July 18, 2025 • 44 mins
Bloomberg’s Ed Ludlow discusses Netflix earnings as the company’s shares fall. Plus, the CFO of Taiwan Semiconductor Manufacturing discusses the company’s $165 billion US expansion plan. And defense tech startup Hadrian closes a $260 million Series C funding round led by Founders Fund.
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Speaker 1 (00:00):
Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
from coast to coast with Caroline Hyde and New York
and Eva Low in San Francisco.
Speaker 2 (00:22):
This is Bloomberg Tech coming up.
Speaker 3 (00:24):
Netflix beats expectations for second quarter results, but the bars
high and it may not be enough to keep the
rally going. Plus, we'll hear from TSMC's CFO on business opportunities,
the impact of tariffs, and much more. In an exclusive
interview and a look at the expansion plans of defense
manufacturing company Hadrian to help build AI powered factories here
(00:45):
in America.
Speaker 2 (00:46):
We speak to the CEO. I want to get to
some news that broke in the last few minutes.
Speaker 3 (00:51):
JP Morgan, one of the biggest research shops on the street,
is expanding its coverage to private companies and that includes
some of the most important tech start up. Open ai
is where their debut research has launched.
Speaker 2 (01:03):
So interesting.
Speaker 3 (01:04):
The analysts on that note saying basically they can't defend
the moat that they have on llm's and in part
because of no profitability till twenty twenty nine, they're worried
about how much patience investors have. Really interesting development when
you track the private sector and the world's biggest startups.
Speaker 2 (01:22):
Let's get to earnings and Netflix.
Speaker 3 (01:24):
Netflix shares down significantly right now, five percent in the session.
That's the most since the beginning of April, as it
stands on an inter day basis. But they beat on
all of these classic financial metrics. Netflix has been saying
for ages, judge us, please Wall Street on these financial metrics,
and they did great in the second quarter, boosting their
(01:45):
outlook as well. The content slate looks strong, and the
ad supported cheer is going to grow doubling in twenty
twenty five.
Speaker 2 (01:51):
Let's get out to blue both. Lucas.
Speaker 3 (01:53):
Sure, he's a managing editor for screen Time. That's our
group that basically tracks the culture and our coverage of
media entertainment and what was not to light with Netflix, Right, Lucas,
this is just like a high bar that's been set
by Wall Street and the company did really well.
Speaker 4 (02:06):
Yeah, I think you nailed it with the high bar. Look,
there was nothing in the results to dislike. It's not
like they beat on any metric by some huge amount,
but they beat on everything. I think it's a stock
that has doubled over the last year. It's a stock
that had been up by forty to fifty percent so
far this year, and it's even though it is now
(02:27):
the most established and most valuable sort pure play entertainment
company out there, it still has this momentum behind it
where people think it has a lot of room to grow,
and so by most conventional you know, PD ratio metrics,
it's overvalued, and so if it only slightly beats, people
just aren't as excited.
Speaker 3 (02:46):
Netflix does this thing where it basically like pre records
its earnings cool and then dumps it as a YouTube video.
This is what Ted Surroundos had to say on AI.
Speaker 5 (02:55):
We remain convinced that AI represents an incredible opportunity to
help creators make films and series better, not just cheaper.
There are AI powered creator tools, so this is real
people doing real work with better tools. Our creators are
already seeing the benefits in production through pre visualization and
shot planning work and certainly visual effects.
Speaker 2 (03:20):
Lucause.
Speaker 3 (03:20):
I don't know how much attention the street was really
paying to that commentary on AI. There was a lot
of focus on the content slate, but do we learn
anything new about Netflix's strategy going forward?
Speaker 2 (03:30):
Nothing kind of Macro High Level.
Speaker 4 (03:33):
Ted has been pretty consistent on his views on AI,
which is that it is a tool, it will be used,
and it's not just about cost cutting. They think it
can make product better. But I think what was new
was him talking about using it on a show. Most
of these Hollywood companies have been very wary of kind
of sharing how they're using AI, unless it's in sort
(03:55):
of a gimmicky way, like they're going to dage someone
for a character nobody are from a movie or show.
But it gets two worked up about that. But this,
along with this Amazon show House of David, are probably
the two highest profile examples, just given how important Netflix
and Amazon art of the ecosystem.
Speaker 3 (04:11):
Lucas all over the socials is Stephen Colbert saying that
the Late Shows canceled?
Speaker 2 (04:17):
Do we know anything? What are the details here?
Speaker 4 (04:19):
Well, we know that the show is going to end
in May of next year, and it's not just the
you know, Stephen Colbert leaving the show. The Late Show,
which started in I believe nineteen ninety three, will cease
to exist. So it's the end of an era in
late night television and there will be a lot of
speculation as to what happens next to Jimmy Kimmel's Show,
or to the Night to the Tonight Show with Jimmy Fallon.
