August 25, 2025 • 42 mins
Bloomberg’s Caroline Hyde discusses the latest on Intel after President Donald Trump announced a 10% stake in the chipmaker. Plus, Elon Musk announces he's suing Apple and OpenAI, accusing the companies of thwarting competition. And the world of esports is set to get bigger with the introduction of the Esports Nations Cup tournament.
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is live
from coast to coast with Caroline Hyde in New York
and ever though in San Francisco.
Speaker 2 (00:21):
This is Bloomberg Tech coming up.
Speaker 3 (00:22):
The US takes nearly ten percent stake in Intel, and
President Trump's celebrating that he got it for zero. What
this means for future deals? Plus, the President of South
Korea heads to the White House with tech leaders from
Samsung and s k Heinez details on that meeting and
gaming gets patriotic.
Speaker 2 (00:39):
Why the Esports World Cup.
Speaker 3 (00:40):
Foundation has announced a new bi annual tournament for nations.
But first, let's check in on these markets. Let's just
check in on Intel, because that is the stock that's
on the move. They want to keep an eye out.
General Benchmark's flat, but Intel up more than two percent.
Speaker 2 (00:53):
We were in the red just for a moment.
Speaker 3 (00:56):
But now we get the real devil in the details
of what that almost ten percent stake looks like from
the government and the president seeming to feel that he's
got it for zero. Let's get into the details. Because
I'm peace to say Miuch Shepherd is with us, of course,
who really helps lead our coverage of the intersection of
technology in Washington and Mike. It is interesting that, of
course the money comes from that that was already promised
(01:17):
to Intel. Remind us of the detail of the deal.
Speaker 4 (01:21):
Well, so in the broad strokes, it's a nearly ten
percent stake totally more than four hundred million shares going
to the US government in this CARA is an exchange
for what has not yet been spent out of the
grant money that was to go to Intel through the
Chips and Science Act. Remember this is the law that
was passed under President Joe Biden designed to spur domestic
(01:43):
chip manufacturing, helping makers like Intel, but others including TSMC
and Samsung as well get fabs and plants up and
running here in the US. Now, Donald Trump is talking
about this as really the US government getting something for nothing,
although if you think about it, that's almost eight point
(02:04):
nine billion in unspent Chips Act money, and so there
is a little bit of something in there. Many are
looking upon this CARA is really an unprecedented intervention in
a company, especially when you think about how sacro san
these principles of the free market have been not only
for Republicans but for Democrats too. And how it has
(02:26):
been looked on with really some skepticism Simpson. Last week
we interviewed former Vice President Mike Pence and former Obama
former Biden rather economic director Lael Brainerd on successive days
and each express their own misgivings and skepticism about the
president of the US government intervening in a company without
(02:48):
a crisis actually unfolding.
Speaker 3 (02:51):
Many though, would frame it from the administration's side that
this is a focus on national security, that this is
a crisis for Intel to be able to be and
turn it around as a national winner of manufacturing.
Speaker 2 (03:04):
But will government intervention do that?
Speaker 4 (03:06):
Mike, Well, that's a great question, Caro, And really that
is how they framed it. They didn't quite use the
crisis word, but they did stress the urgency on the
national security side of having a US flag company leading
the way when it comes to chip production. And curiously,
in the announcement, one thing was missing, and that was
mentioned of the new plant in Ohio that you and
(03:29):
I have talked about a lot, and this is the
one that has been planned by Intel as part of
its revival, the one that was started under the former
chief executive officer, Pac Gelsinger and It was really destined
to be a flagship of that effort, but it has
since been delayed and this is a massive undertaking. It
has been pushed back into the next decade, and they
(03:49):
really need this underway to put Intel really back into
the running when it comes to making those kinds of
advanced chips.
Speaker 5 (03:58):
Their biggest challenge.
Speaker 4 (03:59):
Right now, Caro is finding the customers to be able
to sustain such a massive investment in that Ohio plan,
and right now they don't quite have enough. And the
interesting wrinkle in this is that Donald Trump, by taking
leading the US government into taking the stake in a way,
positions himself as CEO of everything. And this is a
(04:19):
role he has liked to play. He has relished pushing
companies into expanding their investments in the US.
Speaker 6 (04:26):
We've seen it on the tech front, and.
Speaker 4 (04:28):
We start just a few weeks ago with Apple and
expanding their investments in the US. So will he take
some sort of a more active role in trying to
drum up customers to help Intel. And it's CEO Lip
Bhutan who Trump has met in recent weeks at the
White House and really was the one who Trump was
able to persuade to have this exchange of a stake
(04:50):
in exchange for chips act money.
Speaker 3 (04:52):
Mike Shephard bringing us through what is an unprecedented piece
of news.
Speaker 2 (04:56):
We thank you now.
Speaker 3 (04:57):
In video potentially could be a future buyer of Intel's
made chips. But all eyes are on Video more importantly
for its earnings coming out Wednesday, when the investors seeing
it is a key test of boarder AI impact on
demand for more briber Gequity's reporter common Ranicky is here
with us. It is the bell weather in many ways,
but analysts in particular have got excited about what the
(05:19):
revenue could look like coming for this fiscal quarter.
Speaker 6 (05:21):
Yeah, that's really true.
Speaker 7 (05:22):
I mean it's something that we see actually kind of
cyclically around earnings that analysts boost sort of their price
targets for companies ahead of the results. We sort of
rally up to them and everything kind of resets, And
in the last week we had at least nine analysts
increase their price targets for Nvidia. So they see upside
at least over the next twelve months. They're excited going
into this report, and you're right, I mean, revenue growth
(05:44):
is the thing that everybody is always watching within Vidia.
Speaker 6 (05:46):
They put up incredible numbers.
Speaker 7 (05:48):
I think this quarter, analysts are expecting revenue to jump
forty eight percent from last year forty six billion dollars.
That is just, you know, it's not something that we
see every day.
Speaker 3 (06:00):
Certainly for a four trillion dollar company exact, and you're
expecting more than fifty percent growth in earnings per share.
Many though, would question China as the area of concern. Look,
we're just talking about President Trump having unprecedented impact on businesses,
and that deal to sell eight twenties is unprecedented, and
we're warned about.
Speaker 7 (06:17):
Demand totally, and I think that's something that analysts are
and investors are really going to be listening to on
the call what Jensen says about China demand, what total
market they're forecasting that they're.
Speaker 6 (06:29):
Going to be able to see.
Speaker 7 (06:30):
I think people hadn't they hadn't factored in China revenue
maybe in the next few quarters. Right, we know that
things are sort of up in the air there, But
going through fiscal twenty twenty seven twenty twenty eight for Nvidia,
that's something that everybody hoped was going to come back online.
Speaker 6 (06:44):
And so even though it's not a.
Speaker 7 (06:45):
Huge part of their overall revenue. I think it's about
fifteen percent, maybe a little bit less. It's going to matter.
You know that it's a big market, and I mean
if it goes to zero, you know, that's a considerable.
Speaker 3 (06:56):
Hit, and it's going to matter as we question AI
valuations more broadly across the space.
Speaker 2 (07:00):
It's great to have come and ran unicate. We thank you.
It's a very well read piece.
Speaker 3 (07:03):
Today, let's get broader, investor take bringing Erin Brown, managing
director and portfolio manager at Pimco, and just bring us
the context of last week prior of course to Jackson
Hole and euphoria, or on Friday, we were worried about
overall frothy valuations in the area of AI.
Speaker 2 (07:18):
Is in video going to be a key test on that?
I think it is.
Speaker 8 (07:21):
I mean, I think that really is keeping the market
right now with respect to the AI trade on pause,
waiting for more news from the video to see what
earning bears and really to see if they've been able
to continue to grow into what are really lofty growth numbers.
You certainly seen AI come under pressure as the market's
been rallying to new highs but broadening out outside of AI,
(07:44):
and so Navidia, I think is front and center for this,
at least for the market this week with respect to
the AI trade.
Speaker 3 (07:51):
Have you questioned anything fundamentally though that changed in the
last week when we suddenly were awash with concerns about
MIT writings or whether Sam Altman's soula bubble or not.
Speaker 9 (08:04):
Yeah.
Speaker 8 (08:04):
I think the MIT research note really lay bare the
fact that right now implementation and adoption is really critical
in terms of enterprise integration, being able to appropriately adopt
these models into the enterprise environment. And so with the
(08:24):
I think the MIT paper was a little bit misunderstood
in that yes, they're saying that only five percent are productive,
but where they see the real hindrance is not with
the models themselves, but rather with enterprises being able to
implement effectively those models into their software environments. And so
(08:45):
what I think is really key for the next leg
for AI adoption and growth is going to be the
software companies and the implementers that are able to take
these effective CHAT, GBT or other models and enter and
integrate them into the business environment. And so software companies
that can do that effectively are really going to be
(09:07):
the winners I think in the next leg of this
AI trade.
Speaker 3 (09:10):
We got worried about into it or workday earnings. At
the end of last week, we've been worried about some
of the European players. SAP has been under pressure and
others as we worried about software.
Speaker 2 (09:19):
Sort being eaten by AI.
Speaker 3 (09:20):
But then on the flip side, a Palenteer, ultimately a
software company, has been the best performing company of the year.
Speaker 2 (09:27):
Even with some of the recent selloff.
Speaker 3 (09:29):
Do you generally think that software is getting beaten up
too much or do you think companies are able to
embrace and pivot with AI.
Speaker 8 (09:36):
I think right now we're really seeing the winners and
the losers, and the bifurcation of the winners and losers
in the software environment. Companies that are like Palenteer, that
have been really effectively able to deploy AI, use it
and then deliver it effectively to their customers are the
winners right now in this environment, and I think are
(09:58):
going to persist to be the win I think the
companies that are being left behind and the laggards right
now are the companies where Palenteer is sort of eating
their lunch and taking you know, business from them, and
so you know there's going to be winners and losers
in any environment when you see these disruptions occur. But
(10:18):
right now we're really seeing sort of the fight of it.
But I think broadly speaking, as a as an industry group,
software should be the ones that are implementing AI into
enterprise environments and being able to grow into what I
think is a greater demand environment going forward.
Speaker 6 (10:39):
We're moved on from just the picks and.
