really raises the question, if you're not going to try
to win globally long term, why are you even in
(42:05):
the business?
Speaker 4 (42:05):
Taken Okay, so that's a great segue to my next question, Rich,
is what is the future of those companies the Paramounts,
the Disney's, the Comcast, the Warner brother Discoveries, the Foxes.
How do they survive?
Speaker 9 (42:18):
You know, maybe they focus.
Speaker 16 (42:19):
You know, look, niche offerings have always existed in will
always exist.
Speaker 9 (42:24):
Maybe they're each more niche.
Speaker 16 (42:25):
You know, maybe Disney Plus is a way to watch
Disney movies primarily, you know, like a babysitter on demand
for your kids. Maybe it isn't something that you're going
to use every day. Obviously, they're integrating Hulu, they're integrating
you know, Espn. They're launching ESPN Directing Consumer at Disney.
I think they're trying to build a more comprehensive service,
(42:45):
but it's hard. I mean, the price point is certainly different.
You know, ESPN is going to be an expensive addition
into the Disney Plus and Hulu bundle. Look, I'd say
the one company that really has a shot at taking
an entirely different approach, and I would really, you know,
urge anyone listening to this think about Paramount.
Speaker 17 (43:07):
You've got a new CEO coming in.
Speaker 16 (43:09):
You know, you just saw I don't know if you
watched Trump's press conferences yesterday, but you saw Larry Ellison
on stage, you know, really front and center, you know,
talking about massive investment. You saw what you know, the
Ellison family just took control. You know, his son David
has taken control with guidance ors in the process of
taking control of Paramount. You know, there you have a
(43:29):
forty one year old CEO of the combined company after
the merger closes this year, theoretically someone with a twenty
thirty forty year view and hopefully they're not going to
be focusing on cutting investment in programming and focusing on
near term free cash flow. They're going to literally build
to win and take a very tech centric approach to
(43:52):
media because I think what you're really asking is who
has the stomach to think like a tech company in
the sort of you know, the body of a media
or legacy media company. It requires a very different skill set.
You really have to focus. You know, if you think
about what Apple, Amazon, Meta, like, TikTok like, what are
all of those companies obsessing about time spent? That's what
(44:15):
you need to win in streaming. You have to control
time spent. YouTube does a great job of it. Netflix
does a great job of it. Prime Video is doing
a better and you see what they just did with
the NFL and now the NBA is coming like there
is a real focus on driving time spent.
Speaker 17 (44:30):
That's what it takes.
Speaker 16 (44:31):
Look, I think David Olson has a shot at really
being able to do that. The question will be do
you need consolidation over time? I think that's a question
we hear a lot, whether it's WBD or you know,
obviously Comcast has NBC Universal. Will we see consolidation, I
think is sort of where you're heading. I don't think
there's a lot of imminent consolidation because I think there's
(44:53):
a lot in flux right now in the industry. But
over time, I think that becomes the big question of
if you're not trying to get to global scale and
you don't think you can get to hundreds of millions
of subscribers watching hours a.
Speaker 17 (45:04):
Day, you cannot win in this game. You are going
to lose.
Speaker 3 (45:09):
I mean, doesn't that mean, then, Rich there has to
be some consolidation or at some point, I mean we
all just kind of talk about how we're getting kind
of over contented, if you will. I mean, there's just
so much coming out of us. There's only only so
many hours in a day. I mean, at some point,
don't some of them have to go to the wayside?
Speaker 9 (45:29):
Yeah?
Speaker 16 (45:29):
I mean, look, I think either they get scaled back
into just smaller businesses. They you know, they may not
be global competitors. I mean, look, you know Peacock is
domestic only. Who lose domestic only? Paramount Plus is you know,
trying to be global. Max is certainly the one that's
you know, if you look at what David zaslows, and
he's probably done the best job of trying to build
(45:50):
out globally. But they need a lot more content, Like
is it just you know, it feels like Max is
increasingly just becoming HBO And maybe they rebranded. I mean
that was one of our predictions for this year, that
they just rebranded HBO.
Speaker 17 (46:02):
And maybe it's just a more focused service.
Speaker 16 (46:05):
Like right, Like just like Disney has its lane, HBO
has its lane. Maybe these things are just smaller and
playing a different game than right Netflix is playing.
Speaker 4 (46:14):
Rich What do you know about that? What do you
know about consumer behavior in this space? And I think
of my own I mean, my reference point is me,
and I would say that, you know, we subscribe to
all of these things. We spend more money on this
than we would on a cable bundle. It's almost like,
you know, I spend more money on Spotify a year
than I did when I was buying music, you know,
fifteen twenty years ago on CDs. What what's twell twenty
five or thirty years ago. I guess you'd say, got
(46:35):
to get my dates?
Speaker 7 (46:36):
Right?
Speaker 8 (46:36):
What's that?
Speaker 9 (46:37):
Like?
Speaker 4 (46:37):
What's typical consumer behavior here?
Speaker 16 (46:41):
I mean, look, certainly from a time spent standpoint, the
two places that are you know, vacuuming up time spent
on television screens. You know, the big screen in the
home is YouTube and Netflix, and everybody else is you know,
pretty far behind. I mean, Amazon's coming up and certainly
doing better, but everybody else is still fairly small. And
(47:03):
I think you know, this guy sort of goes to
what is your core service? You know, who are gonna
be the core services in the home?
Speaker 9 (47:11):
Like when you get home on.
Speaker 16 (47:12):
Thursday night, you know you've had a long work day.
You're gonna turn on some entertainment. What are you turning on? Like,
if you're not flipping through TikTok or you're not flipping
through reels or YouTube or whatever on your phone, you're
turning on the big screen device, where do you go first?
Speaker 9 (47:28):
Like that moment of truth?
Speaker 16 (47:30):
That's what Netflix has been winning, right, Like they are
the place you turn to find something to watch.
Speaker 17 (47:35):
Then you may go to one of the others unless.
Speaker 16 (47:37):
You're specifically watching, like you know you want Last of
Us on HBO because the new season is coming back,
you may watch that one show. But where you sort
of start your search behavior. I think Netflix has done
an incredible job of owning that. Everybody else is sort
of playing second fiddle to that, and that's their problem.
Speaker 3 (47:56):
Hey, listen really quickly, got about twenty five thirty seconds. Yeah,
is going to release an imax on Thanksgiving Day twenty
twenty six and debut on Netflix on Christmas Day twenty
twenty six. That strategy is that makes sense for Netflix
to be doing that again, just got about thirty seconds.
Speaker 16 (48:14):
Look, bottom line, there's certain directors that are still obsessed
with theatrical I think if you look at Carry On,
which is now bigger than Birdbox, one of the third
biggest film ever on Netflix globally, that was the Jason
Bateman film that came out a few weeks ago. Like,
you can break a film globally and get into the
zeitgeist globally on Netflix. But there are certain directors that
(48:35):
are stuck in the theatrical world. And believe in that experience,
and Netflix is trying something. We'll see whether the imax
only experience creates an incremental excitement around the film. It'll
be an interesting test. I do not think it is
a core strategy in any way.
Speaker 3 (48:50):
Well, always a good experience with you, Rich Greenfield, while
partner media analysts and technology analyst at Lightshead Partner's joining
us on this Wednesday road. How about you let me drive?
Speaker 4 (49:02):
Oh no, no, no no, this is not a toy jug.
Speaker 8 (49:06):
Honey, Please, how do the driving gravels? Let's mate, I
want to drive.
Speaker 5 (49:10):
It's a good question time.
Speaker 8 (49:17):
This is the drive to the clothes.
Speaker 12 (49:20):
Plums for me.
Speaker 8 (49:20):
I think well.
Speaker 2 (49:21):
Drier Yeladn on Bloomberg Radio.
Speaker 3 (49:24):
All right, everybody, just about eighteen nineteen minutes to go
until we wrap up the trade on this Wednesday, January
twenty six.
Speaker 11 (49:30):
You just heard Charlie and Bill Maloney.
Speaker 3 (49:31):
Breaking down them and we've seen certainly a rally underway
with the Nastak one hundred out performing on a percentage
basis up about one point three percent.
Speaker 11 (49:40):
So let's get to it with our drive to the close.
Speaker 3 (49:42):
Guests back with us as Alexis Brown Roberts she's chief
operating officer at Alexis Investment Partners. They've got about one
hundred and eighty five million dollars in assets under management.
She joins us from Montgomery, Texas.
Speaker 11 (49:53):
Alexis good to have you back with us.
Speaker 3 (49:55):
Tell us about the momentum that we are seeing now
that we are starting now that Donald Trump is in
the White House, We're starting to get some clues about
maybe some of the initiatives that will come under him.
Speaker 11 (50:07):
We talked a lot about AI today.
Speaker 3 (50:10):
As a result, I'm just curious what your investors are
doing making any changes if so, to their portfolio as
a result.