(04:39):
You know, CBS is really trying to position this as
a financial decision. I don't think it would surprise anyone
to know that ratings for late night shows have gone down,
the cost of doing it hasn't gone up or hasn't
gone down either, So you know, the profit made from
these types of shows is now very slim. Some might
even say they don't make money. But it's hard not
to believe that there is some political angle to this,
(05:02):
given what has happened between with the repair amount deal
and the Trump administration. But nobody has any hard reporting
on that.
Speaker 3 (05:08):
I know that was a jump from Netflix earnings to
the Late Show, but it's what everyone's talking about right
now online Bloombos. Lucashaw, who leads the screen Time team,
thank you very much. I want to stick with Netflix.
Dan kern Or Benchmarks Senior Anlyst joins us now. Benchmark
currently has a hold on Netflix. What we didn't get into,
Lucas was the ad supported tier. They're saying that that
(05:30):
is in sort of a revenue contribution terms it's going
to double in twenty twenty five. But did we learn
anything more beyond the financials on how the consumer is
engaging with that ad supported tier?
Speaker 6 (05:42):
Dan, Yeah, Can I actually just go back to something
Lucas said for a second. I think that there was
some bits to pick with relation to the report. I mean,
if you wanted to be negative on the stack, you
would basically say that almost all of the Guide inturies
came from FX and less from member growth and growth
and monetization, particularly in that ad supported chair that you
(06:04):
just mentioned. And in addition, their engagement grew by only
one percent, which while it's been stable for the last
two and a half years, you've had the rest of
Hollywood kind of pulling back on content spend, and so
why are they not growing their engagement faster as they
continue to spend I think sixteen eighteen billion dollars this
year and then growing that a little bit less than
revenue going forward. So that's just one point I'd make
(06:24):
on the ad supported side. Yes, I think we did
learn a little bit more last night. We learned that
retention remains strong. We learned that ad supported is now
more than fifty percent of new sign ups but we
also learned later in the call and the callback that
their pricing is improving on ad monetization, and so I
do think if you wanted to be more positive on
the story, you would say, okay. So even if most
(06:47):
of the guidance rays came from FX, they still be
it on member growth, which we thought would happened going
to the print. And they also improve monetization on the
ad supported, which is going to be the long tail
of the growth story, and so numbers for twenty twenty.
Speaker 2 (07:01):
Six should also then move slightly higher.
Speaker 3 (07:06):
There are gonna be lots of people watching bluebexs Het
right now saying hold on. If Netflix was so good,
why is the stock down five percent? And of course,
as of last night's close, it was a stock that
was up forty three percent, market cap of five hundred billion,
and that eclipses you know, your Disneys and your Warner
Brother Discoveries by some distance. Right, this is a company.
Would you say that's in good health?
Speaker 6 (07:29):
I think they're in fantastic health. I mean they're the
king of the streamers.
Speaker 2 (07:32):
Right.
Speaker 6 (07:32):
You can argue YouTube, and you can argue YouTube monetization.
You can argue how much room Netflix has to run,
but by almost all engagement metrics, by subscriber metrics, they're
dominating the streaming industry, and they're doing it as opposed
to all the rest of the companies that you mentioned.
They're doing it profitably and very much so. If anything else.
You know, they actually took up their operating margin guidance
(07:53):
this year and it continues to create higher and so
maybe that's one of the reasons why they're not splashing
out more cash on content spen. They're trying to do
it in a thoughtful manner, which we saw others do
in maybe a less thoughtful manner, and they're trying to
dig out of their holes. So Netflix is a terrific
position going forward. But as Lucas said, you know, expectations
are very elevated.
Speaker 3 (08:14):
Dan, what are you watching right now on Netflix and
what are you excited about in the content s Late.
Speaker 6 (08:21):
Squid Games three looks super exciting, the new animated stuff
they've got coming out since we talked about that. Really
interesting articles out today about how also kids content is
leading sort of the retention charge. So very interested to
see what they produce. Being a family guy here, really
interested to see what they produce downslate, but you know
(08:43):
there are gonna be some unique events fights in the
back half.
Speaker 2 (08:45):
Of the year. I look forward to those.
Speaker 6 (08:47):
And then of course you've got the NFL Christmas Day
Games and who could miss those, right, that's.
Speaker 3 (08:53):
A great summary of both the produced and live content.
Dan khanas bench Mark Capital is seene around this. Great
to have you on the show. Now let's get some news. Overnight,
Meta hired a pair of key AI researchers from Apple,
not long after already poaching their former boss from the
iPhone maker. Sources say that Mark Lee and Tom Gunter
were hired for Meta's Superintelligence Labs team, and one of
(09:16):
them has even started the new job already. So a
part of a scramble for AI talent across the tech
industry lately, with Meta proving especially aggressive in its recruiting.
That was another Bloomberg exclusive overnight. Now coming up, we're
going to have to take a look at how uncertainty
over whether President Trump will fire fed chair your own
power is impacting technology investors.