Speaker 8 (10:41):
Shovels of AI and now really looking to the deployment
stage and the monetization stage, and that's where software should
really shine.
Speaker 3 (10:49):
And video is the picks and shovels. It's the key
tests this week in terms of earnings. What are you
hearing in terms of well, the depreciation of the assets
that ultimately in video is selling to all of these
hyper scale it's whether demand goes, but how long are.
Speaker 2 (11:02):
They sticking around? Have you managed to sort of model
that out?
Speaker 8 (11:05):
No, I mean not explicitly in terms of modeling it out,
but I think right now we're still in very early
stages of this, and so I think there still is
quite a long runway for the video chips. But you
are seeing that, you know, with we're seeing you know,
good scale adoption. But we're also seeing a lot of
innovation and that should really just keep demand, you know,
(11:27):
pretty robust for the picks and shovels as we continue
to innovate, you know those, you know, the the entry
trips into the AI space.
Speaker 3 (11:38):
Amon Brown, really great context, digging deep in tech. We
so appreciate it for any manager over at PIMCO.
Speaker 2 (11:44):
Thank you.
Speaker 3 (11:45):
Meanwhile, we've had some breaking news and it all surrounds
big players in AI and it's in fact Enal Muskus
suing Apple and open Ai over an alleged arrangement on
its iPhone. Of course, open Ai has been in some
ways integrated within Apple offerings.
Speaker 2 (12:01):
Elon Musk taking issue with that.
Speaker 3 (12:02):
He took his fight to X last week, concerned about
the rankings on Apple App Store of certain generator of
AI products and feeling that X doesn't get enough love there.
We'll dig deep on that story. We're still out four
tenser percent on Apple. Coming up, though, we're going to
be talking more trade, joined.
Speaker 2 (12:18):
By Gano Globals Eliza Tobin and what.
Speaker 3 (12:21):
To expect from a meeting between Donald Trump and President
of South Korea and it's tech giants.
Speaker 2 (12:26):
This is Bloomberg Tech.
Speaker 3 (12:37):
South Korean President nij Mung is said to read with
President Trump at the White House today. In focus will
be South Korea's three hundred and fifty billion dollar pledge
for projects in the United States, announced a month ago,
but pretty few details on what actually is known. Meanwhile,
several Korean firms already have existing US investment plans. Samsung
planning for a multi billion dollar semiconductive plant in Texas,
(12:59):
or hi nd I when it's twenty one billion dollar
pledge to expand future industries and ev charging production, or
even TSMC when this one hundred billion dollar investment in
US chip manufacturing operations present LYE will be joined by
the leaders of some of those companies in today's meeting.
That's bringing in e Lisotobin, imagined, director of Ghano Global,
who can help break down ultimately what these sorts of
negotiations look like and what perhaps if you're an equity
(13:22):
holder in a Samsung or in a TSMC, what future
deals could look like.
Speaker 6 (13:29):
Caroline is great to be on with you.
Speaker 3 (13:32):
Yeah, Li said, to talk us through as to what
we anticipate. Will there be semiconductor tariffs coming this direction
for certain of these companies, Will they get a carve
out because they're investing so much. Will we hear anything
about equity stakes being taken by leaders like the President
of the United States and the US government in sentences
semi conductor companies.
Speaker 10 (13:51):
Yeah, Caroline, you've really put your finger on it. This
is what everyone is wondering. This is what we're all
waiting to see. What is going to be this shape
the semiconductor terriffs. These Section two thirty two tariff investigations
that Commerce has been doing for months, and they keep
kicking the can down the road. What's really complicating things
is that these are now being kind of merged and
(14:14):
mixed up with the ongoing trade negotiations that the United
States is having with South Korea, Japan, the EU and
all these other partners. And so these countries are racing
to get exemptions or some kind of guarantee.
Speaker 6 (14:28):
Of a lower rate of tariffs.
Speaker 10 (14:30):
But nothing really is certain until you see that deal,
that handshake in the Oval Office between Donald Trump and
his South Korean counterpart.
Speaker 6 (14:40):
So really, looking forward.
Speaker 10 (14:42):
What I'm waiting to see with all the dust settling
with semiconductor tariffs is how is it all going to
net out? Are we going to see a distinction between
China on the one side, and US trusted allies and
partners on the other hand, which are trusted appliers and
key parts of the semiconductor supply chain players like Samsung
(15:04):
and s k Heinex.
Speaker 2 (15:06):
I'm just.
Speaker 3 (15:08):
I like the idea that you're calling them trusted partners
and allies. And then we get the latest post from
President Trump sent to seemingly the president of South Korea
ahead of the meeting.
Speaker 2 (15:20):
What is going on in South Korea? Question mark?
Speaker 3 (15:22):
Seems like a purge or a revolution. We can't have
that and do business there. How, leaders of countries meant
to navigate what they thought as allyship when they're about
to go into a meeting and receive sort of slightly
confusing statements such as this.
Speaker 10 (15:38):
Yeah, this is not really a great sign for the
upcoming talks that we're about to see. For a long time,
you know, even dating back to his first term, President
Trump was putting pressure on allies like the Koreans and
the Japanese in particular on at least two fronts, so
both trade and defense spending. He would always want to
(15:59):
know how much are these allies paying for their own defense?
Speaker 6 (16:02):
As well? As what is the trade balance.
Speaker 10 (16:05):
So I think this is an unfortunate signal that Korea
is going to be under pressure on both fronts. And again,
I think when we see the dust settle of both
the administration's trade negotiations as well as the semiconductor tariffs,
are we going to see a distinction between China, which
I think there's a bipart is in consensus that they're
(16:26):
a threat and an adversary versus these other countries that
are part of the semiconductor ecosystem that we depend on
from Europe to Asia. So is there going to be
a distinction or is there going to be a generally
lower teror freight on the allies and partners than there
is for China. I don't think anyone knows for sure,
and we won't know until the Commerce Department comes out
(16:48):
with the results of the investigation.
Speaker 3 (16:50):
And as I put it into the context of what
did just happen officially on Friday, we've known and thought
it was coming for a while. The ten percent equity
stake can Intel by basically taking money already promise them
by the Chips and Science Ackedlaza. This ultimately is meant
to make the US less dependent on a TSMC and
on a Samsung, but still in the interim we want
(17:11):
them to build manufacturing here.
Speaker 10 (17:15):
Yeah, the Intel deal is really interesting, So I like
to kind of zoom out and think about why does
the US government care about the fate of Intel either Anyway,
you know, this isn't just a normal business deal. We
have to remember that the government is not a business
and so we should be evaluating what's going on here
(17:37):
not just as a business deal, but it's really more
like an insurance policy. What the US government has been doing,
even since the Biden administration to try to rescue Intel.
So your audience will be well aware of the United
States is almost entirely dependent on Taiwan on TSMC for
the supply of advanced semiconductors, and that's a real problem.
Speaker 6 (18:00):
If we ever lost.
Speaker 10 (18:01):
Access to the chips, it would be economic catastrophe. So
the US government sort of stepping into intervene. I think
it is rational to see this as dealing with an
economic emergency, so extraordinary intervention by the government is in
fact required. The question I'm thinking of is, you know,
(18:22):
is this the right kind of government intervention? And what
you know in the history of industrial strategy. You know,
an equity deal might not be the right play. What
these firms that are kind of in strategic sectors that
we can't allow to fail often need is a long term,
reliable source of demand, and that's where the US government
(18:45):
can can sometimes step in more effectively. I will just
remind the audience why Intel is special. Under the CHIPSAC program,
they became the steward of something called the Secure Enclave
program that was set up to have kind of a
minimum viable number of chips being produced here in the
(19:05):
United States for needs like defense and national security. So
it's not realistic to think we're going to rea shure
the entire semiconductor supply chain, but having this goal of
kind of an insurance policy to make sure we can
produce at least some chips in the event of a
contingency is really important.
Speaker 3 (19:24):
Great context Isotobin, Thank you so much, Managing director he
Ghano Global el muss doing Apple and open Ai over
an alleged arrangement on its iPhones, using the two companies
of unfairly favoring open Ai on its smartphones and thwarting
competition such as Musk's Clock. Blomberg Consumer Tech managing editor
(19:45):
is with us Mark German, who knows the thing we'll
do about Apple. I mean a threatened this earlier this
month on x and now has gone through with that threat.
Speaker 2 (19:52):
Ultimately, couldn't do anything to the relationship.
Speaker 3 (19:54):
That open ai does have with Apple and vice versa.
Speaker 11 (19:58):
I don't see so, I mean, if they consider this
an antitrust violation, that being the cord or the government
or what have you. What Apple would have to do
is open up what they call extensions within series. So
right now, the open ai relationship is what's called an
extension in Siri. If it doesn't understand one of your commands,
or it doesn't have the knowledge to answer one of
(20:19):
your commands, it uses open aist GPT as a fallback option. Now,
when Apple introduced this functionality, it's said that they would
have other available AI services, right and so they said
that Gemini would be there. Gemini never actually came to
fruition there. There's a lot more behind the scenes with
the Search Engine lawsuit, working with Gemini on other facets
(20:41):
that have gotten the way of that. But it's possible
if they open this up to third parties. Allow XAI,
allowed Brock, allow Claud allow different AI services in there,
and that would certainly solve the issue. And Elon is right,
they do give pretty hot promotion to some of the
other AI companies in the app Store. They haven't done
a lot of that promotion for a grock and so
(21:01):
maybe we'll see more of that from Apple. But all
in all, I find this lawsuit to be frivolous. I
don't personally consider it an antitrust situation, but it's obviously
not up to me to decide, and it is a
little surprising that Elon Musk actually went through with this.
Speaker 3 (21:15):
Go to the context, of course that you put forward
in a story on Friday, that the relationship between Gemini
AI and Apple does look like it might get closer.
Speaker 11 (21:25):
So Apple's building a new version of Siri for next spring,
and it's obviously much needed for reasons that I don't
have to spend an hour listing now.
Speaker 9 (21:33):
But they basically have two paths.