Speaker 12 (50:17):
Well, Hi, Carolyn tim thanks so much for having me
on again. It's great to be talking with you all again. Yeah,
it is great to see you know. We went through
that December correction and pullback and we're back in that
full bowl market swing and that op trend here and
we've really been enjoying that increased growth and momentum. And
we were actually modest dip buyers into that December pullback.
(50:40):
We decided to buy into some profitable small caps, just
continuing with our diversification, as that was an area that
really got beaten down in that correction and was slightly
underrepresented our portfolio, so we took that opportunity to go
ahead and diversify. And so far investors seemed to be
very happy with everything that's been going on with the
(51:05):
Trump trade and just optimistic. And we are optimistic, especially
near term, but do expect volatility as a lot of
questions are still out there and continuing to be answered.
Speaker 4 (51:16):
Is the volatility a result of potential policy such that
we're continuing to learn more about such as tariffs? I mean,
where else do you see the result of or is
the source rather of volatility?
Speaker 12 (51:27):
That definitely does help increase volatility, But really I think
the volatility is coming from just the full valuation of
this market. I mean, we hit our S and P
six thousand target at the end of last year, and
while we are looking to hopefully end the year between
that sixty five hundred to sixty eight hundred range is
what we're looking at, and who knows, potentially reaching seven
(51:50):
thousand at some point, just with the fact that we
are so fully valued and there are a lot of
moving parts going on and uncertainty going on, we wouldn't
be surprised if there is quite a bit of volatility
even given a very positive year.
Speaker 11 (52:05):
Hey, I answer, I do want to you.
Speaker 4 (52:07):
Have a follow up telling you Carol's telling you.
Speaker 11 (52:11):
I didn't want to jump on them. You know, Alex,
this is one thing I wanted to ask you.
Speaker 3 (52:15):
I mentioned that we're talking a lot about AI and
this initiative that President Trump talked about started talking about yesterday,
and we've been watching some of the names of companies
that are expected to pony up maybe about one hundred
billion right to start, but it could be a lot
more money going forward. But we're seeing names like Oracle
Soft Bank Armholdings all trade a lot higher. I am curious.
(52:38):
Are some of your investors saying, hey, listen the story.
I want exposure, you know, get me there? Are you
hearing that.
Speaker 12 (52:48):
We're definitely big fans of the AI boom and just
the amount of productivity that we're hoping to get out
of AI. We're lucky in the fact that our shareholder
don't tend to be overly assertive in that stuff. I mean,
they're definitely curious about it, but they tend to trust
us to make the investment decisions. And when it comes
(53:09):
to AI in particular, we do have exposure there we
have our Apple or Microsoftware and Video or Google, and
we do still like big tech. We still have that
VUG and there for megacat growth and QQQ and all
of that. But really what intrigues us the most about
AI is the idea that other players are really going
(53:30):
to benefit from the boost in productivity from AI. I mean,
if you harken back to the late nineties and the
innovation that came out of the Internet, which is really
what the last big boom that people are really equating
to AI was. What happened out of that was that
a lot of other companies were able to boost out
of that. So that's what we're most excited about. I mean,
(53:51):
even if you look at last year, companies like Walmart
and Home Depot, they were really able to benefit from
AI and that boosted their earning.
Speaker 4 (54:00):
So I'm wondering about equal weighted S and P five
hundred versus the market cap weighted S and P five hundred.
You prefer the equal weighted S and P five hundred.
Speaker 11 (54:11):
Why is that we do.
Speaker 12 (54:14):
Prefer the equal weighted S and P five hundred. A
lot of that's because the cap weighted S and P
five hundred is pretty much, very heavily in those seven
mag seven stocks, and we do have plenty of exposure
to there, but we'd rather have that tech exposure be
through things like I mentioned, like the QQQ, the VUG,
(54:34):
or even having exposure into certain tech companies that we
like to overemphasize more and then getting actual exposure to
the other four hundred and ninety three names through something
more of an equal weight, especially as we're looking to
diversify our portfolio within the context of believing that there
(54:55):
may be some changing market leadership as we come through
this and see more companies benefit not only from AI
but also perhaps more of accommodative fed as we do
expect them to continue to kind of neutralize interest rates
as well.
Speaker 3 (55:14):
We talked about a lot of the kind of large
cap names, and I am also curious about small caps,
which are now up about three point four percent this year,
and I feel like for a long time we keep
talking about it's time for the mid caps and the
small caps to really maybe you know, for investors to
make some movement into them. How are you where's that
component and what is the role in a portfolio right
(55:36):
now when it comes to small caps and or mid caps.
Speaker 12 (55:40):
Yeah, we like small cabs and mid caps as part
of a broadly diversified portfolio. So we did go ahead
and add to profitable small caps, so S and P
six hundred over something like a Russell two thousand. And
the reason we chose to do that is, for one thing,
we talked about Trump and tariffs and a domestic focus earlier,
(56:02):
and small caps should benefit from that because they tend
to be less affected by things going on for and
they just have less exposure out there than they do domestically.
Same thing, as interest rates come down and perhaps we
get some M and A activity, they should benefit there
as well. And so just as we are looking to
diversify our portfolio again, we still like the tech, but
(56:25):
we wanted to be able to have some exposure elsewhere,
and we think that doing it through an S and
P six hundred is a really good way to do that.
We don't really want to try to be too cute
with it and pick individual small cap names or again
a Russell two thousand, where you're going to have exposure
to unprofitable small caps because interest rates still are relatively
(56:47):
high right now and there was a lot of stimulus
back in the COVID days that are maybe waning out,
and so some of the companies that are just on
life support, you wouldn't want to have exposure there, but
we do like Covidcapin and SMP.
Speaker 11 (57:00):
Thank you all right, good to know and good to
get some time with you. Alexis. Thanks Alexis Brown Roberts.
Speaker 3 (57:04):
She's chief operating officer at Alexis Investment Partners. Joining us
from Texas Montgomery, Texas on this Wednesday.
Speaker 2 (57:12):
This is the Bloomberg Business Week podcast, available on Apple, Spotify,
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Speaker 2 (00:08):
This is Bloomberg Business Week Insight from the reporters and
editors that bring you America's most trusted business magazine, plus
global business finance and tech news the Bloomberg Business Week
Podcast with Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 3 (00:26):
Well, a bunch of names are rallying in the tech
sector today and then include some stocks affirms that power
and equipment data centers. Those are names that we are
seeing movie and this has to do with some of
the news that we got yesterday from President Trump when
he announced a one hundred billion dollar joint venture to
fund artificial intelligence infrastructure. And so we're talking about some
(00:47):
big spend maybe over the next few years. It is
a joint venture tip that brings together some well known
companies in the tech space.
Speaker 4 (00:53):
Includes Oracle, soft Bank, and open Ai to work on
artificial intelligence infrastructure. Armholdings, Microsoft and Nvidia will provide technology
as well. And that brings us to our first interview
Bloomberg Technology co host Caroline Hyde with the CEO of Armholdings,
Renee Has.
Speaker 5 (01:10):
Tim, Carol, thank you so much and Renee Has. It
is a joy to welcome you, CEO of ARM, who
is indeed a technology partner on what is initially a
one hundred billion dollar investment can scale to five hundred
billion dollars.
Speaker 6 (01:23):
In the next few years. What exactly is Arm's role here?
Speaker 7 (01:29):
Good morning, Kroen. Yeah, it's an exciting day for sure,
such a significant investment infrastructure. So ARM will be the
CPU of choice, if you will. Inside these AI data centers.
We power Grace Blackwell, which is the Nvidia product that
will be used. But lots of opportunity for all kinds
of armed technology, but most importantly the CPUs that power Stargate,
(01:52):
they'll be armed.
Speaker 5 (01:54):
So already, as you say, integrated into Grace Blackwell, what
sort of innovations could this stir on your side? What
way will we see your designs progress into this supercomputer
and more to come.
Speaker 7 (02:05):
Maybe five hundred billion dollars of investment and multiple gigawatts
of energy require incredibly efficient processor solutions. So I think
as we go forward, as these plans get more and
more defined, I think there'll be more and more opportunity.
But right now we're super excited to be involved with
Nvidia and Grace Blackwell.
Speaker 5 (02:25):
I think that's so key as these plans get more
and more defined. These are at the moment pretty new
announcements coming, but people questioning how new the ultimate decision
to spend has been because we already had massive Of course,
this leader of soft Bank, which in many ways owns
a large part of ARM, talking about this one hundred
billion dollar investment in infrastructure in the US.
Speaker 6 (02:45):
But a few weeks ago, how has this been in
the making.
Speaker 7 (02:49):
These discussions have been going on for many months. Something
like this does not happen overnight. I think the world
is seen that to reach AGI or ASI or some
of the the capabilities of artificial intelligence, a tremendous amount
of capital is going to be required. Obviously, a lot
of power is going to be required, a lot of
compute is going to be required. MASA has been looking
(03:10):
at this for quite some time. We've been talking to
the open ayfolks and Oracle and MGX and Microsoft and Nvidia.