Speaker 2 (09:36):
I also want to get out.
Speaker 3 (09:38):
To shares of crypto related stocks and take a look
at bitcoin. This is more about stable coin, but the
Genius Act has gone through the stable coin legislation. Coinbas
is actually office section highs up four percent circles bin volatle.
But what we know is that this will be sent
to the President's desk today and that they'll be as
signing ceremony later today.
Speaker 2 (09:59):
Stick with us. What im more on that this is
Bloomberg Tech.
Speaker 3 (10:14):
It's been another wild week in tech, particularly in financial markets,
lurching on every twist. In a saga around President Donald
Trump and FED Chair Jerome Powell, the President says he's
not firing Powell, but somehow that statement still felt like
a threat that chaos has very real consequences for policy
and for technology investors. Joining us now Joe Joub, managing
(10:35):
partner at Lenia Capito and crucially a former FED insider
and staffer who worked on markets and monetary policy inside
the belly of the beast. Joe, it's going to have
you back on Bloomberg Tech. You know what it's like
being inside the FED. You understand the independence of the FED,
But what have you made of this scenario as somebody
(10:55):
that's now left the FED behind and works principally as
a private markets stuff.
Speaker 7 (11:01):
Yeah.
Speaker 8 (11:01):
Look, I think the most direct relationship between FED policy
and technology investing adventure capital investing is the path of
interest rates, and in particular what that means is, you know,
interest rates have such a huge impact on valuations and
returns in private markets, especially as companies go public. So
so now, as an entrepreneurial investor running my own firm,
(11:24):
I don't you know, I don't think as much about
who's sort of driving the buzzer because ultimately macroeconomics is
a very much rules and and sort of a principle
based uh sort of a profession, and whether it's this
chair another chair, the path of interest rates between A
and B wouldn't be that much different just because for
(11:47):
a couple of reasons. One, if there's also eleven other
voting members in the room, and so so in my book,
you know rates are coming down, when whether they come
down in July or September the start of the cut,
it doesn't really significantly impact private markets valuations. Also, you
(12:07):
know in private market, if there's a lag of many
months before asset prices are just in the staff market,
that might impact plus IPO stocks a bit more. But
as to cut to sum it up, in private markets,
we're working at often the path of interest rates to
put into our financial models, and between you know, the
chair or another chair, that the delta wouldn't be significant.
Speaker 3 (12:31):
There's a difference, of course, of being a staffer or
working at the Federal Reserve and then being an appointed
official at the top of the Federal Reserve. But would
you just reflect a little bit like what it was
like to work their research there at the time, and
whether you or your colleagues would really pay any attention
to the politics of the day.
Speaker 8 (12:52):
You know, to be honest, you know, there's not much
that the staffers could do. And now at the board
level and the involuntate level often you know, the board
is you know, very influential, but there's still eleven other uh,
twelve other banks sort.
Speaker 7 (13:08):
Of in the room.
Speaker 8 (13:09):
And and so you know, I think the last thing
I'll say on this top, you know, because I worked
there ten more than ten years ago, and I was
there during the transition from burning into the yelling and
and and at that point you realize, whoever was you know,
if you were driving the bus, shouldn't impact MONITOR policy
that much because ultimately MONITOR policy is made on a
(13:30):
set of rules tailored the tailor rule you know, markets
and the GDP and inflation so so so. So that's
why as a result, as a staffer, you don't you
don't really pay that much attention to the politics. Now
on the private market side, I pay a little bit
more attention to the chair because that will impact sort
(13:51):
of the path of interest rates. But again it just
is not it's not significant to what we do.
Speaker 3 (13:58):
We've been using the phrase private markets, but you're also
almost all intensive purposes a venture capital investor, right. And
the way that it's always explained to me is when
you think about the makeup of the LPs. They might
be high network individuals or family offices. They have a
choice go with various assets where rates and the current
yield on any given treasury is one factor. But they
(14:19):
might also say, well, over a ten year horizon, I
want to get one hundred X on my investment or
something like that. Just explain the mechanics of how that
factor is in.
Speaker 8 (14:28):
Yeah, well, look, as a matter of principle, as an investor,
you know there's sort of average returns you sort of expect,
like if you can always get two to five percent
in money markets on average, because Fetch finds is two
percent on average, and you can go up to five
percent like in the last couple of years, and then
in terms of and then you can sort of go
into the higher risk assets like private credit, public credit,
(14:49):
getting in real estate getting eight twelve percent.
Speaker 2 (14:52):
But then you often go.
Speaker 8 (14:53):
Get the risk current and work for text acts and
venture capital seeking twenty percent returns a year now because
because the risk free rate is sort of the alternative,
the lower the rate, the more risk seeking the average
allocator becomes, and vice versas. So as rays are coming down,
you would expect this, all things equal, sort of allocators
(15:15):
should be allocating more into risk assets. This is sort
of the opposite of what happened during Q either. The
point of QUE was to suppress eels, to kind of
you know, enforcing investors to go into risk assets, and
so the last couple of years that kind of winning
reverse and now we're kind.