Speaker 11 (21:35):
They can go completely in house with the new version
of Siri, and by in house I mean self developed
large language models to power it, or they could use
a third party to help out in terms of building
the new sery. So they've been talking to a bunch
of possible partners to see if they're willing to power
aspects of that new series. So they've been talking very
much to Claude from Anthropic, and I believe eventually they'll
(21:57):
reach some sort of agreement. But more recently they started
negotiations with Google about Google building a model based on
its Gemini technology for Apple as well. So we'll see
where they ultimately land in a few months.
Speaker 3 (22:09):
And before that, we've got more hardware to Carme and
Mark Gooman. You've been writing about that throughout the weekend
on Poweron. I urge everyone to go and take a
read and then listen. We thank you so much for
joining us. Welcome back to Bloomberg Tech. Let's check in
on a couple of stocks, because more broadly the benchmarks
are flat.
Speaker 2 (22:28):
But I'm looking at PDD up more than one.
Speaker 3 (22:30):
Point two percent. Let's now call it. This is the
owner of tim who, of course actually reported slightly better
than anticipated numbers. Revenue pushed up seven percent. Look, it
is the slowest pace of expansion in the years for
the Chinese e commerce giant. However, it did manage to
beat some pretty low expectations of analysts. Net income that
was on the downside. But really this is coming from
(22:51):
galvanizing consumers. They're trying to offset this economic fallout from
US tarras and a little bit of a relief today,
Intel up one and a half percent. This is the
US government does take that ten percent. State does have
President Trump saying they got it the zero, but he
does want to show support. And this is all about
having a domestic champion here in the United States when
it comes to chip manufacturing. But that's all about the
store of AI, isn't it. And let's talk about AI startup.
(23:13):
Perplexity set to allow publishers the opportunity to actually share
in revenue their articles generate. The move comes as the
company faces pretty mounting criticism and legal action from media
outlets over its use of their content promote showing Gafari
and places to say, it's still here in New York
and I'm thrilled about it. What are we seeing in
terms of Perplexity trying to fend off issues. This is
all about comment. This is all about well, the actual
(23:36):
new product that they're offering and trying to share revenue there.
Speaker 12 (23:39):
That's right, So Perplexity as well as other AI companies,
But they've really been one of the quickest is making
a big push into an AI browser, right, so having
all the AI tools actually embedded into your web search
and being able to sort of understand what you're seeing
on the web and everything you're doing on your computer.
At the same time, they want to be able to
have high quality information right for people when are searching
(24:01):
through different tabs. So they're integrating this new kind of
premium tier of subscription that will allow you to actually
get some more high quality news sources into your AI
browser assistant and give five percent of that revenue share
two publishers who partner with them.
Speaker 3 (24:19):
Okay, so they're able to charge more and therefore allow
some money to go to them, but that must be
a fraction thus far of the actual use of publishers
and what they're working on. And many have been fighting
back at Perplexity for that.
Speaker 12 (24:31):
That's right, And by the way, I misspoke, it's actually
eighty percent of revenue share, which is high, and what
I meant was it's five dollars a month for the subscription.
Speaker 2 (24:37):
And yes it comes at a time. I mean, this
company has had.
Speaker 12 (24:42):
Some fights with media companies in the past and continues
to write they have had accusations of plagiarism that they've denied.
They have also more recently just sort of been facing
copyright infringement lawsuits. They're not the only ones, right, Almost
every major AI company.
Speaker 6 (24:58):
Is facing these kinds of leak battles.
Speaker 12 (25:00):
But Perplexity in particular has sort of faced some criticism
over that, and I think now they're trying to show
that they can.
Speaker 2 (25:08):
Work with publishers.
Speaker 12 (25:09):
They have done some similar sharing of their revenue in
the past, but that's been on ads, and this is
one of the first to be on subscriptions.
Speaker 2 (25:16):
And it's different, isn't it from me?
Speaker 3 (25:18):
Just mega deals that we see Open ai or maybe
even Google, of which, of course Perplexity has thrown their
hat in the ring for a Chrome browser.
Speaker 2 (25:25):
What they've just been giving.
Speaker 3 (25:26):
Lump sums in some way to some of these publishing companies.
Speaker 5 (25:29):
That's right.
Speaker 2 (25:30):
So Perplexity says.
Speaker 12 (25:31):
They don't want to do these big one off deals,
but they actually think that it's more sustainable to do
these long term partnership or you know, more structural sort
of percentage partnerships of the actual subscription revenue or the
ad revenue.
Speaker 3 (25:42):
Sharan Gafari, We thank you for being in the house
in New York. Now elsewhere in AI. Palenteer down once
again as investors question returns on AI investments and valuations concerns,
which you've been hitting Palenteer for at least two weeks.
Speaker 2 (25:53):
Now, that's bring in Jeffrey's.
Speaker 3 (25:55):
Analyst Brentville is one of the most bearish analysts with
a sixty dollars price target and an underperformed rating. And
you just thought the valuation got totally out of whack.
Has the full rectified anything for you?
Speaker 2 (26:05):
Thus?
Speaker 13 (26:06):
Well, no, I mean it's still seventy times revenue. We've
ever seen a software coming trade of this multiple. So,
as we've said, you can touch multiples like this, but
you can never sustain or live. It's like living on
the top of mine ever, so you can get there,
but you can't stay there. So again, the fundamentals of
this company are blowing any anyone's expectation, including ours away.
(26:30):
For them to put up a rule in ninety which
is top line and bottom line margin combined equally ninety
is unheard of. So they are effectively on a different
planet as it relates to their fundamentals. But the valuation
is there as well, so I think we've tried to
separate the two and saying the company is performing extremely well.
Speaker 9 (26:54):
We don't see anything like it in our coverage universe. However,
we have seen this before.
Speaker 13 (27:00):
You saw a snowflake data on others that trade in
at those similar multiples. They never sustained and it was
it was a tough fall. So the minute that revenue
growth decelerates, and we've had eight quarters of accelerating revenue growth,
once you see that dcell, the multiple is a concern.
Speaker 3 (27:18):
So do you have a view on when that deceleration
will actually have because you've you've said in your notes,
so you've got limited visibility, lumpiness and quarterly bookings. I mean,
and this is actually going to start showing up and
convincing the retail investor that has helped drive it up
into the right Yeah, I.
Speaker 9 (27:33):
Mean, it's a good point.
Speaker 13 (27:33):
So the majority, a huge part of the investor bases retail.
Speaker 9 (27:37):
It's about forty percent.
Speaker 13 (27:39):
And so our clients are institutions, and I don't speak
to a lot of clients and volunteer because our institutions
have basically valuation thresholds that they can't break through. And
we've they've all seen this movie before in the last
twenty years in our group. So from a retail perspective,
it can keep working. When does it break? We don't
see a break down on the fundamentals. I think the
(28:01):
question becomes, you know, the comps are going to start.
Speaker 9 (28:04):
Getting harder and can they sustain that level of growth?
Speaker 13 (28:08):
And doctor Karp, the CEO, has said this that they
expect headcount to actually shrink and they can grow revenue
ten x on a shrinking employee workforce at Volunteer, which
is to me kind of mind blowing because if you
think about it, you need a lot of talenteer people
and services people to get the software working. How does
(28:31):
this happen? Is AI make the software work? There's a
couple of things that just I think everyone's trying to
make sense of. That's one comment that how do you
grow ten x with that tiny of a workforce?
Speaker 3 (28:42):
And Brent, you've outlined the issues of employees, but there
are upside risks that you also detail that they actually
do do faster and expected monetization, particularly of the AIP
or they do get sustained commercial momentum. How long can
the market remain irrational and others remain Solvent.
Speaker 9 (29:00):
Well, the market can remain rational for a while.
Speaker 13 (29:02):
Again, remember you're dealing with the retail in sol Based,
you're not dealing within the institutional base, so as a
pig in the stock.
Speaker 9 (29:10):
So I'd just say that this could continue to go on.
Speaker 13 (29:13):
And this is the area that we've been wrong, which
is the magnitude of in the duration of how long
it would sustain.
Speaker 9 (29:19):
I mean, if you take the.
Speaker 13 (29:19):
Next closest multiple in software and this is close to
seventy times, it's it's cloud Flare at twenty twenty five times,
and then it falls off a cliff from there in
terms of the multiples across our coverage.
Speaker 9 (29:32):
So you're just really.
Speaker 13 (29:34):
Dealing with something that is super unique. Their business is
super unique.
Speaker 9 (29:38):
The execution has.
Speaker 13 (29:40):
Been incredible, so there's been no real reason fundamentally to
sell a stock other than, hey, the multiple is where
it's at.
Speaker 9 (29:50):
So I think it's it's hard. It's a hard one
because again you have to give them credit.
Speaker 13 (29:56):
The product is working, the customers love it, and you
look at the coal money in the execution.
Speaker 9 (30:01):
Has been it's been next to no one, no one's
been even close to him.
Speaker 3 (30:06):
Well, they still remain the best performing stock in the
SP five hundred. Despite the recent for what we see
how much the momentum carries on brenha It's always so
great to check in with you, Jeffrey's analyst. Thanks for
your time. And another defense tech company to watch. This
one actually part of it not part of the public
markets yet. In fact it's private and it's called Seronic
and wants to speed up shipbuilding in the United States
with the goal of securing US naval dominance.
Speaker 2 (30:25):
According to the CEO.
Speaker 3 (30:27):
We spoke with that CEO, Dino Marucas, about the shift
that he's seeing in government interest.
Speaker 14 (30:34):
I was in the seal teams for eleven years. My
last five years were spent on Seal Team six. That
was from two thousand and four to twenty fifteen. I
say that to say this, this is the fastest that
I've seen the military and the government move to adopt
anything in my life.
Speaker 5 (30:52):
Now.
Speaker 14 (30:53):
That is extremely encouraging from a business and an operational perspective,
but it should also be concerning when we think about
why is that happening right? The potential threat with China
and the South Pacific. We need to move and we
need to move now. And that's why we're operating so
quickly here at Teharonic. We're investing private capital to build
(31:13):
the technology that our warfighters need and get those solutions
in their hands as fast as possible.
Speaker 2 (31:18):
What else do you need to know?
Speaker 3 (31:19):
You talked about how you're building the infrastructure around the talent,
But what is it that keeps you up at night,
that stops and holds you.