So I think what you're seeing that just came together
was the culmination of all those conversations. But it didn't
happen overnight.
Speaker 6 (03:23):
For sure, does it have the money.
Speaker 5 (03:25):
I'm afraid some shade being thrown on this project by
one in a musque.
Speaker 6 (03:29):
Do you have anything to provide?
Speaker 5 (03:31):
I know you're the technology partner, but what about the capital.
Speaker 7 (03:35):
Yeah, I haven't seen Elon's tweet, although I certainly certainly
have heard about it. There is a lot of backing
for this, Caroline. Believe me, it was not taken lightly
to make the announcement yesterday at the White House with
President Trump. So I think it can feel pretty good
that the financial backing behind.
Speaker 6 (03:54):
This is quite solid and open.
Speaker 5 (03:56):
AI itself saying one hundred billion dollars is going to
be deployed in me comgiately, we understand already ground broken
in Texas.
Speaker 6 (04:04):
How big could this scale?
Speaker 5 (04:06):
How large a supercomputer on this particular time, and where
does the rest of the four hundred billion dollars go?
Speaker 8 (04:11):
Do you think?
Speaker 7 (04:12):
Well, just by way of if you look at the
dollars and the power the largest data center today or
data centers for AI or in the hundreds of megawatts,
five hundred billion dollars, which is just a gigantic amount,
buys you multiple gigawatts of energy, so you're talking orders
of magnitude of scale. The complexity required with that, though, Karen,
(04:34):
is enormous when you think about logistics, when you think
about materials, when you think about moving all those things around.
Speaker 9 (04:41):
This is what's going to drive a lot of jobs.
Speaker 7 (04:43):
By the way, our role at ARM is going to
be all around power efficiency. When you're at that scale,
every milliwat counts in terms of saving power. So that's
what our focus is going to largely be on.
Speaker 5 (04:56):
Talking of jobs, have you got the talent for this
KILO project?
Speaker 6 (05:00):
Where do you need to be allocating to it at
the moment? Is it talent?
Speaker 5 (05:03):
Is it bringing in yet more technology? Is it even
making acquisitions.
Speaker 7 (05:09):
We've been very, very aggressive in hiring folks. The ARM
has grown a lot since I became CEO in twenty
twenty two. We're about five thousand people or so. Then
we're now north of eight thousand. We've got lots of
open job rex, We're working with lots of partners. It
will take a lot of talent to pull this off,
but that's why we have a lot of partners involved
in this as well, whether it's Microsoft and Video Oracle,
(05:31):
Open AI. It's going to take a village, but we're
so excited about the opportunity and just the benefits I
think it's going to bring to humanity.
Speaker 6 (05:39):
What about benefits to others than open Ai?
Speaker 5 (05:42):
Is this going to remain only compute for open ai
right now?
Speaker 7 (05:47):
That's all we're talking about is open ai as the
primary partner. And again, our role at ARM is really
going to be providing the efficient processors. I'm super focused
on that. It's a big problem to undertake, but we're
thrilled that we're going to be the CPU of choice
inside these data centers.
Speaker 5 (06:04):
I remember a little while ago, in about May of
last year, having a conversation with another person in chips
is all about efficiency on energy who actually is also
called Renee.
Speaker 6 (06:14):
And I'm talking about Amper here.
Speaker 5 (06:15):
They have a close relationship with Oracle and soft Bank
has potentially been interested. How do you feel about the
relationship you're doing with that Oracle right now? And could
there be some sort of working relationship with ampere.
Speaker 7 (06:26):
Renee James is a great friend. Ampier uses arm CPUs.
Oracle is a big user of Ampier CPUs, so I imagine
in some way, shape or form, Yeah, I think Ampier
will be involved in this.
Speaker 5 (06:37):
Do you think they'll ever become part of the soft
Bank conglomerates of chip expertise?
Speaker 10 (06:43):
Yeah?
Speaker 11 (06:44):
That part.
Speaker 7 (06:45):
I can't go too far on, but I think you know,
ARM being the center of this is probably one of
the key data points from this announcement.
Speaker 5 (06:51):
Just on ultimately the laser focus that you have on
this energy side of things and the efficiency side of things,
but also that dovetailing with Mass's.
Speaker 6 (07:01):
Vision, your own vision to be ever more relevant in
data centers. Is this the project? Is this the fruition
that we'll get.
Speaker 7 (07:09):
I think what you're seeing is a culmination of continued
efforts in this space. We've been at the data center
problem for quite some time. We understand it better and
better each day, each week, each month, each year. You've
got major deployments now for ARM compute. I would look
at this as sort of the next phase of that evolution.
Some of the problems that need to be solved around
(07:31):
these AI data centers are very, very innovative, whether it's
at the blade.
Speaker 9 (07:35):
Level or at the ract level.
Speaker 7 (07:37):
Every ounce of power counts, and we think we've got
an amazing ip and solutions to go off and address that.
Speaker 5 (07:45):
Every ounce of power counts, every bit of capital counts,
but also it counts to have relationships at the top
of government. It feels like and from a bystander, here
there's friction. There's friction with eat on musk and some moment,
How difficult is that for you to navigate? How hard
is it for the US to win in this circumstance
If we've got two KEI players going head to head, well, you.
Speaker 7 (08:10):
Know, there's always going to be competition, Caroline, no matter
what market we're talking about. I was in Washington the
last few days around the ignageration activities. One of the
things I was just really struck with in talking to
many of the new officials who are coming on board,
is just the amount of pace that wants to be
applied to solving some of these problems. You know, again,
(08:32):
to put up these large data centers is not only
a huge task in terms of capital and compute, but
you need permits and regulatory clearances and a number of
different things that need to get done to pave the way.
And I really get the sense that with this new
administration they're very much on board to make this happen
and make it happen inside the United States.
Speaker 5 (08:54):
Is there a risk though, that we're going too fast
because suddenly we're potentially getting rules of the road, the
regulation and indeed, some of the governance will just torn
down in favor of pace.
Speaker 7 (09:08):
You know, I'm an AI optimist. You and I have
chatted about this a number of times. I think the
benefits that are going to come from this work are
going to outweigh it with the negatives.
Speaker 12 (09:16):
You know.
Speaker 7 (09:17):
One of the areas I continue to be the most
excited about is medicine drug research. When you think about
the fact that today it takes ten to fifteen years,
twenty years to develop a new drug. From the start
of the molecular science, ninety five percent of those drugs fail.
They never see the light of day. And then you
get into the testing, whether it's on animals and humans
and focus groups, shrinking all of those things down, finding
(09:40):
ways to cure cancer, finding ways to have drugs that
are specifically your genome, your DNA. This is all possible
with AI, and I think AIS be require to have
the breakthrough to cure some of these horrible diseases that
we've never been able to solve.
Speaker 6 (09:54):
And this is a private effort.
Speaker 5 (09:55):
This is money and capital coming from foreign entities, but private.
They held businesses here in the US and indeed the
capital markets.
Speaker 6 (10:03):
Does no one need to come from government, because actually
that's what we saw in the previous administration, was.
Speaker 5 (10:07):
Real money coming from the government for chips. Will that
come from this next administration?
Speaker 7 (10:12):
Do you think, Yeah, that's not part of this announcement.
This announcement has nothing to do with the government in
terms of putting money into it. I think though, the
government has a role to play, as I mentioned, in
terms of just clearing some of the regulatory hurdles, which
is not small. So having the government on your side
as you're trying to accelerate these efforts is only a
good thing.
Speaker 5 (10:31):
Rene Has has been nothing but a good thing having
you on the show. We appreciate it, CEO of and
sending it back to you, Tim and Carol.
Speaker 3 (10:38):
All right, so appreciate it our Caroline Hi there with
the CEO of Armholdings, Renee Has. We are staying though,
with the world of artificial intelligence because there is so
much going on.
Speaker 11 (10:47):
It really is top of mind.
Speaker 3 (10:48):
And this is coming after the first twenty four hours
back in Washington, we did see President Trump send a
different message to the AI community. He basically was just saying,
just build and that is kind of teeing off what
we just heard from the Arm Holdings CEO that one
hundred billion dollar AI spending spree led by SoftBank, Open
Ai and Oracle with a focus on that physical infrastructure.
Speaker 11 (11:10):
And there's a lot more than that going on. Tim.
Speaker 10 (11:13):
Yeah.
Speaker 4 (11:13):
At the same time President Trump were sending Biden sweeping
executive order on AI. The move immediately haulted the implementation
of key safety and transparency requirements for AI developers. And
then another headline alphabet Google's latest one billion dollars into
one of the most promising rivals to open a We're
talking about the AI developer anthropic. So here with our
(11:34):
AI roundup. Back with us, as Bloomberg News AI reporter
Rachel Metz joins us live from San Francisco. Rachel, I
do want to start with what we just heard from
Renee has and Caroline Hyde about this stargate project at
one hundred billion dollars five hundred billion dollars. Help us
read through the numbers here and read through the press releases.
Give us an understanding of how you're interpreting this announcement.