Speaker 2 (15:30):
Of getting back again. Joe, we're showing your portfolio earlier.
Speaker 3 (15:35):
One of the names you're in Scale AI or were
in I think your reaction and your summary of that
Meta superintelligence team and the Aquaharer Scale.
Speaker 8 (15:47):
Yeah, we're still a significant you know, investor in the company,
so as a as a as a a to take
step back. You know, in the last eighteen months, we've
deployed over nine figures of capital into the air foundational companies,
and some of them are listed. There's others we didn't
list on our website for for ada reasons, and Scale
is one of those investments. And so I sort of,
(16:09):
you know, I've read a lot about what's covered in
the present. My take is I still believe in the
long term potential of that business for a few reasons.
One is like it's business model is more of assass
and consulting, a business model where who's at the helm
impacts the company's future a bit less than if this
were at a large language model company where the leadership
(16:32):
team and the family and team and the engineers were
probably would account for this majority of the value. So
you know, Scale has many large, large contracts from the government,
from corporations, and these are recurring businesses. So after the
sort of the transaction by Wally, you know, we receive
some stream.
Speaker 3 (16:52):
Sorry real quick, we're short on time, but I really
wanted to ask you about this. We reported that JP
Morgan is moving into research a private company starting with
open AI. Do you have exposure to just thirty seconds,
but you're going to read that research.
Speaker 2 (17:07):
Honestly.
Speaker 8 (17:08):
Pubably market investors tend to less understand private markets a
bit more. I heard the show a little earlier. In
private markets, companies are supposed to be burning cash. They're
kind of like students in undergrad or in college. You
want to be burning cash in maximized growth. So to
whether the company becomes proper twenty twenty seven twenty twenty
nine is probably not as important as the public markets
(17:30):
invest research animals make it make the scene.
Speaker 3 (17:34):
Joe's out managing partner Millennia Capital on all of the
news of the week in the day.
Speaker 2 (17:39):
We really appreciate it. Thank you very much for coming up.
Speaker 3 (17:41):
We're going to hear from the CFO of TSMC about
the chip makers efforts to expand into the United States.
Speaker 2 (17:48):
That's coming up next. This is Bloomberg Tech.
Speaker 3 (18:04):
Taiwan Semiconductor Manufacturing says it plans to remain prudent about
spending this year even as the chip maker works to
build out production capacity in the US. TSMC CFO ween
to one set down exclusively with Bloomberg discuss some of
the risks for the Taiwanese company setting up in the US.
Speaker 9 (18:23):
The same problems that we faced before. You have a
culture difference, the generally more expensive here, all these things
they are facing.
Speaker 10 (18:35):
The same thing for suppliers that are considering from Taiwan
moving some operations to the US. What sort of assistance
can TSMC provide.
Speaker 9 (18:47):
We understand the challenges for these suppliers because we've been
through it. So we brought us these challenges to the
attention of the government about permit application and things like that,
(19:07):
the humor resources availability. That's what we can do to
urge the government try to solve this issue for these suppliers.
Speaker 3 (19:19):
That was TSMC CFO wend L Juan, who can check
out the entire interview on bloomberg dot com. Bloomberg's Annabelle
Drewlers joins us now after conducting that interview late night
in Taipei. There was so much more in it. What
were the other key themes?
Speaker 10 (19:35):
Yeah, I think if you were to sort of take
a step back and think, what was the key message
out of these earnings, and I think in one word,
it was conservative Because tsmcs we know, had a very
strong quarter. They managed to lift their full year growth forecast.
For instance, the thirty percent. That was up from around
twenty five percent, and even when you think about how
they performed in the first half of the year, their
(19:56):
guidance for the third quarter, it's very strong and it's
well that so the key question was sort of what
exactly is going to be happening in your fourth quarter
and just how bad could it get as well. But essentially,
Wendelwang he told me that they are just very concerned
about the macar uncertainties. That really relates to tariffs, of course,
and that also played into the Kapex story, which was
another big talking point in the interview, because they've kept
(20:18):
that at thirty eight to forty.
Speaker 7 (20:19):
Two billion dollars.
Speaker 10 (20:21):
He said that they're going to be sticking with that
again given those uncertainties. Even though he sat for a
company of that size, you don't expect it to have
any sort of big fluctuations year to year. So he
still does say it's sustainable.
Speaker 3 (20:32):
And I'm alsothing really key to understand about TSMC, Like
it's the crown jewel of Taiwan, right, but it operates
in Taiwanese dollars while booking its revenue in US dollars,
hence the FX impact. How did they explain that to
you and how it will manifest I guess throughout the
rest of the year.