Speaker 14 (31:25):
Back when we think about what we need, I break
it down to talent, customer capital. If you bring those
three things together, there is a there's magic that is
happening here at Turonic. What do I mean by that
is we have a world like, truly world class team.
Our co founders come from phenomenal companies with phenomenal backgrounds.
(31:49):
We have over eight hundred employees now across the country
and actually across the world. We've opened locations in Australia
and the UK as well. Capital we have some of
the world largest invest investors eight VC, Andrees and Horowitz
and the list goes on.
Speaker 3 (32:05):
And you call commercial customers as well, just to round
things out. How big is could that be in terms
of demand?
Speaker 14 (32:13):
I mean that we look at the commercial sector as
absolutely critical. I mean one hundred billion dollars plus commercial
maritime market. And here's here's the thing that I point
out to people when you're focussing about on defense, it's
you need a strong commercial industry to have a strong
defense industry. We build all of our products for dual
(32:35):
use defense and commercial.
Speaker 5 (32:37):
What that let us what's that?
Speaker 14 (32:38):
What that lets us do is diversify our revenue base.
Invest more dollars into R and D to build better
solutions for the government, Build robust and reliable supply chains
that can scale, take advantage of economies of scale like
you have to build for commercial use cases as well.
The days of building one off, bespoke solutions for the
(32:58):
government are just over. We need to be building ships
by the hundreds and boats by the thousands.
Speaker 9 (33:05):
And that's what we're doing at Soeronic.
Speaker 3 (33:06):
And you've been able to make your supply chain work
to fit that at the moment, because with tariffs coming
in and changing the rules around metals and supplies, how
has that been for you to navigate?
Speaker 14 (33:17):
We spend a lot a lot of time on supply chain.
We have two dozen people that focus on nothing but
supply chain. But here's the beauty of what we've been
able to do at Seronic, we're completely vertically integrated from
start to finish. When I say we're building our own
boats and ship, we're building our own boats and ships
right We're contracting the aluminum and the fiberglass. We're bringing
(33:39):
in every single component that is integrated onto our platforms.
We're doing final assembly, and we have the capital and
the team to bring things in house when we find
bottlenecks in that supply chain. That's very rare and very
unique and a very very strong differentiator when you talk
about what it takes to actually get to scale.
Speaker 5 (34:00):
Sour on X.
Speaker 3 (34:00):
CEO Dino Mavrucus with us earlier well later last week. Now,
the SpaceX delayed the test flight of its Starship rocket
on Sunday, just half an hour before its schedules lift off,
due to a liquid oxygen leak.
Speaker 2 (34:13):
Now it marks another.
Speaker 3 (34:15):
Blow to SpaceX's launch record, after two earlier flights this
year it's ended up in explosions. Now the company is
aiming for another launch later tonight. Coming up the world
of esports and looks to gain a wider fan base
and housing a new tournament.
Speaker 2 (34:30):
More on that next.
Speaker 3 (34:31):
While watching some outperformers in the world are gaming EA roadblocks,
both trading higher significantly outperforming, for example on roadblocks more
than after last week's sell off.
Speaker 2 (34:42):
This is blue Bag Tech.
Speaker 3 (34:54):
The Esports World Cup Foundation when it's announced a new
bi annual tournament called the Esport's Nations Cup, bringing together
the world's best players in an attempt to elevate esports
to a new cultural and patriotic movement. The tournament is
set to debut in twenty twenty six. In read, joining
US now Sports World Cup CEO Ralph Ria Reichert, there
(35:15):
we are, Ralph, give me a sense of why representing
countries matters here.
Speaker 15 (35:21):
So when we look at what happened this year this
wayear was the second iteration of the Esports World Cup.
Was the first time that all the games industry comes
together and competes across twenty four different games. And this
is a unique moment because esports has been very segregated
into different disciplines and now there's one place where this
all happens together. And we've proven that it a can
(35:42):
happen on this scale and b be successful with seven
hundred million viewers across the world three million people visiting
Riat for it, which is, you know, as much as
that Vegas has visitors in.
Speaker 9 (35:53):
Four weeks, So that was the proof point.
Speaker 15 (35:55):
Now we want to bring it to the next level
because Esports has been build out of clubs, which are
super important and the origin of it, but for my
mom to care to take it for the next step
and really make it mainstream. We believe that Nations is
a very logical step. And by building this platform and
the model of the Esports Work Cup, we the foundation
(36:16):
now have the means and the trust of the publisher,
the community, and the fans and the players most importantly
to do this, and that's why we announced it on Saturday,
and we're incredibly excited about it.
Speaker 3 (36:27):
Why in the Middle East, what has we had been
so quick to adopt this?
Speaker 5 (36:32):
So I think there's a few reasons.
Speaker 15 (36:33):
I mean, number one, there is out of the population
of Saudi Arabia, sixty three percent are below thirty five
and seventy percent of the population in Saudi Arabia identifies
as gamers, so it's a huge home for gaming. And
then the Crown Prince himself is the thirty eight years
and now whold right, so he's endemically has grown up
(36:55):
with gamings and a lot of people in the government actually,
so I think it's the first woman that's out there
where you know, it's consisting of people who really understand
gaming from the inside out rather than looking out of it.
And number three, Saudi Arabi has publicly said this multiple
times since diversifying their economy and tourism is a big one,
(37:17):
but gaming as well of this diversification and the largest
e sports event in the world is a no brainer.
Speaker 9 (37:23):
To achieve that.
Speaker 3 (37:24):
I mean, they had Ronaldo of course giving away prizes
at the recent festival, and he lives over there playing
as well.
Speaker 2 (37:31):
I'm interested in Ralph just about how much money has
managed to be built through this.
Speaker 3 (37:36):
What sort of sponsorship are you're seeing, because the number
is the viewership, the eyeballs are extraordinary.
Speaker 15 (37:41):
Yes, So I mean, as you said right, Ronaldo is
our global ambassador. So I was on stage with him
the other day presenting the trophy to Team Falcons, who
have won a very quickly, second Team Liquid, an American
European crossover, and last but not least, Team Vitality, which
is the European club. But we have more than twenty
two sponsors with many international names like Sony, Amazon, Pepsi,
(38:03):
Hillton and Nasacard. So the lineup is incredible. It's well
over a nine figure sponsorship income. But to be honest,
the industry is still early. So without host city fees
and country hosting fees like we have gotten through Saudi
Arabia at this scale, this wouldn't be possible. And we've
seen this a little bit in the last few years,
that the monetization is not where it's in traditional sports.
(38:26):
And I think one of the things we always miss
is traditional sports is heavily subsidized by governments as well
by public money, being it in the college system or
an amateur system, or in when the biggest sports events
come to countries right where it's a big marketing and
financial support. And I think what we're seeing with the
Esports World Cup and now with the Esport's Nations Cup
(38:47):
is for the first time that governments really at scale,
invest into it, believe in it, and use it as
a cultural tool like they do with traditional sports.
Speaker 3 (38:56):
It's been great seeing some of the numbers, seeing some
of the celebrations, talking about in the next tournament, rav
Racket of Esports World Cup. Great speaking with you, Thank you,
Federal Trade Commission, is urging tech companies to resist what
they see as pressure from foreign governments. Two weekend data
(39:17):
privacy and free speech protections for US consumers now, FGC
Chairman Andrew Ferguson spoke to us about the agency's concerns
what he wants to hear from US tech companies in.
Speaker 16 (39:28):
The United Kingdom, in Europe and elsewhere. American tech companies
that do business, you know, in the United States and
elsewhere are coming under pressure, sometimes through direct legislation, to
potentially censor speech in Europe, maybe even in the United States.
Speaker 5 (39:44):
Of course, the Brazilian Supreme Court Justice.
Speaker 16 (39:47):
Is of the view that American tech companies need to
censor speech everywhere because it's the nature of the Internet.
And it was really important to me, as an American
law enforcer to make it clear to American companies, you
don't get to take a free shot at American consumers
because of something that governments in other parts of the.
Speaker 5 (40:02):
World are asking you to do.
Speaker 16 (40:04):
We've got laws here in the United States that protect
the relationship between American consumers and American tech firms, and
so no one should think that you just sort of
get to do to Americans whatever you want. In order
to comply with the demands of foreign governments, and that
you know, American laws, particularly the Federal Trade Commission Act
that I enforce, don't allow American tech companies to hurt
(40:26):
American consumers just because of foreign government is demanding it.
And I just wanted to make sure that everyone, consumers
and the tech firms understood this is how I see
the law. And I want you to come to explain
to me how you are planning to protect American consumers
notwithstanding the demands of these foreign governments, and if they aren't,
then I'm going to enforce the law against them.
Speaker 3 (40:47):
Thus far, we have seen action taken in particular by
Apple pushing back in requirements by the United Kingdom for
a so called backdoor into data that they hold rypto data.
I'm interested as to how you felt that unfolded in
the UK and with a Apple played by the play
that you wanted to see.
Speaker 16 (41:04):
Yeah, I mean look, and I think a lot of
credit here needs to go to the Vice President who
sort of personally managed trying to protect Americans from these
demands of a foreign government. But yeah, I mean, look,
I want American tech firms to understand you have legal
obligations in your home country and the country that made
it possible for you to become what you have become
(41:25):
to protect American consumers and not basically to give Americans
the short shrift because it would be easier to comply
with the demands of a foreign government. And so I'm
glad that because of pressure from the United States and
particularly from the Vice President, that we were able to
achieve this outcome or protect consumers from Apple.
Speaker 5 (41:43):
But this isn't going away.
Speaker 16 (41:44):
Europe has passed these laws that promote censorship, Britain has
these laws. We're seeing this sort of thing happening in Brazil,
and it's very important that American tech companies understand you
cannot just sort of take it out on Americans in
order to comply with these other foreign governments.
Speaker 5 (41:59):
You have to protect Americans first.
Speaker 3 (42:01):
FTC Chair Andrew Ferguson Go to online and see the
full interview.
Speaker 2 (42:06):
But that does it. From this edition of Bloomberg.
Speaker 3 (42:08):
Tech has check in on Intel shares, a historic time
for a company when ten percent of its secuity is
now held by the US government. They don't want governance role.
But President Trump earlier today taking to truth social and
now at a press conference discussing the upside for America.