(11:57):
Now that the dust has settled just about twenty four
hours after.
Speaker 13 (11:59):
This announcement, so, as Renee said, this has been in
the works for a while, and we've reported on various
talks related to infrastructure plans. As we all know at
this point, AI is extremely expensive, so if you're going
to do anything really impactful, you're going to have to
spend a lot of money. So it does make sense
(12:20):
that there are some really big price tags connected to this,
and the names that are involved make a lot of sense.
I think it's important to keep in mind that this
is really meant to be beneficial to open AI. Open
Ai is an equity holder in this, and also, as
they said, this is to build infrastructure for that company.
Speaker 3 (12:39):
Well, and that's what I was curious about Rachel's We
kind of went through the list of companies, those companies
that are part of this, including ARM and others. Does
it mean that they are at an advantage and those
that are not at a disadvantage?
Speaker 13 (12:54):
You mean, are these companies that are involved at more
of an advantage than other companies that are not involved.
Speaker 3 (12:58):
Yeah, in this particular bill in terms of infrastructure and
then kind of working with the government directly.
Speaker 14 (13:05):
I mean, you.
Speaker 13 (13:06):
Could say that they're at an advantage because they are
market leaders working with a market leader, but it sort
of remains to be seen like right now, some buildout
is underway in Texas, as they said. Larry Ellison indicated
last night in an interview on Fox News that the
Texas buildout will be used to train an upcoming.
Speaker 15 (13:26):
Model from open AI.
Speaker 13 (13:28):
But other than that, we don't really know much about
what's going to happen here. We don't even know who's
putting in how much money for the most.
Speaker 15 (13:34):
Part, so a lot of this tool is a TBD,
I would say.
Speaker 4 (13:37):
Well, speaking of that, we're already hearing from Elon Musk,
your close advisor to the president and of course overseeing DOGE.
He openly questioned whether companies that joined this announcement promising
hundreds of billions of dollars in AI infrastructure could actually
follow through on their promise. How do you look at
Elon Musk's role in all this, considering his history with
(13:57):
Sam Altman at open AI, what he's doing at XAI,
and his close proximity to the president, how do you
make sense of that?
Speaker 13 (14:06):
I think you've got to answered your own question a
little bit right there. I mean, it sounds Elon Musk
clearly has a long history with Sam Altman and with
open AI, and Elon is also involved in his own company,
he's involved with now the federal government.
Speaker 15 (14:20):
So he's got a lot going on.
Speaker 13 (14:22):
I think he made a really fair observation, though, like, hey,
where where is this money coming from? Because as we
were just talking about, they are saying, here, we're going
to be using this much money, but it isn't clear
at this point where exactly all that money is coming from,
and that money hasn't all been spent yet. So I
do think that questioning where it's going to come from
(14:43):
is fair. I think it's a fair question to ask.
Speaker 4 (14:45):
But is it surprising to you, Rachel, not to see
an Elon Musk company front and center in this announcement
given his influence on President Trump?
Speaker 13 (14:55):
Hmm, you know, I'm really not sure, because again, this
has been in the works for for a long time,
so it would be difficult, I would think for Xai
or another of Elon Musk's companies to sort of swoop in.
If these other companies, let's say, we're talking about this
for a long time, that might be a little more surprising.
Speaker 2 (15:14):
Rachel.
Speaker 3 (15:15):
So wait, if this has been in the talks for
a long time, are you saying since President Trump was elected?
Speaker 11 (15:20):
So this is.
Speaker 3 (15:20):
Definitely, you know, an initiative that Donald Trump the president
started or would this be also have or have been
announced potentially under if we had seen Kamala Harris in
the White House.
Speaker 13 (15:33):
I mean, this is not the government is not doing this.
This is something that's been.
Speaker 15 (15:37):
In the works.
Speaker 13 (15:38):
This is a private sector investment that's been in the
works for a long time. I mean, we've reported on
various talks and possibilities for this sort of arrangement over
the past year.
Speaker 4 (15:49):
It's interesting to hear that because at the same time,
speaking of government, as I mentioned, President Trump resented biden
sweeping executive order on AI, so it halted the implementation
of key safety and transparent and see requirements for AI developers.
How do you analyze a move like that in terms
of regulation and certainly the calls that we've seen from
some folks in the community that say, hey, this is
(16:11):
technology that needs to have some oversight.
Speaker 3 (16:13):
Yeah, and where's Elon's kind of stamp in this where
he has raised those concerns.
Speaker 15 (16:19):
Yeah, No, those are some really good questions.
Speaker 13 (16:21):
I feel like what we're seeing now is sort of
what one would expect. You'd expect to see, less oversight,
less regulation, with this administration, But there are also a
lot of valid questions about how these AI models are
going to be used or being used now, how powerful
they will be, all those kinds of things. Even AI
(16:43):
companies themselves have said that they support various forms of regulation.
So I'm not really sure what's going to happen from
here on out in this administration, but it is clear
that there will certainly be less regulation, less emphasis on
openness on the parts of the tech company.
Speaker 11 (16:58):
And is it safe to say Rachel.
Speaker 3 (16:59):
At the same time time, when we think about officials
overseas or over in Europe, where they have often been ahead,
I feel like when it comes to privacy, consumer privacy,
with social media and the digital world, that they're going
to keep moving ahead. In terms of AI oversight, AI transparency.
Speaker 15 (17:17):
It's possible, it is possible that we'll see that.
Speaker 13 (17:20):
I think the next I would say the next like
four months, six months is going to be really instructive
as to what's going to happen over the next year
or two.
Speaker 4 (17:26):
Okay, we said this would be like, you know, a
round of quick questions or fire questions when it comes
to AI. So we're kind of going all over the
places promised Rachel. I'm wondering about this recent funding and
more recent funding for Anthropic. This is a company that's
a competitor to open AI, Google putting in the latest
(17:47):
billion dollars into the company. Is this a company that
does hold a candle to open AI, especially given the
announcements yesterday.
Speaker 8 (17:55):
Yeah.
Speaker 13 (17:55):
I think certain models that they make are super competitive.
I know that program in particular, really love using some
of their models. Anthropic has really prided itself as a
company that focuses on safety. I think that resonates with
a lot of their customers, and they have a lot
of smart people working there. As we said before, AI
extremely expensive to build, so they're going to have to
(18:17):
keep bringing in money to get their systems to where
they want them to be and get them out to
their customers.
Speaker 11 (18:23):
You know, I am curious.
Speaker 3 (18:25):
As we said, there's a lot kind of coming at
at the space, and I'm not surprised, right, I mean,
I feel like so many of our conversations revolve around some.
Speaker 11 (18:32):
Kind of aspect of AI.
Speaker 3 (18:33):
We're going to have more about drug development a little
bit later on this hour, so there's just so much
going on.
Speaker 11 (18:38):
But how are you I don't.
Speaker 3 (18:40):
Know, thinking about kind of the world right now when
it comes to AI and what's top of mind for you.
Speaker 15 (18:48):
Ooh, that's a tricky one.
Speaker 13 (18:50):
I mean, I feel like we're entering a phase where
a lot of companies are working on agents AI systems
that can carry out more complicated tasks.
Speaker 15 (18:59):
But it's still very very early days in that.
Speaker 13 (19:01):
I mean, companies have been trying to build that sort
of thing for a while now, and we're just starting
to see some real products go out over these past
several months, and we'll see also in the future.
Speaker 15 (19:11):
So I think that's.
Speaker 13 (19:11):
Something I'm going to be keeping a close eye on
and seeing just how capable these things are. I mean,
there are so many promises and so many bombastic figures
in AI, but I think it really comes down to like,
how do these things actually work for people? How are
they built? And also I'll be paying more and more
attention on the environmental impacts, which I think a lot
of people are paying more attention to as well. As
(19:33):
these systems get bigger and more powerful, they consume more resources,
and that's also something I know a lot of people
are interested in.
Speaker 3 (19:39):
All Right, great perspective, As always, there's as we said,
so many headlines, so many different stories, and Rachel mets
just making sense of it all.
Speaker 11 (19:45):
Rachel Metz is Bloomberg News AI reporter.
Speaker 2 (19:48):
You're listening to the Bloomberg Business Week podcast. Catch us
live weekday afternoons from two to five pm Eastern Listen
on Applecarplay and Android Auto with the Bloomberg Business app,
or live on YouTube.
Speaker 3 (20:02):
As you know, we are all in on AI today,
as seems to be the case in Washington, President Trump, Davos,
a lot of tech companies, Google and more. As you
heard earlier, one area we increasingly are talking about when
it comes to artificial intelligence is healthcare and specifically drug discovery.
And our next guest can shed some light on that
with us is najat Con. She is chief Commercial and
(20:22):
R and D Officer at the publicly traded three billion
dollar market cap biotech and drug discovery company Recursion. It
is headquartered in Salt Lake City. She joins us here
at our New York studio. So great to have you here.
It does feel like we have this theme. First of all,
tell us.