Speaker 10 (20:54):
Yeah, that's it. I mean Taiwan or TSMC. As you said,
it is the major company in Taiwan. It's by far
the heaviest waiting on the local benchmark here. But as
you said, it's got basically one hundred percent of its
revenue and US dollars around seventy five percent of its costs,
its outgoings or in Taiwanese dollars, and in the past
few months there's been a rapid appreciation in the taiwan
(21:15):
dollars that's having a really big impact on the company
earnings because actually, if you had looked at them just
in usd figures, the numbers would have been even stronger,
but it was around a four and a half five
percent hit for the period. But in terms of how
they're managing this, we'll asked about sort of the different
hedging tools that are available to them. They said that
they do prefer vanilla strategies, but some of the things
(21:37):
they're doing that he spoke about included selling Taiwanese dollars
or US dollars rather in the spot market they're injecting money.
We've seen them injecting ten billion dollars for instance, recently
into TSMC Globals that's a subsidiary. Then they also use
forward contracts as well, so essentially just trying to manage
those risks.
Speaker 7 (21:55):
But were actually do un to stand.
Speaker 10 (21:57):
They're a very big Bloomberg customer as well, because they
are trying to manage these basically on a daily basis.
Speaker 2 (22:03):
Anabel's super quick summarize their AI demand.
Speaker 7 (22:08):
AI demand is super robust.
Speaker 10 (22:10):
I mean that was really really clear out of these
figures as well, and they're basically guiding for very strong
demand from some of their key customers. Of course, we
know that's in Video, we know that's Apple, and we
don't really see so much optimism from them generally. But
when they're saying things like robust demand, I mean, the
market really needs to be paying attention to that.
Speaker 3 (22:28):
Bloomberg's, Anabel Rulers and Taipei thank you very much. Now
coming up, we're going to continue the tech earnings discussion
with Martin Norton from Empower, a conversation that you do
want not want to miss because looking at that calendar,
my goodness, there's a lot to come. This is Bloomberg Tech.
(23:03):
Welcome back to Bloomberg Tech. Netflix is worth recapping right.
The stocks down almost five percent. That puts it on
track for its biggest drop since the first week of April.
Speaker 2 (23:11):
But it is a stock there was up more than.
Speaker 3 (23:13):
Forty percent so far this year in excess of five
hundred billion dollars market cap.
Speaker 2 (23:17):
Beat across the board.
Speaker 3 (23:18):
Strong forecast, but a very high bar and that's kind
of a big factor and the only real stock story
that's out there in the market right now, though for
a couple of more to come. Now, what happens next?
Big tech earnings on the docket Next week you have Tesla,
and then you have Alphabet, and then it just comes
thick and fast the week after with Apple, Amazon, and
(23:39):
then much later in August Nvidia. Earnings in the tech
space is back in focus. Thank goodness, what are we expecting?
Martin Norton, chief investment strategist at Enpower is with us.
It's my happy time, right, this is what we're so
excited about. We get that granular detail on capital expenditures,
on the big picture of what's happen happening with the
(24:00):
customer base, what is it that you're most focused in
on and zero in on this earnings period.
Speaker 11 (24:05):
Well, you know what's interesting when I reflect back on
it's been such a busy year, so much news. But
one of the things that I think has been maybe
appreciated by the market but not appreciated as much by
the commentators is what a reinforcing narrative we've seen around AI.
So of course we're focused on tariffs, We're focused on
everything that's happening at the FED. But if we roll
(24:27):
the clock back to the start of the year and
all the questions that we're surfacing around deep seek, let
alone concerns about where AI demand is, what we've really
seen as.
Speaker 7 (24:36):
The year has progressed, is.
Speaker 11 (24:38):
That capex, you know, continuing and then also these nascent
signs of AI demand in AI implementation, which has been
such a boon for the hyperscalers in particular. So I
think watching that AI narrative continue is especially important in
this in this earning season.
Speaker 3 (24:57):
A team in New York, let's bring back the calendar.
I just want to make one point on in video
because in VideA comes so late in the season. But
what I reflect on is that when in Nvidia hit
four trillion dollars of market cap. All of the research
I was reading was about how the data in the
ninety days prior to that had basically shown that Nvidia's
most important customers had that commitment that you just outlined
(25:19):
on capital expenditures. Take that forward into this next period
and bear with me. You know, is it just as
simple as you need to see Alphabet, Microsoft Meta continue
to say we're committed to this for in Nvidia, then
to have a great print when it comes around.
Speaker 11 (25:33):
Well, I think that's that's the first derivative if you
do want to see the customers showing that commitment kind
of reinforcing what they've suggested in terms of capex estimates,
which are very tremendous as we've seen. But then also
that second derivative, which is what I think of as
that AI implementation both within the tech sector but then
for the economy overall. And I think as you start
(25:54):
to see that that second derivative that demand come through,
I think that is reinforcement for the pick and shovels,
for the NVIDIAs of the.