Speaker 2 (42:24):
Don't forget to check out our podcast. You can find
it on the terminal as well as online on
Speaker 3 (42:28):
Apple, Spotify, and iHeart From New York, this is Bloomberg
Tech
Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is live
from coast to coast with Caroline Hyde in New York
and ever though in San Francisco.
Speaker 2 (00:21):
This is Bloomberg Tech coming up.
Speaker 3 (00:22):
The US takes nearly ten percent stake in Intel, and
President Trump's celebrating that he got it for zero. What
this means for future deals? Plus, the President of South
Korea heads to the White House with tech leaders from
Samsung and s k Heinez details on that meeting and
gaming gets patriotic.
Speaker 2 (00:39):
Why the Esports World Cup.
Speaker 3 (00:40):
Foundation has announced a new bi annual tournament for nations.
But first, let's check in on these markets. Let's just
check in on Intel, because that is the stock that's
on the move. They want to keep an eye out.
General Benchmark's flat, but Intel up more than two percent.
Speaker 2 (00:53):
We were in the red just for a moment.
Speaker 3 (00:56):
But now we get the real devil in the details
of what that almost ten percent stake looks like from
the government and the president seeming to feel that he's
got it for zero. Let's get into the details. Because
I'm peace to say Miuch Shepherd is with us, of course,
who really helps lead our coverage of the intersection of
technology in Washington and Mike. It is interesting that, of
course the money comes from that that was already promised
(01:17):
to Intel. Remind us of the detail of the deal.
Speaker 4 (01:21):
Well, so in the broad strokes, it's a nearly ten
percent stake totally more than four hundred million shares going
to the US government in this CARA is an exchange
for what has not yet been spent out of the
grant money that was to go to Intel through the
Chips and Science Act. Remember this is the law that
was passed under President Joe Biden designed to spur domestic
(01:43):
chip manufacturing, helping makers like Intel, but others including TSMC
and Samsung as well get fabs and plants up and
running here in the US. Now, Donald Trump is talking
about this as really the US government getting something for nothing,
although if you think about it, that's almost eight point
(02:04):
nine billion in unspent Chips Act money, and so there
is a little bit of something in there. Many are
looking upon this CARA is really an unprecedented intervention in
a company, especially when you think about how sacro san
these principles of the free market have been not only
for Republicans but for Democrats too. And how it has
(02:26):
been looked on with really some skepticism Simpson. Last week
we interviewed former Vice President Mike Pence and former Obama
former Biden rather economic director Lael Brainerd on successive days
and each express their own misgivings and skepticism about the
president of the US government intervening in a company without
(02:48):
a crisis actually unfolding.
Speaker 3 (02:51):
Many though, would frame it from the administration's side that
this is a focus on national security, that this is
a crisis for Intel to be able to be and
turn it around as a national winner of manufacturing.
Speaker 2 (03:04):
But will government intervention do that?
Speaker 4 (03:06):
Mike, Well, that's a great question, Caro, And really that
is how they framed it. They didn't quite use the
crisis word, but they did stress the urgency on the
national security side of having a US flag company leading
the way when it comes to chip production. And curiously,
in the announcement, one thing was missing, and that was
mentioned of the new plant in Ohio that you and
(03:29):
I have talked about a lot, and this is the
one that has been planned by Intel as part of
its revival, the one that was started under the former
chief executive officer, Pac Gelsinger and It was really destined
to be a flagship of that effort, but it has
since been delayed and this is a massive undertaking. It
has been pushed back into the next decade, and they
(03:49):
really need this underway to put Intel really back into
the running when it comes to making those kinds of
advanced chips.
Speaker 5 (03:58):
Their biggest challenge.
Speaker 4 (03:59):
Right now, Caro is finding the customers to be able
to sustain such a massive investment in that Ohio plan,
and right now they don't quite have enough. And the
interesting wrinkle in this is that Donald Trump, by taking
leading the US government into taking the stake in a way,
positions himself as CEO of everything. And this is a
(04:19):
role he has liked to play. He has relished pushing
companies into expanding their investments in the US.
Speaker 6 (04:26):
We've seen it on the tech front, and.
Speaker 4 (04:28):
We start just a few weeks ago with Apple and
expanding their investments in the US. So will he take
some sort of a more active role in trying to
drum up customers to help Intel. And it's CEO Lip
Bhutan who Trump has met in recent weeks at the
White House and really was the one who Trump was
able to persuade to have this exchange of a stake
(04:50):
in exchange for chips act money.
Speaker 3 (04:52):
Mike Shephard bringing us through what is an unprecedented piece
of news.
Speaker 2 (04:56):
We thank you now.
Speaker 3 (04:57):
In video potentially could be a future buyer of Intel's
made chips. But all eyes are on Video more importantly
for its earnings coming out Wednesday, when the investors seeing
it is a key test of boarder AI impact on
demand for more briber Gequity's reporter common Ranicky is here
with us. It is the bell weather in many ways,
but analysts in particular have got excited about what the
(05:19):
revenue could look like coming for this fiscal quarter.
Speaker 6 (05:21):
Yeah, that's really true.
Speaker 7 (05:22):
I mean it's something that we see actually kind of
cyclically around earnings that analysts boost sort of their price
targets for companies ahead of the results. We sort of
rally up to them and everything kind of resets, And
in the last week we had at least nine analysts
increase their price targets for Nvidia. So they see upside
at least over the next twelve months. They're excited going
into this report, and you're right, I mean, revenue growth
(05:44):
is the thing that everybody is always watching within Vidia.
Speaker 6 (05:46):
They put up incredible numbers.
Speaker 7 (05:48):
I think this quarter, analysts are expecting revenue to jump
forty eight percent from last year forty six billion dollars.
That is just, you know, it's not something that we
see every day.
Speaker 3 (06:00):
Certainly for a four trillion dollar company exact, and you're
expecting more than fifty percent growth in earnings per share.
Many though, would question China as the area of concern. Look,
we're just talking about President Trump having unprecedented impact on businesses,
and that deal to sell eight twenties is unprecedented, and
we're warned about.
Speaker 7 (06:17):
Demand totally, and I think that's something that analysts are
and investors are really going to be listening to on
the call what Jensen says about China demand, what total
market they're forecasting that they're.
Speaker 6 (06:29):
Going to be able to see.
Speaker 7 (06:30):
I think people hadn't they hadn't factored in China revenue
maybe in the next few quarters. Right, we know that
things are sort of up in the air there, But
going through fiscal twenty twenty seven twenty twenty eight for Nvidia,
that's something that everybody hoped was going to come back online.
Speaker 6 (06:44):
And so even though it's not a.
Speaker 7 (06:45):
Huge part of their overall revenue. I think it's about
fifteen percent, maybe a little bit less. It's going to matter.
You know that it's a big market, and I mean
if it goes to zero, you know, that's a considerable.
Speaker 3 (06:56):
Hit, and it's going to matter as we question AI
valuations more broadly across the space.
Speaker 2 (07:00):
It's great to have come and ran unicate. We thank you.
It's a very well read piece.
Speaker 3 (07:03):
Today, let's get broader, investor take bringing Erin Brown, managing
director and portfolio manager at Pimco, and just bring us
the context of last week prior of course to Jackson
Hole and euphoria, or on Friday, we were worried about
overall frothy valuations in the area of AI.
Speaker 2 (07:18):
Is in video going to be a key test on that?
I think it is.
Speaker 8 (07:21):
I mean, I think that really is keeping the market
right now with respect to the AI trade on pause,
waiting for more news from the video to see what
earning bears and really to see if they've been able
to continue to grow into what are really lofty growth numbers.
You certainly seen AI come under pressure as the market's
been rallying to new highs but broadening out outside of AI,
(07:44):
and so Navidia, I think is front and center for this,
at least for the market this week with respect to
the AI trade.
Speaker 3 (07:51):
Have you questioned anything fundamentally though that changed in the
last week when we suddenly were awash with concerns about
MIT writings or whether Sam Altman's soula bubble or not.
Speaker 9 (08:04):
Yeah.
Speaker 8 (08:04):
I think the MIT research note really lay bare the
fact that right now implementation and adoption is really critical
in terms of enterprise integration, being able to appropriately adopt
these models into the enterprise environment. And so with the
(08:24):
I think the MIT paper was a little bit misunderstood
in that yes, they're saying that only five percent are productive,
but where they see the real hindrance is not with
the models themselves, but rather with enterprises being able to
implement effectively those models into their software environments. And so
(08:45):
what I think is really key for the next leg
for AI adoption and growth is going to be the
software companies and the implementers that are able to take
these effective CHAT, GBT or other models and enter and
integrate them into the business environment. And so software companies
that can do that effectively are really going to be
(09:07):
the winners I think in the next leg of this
AI trade.
Speaker 3 (09:10):
We got worried about into it or workday earnings. At
the end of last week, we've been worried about some
of the European players. SAP has been under pressure and
others as we worried about software.
Speaker 2 (09:19):
Sort being eaten by AI.
Speaker 3 (09:20):
But then on the flip side, a Palenteer, ultimately a
software company, has been the best performing company of the year.
Speaker 2 (09:27):
Even with some of the recent selloff.
Speaker 3 (09:29):
Do you generally think that software is getting beaten up
too much or do you think companies are able to
embrace and pivot with AI.
Speaker 8 (09:36):
I think right now we're really seeing the winners and
the losers, and the bifurcation of the winners and losers
in the software environment. Companies that are like Palenteer, that
have been really effectively able to deploy AI, use it
and then deliver it effectively to their customers are the
winners right now in this environment, and I think are
(09:58):
going to persist to be the win I think the
companies that are being left behind and the laggards right
now are the companies where Palenteer is sort of eating
their lunch and taking you know, business from them, and
so you know there's going to be winners and losers
in any environment when you see these disruptions occur. But
(10:18):
right now we're really seeing sort of the fight of it.
But I think broadly speaking, as a as an industry group,
software should be the ones that are implementing AI into
enterprise environments and being able to grow into what I
think is a greater demand environment going forward.
Speaker 6 (10:39):
We're moved on from just the picks and.
Speaker 8 (10:41):
Shovels of AI and now really looking to the deployment
stage and the monetization stage, and that's where software should
really shine.