Speaker 11 (20:37):
About your company and what you guys are working on.
Speaker 14 (20:40):
Absolutely, you know, Recursion is really focused on founded on
the intersection of AI and bio coming together. And one
of the main reasons for that is today if you
look in the healthcare industry making medicines, ninety percent of
those drugs fail in the clinic, so only a ten
percent success story time and cost is too long and
patients for waiting. So what Recursions is doing is leveraging
(21:01):
AI and high quality data sets that are actually generated
in our own labs at scale automated web labs in
order to build fit for purpose AI algorithms that are
then used to decode biology to really understand what's driving
the disease, use generative AI to design molecules, designing molecules
that somebody who's a PhD Organic chemist never considered before,
(21:24):
and then using that to make medicines in the clinic.
So today we have ten clinical stage and preclinical programs
in the clinic across oncology and rare diseases, and over
ten programs in discovery and ten additional programs with partners
like Roach and Santa Fe. So real powerhouse in terms
of not just the idea of using AI, but applying
(21:47):
it to make medicines that are different shaded for is.
Speaker 4 (21:49):
It's actually being used right now as we speak absolutely
explain exactly how that's happening.
Speaker 8 (21:54):
So I'll give some success stories.
Speaker 14 (21:56):
Maybe I'll share an example because it just makes it
more real. Nine is a program. It's in solid tumors,
that's in the clinic. It's recruiting patients today. The concept
that this protein, this target could be important in cancer
came from these maps of biology that recursion creates. You're
taking images of cells, applying computer vision and AI, and
(22:19):
then actually you can discern what compounds take diseased cells
back to healthy cells. So from that's where the insight
came from. Second, we actually use generative AI active learning
to design the molecule. One of the biggest challenges when
you're actually trying to design the molecule is ensuring that
it doesn't just work well from an efficacy perspective, but
(22:41):
it's also safe. So that's the other thing, and here's
the beauty of it.
Speaker 11 (22:45):
Wait, so it's being put to use though already, like.
Speaker 3 (22:47):
On actionity, we're seeing what you guys are doing, we're
seeing it on patients.
Speaker 14 (22:52):
Absolutely all of the programs in the clinic or in
pre clinical is using AI, and as an example, just
the RBM thirty nine program which is in solid tumors.
It takes usually about forty two to almost fifty months
to get into the clinic from an idea to get
into the clinic, this took eighteen months two hundred less
(23:12):
than two hundred molecules synthesize usually in industry, and I
come from large pharma before you're making three four five
thousand compounds, so you're doing things better faster, And the
insight is a first in class molecule, which means nobody's
come up with this before. The idea came from leveraging
AI to create these maps of biology coupled with precision
(23:33):
AI chemistry design to make new molecules.
Speaker 3 (23:36):
But as we've talked about Nazade, like the AI or
the outcome is only as good as the data going
in and app So some say that we're still kind
of early in. I know there's a lot of data
out there, but I would in the healthcare community, how
do you ensure the kind of the purity of your
data sets that your outcomes are really productive.
Speaker 14 (23:55):
That's such an excellent question. Look, I think even before
we talk about AI data is the different shader and
fit for purpose data sets. So at recursion we have
about sixty petabytes of data that we have generated both
internally and also partnering with partners such as Tempest and others.
This is the difference. It's having a wet lab and
(24:17):
a dry lab. So essentially you're generating the data, using
that data to train your algorithms, and you're going back
in those algorithms as they get better. Are actually than
predicting what experiments you should make. We call it the
real world and the world model and so forth. That
is a different shader because then you can have your
algorithms be best in class. And a lot of this
is proprietary data sets in Salt Lake in our headquarters
(24:38):
that we are generating, and then on top of that,
you're applying it around problems that really matter. This is
the other thing that's really important. We don't just use
AA for the sake of AI, but we use it
based on the pain points that leading to the ninety
percent failure rate today. Right, So what are those number
one understanding was driving the disease? It sounds really simple,
(24:59):
but it's usually not one protein. Is multiple things that
are happening in our body. Maps of biology give you
not just the pinpoint of what's driving the disease, but
everything else that is connected to think about it as
the highways that connect across our different cells and organs.
The other is also using AI and machine learning to
think about ten to the sixtieth permutation is what you
can have in terms of the compounds you can make.
(25:19):
No human can actually think through that. So you're using
AI to design the molecules all in a computer and
only make the ones that you've convictioned it.
Speaker 4 (25:26):
We heard Larry Elison say yesterday that we could see
a cancer vaccine, an mRNA based cancer vaccine as a
result of investment in AI. You're talking about tumors being targeted.
What are the other conditions now that you think could
be targeted as a result of AI and pharmaceuticals within
our lifetime? Like, what's the world that we should be
(25:47):
imagining for our kids.
Speaker 8 (25:48):
And for our grandkids?
Speaker 4 (25:49):
Yeah, I think for us maybe in a few years.
Speaker 14 (25:51):
Well, that's the goal because patients are waiting, and that's
the reason why the BET and what we're doing. Here's
what I would say oncology. Absolutely, rare disease is we
also have programs and rare diseases, whether the underpinning of
it is genetic mutations or other aspects. And this is
and also immunology. That's the next arc. And I want
to emphasize immunology because the immunom is what connects all
(26:12):
of the different diseases, whether it's oncology, neuro and so forth.
The trick to it is the following though. It's not
enough to just have one data layer. You need to
have multiple data layers. So what do I mean. You
want to have genetics, You want to have transcryptomic, which
is how are the proteins, how is mRNA being transcribed?
You want to have protein data, You want to have
patient data like eachr the claims. You have to connect
(26:36):
across all of those data system That's what we're doing.
So what Recursion has is a multi O mix, multi
modal data layer that we have generated the petabies that
I mentioned. That is quite unique because you need that
to be able to address biology from all of those
different angles oncology, immunology, neuroscience.
Speaker 3 (26:54):
We only have about a minute or so left here.
I know we could probably go on for at least
an hour to write to talk a.
Speaker 11 (26:58):
Little bit more about this.
Speaker 3 (27:01):
Your stock surge back in the summer of twenty twenty
three with a record rally following news of the investment
from Nvidia that was more than one and a half
years ago.
Speaker 11 (27:09):
What's Nvidia's role in all of this?
Speaker 14 (27:11):
Great question.
Speaker 3 (27:12):
It's a big investment, and again only got about forty
five fifty seconds.
Speaker 14 (27:15):
We talked about how data is really important and high
quality data and AI algorithms that sit on top of that.
Everything that underpins developing these AI algorithms and finding insights
from the data is that you have to have exceptional
supercomputer capabilities. And by the way, the one that we've built,
Biohi two with recursion and collaborate with the Nvidia and collaboration,
(27:35):
is the fastest supercomputer in the life sciences industry, thirty
fifth in the world, fastest in life sciences. Without that,
we can do these things at scale.
Speaker 3 (27:44):
So do you ultimately again just got about ten fifteen seconds.
Do you ultimately hook up with the big drug makers?
Do they access your technology or how does this?
Speaker 14 (27:51):
Yeah, we have partnerships with four pharma companies large Sanofee,
Roschenantec buyer, MARCGA with multiple programs across oncology, immunology, and
neuroscience that we're partnering on well.
Speaker 3 (28:02):
Stay in touch, love to hear more as you guys
build out and continue your build out. NA dot Com
Chief Commercial and R and D officer at the publicly
traded three billion dollar market cap biotech company Recursion. Joining
us right here in studio.
Speaker 1 (28:17):
You're listening to the Bloomberg Business Week podcast. Catch us
live weekday afternoons from two to five these during listen
on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 4 (28:31):
President Donald Trump widened his tariff threats to include China
and the EU on a second day back in office,
after day ones on Canada and Mexico and his sits Carol.
Here's what he said. We're talking about a tariff of
ten percent on China based on the fact that they're
sending fetanol to Mexico and Canada. He said that during
an event at the White House on Tuesday, and he
(28:51):
specified February first as a possible date.
Speaker 3 (28:54):
We've seen some reaction to at the NASDAK Golden Dragon
China Index, which tracks companies Chinese companies that trade here
in the United States that do business in China but
are traded. As we said in the US. It's down
about half a percent right now, so we keep an
eye on it. For some sensitivity about US China and
terrists between the two, well, for.
Speaker 4 (29:11):
An idea of what Chinese companies faced over the next
four years. We bring back Ben Harberg. He's founder and
portfolio manager of Core Values Alpha. He manages the CVA
Great China Growth ETF ticker cg RO. It's got a
market cap about seven and a half million dollars. It's
biggest holdings include shall Me, PDD, ten Cent, Trip, dot Com, Buid,
and more. Ben usually joining us from China, but today
(29:33):
he's stateside in Washington, d C. Ben, you were in
d C for the inauguration. Why did you make the trip?
Speaker 8 (29:42):
I think this is done in America.
Speaker 10 (29:44):
I think this is the new really is a new
era for business, for regulation, for education reform.