Speaker 2 (26:01):
World, the world cord is tariffs.
Speaker 3 (26:04):
Well, how are the analysts on your desks kind of
thinking about that and modeling for that right now.
Speaker 11 (26:11):
Well, you know, it's so interesting because if we're taking
a look just at price performance since that bottom on
April eighth, if you're looking at it, you know, in particular,
it's a forty five percent run.
Speaker 7 (26:20):
There has been this massive.
Speaker 11 (26:22):
Enthusiasm where the market is beginning to appreciate what's happening
with AI and maybe sigh of relief in terms of
the resilience of the economy. But I think when we're
taking a look at terrifs, we haven't really seen the
full force of those costs come into effect, and so
of course we want to see what happens with corporate
earnings in Q two. But as I think about longer
(26:43):
term and kind of this rollback of globalization, I guess
my thought is, you know, longer term, what does.
Speaker 7 (26:48):
This mean for corporate profitability?
Speaker 11 (26:50):
And you know, there's a revenue that the government is
collecting that's coming from corporations, and so what that looks
like That is kind of the wild card in terms
of how that weighs on you too, But longer term
what that means for earnings Marty.
Speaker 3 (27:04):
I really appreciated you you going back to reference that
kind of deep Seak moment in April where long story
short markets were roiled by the performance of deep Seats
model and the cost of it getting there. But one
of the things was happened was there was a kind
of a valuation reset on the MAG seven. Have they
climbed back to a level where you're still like or
is there some some interest to look at the MAG
(27:25):
seven in a portfolio right now?
Speaker 7 (27:27):
Well, that's what jumps out to me.
Speaker 11 (27:28):
So when we're taking a look at valuations, what we
really want to focus on is the extremes. So for example, technology,
if we're looking at its valuations, price to forward earnings
over kind of a history for that particular sector, it
is in those extremes.
Speaker 7 (27:42):
It's in those ninth tenth defiles.
Speaker 11 (27:44):
But when we're looking at the MAG seven, we don't
see that same I guess extreme valuation picture. So I
think it's really that once you punch that we saw
for the MAG seven, first getting hit by the deep
seat questions, then getting hit on the tariff that have
made those those companies a little bit more approachable in valuation.
And when you think about the health of these companies,
(28:05):
kind of their their ties to AI and their general
kind of strength within the overall economy. It's hard not
to consider the MAG seven a bit of an opportunity,
at least offering a bit more margin of safety than
some of the other tech related names.
Speaker 3 (28:19):
Marta, I'm going to go to a question I've not
had the opportunity to ask for many months now, how
good which is how are you you using AI in
each of your sort of daily tasks?
Speaker 2 (28:29):
It works seriously? And which tools do you rely on?
Speaker 7 (28:32):
Well, you know, it's a good question.
Speaker 11 (28:34):
I am a slow adapter, so you know, I'm definitely
representing more of the tail or more the average of
the investment community. And I do you know, I'll use
chat GPT on the regular just to get a quick
summary view of what things look like. Hey, give me
the lay of the land in this, give me the
lay of the land in that. And more increasingly beginning
to think about what we can do to automate tasks,
(28:56):
especially that spreadsheet build those deeper analytical fis. What can
we do to make that faster so that we can
get the heart of the questions sooner and spend more
time on the analysis. So I'm really thrilled about it,
despite the fact that I'm a late adapter in most things.
I think this is something that is really opening up
the bandwidth to explore the more interesting stuff of my job.
Speaker 2 (29:18):
I really appreciate the answer.
Speaker 3 (29:19):
It's like a lot of our audience are facing the
same questions with themselves. Something we reported earlier in the
program is that JP Morgan, basically the biggest research shop
right on the street, is expanding its research coverage to
private companies, and they're starting with open AI.
Speaker 2 (29:35):
What I wanted to ask you about that.
Speaker 3 (29:36):
Was like almost as like a private proxy when you
think about your own portfolio management, would you read research
of those private companies to kind of think about the
exposure your public companies have to that name open AI,
or just to inform like future investment opportunity, you know.
Speaker 11 (29:54):
I think that convergence of public private is really important
for the investment community. I think it's really tempting to say,
you know, on the private equity side, are we looking
at a market peak or you know.
Speaker 7 (30:05):
Begetting tactical with it.
Speaker 11 (30:07):
But the reality is that so much of the US
market is actually private at this point, and so for
us to really understand the dynamics of the public market,
we have to have better understanding of the private market
and getting those you know, those bits of information. It's
it's kind of an inefficient market at this point. So
the more that we can dig in, the more systems
that we can build, the more landscape that we can view,
(30:30):
combining the public and the private, I think that will
inform our analysis all the better.
Speaker 3 (30:35):
Martin Norton Empower Chief Investment Strategy, is great to have
you back on the show.