Speaker 3 (10:49):
And video is the picks and shovels. It's the key
tests this week in terms of earnings. What are you
hearing in terms of well, the depreciation of the assets
that ultimately in video is selling to all of these
hyper scale it's whether demand goes, but how long are.
Speaker 2 (11:02):
They sticking around? Have you managed to sort of model
that out?
Speaker 8 (11:05):
No, I mean not explicitly in terms of modeling it out,
but I think right now we're still in very early
stages of this, and so I think there still is
quite a long runway for the video chips. But you
are seeing that, you know, with we're seeing you know,
good scale adoption. But we're also seeing a lot of
innovation and that should really just keep demand, you know,
(11:27):
pretty robust for the picks and shovels as we continue
to innovate, you know those, you know, the the entry
trips into the AI space.
Speaker 3 (11:38):
Amon Brown, really great context, digging deep in tech. We
so appreciate it for any manager over at PIMCO.
Speaker 2 (11:44):
Thank you.
Speaker 3 (11:45):
Meanwhile, we've had some breaking news and it all surrounds
big players in AI and it's in fact Enal Muskus
suing Apple and open Ai over an alleged arrangement on
its iPhone. Of course, open Ai has been in some
ways integrated within Apple offerings.
Speaker 2 (12:01):
Elon Musk taking issue with that.
Speaker 3 (12:02):
He took his fight to X last week, concerned about
the rankings on Apple App Store of certain generator of
AI products and feeling that X doesn't get enough love there.
We'll dig deep on that story. We're still out four
tenser percent on Apple. Coming up, though, we're going to
be talking more trade, joined.
Speaker 2 (12:18):
By Gano Globals Eliza Tobin and what.
Speaker 3 (12:21):
To expect from a meeting between Donald Trump and President
of South Korea and it's tech giants.
Speaker 2 (12:26):
This is Bloomberg Tech.
Speaker 3 (12:37):
South Korean President nij Mung is said to read with
President Trump at the White House today. In focus will
be South Korea's three hundred and fifty billion dollar pledge
for projects in the United States, announced a month ago,
but pretty few details on what actually is known. Meanwhile,
several Korean firms already have existing US investment plans. Samsung
planning for a multi billion dollar semiconductive plant in Texas,
(12:59):
or hi nd I when it's twenty one billion dollar
pledge to expand future industries and ev charging production, or
even TSMC when this one hundred billion dollar investment in
US chip manufacturing operations present LYE will be joined by
the leaders of some of those companies in today's meeting.
That's bringing in e Lisotobin, imagined, director of Ghano Global,
who can help break down ultimately what these sorts of
negotiations look like and what perhaps if you're an equity
(13:22):
holder in a Samsung or in a TSMC, what future
deals could look like.
Speaker 6 (13:29):
Caroline is great to be on with you.
Speaker 3 (13:32):
Yeah, Li said, to talk us through as to what
we anticipate. Will there be semiconductor tariffs coming this direction
for certain of these companies, Will they get a carve
out because they're investing so much. Will we hear anything
about equity stakes being taken by leaders like the President
of the United States and the US government in sentences
semi conductor companies.
Speaker 10 (13:51):
Yeah, Caroline, you've really put your finger on it. This
is what everyone is wondering. This is what we're all
waiting to see. What is going to be this shape
the semiconductor terriffs. These Section two thirty two tariff investigations
that Commerce has been doing for months, and they keep
kicking the can down the road. What's really complicating things
is that these are now being kind of merged and
(14:14):
mixed up with the ongoing trade negotiations that the United
States is having with South Korea, Japan, the EU and
all these other partners. And so these countries are racing
to get exemptions or some kind of guarantee.
Speaker 6 (14:28):
Of a lower rate of tariffs.
Speaker 10 (14:30):
But nothing really is certain until you see that deal,
that handshake in the Oval Office between Donald Trump and
his South Korean counterpart.
Speaker 6 (14:40):
So really, looking forward.
Speaker 10 (14:42):
What I'm waiting to see with all the dust settling
with semiconductor tariffs is how is it all going to
net out? Are we going to see a distinction between
China on the one side, and US trusted allies and
partners on the other hand, which are trusted appliers and
key parts of the semiconductor supply chain players like Samsung
(15:04):
and s k Heinex.
Speaker 2 (15:06):
I'm just.
Speaker 3 (15:08):
I like the idea that you're calling them trusted partners
and allies. And then we get the latest post from
President Trump sent to seemingly the president of South Korea
ahead of the meeting.
Speaker 2 (15:20):
What is going on in South Korea? Question mark?
Speaker 3 (15:22):
Seems like a purge or a revolution. We can't have
that and do business there. How, leaders of countries meant
to navigate what they thought as allyship when they're about
to go into a meeting and receive sort of slightly
confusing statements such as this.
Speaker 10 (15:38):
Yeah, this is not really a great sign for the
upcoming talks that we're about to see. For a long time,
you know, even dating back to his first term, President
Trump was putting pressure on allies like the Koreans and
the Japanese in particular on at least two fronts, so
both trade and defense spending. He would always want to
(15:59):
know how much are these allies paying for their own defense?
Speaker 6 (16:02):
As well? As what is the trade balance.
Speaker 10 (16:05):
So I think this is an unfortunate signal that Korea
is going to be under pressure on both fronts. And again,
I think when we see the dust settle of both
the administration's trade negotiations as well as the semiconductor tariffs,
are we going to see a distinction between China, which
I think there's a bipart is in consensus that they're
(16:26):
a threat and an adversary versus these other countries that
are part of the semiconductor ecosystem that we depend on
from Europe to Asia. So is there going to be
a distinction or is there going to be a generally
lower teror freight on the allies and partners than there
is for China. I don't think anyone knows for sure,
and we won't know until the Commerce Department comes out
(16:48):
with the results of the investigation.
Speaker 3 (16:50):
And as I put it into the context of what
did just happen officially on Friday, we've known and thought
it was coming for a while. The ten percent equity
stake can Intel by basically taking money already promise them
by the Chips and Science Ackedlaza. This ultimately is meant
to make the US less dependent on a TSMC and
on a Samsung, but still in the interim we want
(17:11):
them to build manufacturing here.
Speaker 10 (17:15):
Yeah, the Intel deal is really interesting, So I like
to kind of zoom out and think about why does
the US government care about the fate of Intel either Anyway,
you know, this isn't just a normal business deal. We
have to remember that the government is not a business
and so we should be evaluating what's going on here
(17:37):
not just as a business deal, but it's really more
like an insurance policy. What the US government has been doing,
even since the Biden administration to try to rescue Intel.
So your audience will be well aware of the United
States is almost entirely dependent on Taiwan on TSMC for
the supply of advanced semiconductors, and that's a real problem.
Speaker 6 (18:00):
If we ever lost.
Speaker 10 (18:01):
Access to the chips, it would be economic catastrophe. So
the US government sort of stepping into intervene. I think
it is rational to see this as dealing with an
economic emergency, so extraordinary intervention by the government is in
fact required. The question I'm thinking of is, you know,
(18:22):
is this the right kind of government intervention? And what
you know in the history of industrial strategy. You know,
an equity deal might not be the right play. What
these firms that are kind of in strategic sectors that
we can't allow to fail often need is a long term,
reliable source of demand, and that's where the US government
(18:45):
can can sometimes step in more effectively. I will just
remind the audience why Intel is special. Under the CHIPSAC program,
they became the steward of something called the Secure Enclave
program that was set up to have kind of a
minimum viable number of chips being produced here in the
(19:05):
United States for needs like defense and national security. So
it's not realistic to think we're going to rea shure
the entire semiconductor supply chain, but having this goal of
kind of an insurance policy to make sure we can
produce at least some chips in the event of a
contingency is really important.
Speaker 3 (19:24):
Great context Isotobin, Thank you so much, Managing director he
Ghano Global el muss doing Apple and open Ai over
an alleged arrangement on its iPhones, using the two companies
of unfairly favoring open Ai on its smartphones and thwarting
competition such as Musk's Clock. Blomberg Consumer Tech managing editor
(19:45):
is with us Mark German, who knows the thing we'll
do about Apple. I mean a threatened this earlier this
month on x and now has gone through with that threat.
Speaker 2 (19:52):
Ultimately, couldn't do anything to the relationship.
Speaker 3 (19:54):
That open ai does have with Apple and vice versa.
Speaker 11 (19:58):
I don't see so, I mean, if they consider this
an antitrust violation, that being the cord or the government
or what have you. What Apple would have to do
is open up what they call extensions within series. So
right now, the open ai relationship is what's called an
extension in Siri. If it doesn't understand one of your commands,
or it doesn't have the knowledge to answer one of
(20:19):
your commands, it uses open aist GPT as a fallback option. Now,
when Apple introduced this functionality, it's said that they would
have other available AI services, right and so they said
that Gemini would be there. Gemini never actually came to
fruition there. There's a lot more behind the scenes with
the Search Engine lawsuit, working with Gemini on other facets
(20:41):
that have gotten the way of that. But it's possible
if they open this up to third parties. Allow XAI,
allowed Brock, allow Claud allow different AI services in there,
and that would certainly solve the issue. And Elon is right,
they do give pretty hot promotion to some of the
other AI companies in the app Store. They haven't done
a lot of that promotion for a grock and so
(21:01):
maybe we'll see more of that from Apple. But all
in all, I find this lawsuit to be frivolous. I
don't personally consider it an antitrust situation, but it's obviously
not up to me to decide, and it is a
little surprising that Elon Musk actually went through with this.
Speaker 3 (21:15):
Go to the context, of course that you put forward
in a story on Friday, that the relationship between Gemini
AI and Apple does look like it might get closer.
Speaker 11 (21:25):
So Apple's building a new version of Siri for next spring,
and it's obviously much needed for reasons that I don't
have to spend an hour listing now.
Speaker 9 (21:33):
But they basically have two paths.
Speaker 11 (21:35):
They can go completely in house with the new version
of Siri, and by in house I mean self developed
large language models to power it, or they could use
a third party to help out in terms of building
the new sery. So they've been talking to a bunch
of possible partners to see if they're willing to power
aspects of that new series. So they've been talking very
much to Claude from Anthropic, and I believe eventually they'll
(21:57):
reach some sort of agreement. But more recently they started
negotiations with Google about Google building a model based on
its Gemini technology for Apple as well. So we'll see
where they ultimately land in a few months.