Speaker 8 (29:52):
I wanted to see the personalities.
Speaker 10 (29:53):
I wanted to spend time with the cabinet members and
really get a sense of where things are headed, and
meet the MAGA faithful of course as well, but really
really to be here at the presspice if I think
something really exciting for our country.
Speaker 4 (30:08):
It's interesting to hear you say that because you run
a portfolio that is made up of companies that do
business in China, and China is certainly in the crosshairs
of the Trump administration. It happened during the first term,
it's no doubt happening already right now. So surprised to
hear from you that you would be optimistic about the
Trump administration given your holdings.
Speaker 10 (30:32):
Well, we have pretty diversified holdings. As we discussed last time.
We have much bigger on the private side.
Speaker 8 (30:36):
Much of that is in the United States.
Speaker 10 (30:38):
Some of our biggest holdings are US defense names as well.
So the segro ETF is part of a diversified portfolio.
Is I think we think is exciting given the kind
of undervalued nature of the Chinese market, But it's by
no means our principal vehicle and one that shapes our policy.
Speaker 8 (30:53):
But I don't think that.
Speaker 10 (30:54):
I don't think the two are necessarily independent of one another.
A strong US economy also benefits China. And at the
end of the day, I think Trump is a businessman.
He wants to see you, As you said publicly, both
economies do well. You think both economies together can solve
many of the world's problems. And I think what's critical
now is that we lay the foundations for a actionable,
(31:17):
pragmatic trade deal, kind of a two point zero trade
deal that actually could I think i've filled you guys
before benefit Chinese stocks in the long term because a
lot of those tensions would.
Speaker 8 (31:28):
Be taken off the table in the name of pragmatism.
Speaker 3 (31:31):
So what's more interesting to you than Ben because we
often talk to you about what's going on with Chinese companies,
in particular amid US China relations and other news developments.
Having said that, as you said, you guys across your
portfolio can go to other places.
Speaker 11 (31:45):
What's more exciting to you right now?
Speaker 3 (31:47):
Is it trading in US companies, buying investing in US
companies at this point as a result of a Trump
White House, a second Trump White House, or are there
opportunities in China as well?
Speaker 13 (31:59):
Well?
Speaker 10 (31:59):
Again exclusive, I think the Chinese companies are massively undervalued,
but we have held the viewpoint for over a year
that were Trump to come into office, it could lead
to a binary, significantly improved outcome for Chinese companies. And
if they're already trading at historic lows and against all fundamentals,
that means that investing the Chinese market today. If a
(32:20):
trade deal is struck, and I think it will be
because because Trump wants to get things done, could lead
to four or five x returns on the current kind
of valuations of today's Chinese companies that we see it.
With TikTok for instance, I mean, TikTok is probably worth
about five times greater than what it's trading on the
private secondary market once some kind of you know, kind
(32:44):
of concrete outcome is determined about its future. We were
of the viewpoint, for instance, that it would not be banned,
and everything has played out exactly as expected. So I'm
also very much excited about America. My kind of personal
passion is the reindustrial relation of the United States. Thinking
about ways that we also build our supply chain independents,
(33:05):
reinvigorate our manufacturing, think about all the key technology areas,
be it quantum, AI, drones, and next generation defense, and
so there's going to be a lot of really exciting
investment into that space as well. One of our biggest
holdings historically was Palan. Here we've invested in a lot
of the other next generation defense technology companies in the
United States, and I think all of them are going
to boom with this administration coming in.
Speaker 4 (33:26):
But to be clear, the only fund you managed, at
least according to the Bloomberg terminal, is the Core Values
Alpha Greater China ATF correct.
Speaker 8 (33:33):
I know.
Speaker 10 (33:34):
I'm also a managing partner on all of our private
funds as well.
Speaker 4 (33:37):
Okay, but public public funds as far as like portfolio.
Speaker 8 (33:40):
None of these are public. Yeah, these are the private Okay.
Speaker 4 (33:42):
So the public fund, the public fund that you have though,
is exclusively China.
Speaker 8 (33:45):
And we're adding in more. Okay, we're adding in more
to that.
Speaker 4 (33:49):
What are you adding in?
Speaker 8 (33:51):
So we're adding in.
Speaker 10 (33:52):
If you look at the website, we really we describe
ourselves as America First Equities Investing, and we'll be launching
several We'll be launching a defense related fund, We'll be
launching a US reshoring related fund, We'll be launching several
other products that that I think will benefit from the
current dynamic. And our thesis on the China Fund from
the offset was we're competing against other fund managers like
(34:14):
k web that are CCP owned. The ic C is
the owner of k WEB, which is a state owned
asset manager from China. And our view was we could
differentiate from them and outperform them, as we did last
year by doing a screen of all those China names
to en sure they weren't infringing upon US national security
interests or values.
Speaker 8 (34:32):
So that was our differentiator in launching this product from
day one. It's kind of America first, China investing.
Speaker 4 (34:37):
Given what I'm hearing from you, and given what we've
talked about in the past, it's it's you know, you're
talking a lot about the US. Our focus int of
interviews with you over the past couple of years have
been in China. You've joined us from China. Oftentimes, do
you see yourself staying in China over the next four
years or do you move to the United States.
Speaker 8 (34:53):
We've always been multipolar.
Speaker 10 (34:54):
We have had we have our offices in China, but
we've I've also based myself based myself most of the
time in out of the Middle East the last couple
of years, and then we have homes in Boston and
San Francisco, so I've always been multipleler moving between those.
But I think that over the coming year or two,
you'll see me spending a lot more time here in
the US because this is really where decisions are being
(35:15):
taken that will ripple.
Speaker 8 (35:16):
Through the rest of the world, and I want to
be on board for it.
Speaker 11 (35:20):
Totally get it, hey, Ben, So remind us how much
you guys.
Speaker 3 (35:22):
Have in assets under management and what you are seeing
in terms of flows coming in or going out.
Speaker 10 (35:28):
We're about two and a half billion dollars across all
of our products, and again most.
Speaker 8 (35:32):
Of that is private.
Speaker 10 (35:35):
We have been effective at it again taking on board
capital from from the Middle East, from Europe and the
United States and depulling that again into really strong names.
On the US side, China's obviously seen a dearth of
Western capital flowing into it, as probably is relatable and
understandable under the kind of conditions that have been going.
Speaker 8 (35:57):
On for the last five six years.
Speaker 10 (35:59):
But we've found a way to find products that match
kind of the requirements of different institutional limited partners depending
on the type of capital explore controls they face.
Speaker 3 (36:09):
What are you seeing in terms of Middle Eastern investors?
I do feel like it's almost a new day in
Washington when it comes to investments perhaps coming from that
region of the world into the United States. What are
you seeing and hearing only got about thirty seconds here.
Speaker 10 (36:26):
They were always very overweight towards the West, but more
so towards Western Europe.
Speaker 8 (36:30):
I think they recognized today that's a.
Speaker 10 (36:31):
No go and unattractive, and so a lot of them
I bumped into a lot of them over the course
of the past weekend who are wanting to scale up
their investments in the United States, across energy, the energy
necessary for this AI revolution, into defense technology, into things
that will be benefiting from Trump's very business friendly, deregulatory
(36:52):
and tax friendly regime.
Speaker 11 (36:54):
All right, going to leave it on that note. Good
to catch up with you. I'm so appreciate it.
Speaker 3 (36:57):
Ben Harberg, He's founder and portfolio manager of Core Values Alpha,
joining us on this Wednesday from Washington, DC.
Speaker 2 (37:06):
This is the Bloomberg Business Week Podcast. Listen live each
weekday starting at two pm Eastern up on applecar Play
and Android Auto with the Bloomberg Business App. You can
also listen live on Amazon Alexa from our flagship New
York station, Just Say Alexa played Bloomberg eleven thirty.
Speaker 4 (37:24):
Netflix shares at a record today app nine and a
half percent as we speak. The company reported its biggest
quarterly subscriber gain in history. It was buoyed by its
first major live sporting events and the return of squid game.
Rich Greenfield is partner in a media technology analysts at
Lightshed Partners. He joins us from New York City.
Speaker 8 (37:43):
Rich.
Speaker 4 (37:43):
There are good quarters and then there are good quarters
such as this one. What specifically, in your view, led
to this blowout quarter.
Speaker 16 (37:52):
Look, it's all about investing in content, right, I mean,
this is a company that has despite all of the
competitive landscape. You know, you think about over the last
five or six years, You've seen things like Disney Plus
and Paramount Plus and Peacock, all of the you know,
(38:12):
all of these big legacy media companies have ramped up
streaming services.
Speaker 9 (38:17):
They've each lost billions of dollars.
Speaker 16 (38:20):
They're all now scaling back, you know, cutting back their spend,
desperately trying to get to profitability and to eke out
some you know, positive contribution from years of losing money
in sort of a black hole. Meanwhile, Netflix has just
continued to persevere build more content, create more content that
(38:40):
consumers love, and really focus with a real global focus
on making sure that there's constantly new content for you
to watch.