Speaker 2 (30:38):
Thank you very much.
Speaker 3 (30:40):
Now, coming up, manufacturing company Hadrian announces expansion plans to
help build out AI powered factories here in America. This
is the defense use case. We're going to speak to
CEO Chris Power. Next, this is Bloomberg Tech. Defense manufacturing
(31:08):
company Hadrian has announced it's raised the two hundred and
sixty million dollar Series C that will be used to
expand its footprint in California and Arizona. The company's building
AI and robot automated factories across the US, utilized heavily
in the aerospace and defense industries. Chris Powers, Hadrian, CEO,
joins US now and Chris, welcome to Bloomberg Tech. It's
(31:29):
really great to have you on. One of your investors
says that the product is the factory. Just explain that.
Speaker 12 (31:38):
So we view our job as to reindustrialize the country
and from the seventies to the twenty twenties, we really
like offshot everything we possibly could. And it's this whole
system of both our software powered by Opus as well
as this new American workforce that creates this factory system,
and that that is the real output to our customers.
It's like, what are we producing, how accurate it is,
how on time it is, and this full stack factory
(31:59):
of time and the new American workforce we're enabling with
that alongside is the most important thing we're building. And
that's why we think the factory system that we're building
with people and technology combined is the product sizeable round.
Speaker 3 (32:13):
Interesting group of investors, founders, fund in rees and Luxe capital.
Why the size of the round, the difficulty or not
in raising it, and what you plan to do with it, Chris.
Speaker 12 (32:24):
We're very lucky that we're open and shut within a
small handful of weeks, less than a month. Really, that's
just a credit to a fundraising ability of the market.
It's just the team's hard work over the last year.
What we will do with this capital is expand into
Arizona with a new factory for our customers that's four
times a size, as well as use that capital to
(32:45):
hire more people so we can ship more manufacturing capabilities
to our customers, both in aerospace and defense sectors, commercial manufacturing,
and obviously you know the d D as well.
Speaker 3 (32:55):
In January of this year, I was with the Anderill
team in Ohio when they announced and confirmed that would
be the side of Arsenal one, and part of the
discussion I had with Palmer Lucky was why not California.
You know, Hadrian also has this big footprint in California,
but you've looked to Arizona for your expansion. I think
that's really worth discussing.
Speaker 12 (33:18):
Yeah, we all have you know, R and D in California,
and we're not moving out of California. But one of
the most important things is that we're creating thousands and
thousands of new manufacturing jobs in every state. Arizona's been
great to work with on the practical stuff like permitting workforce,
getting energy connected to the building, all these basic things
that are harder to do in some states. So we're
(33:38):
really happy to expand into Arizona. But it also won't
be the last. You know, our goal is to have
factories in every state and creating you know, millions of
new manufacturing jobs along the way.
Speaker 3 (33:48):
Because something that I think was kind of missed from
your post and the announcement was what you're expanding into
welding casting additive, is that just because that's where the
demand is, particularly from the DoD and the the defense
apparatus of this country.
Speaker 2 (34:03):
That's right.
Speaker 12 (34:03):
I think if you look at you know, pretty public
information from the Secretary of the Navy or the Army
in areas like shipbuilding, the nuclear force, munitions, there's these
huge lack of skills in the country. You know, we
need millions of world as, we need millions of machinists,
we need millions of quality inspectors in all these manufacturing
capability areas, and we just don't have the skilled workforce
(34:26):
of that volume anymore. And this is what we're really
doing with factories as the service, which is combining technology
to make people ten times more efficient and enabling them.
It's not about replacing workforce and manufacturing, because we just
don't have a manufacturing workforce anymore in this country. So
we really need to combine the two things that America
is best at, you know, American software, in the American spirit,
(34:46):
to get this ten times advantage over our global competitors.
And yeah, we're working on those categories primarily because they're
so important for areas like shipbuilding.
Speaker 3 (34:55):
Chris, when your peers come on this program, you know Castellian,
Saronic vanavar Land or the Aerill team, they frame it
in the context of China, China's manufacturing prowess, its competence
in areas like software and hardware. How do you think
about China and what is the sort of Hadrian mission
statement with regards to China, if indeed you take it
(35:17):
into consideration.
Speaker 12 (35:20):
Yeah, we think that the arsenal of inventory is not deterrence.
It's the ability to produce fast and onshore, not just
in areas of defense, but in pharmaceuticals. And that's why
you have to reindustrialize the country.
Speaker 2 (35:31):
And I agree.
Speaker 12 (35:32):
You know, we've given the farm away to the CCP
by letting them have all our manufacturing capability of the
last three decades, and now we're in a position where
that really degraded the skill set of the trades in
the US. And this is why, you know, building ships,
building munitions, building machine components in this country is very
difficult because we kind of offshore that talent of the Chinese.