Speaker 3 (22:09):
And before that, we've got more hardware to Carme and
Mark Gooman. You've been writing about that throughout the weekend
on Poweron. I urge everyone to go and take a
read and then listen. We thank you so much for
joining us. Welcome back to Bloomberg Tech. Let's check in
on a couple of stocks, because more broadly the benchmarks
are flat.
Speaker 2 (22:28):
But I'm looking at PDD up more than one.
Speaker 3 (22:30):
Point two percent. Let's now call it. This is the
owner of tim who, of course actually reported slightly better
than anticipated numbers. Revenue pushed up seven percent. Look, it
is the slowest pace of expansion in the years for
the Chinese e commerce giant. However, it did manage to
beat some pretty low expectations of analysts. Net income that
was on the downside. But really this is coming from
(22:51):
galvanizing consumers. They're trying to offset this economic fallout from
US tarras and a little bit of a relief today,
Intel up one and a half percent. This is the
US government does take that ten percent. State does have
President Trump saying they got it the zero, but he
does want to show support. And this is all about
having a domestic champion here in the United States when
it comes to chip manufacturing. But that's all about the
store of AI, isn't it. And let's talk about AI startup.
(23:13):
Perplexity set to allow publishers the opportunity to actually share
in revenue their articles generate. The move comes as the
company faces pretty mounting criticism and legal action from media
outlets over its use of their content promote showing Gafari
and places to say, it's still here in New York
and I'm thrilled about it. What are we seeing in
terms of Perplexity trying to fend off issues. This is
all about comment. This is all about well, the actual
(23:36):
new product that they're offering and trying to share revenue there.
Speaker 12 (23:39):
That's right, So Perplexity as well as other AI companies,
But they've really been one of the quickest is making
a big push into an AI browser, right, so having
all the AI tools actually embedded into your web search
and being able to sort of understand what you're seeing
on the web and everything you're doing on your computer.
At the same time, they want to be able to
have high quality information right for people when are searching
(24:01):
through different tabs. So they're integrating this new kind of
premium tier of subscription that will allow you to actually
get some more high quality news sources into your AI
browser assistant and give five percent of that revenue share
two publishers who partner with them.
Speaker 3 (24:19):
Okay, so they're able to charge more and therefore allow
some money to go to them, but that must be
a fraction thus far of the actual use of publishers
and what they're working on. And many have been fighting
back at Perplexity for that.
Speaker 12 (24:31):
That's right, And by the way, I misspoke, it's actually
eighty percent of revenue share, which is high, and what
I meant was it's five dollars a month for the subscription.
Speaker 2 (24:37):
And yes it comes at a time. I mean, this
company has had.
Speaker 12 (24:42):
Some fights with media companies in the past and continues
to write they have had accusations of plagiarism that they've denied.
They have also more recently just sort of been facing
copyright infringement lawsuits. They're not the only ones, right, Almost
every major AI company.
Speaker 6 (24:58):
Is facing these kinds of leak battles.
Speaker 12 (25:00):
But Perplexity in particular has sort of faced some criticism
over that, and I think now they're trying to show
that they can.
Speaker 2 (25:08):
Work with publishers.
Speaker 12 (25:09):
They have done some similar sharing of their revenue in
the past, but that's been on ads, and this is
one of the first to be on subscriptions.
Speaker 2 (25:16):
And it's different, isn't it from me?
Speaker 3 (25:18):
Just mega deals that we see Open ai or maybe
even Google, of which, of course Perplexity has thrown their
hat in the ring for a Chrome browser.
Speaker 2 (25:25):
What they've just been giving.
Speaker 3 (25:26):
Lump sums in some way to some of these publishing companies.
Speaker 5 (25:29):
That's right.
Speaker 2 (25:30):
So Perplexity says.
Speaker 12 (25:31):
They don't want to do these big one off deals,
but they actually think that it's more sustainable to do
these long term partnership or you know, more structural sort
of percentage partnerships of the actual subscription revenue or the
ad revenue.
Speaker 3 (25:42):
Sharan Gafari, We thank you for being in the house
in New York. Now elsewhere in AI. Palenteer down once
again as investors question returns on AI investments and valuations concerns,
which you've been hitting Palenteer for at least two weeks.
Speaker 2 (25:53):
Now, that's bring in Jeffrey's.
Speaker 3 (25:55):
Analyst Brentville is one of the most bearish analysts with
a sixty dollars price target and an underperformed rating. And
you just thought the valuation got totally out of whack.
Has the full rectified anything for you?
Speaker 2 (26:05):
Thus?
Speaker 13 (26:06):
Well, no, I mean it's still seventy times revenue. We've
ever seen a software coming trade of this multiple. So,
as we've said, you can touch multiples like this, but
you can never sustain or live. It's like living on
the top of mine ever, so you can get there,
but you can't stay there. So again, the fundamentals of
this company are blowing any anyone's expectation, including ours away.
(26:30):
For them to put up a rule in ninety which
is top line and bottom line margin combined equally ninety
is unheard of. So they are effectively on a different
planet as it relates to their fundamentals. But the valuation
is there as well, so I think we've tried to
separate the two and saying the company is performing extremely well.
Speaker 9 (26:54):
We don't see anything like it in our coverage universe. However,
we have seen this before.
Speaker 13 (27:00):
You saw a snowflake data on others that trade in
at those similar multiples. They never sustained and it was
it was a tough fall. So the minute that revenue
growth decelerates, and we've had eight quarters of accelerating revenue growth,
once you see that dcell, the multiple is a concern.
Speaker 3 (27:18):
So do you have a view on when that deceleration
will actually have because you've you've said in your notes,
so you've got limited visibility, lumpiness and quarterly bookings. I mean,
and this is actually going to start showing up and
convincing the retail investor that has helped drive it up
into the right Yeah, I.
Speaker 9 (27:33):
Mean, it's a good point.
Speaker 13 (27:33):
So the majority, a huge part of the investor bases retail.
Speaker 9 (27:37):
It's about forty percent.
Speaker 13 (27:39):
And so our clients are institutions, and I don't speak
to a lot of clients and volunteer because our institutions
have basically valuation thresholds that they can't break through. And
we've they've all seen this movie before in the last
twenty years in our group. So from a retail perspective,
it can keep working. When does it break? We don't
see a break down on the fundamentals. I think the
(28:01):
question becomes, you know, the comps are going to start.
Speaker 9 (28:04):
Getting harder and can they sustain that level of growth?
Speaker 13 (28:08):
And doctor Karp, the CEO, has said this that they
expect headcount to actually shrink and they can grow revenue
ten x on a shrinking employee workforce at Volunteer, which
is to me kind of mind blowing because if you
think about it, you need a lot of talenteer people
and services people to get the software working. How does
(28:31):
this happen? Is AI make the software work? There's a
couple of things that just I think everyone's trying to
make sense of. That's one comment that how do you
grow ten x with that tiny of a workforce?
Speaker 3 (28:42):
And Brent, you've outlined the issues of employees, but there
are upside risks that you also detail that they actually
do do faster and expected monetization, particularly of the AIP
or they do get sustained commercial momentum. How long can
the market remain irrational and others remain Solvent.
Speaker 9 (29:00):
Well, the market can remain rational for a while.
Speaker 13 (29:02):
Again, remember you're dealing with the retail in sol Based,
you're not dealing within the institutional base, so as a
pig in the stock.
Speaker 9 (29:10):
So I'd just say that this could continue to go on.
Speaker 13 (29:13):
And this is the area that we've been wrong, which
is the magnitude of in the duration of how long
it would sustain.
Speaker 9 (29:19):
I mean, if you take the.
Speaker 13 (29:19):
Next closest multiple in software and this is close to
seventy times, it's it's cloud Flare at twenty twenty five times,
and then it falls off a cliff from there in
terms of the multiples across our coverage.
Speaker 9 (29:32):
So you're just really.
Speaker 13 (29:34):
Dealing with something that is super unique. Their business is
super unique.
Speaker 9 (29:38):
The execution has.
Speaker 13 (29:40):
Been incredible, so there's been no real reason fundamentally to
sell a stock other than, hey, the multiple is where
it's at.
Speaker 9 (29:50):
So I think it's it's hard. It's a hard one
because again you have to give them credit.
Speaker 13 (29:56):
The product is working, the customers love it, and you
look at the coal money in the execution.
Speaker 9 (30:01):
Has been it's been next to no one, no one's
been even close to him.
Speaker 3 (30:06):
Well, they still remain the best performing stock in the
SP five hundred. Despite the recent for what we see
how much the momentum carries on brenha It's always so
great to check in with you, Jeffrey's analyst. Thanks for
your time. And another defense tech company to watch. This
one actually part of it not part of the public
markets yet. In fact it's private and it's called Seronic
and wants to speed up shipbuilding in the United States
with the goal of securing US naval dominance.
Speaker 2 (30:25):
According to the CEO.
Speaker 3 (30:27):
We spoke with that CEO, Dino Marucas, about the shift
that he's seeing in government interest.
Speaker 14 (30:34):
I was in the seal teams for eleven years. My
last five years were spent on Seal Team six. That
was from two thousand and four to twenty fifteen. I
say that to say this, this is the fastest that
I've seen the military and the government move to adopt
anything in my life.
Speaker 5 (30:52):
Now.
Speaker 14 (30:53):
That is extremely encouraging from a business and an operational perspective,
but it should also be concerning when we think about
why is that happening right? The potential threat with China
and the South Pacific. We need to move and we
need to move now. And that's why we're operating so
quickly here at Teharonic. We're investing private capital to build
(31:13):
the technology that our warfighters need and get those solutions
in their hands as fast as possible.
Speaker 2 (31:18):
What else do you need to know?
Speaker 3 (31:19):
You talked about how you're building the infrastructure around the talent,
But what is it that keeps you up at night,
that stops and holds you.
Speaker 14 (31:25):
Back when we think about what we need, I break
it down to talent, customer capital. If you bring those
three things together, there is a there's magic that is
happening here at Turonic. What do I mean by that
is we have a world like, truly world class team.
Our co founders come from phenomenal companies with phenomenal backgrounds.