Speaker 17 (38:50):
And I think that focus on time spent.
Speaker 16 (38:53):
You know, most of the other media companies out there
that have streaming platforms. You know there's one show maybe
a quarter that you watch once a week, get best
for like forty five minutes, maybe even twenty or thirty minutes,
Like they're not optimizing for time spent. Netflix never wants
you leaving, Like literally, they are trying to put as
much great new content on every single day, every week
(39:15):
there's something fresh, like they don't want you leaving, and
that time spent is obviously bearing fruit. You see it
in how much share they have of TV time spent
versus all of their peers, dwarfing the Disney pluses, the Hulus,
the Peacocks, the Paramount pluses. But it's also giving them
importantly the ability to raise price, because you see price
going up pretty meaningfully yesterday, and I don't think there's
(39:38):
gonna be any meaningful consumer pushback.
Speaker 3 (39:40):
All right, So that's true, whether it's Squid Games or
Beyonce or something I'm binging on which will remain I'm
not gonna tell you what I I just.
Speaker 16 (39:50):
Watched Black Doves. I just watched Black Doves. Like there's
just lots of content from all over the world, right
vice versa, Like there's you WWE Raw, which they took
from you know, essentially what was on USA network now
it's on Netflix. It's not just being watched domestically. I
think the beauty of Netflix is it's being watched globally.
It was the fourth largest programming last week. So if
(40:12):
you look at sort of like how they're building global viewership,
squid Game was the opposite, right, that was international programming
coming to the US. Like, they're just doing an incredible
job globalizing content and building audience.
Speaker 11 (40:26):
Well, okay, so rich.
Speaker 3 (40:27):
If it's so obvious, why aren't the others doing it?
Or is it just that Netflix is doing it so
well and they keep making so much money that their
pockets just kind of are swelling with money that they
can spend on even more content which the others don't
kind of have.
Speaker 11 (40:43):
I mean to help me understand.
Speaker 16 (40:46):
I got a text message from an investor last night
and they were just like, why does everyone just not
copy them?
Speaker 9 (40:52):
I don't understand.
Speaker 11 (40:53):
Yeah, that's my question.
Speaker 16 (40:56):
One is you know, and Netflix sort of hooked fun.
You know, it was almost trolling in their press release
if you're read through it, they were like, we don't
have to worry about declining legacy businesses. Right like all
of these traditional media companies, they're trying to balance right there,
their core cash generation comes from linear television. That business
(41:20):
is in decline. You know, you're seeing cord cutting getting worse.
You're seeing ad dollars shifting from linear TV to streaming
TV and even to mobile platforms, and so they're facing
all of these pressures. And so it's very hard when
your core business is in secular decline investing heavily in
the future and telling investors don't worry about making money now,
(41:41):
will make money in the future.
Speaker 17 (41:43):
They tried that.
Speaker 16 (41:44):
I think they ran out of leash pretty quickly because
investors didn't believe there was a pot of gold at
the end. And so the bottom line is, I think
the answer to your question is they don't have the
stomach to build a massively scaled global platform. And it
really raises the question, if you're not going to try
to win globally long term, why are you even in
(42:05):
the business?
Speaker 4 (42:05):
Taken Okay, so that's a great segue to my next question, Rich,
is what is the future of those companies the Paramounts,
the Disney's, the Comcast, the Warner brother Discoveries, the Foxes.
How do they survive?
Speaker 9 (42:18):
You know, maybe they focus.
Speaker 16 (42:19):
You know, look, niche offerings have always existed in will
always exist.
Speaker 9 (42:24):
Maybe they're each more niche.
Speaker 16 (42:25):
You know, maybe Disney Plus is a way to watch
Disney movies primarily, you know, like a babysitter on demand
for your kids. Maybe it isn't something that you're going
to use every day. Obviously, they're integrating Hulu, they're integrating
you know, Espn. They're launching ESPN Directing Consumer at Disney.
I think they're trying to build a more comprehensive service,
(42:45):
but it's hard. I mean, the price point is certainly different.
You know, ESPN is going to be an expensive addition
into the Disney Plus and Hulu bundle. Look, I'd say
the one company that really has a shot at taking
an entirely different approach, and I would really, you know,
urge anyone listening to this think about Paramount.
Speaker 17 (43:07):
You've got a new CEO coming in.
Speaker 16 (43:09):
You know, you just saw I don't know if you
watched Trump's press conferences yesterday, but you saw Larry Ellison
on stage, you know, really front and center, you know,
talking about massive investment. You saw what you know, the
Ellison family just took control. You know, his son David
has taken control with guidance ors in the process of
taking control of Paramount. You know, there you have a
(43:29):
forty one year old CEO of the combined company after
the merger closes this year, theoretically someone with a twenty
thirty forty year view and hopefully they're not going to
be focusing on cutting investment in programming and focusing on
near term free cash flow. They're going to literally build
to win and take a very tech centric approach to
(43:52):
media because I think what you're really asking is who
has the stomach to think like a tech company in
the sort of you know, the body of a media
or legacy media company. It requires a very different skill set.
You really have to focus. You know, if you think
about what Apple, Amazon, Meta, like, TikTok like, what are
all of those companies obsessing about time spent? That's what
(44:15):
you need to win in streaming. You have to control
time spent. YouTube does a great job of it. Netflix
does a great job of it. Prime Video is doing
a better and you see what they just did with
the NFL and now the NBA is coming like there
is a real focus on driving time spent.
Speaker 17 (44:30):
That's what it takes.
Speaker 16 (44:31):
Look, I think David Olson has a shot at really
being able to do that. The question will be do
you need consolidation over time? I think that's a question
we hear a lot, whether it's WBD or you know,
obviously Comcast has NBC Universal. Will we see consolidation, I
think is sort of where you're heading. I don't think
there's a lot of imminent consolidation because I think there's
(44:53):
a lot in flux right now in the industry. But
over time, I think that becomes the big question of
if you're not trying to get to global scale and
you don't think you can get to hundreds of millions
of subscribers watching hours a.
Speaker 17 (45:04):
Day, you cannot win in this game. You are going
to lose.
Speaker 3 (45:09):
I mean, doesn't that mean, then, Rich there has to
be some consolidation or at some point, I mean we
all just kind of talk about how we're getting kind
of over contented, if you will. I mean, there's just
so much coming out of us. There's only only so
many hours in a day. I mean, at some point,
don't some of them have to go to the wayside?
Speaker 9 (45:29):
Yeah?
Speaker 16 (45:29):
I mean, look, I think either they get scaled back
into just smaller businesses. They you know, they may not
be global competitors. I mean, look, you know Peacock is
domestic only. Who lose domestic only? Paramount Plus is you know,
trying to be global. Max is certainly the one that's
you know, if you look at what David zaslows, and
he's probably done the best job of trying to build
(45:50):
out globally. But they need a lot more content, Like
is it just you know, it feels like Max is
increasingly just becoming HBO And maybe they rebranded. I mean
that was one of our predictions for this year, that
they just rebranded HBO.
Speaker 17 (46:02):
And maybe it's just a more focused service.
Speaker 16 (46:05):
Like right, Like just like Disney has its lane, HBO
has its lane. Maybe these things are just smaller and
playing a different game than right Netflix is playing.
Speaker 4 (46:14):
Rich What do you know about that? What do you
know about consumer behavior in this space? And I think
of my own I mean, my reference point is me,
and I would say that, you know, we subscribe to
all of these things. We spend more money on this
than we would on a cable bundle. It's almost like,
you know, I spend more money on Spotify a year
than I did when I was buying music, you know,
fifteen twenty years ago on CDs. What what's twell twenty
five or thirty years ago. I guess you'd say, got
(46:35):
to get my dates?
Speaker 7 (46:36):
Right?
Speaker 8 (46:36):
What's that?
Speaker 9 (46:37):
Like?
Speaker 4 (46:37):
What's typical consumer behavior here?
Speaker 16 (46:41):
I mean, look, certainly from a time spent standpoint, the
two places that are you know, vacuuming up time spent
on television screens. You know, the big screen in the
home is YouTube and Netflix, and everybody else is you know,
pretty far behind. I mean, Amazon's coming up and certainly
doing better, but everybody else is still fairly small. And
(47:03):
I think you know, this guy sort of goes to
what is your core service? You know, who are gonna
be the core services in the home?
Speaker 9 (47:11):
Like when you get home on.
Speaker 16 (47:12):
Thursday night, you know you've had a long work day.
You're gonna turn on some entertainment. What are you turning on? Like,
if you're not flipping through TikTok or you're not flipping
through reels or YouTube or whatever on your phone, you're
turning on the big screen device, where do you go first?
Speaker 9 (47:28):
Like that moment of truth?
Speaker 16 (47:30):
That's what Netflix has been winning, right, Like they are
the place you turn to find something to watch.
Speaker 17 (47:35):
Then you may go to one of the others unless.