(31:49):
We have over eight hundred employees now across the country
and actually across the world. We've opened locations in Australia
and the UK as well. Capital we have some of
the world largest invest investors eight VC, Andrees and Horowitz
and the list goes on.
Speaker 3 (32:05):
And you call commercial customers as well, just to round
things out. How big is could that be in terms
of demand?
Speaker 14 (32:13):
I mean that we look at the commercial sector as
absolutely critical. I mean one hundred billion dollars plus commercial
maritime market. And here's here's the thing that I point
out to people when you're focussing about on defense, it's
you need a strong commercial industry to have a strong
defense industry. We build all of our products for dual
(32:35):
use defense and commercial.
Speaker 5 (32:37):
What that let us what's that?
Speaker 14 (32:38):
What that lets us do is diversify our revenue base.
Invest more dollars into R and D to build better
solutions for the government, Build robust and reliable supply chains
that can scale, take advantage of economies of scale like
you have to build for commercial use cases as well.
The days of building one off, bespoke solutions for the
(32:58):
government are just over. We need to be building ships
by the hundreds and boats by the thousands.
Speaker 9 (33:05):
And that's what we're doing at Soeronic.
Speaker 3 (33:06):
And you've been able to make your supply chain work
to fit that at the moment, because with tariffs coming
in and changing the rules around metals and supplies, how
has that been for you to navigate?
Speaker 14 (33:17):
We spend a lot a lot of time on supply chain.
We have two dozen people that focus on nothing but
supply chain. But here's the beauty of what we've been
able to do at Seronic, we're completely vertically integrated from
start to finish. When I say we're building our own
boats and ship, we're building our own boats and ships
right We're contracting the aluminum and the fiberglass. We're bringing
(33:39):
in every single component that is integrated onto our platforms.
We're doing final assembly, and we have the capital and
the team to bring things in house when we find
bottlenecks in that supply chain. That's very rare and very
unique and a very very strong differentiator when you talk
about what it takes to actually get to scale.
Speaker 5 (34:00):
Sour on X.
Speaker 3 (34:00):
CEO Dino Mavrucus with us earlier well later last week. Now,
the SpaceX delayed the test flight of its Starship rocket
on Sunday, just half an hour before its schedules lift off,
due to a liquid oxygen leak.
Speaker 2 (34:13):
Now it marks another.
Speaker 3 (34:15):
Blow to SpaceX's launch record, after two earlier flights this
year it's ended up in explosions. Now the company is
aiming for another launch later tonight. Coming up the world
of esports and looks to gain a wider fan base
and housing a new tournament.
Speaker 2 (34:30):
More on that next.
Speaker 3 (34:31):
While watching some outperformers in the world are gaming EA roadblocks,
both trading higher significantly outperforming, for example on roadblocks more
than after last week's sell off.
Speaker 2 (34:42):
This is blue Bag Tech.
Speaker 3 (34:54):
The Esports World Cup Foundation when it's announced a new
bi annual tournament called the Esport's Nations Cup, bringing together
the world's best players in an attempt to elevate esports
to a new cultural and patriotic movement. The tournament is
set to debut in twenty twenty six. In read, joining
US now Sports World Cup CEO Ralph Ria Reichert, there
(35:15):
we are, Ralph, give me a sense of why representing
countries matters here.
Speaker 15 (35:21):
So when we look at what happened this year this
wayear was the second iteration of the Esports World Cup.
Was the first time that all the games industry comes
together and competes across twenty four different games. And this
is a unique moment because esports has been very segregated
into different disciplines and now there's one place where this
all happens together. And we've proven that it a can
(35:42):
happen on this scale and b be successful with seven
hundred million viewers across the world three million people visiting
Riat for it, which is, you know, as much as
that Vegas has visitors in.
Speaker 9 (35:53):
Four weeks, So that was the proof point.
Speaker 15 (35:55):
Now we want to bring it to the next level
because Esports has been build out of clubs, which are
super important and the origin of it, but for my
mom to care to take it for the next step
and really make it mainstream. We believe that Nations is
a very logical step. And by building this platform and
the model of the Esports Work Cup, we the foundation
(36:16):
now have the means and the trust of the publisher,
the community, and the fans and the players most importantly
to do this, and that's why we announced it on Saturday,
and we're incredibly excited about it.
Speaker 3 (36:27):
Why in the Middle East, what has we had been
so quick to adopt this?
Speaker 5 (36:32):
So I think there's a few reasons.
Speaker 15 (36:33):
I mean, number one, there is out of the population
of Saudi Arabia, sixty three percent are below thirty five
and seventy percent of the population in Saudi Arabia identifies
as gamers, so it's a huge home for gaming. And
then the Crown Prince himself is the thirty eight years
and now whold right, so he's endemically has grown up
(36:55):
with gamings and a lot of people in the government actually,
so I think it's the first woman that's out there
where you know, it's consisting of people who really understand
gaming from the inside out rather than looking out of it.
And number three, Saudi Arabi has publicly said this multiple
times since diversifying their economy and tourism is a big one,
(37:17):
but gaming as well of this diversification and the largest
e sports event in the world is a no brainer.
Speaker 9 (37:23):
To achieve that.
Speaker 3 (37:24):
I mean, they had Ronaldo of course giving away prizes
at the recent festival, and he lives over there playing
as well.
Speaker 2 (37:31):
I'm interested in Ralph just about how much money has
managed to be built through this.
Speaker 3 (37:36):
What sort of sponsorship are you're seeing, because the number
is the viewership, the eyeballs are extraordinary.
Speaker 15 (37:41):
Yes, So I mean, as you said right, Ronaldo is
our global ambassador. So I was on stage with him
the other day presenting the trophy to Team Falcons, who
have won a very quickly, second Team Liquid, an American
European crossover, and last but not least, Team Vitality, which
is the European club. But we have more than twenty
two sponsors with many international names like Sony, Amazon, Pepsi,
(38:03):
Hillton and Nasacard. So the lineup is incredible. It's well
over a nine figure sponsorship income. But to be honest,
the industry is still early. So without host city fees
and country hosting fees like we have gotten through Saudi
Arabia at this scale, this wouldn't be possible. And we've
seen this a little bit in the last few years,
that the monetization is not where it's in traditional sports.
(38:26):
And I think one of the things we always miss
is traditional sports is heavily subsidized by governments as well
by public money, being it in the college system or
an amateur system, or in when the biggest sports events
come to countries right where it's a big marketing and
financial support. And I think what we're seeing with the
Esports World Cup and now with the Esport's Nations Cup
(38:47):
is for the first time that governments really at scale,
invest into it, believe in it, and use it as
a cultural tool like they do with traditional sports.
Speaker 3 (38:56):
It's been great seeing some of the numbers, seeing some
of the celebrations, talking about in the next tournament, rav
Racket of Esports World Cup. Great speaking with you, Thank you,
Federal Trade Commission, is urging tech companies to resist what
they see as pressure from foreign governments. Two weekend data
(39:17):
privacy and free speech protections for US consumers now, FGC
Chairman Andrew Ferguson spoke to us about the agency's concerns
what he wants to hear from US tech companies in.
Speaker 16 (39:28):
The United Kingdom, in Europe and elsewhere. American tech companies
that do business, you know, in the United States and
elsewhere are coming under pressure, sometimes through direct legislation, to
potentially censor speech in Europe, maybe even in the United States.
Speaker 5 (39:44):
Of course, the Brazilian Supreme Court Justice.
Speaker 16 (39:47):
Is of the view that American tech companies need to
censor speech everywhere because it's the nature of the Internet.
And it was really important to me, as an American
law enforcer to make it clear to American companies, you
don't get to take a free shot at American consumers
because of something that governments in other parts of the.
Speaker 5 (40:02):
World are asking you to do.
Speaker 16 (40:04):
We've got laws here in the United States that protect
the relationship between American consumers and American tech firms, and
so no one should think that you just sort of
get to do to Americans whatever you want. In order
to comply with the demands of foreign governments, and that
you know, American laws, particularly the Federal Trade Commission Act
that I enforce, don't allow American tech companies to hurt
(40:26):
American consumers just because of foreign government is demanding it.
And I just wanted to make sure that everyone, consumers
and the tech firms understood this is how I see
the law. And I want you to come to explain
to me how you are planning to protect American consumers
notwithstanding the demands of these foreign governments, and if they aren't,
then I'm going to enforce the law against them.
Speaker 3 (40:47):
Thus far, we have seen action taken in particular by
Apple pushing back in requirements by the United Kingdom for
a so called backdoor into data that they hold rypto data.
I'm interested as to how you felt that unfolded in
the UK and with a Apple played by the play
that you wanted to see.
Speaker 16 (41:04):
Yeah, I mean look, and I think a lot of
credit here needs to go to the Vice President who
sort of personally managed trying to protect Americans from these
demands of a foreign government. But yeah, I mean, look,
I want American tech firms to understand you have legal
obligations in your home country and the country that made
it possible for you to become what you have become
(41:25):
to protect American consumers and not basically to give Americans
the short shrift because it would be easier to comply
with the demands of a foreign government. And so I'm
glad that because of pressure from the United States and
particularly from the Vice President, that we were able to
achieve this outcome or protect consumers from Apple.
Speaker 5 (41:43):
But this isn't going away.
Speaker 16 (41:44):
Europe has passed these laws that promote censorship, Britain has
these laws. We're seeing this sort of thing happening in Brazil,
and it's very important that American tech companies understand you
cannot just sort of take it out on Americans in
order to comply with these other foreign governments.
Speaker 5 (41:59):
You have to protect Americans first.
Speaker 3 (42:01):
FTC Chair Andrew Ferguson Go to online and see the
full interview.
Speaker 2 (42:06):
But that does it. From this edition of Bloomberg.
Speaker 3 (42:08):
Tech has check in on Intel shares, a historic time
for a company when ten percent of its secuity is
now held by the US government. They don't want governance role.
But President Trump earlier today taking to truth social and
now at a press conference discussing the upside for America.
Speaker 2 (42:24):
Don't forget to check out our podcast. You can find
it on the terminal as well as online on
Speaker 3 (42:28):
Apple, Spotify, and iHeart From New York, this is Bloomberg
Tech
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