Speaker 16 (47:37):
You're specifically watching, like you know you want Last of
Us on HBO because the new season is coming back,
you may watch that one show. But where you sort
of start your search behavior. I think Netflix has done
an incredible job of owning that. Everybody else is sort
of playing second fiddle to that, and that's their problem.
Speaker 3 (47:56):
Hey, listen really quickly, got about twenty five thirty seconds. Yeah,
is going to release an imax on Thanksgiving Day twenty
twenty six and debut on Netflix on Christmas Day twenty
twenty six. That strategy is that makes sense for Netflix
to be doing that again, just got about thirty seconds.
Speaker 16 (48:14):
Look, bottom line, there's certain directors that are still obsessed
with theatrical I think if you look at Carry On,
which is now bigger than Birdbox, one of the third
biggest film ever on Netflix globally, that was the Jason
Bateman film that came out a few weeks ago. Like,
you can break a film globally and get into the
zeitgeist globally on Netflix. But there are certain directors that
(48:35):
are stuck in the theatrical world. And believe in that experience,
and Netflix is trying something. We'll see whether the imax
only experience creates an incremental excitement around the film. It'll
be an interesting test. I do not think it is
a core strategy in any way.
Speaker 3 (48:50):
Well, always a good experience with you, Rich Greenfield, while
partner media analysts and technology analyst at Lightshead Partner's joining
us on this Wednesday road. How about you let me drive?
Speaker 4 (49:02):
Oh no, no, no no, this is not a toy jug.
Speaker 8 (49:06):
Honey, Please, how do the driving gravels? Let's mate, I
want to drive.
Speaker 5 (49:10):
It's a good question time.
Speaker 8 (49:17):
This is the drive to the clothes.
Speaker 12 (49:20):
Plums for me.
Speaker 8 (49:20):
I think well.
Speaker 2 (49:21):
Drier Yeladn on Bloomberg Radio.
Speaker 3 (49:24):
All right, everybody, just about eighteen nineteen minutes to go
until we wrap up the trade on this Wednesday, January
twenty six.
Speaker 11 (49:30):
You just heard Charlie and Bill Maloney.
Speaker 3 (49:31):
Breaking down them and we've seen certainly a rally underway
with the Nastak one hundred out performing on a percentage
basis up about one point three percent.
Speaker 11 (49:40):
So let's get to it with our drive to the close.
Speaker 3 (49:42):
Guests back with us as Alexis Brown Roberts she's chief
operating officer at Alexis Investment Partners. They've got about one
hundred and eighty five million dollars in assets under management.
She joins us from Montgomery, Texas.
Speaker 11 (49:53):
Alexis good to have you back with us.
Speaker 3 (49:55):
Tell us about the momentum that we are seeing now
that we are starting now that Donald Trump is in
the White House, We're starting to get some clues about
maybe some of the initiatives that will come under him.
Speaker 11 (50:07):
We talked a lot about AI today.
Speaker 3 (50:10):
As a result, I'm just curious what your investors are
doing making any changes if so, to their portfolio as
a result.
Speaker 12 (50:17):
Well, Hi, Carolyn tim thanks so much for having me
on again. It's great to be talking with you all again. Yeah,
it is great to see you know. We went through
that December correction and pullback and we're back in that
full bowl market swing and that op trend here and
we've really been enjoying that increased growth and momentum. And
we were actually modest dip buyers into that December pullback.
(50:40):
We decided to buy into some profitable small caps, just
continuing with our diversification, as that was an area that
really got beaten down in that correction and was slightly
underrepresented our portfolio, so we took that opportunity to go
ahead and diversify. And so far investors seemed to be
very happy with everything that's been going on with the
(51:05):
Trump trade and just optimistic. And we are optimistic, especially
near term, but do expect volatility as a lot of
questions are still out there and continuing to be answered.
Speaker 4 (51:16):
Is the volatility a result of potential policy such that
we're continuing to learn more about such as tariffs? I mean,
where else do you see the result of or is
the source rather of volatility?
Speaker 12 (51:27):
That definitely does help increase volatility, But really I think
the volatility is coming from just the full valuation of
this market. I mean, we hit our S and P
six thousand target at the end of last year, and
while we are looking to hopefully end the year between
that sixty five hundred to sixty eight hundred range is
what we're looking at, and who knows, potentially reaching seven
(51:50):
thousand at some point, just with the fact that we
are so fully valued and there are a lot of
moving parts going on and uncertainty going on, we wouldn't
be surprised if there is quite a bit of volatility
even given a very positive year.
Speaker 11 (52:05):
Hey, I answer, I do want to you.
Speaker 4 (52:07):
Have a follow up telling you Carol's telling you.
Speaker 11 (52:11):
I didn't want to jump on them. You know, Alex,
this is one thing I wanted to ask you.
Speaker 3 (52:15):
I mentioned that we're talking a lot about AI and
this initiative that President Trump talked about started talking about yesterday,
and we've been watching some of the names of companies
that are expected to pony up maybe about one hundred
billion right to start, but it could be a lot
more money going forward. But we're seeing names like Oracle
Soft Bank Armholdings all trade a lot higher. I am curious.
(52:38):
Are some of your investors saying, hey, listen the story.
I want exposure, you know, get me there? Are you
hearing that.
Speaker 12 (52:48):
We're definitely big fans of the AI boom and just
the amount of productivity that we're hoping to get out
of AI. We're lucky in the fact that our shareholder
don't tend to be overly assertive in that stuff. I mean,
they're definitely curious about it, but they tend to trust
us to make the investment decisions. And when it comes
(53:09):
to AI in particular, we do have exposure there we
have our Apple or Microsoftware and Video or Google, and
we do still like big tech. We still have that
VUG and there for megacat growth and QQQ and all
of that. But really what intrigues us the most about
AI is the idea that other players are really going
(53:30):
to benefit from the boost in productivity from AI. I mean,
if you harken back to the late nineties and the
innovation that came out of the Internet, which is really
what the last big boom that people are really equating
to AI was. What happened out of that was that
a lot of other companies were able to boost out
of that. So that's what we're most excited about. I mean,
(53:51):
even if you look at last year, companies like Walmart
and Home Depot, they were really able to benefit from
AI and that boosted their earning.
Speaker 4 (54:00):
So I'm wondering about equal weighted S and P five
hundred versus the market cap weighted S and P five hundred.
You prefer the equal weighted S and P five hundred.
Speaker 11 (54:11):
Why is that we do.
Speaker 12 (54:14):
Prefer the equal weighted S and P five hundred. A
lot of that's because the cap weighted S and P
five hundred is pretty much, very heavily in those seven
mag seven stocks, and we do have plenty of exposure
to there, but we'd rather have that tech exposure be
through things like I mentioned, like the QQQ, the VUG,
(54:34):
or even having exposure into certain tech companies that we
like to overemphasize more and then getting actual exposure to
the other four hundred and ninety three names through something
more of an equal weight, especially as we're looking to
diversify our portfolio within the context of believing that there
(54:55):
may be some changing market leadership as we come through
this and see more companies benefit not only from AI
but also perhaps more of accommodative fed as we do
expect them to continue to kind of neutralize interest rates
as well.
Speaker 3 (55:14):
We talked about a lot of the kind of large
cap names, and I am also curious about small caps,
which are now up about three point four percent this year,
and I feel like for a long time we keep
talking about it's time for the mid caps and the
small caps to really maybe you know, for investors to
make some movement into them. How are you where's that
component and what is the role in a portfolio right
(55:36):
now when it comes to small caps and or mid caps.
Speaker 12 (55:40):
Yeah, we like small cabs and mid caps as part
of a broadly diversified portfolio. So we did go ahead
and add to profitable small caps, so S and P
six hundred over something like a Russell two thousand. And
the reason we chose to do that is, for one thing,
we talked about Trump and tariffs and a domestic focus earlier,
(56:02):
and small caps should benefit from that because they tend
to be less affected by things going on for and
they just have less exposure out there than they do domestically.
Same thing, as interest rates come down and perhaps we
get some M and A activity, they should benefit there
as well. And so just as we are looking to
diversify our portfolio again, we still like the tech, but
(56:25):
we wanted to be able to have some exposure elsewhere,
and we think that doing it through an S and
P six hundred is a really good way to do that.
We don't really want to try to be too cute
with it and pick individual small cap names or again
a Russell two thousand, where you're going to have exposure
to unprofitable small caps because interest rates still are relatively
(56:47):
high right now and there was a lot of stimulus
back in the COVID days that are maybe waning out,
and so some of the companies that are just on
life support, you wouldn't want to have exposure there, but
we do like Covidcapin and SMP.
Speaker 11 (57:00):
Thank you all right, good to know and good to
get some time with you. Alexis. Thanks Alexis Brown Roberts.
Speaker 3 (57:04):
She's chief operating officer at Alexis Investment Partners. Joining us
from Texas Montgomery, Texas on this Wednesday.
Speaker 2 (57:12):
This is the Bloomberg Business Week podcast, available on Apple, Spotify,
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