(35:52):
I certainly think that, you know, the US needs to
be the strongest industrial power, like we werest World War
two again in order to to prevent or meet that threat.
Speaker 3 (36:04):
Chris, is your ceiling limited just by the idea that
your core customer is the DoD or in the future,
do you do business with these other primes and other
startups as well?
Speaker 2 (36:13):
Very quick?
Speaker 12 (36:14):
So all of our customers are you know, a defense
startup or a stage startup from day one up to
all the mega primes through that whole chain. The deity
is I think we've been recently a part of our business,
but we are working with the vast majority of hardware
startups all the way through to the megacap, public prime
and everything in the middle.
Speaker 2 (36:34):
Chris Power, Adrian CEO, really grateful for your time on
Bloomberg Tech. Thank you very much. Now I want to
get to a story out of China.
Speaker 3 (36:40):
China's top venture capital firms are back in the market,
raising over two billion dollars in new dollars denominated funds.
Light Speed China is targeting four hundred million dollars for
deep Tech.
Speaker 2 (36:52):
Monolith, which backs.
Speaker 3 (36:53):
Moonshot AI, plans a second fund worth at least two
hundred and sixty five million dollars at least six major firms,
according overseas investors, signaling renewed global interests in China's startup
ecosystem from AI to consumer tech. Okay, coming up, President
Trump is set to release new AI guardelines. We're gonna
have all the details on that. Next, this is Bloomberg Tech.
(37:30):
President Trump is expected to announce you AI policy guidelines
calling for an easing of regulation and an expansion to
energy sources for its data centers. For more, I want
to get out to bloombergs Mike Shephard in Washington, DC.
What's the need to know here, Mike, Well.
Speaker 13 (37:45):
The thing we need to know is that this will
be the administration's most significant policy statement to date on
artificial intelligence. It's been in the works for about six months.
This is one of the first things the presidents set
out to do upon taking office. We tap David Sachs,
the venture capitalist, somebody who's been on this program even
just this week to talk about artificial intelligence, to lead
(38:08):
this effort along with Michael Kratzios, another regular guest on
these airwaves, and together they have been trying to turn
away from what have been seen as a rules heavy
approach under the prior administration. They want to do something
that will do more to ensure and speed adoption of
this technology while also still trying to set a few
(38:29):
rules of the road. We're expecting the President to deliver
remarks on AI at an event at the White House
on Wednesday, July twenty third. David Sachs will be here.
It's an event that's being put together with the folks
from the All In podcasts, where David Sachs is one
of the co hosts. And we're also expecting the President
to be signing a few executive orders connected with all
(38:51):
of that. It's not going to be as far reaching
a statement on the technology itselfless to be focused more
on executive branch actions, yet it still will carry some weight.
We'll be watching it very closely here.
Speaker 2 (39:03):
All eyes on Washington next week. I think that's fair
to say.
Speaker 3 (39:05):
I see some breaking news this morning, which is that
the House Select Committee on China essentially criticizing or reprimanding
the president allowing chip makers and Vidia the focus in
being able to resume some limited chip sales back into China.
Speaker 13 (39:21):
What do we know, Well, we're hearing from the top
Republican on the committee, one of the toughest China hawks
in town, really raising questions about this decision to allow
Nvidia to resume sales of the H twenty AI chip
in China. Remember, the Trump administration have barred sales and
shipments of that chip to China over national security concerns
(39:44):
just back in April. But in the past week or so,
we have seen that restriction lifted, and that was a
huge win for Nvidia, but it prompted questions from John Molnar,
the Michigan Republican who heads this committee, focused on the
competition and with China and the challenge that the world's
second largest economy poses to the US. Now Mullinara is
(40:07):
raising the concern that look, if we allow these age
twenty chips to be sold once again in China, this
will simply allow Beijing to acquire more capabilities and artificial intelligence,
including some that could go to fuel its military and
intelligence complex.
Speaker 3 (40:24):
In Bloomberg's Mike Shepard, thank you very much. Staying in Washington,
the US Commerce Department is set to impose preliminary anti
dumping duties of ninety three point five percent on imports
of Chinese graphite that's a key component of battery manufacturing.
I want to get out to Evelyna Stoikeu of Bloomberg
ne ef Evelina. You kind of lead our analysis and
(40:45):
in house research of the battery supply chain as a start,
Why would this penalty on graphite have impact?
Speaker 2 (40:52):
Why do we need to know about this?
Speaker 14 (40:55):
Well, as you mentioned that graphite is a key component
for batteries and these terrorists would basically increase the cost
of making battery cells in the US now. Batteries are
important for a variety of sectors, including evs and stationary storage,
and as the US is pushing for more domestic production
for battery cells is a key component around energy, we're
(41:19):
going to see likely increased cost. Most of graphite is
coming from China, and in the US around seventy five
percent of synthetic graphite imports, which is the type of
graphite that is mostly used for batteries, is coming from China.
So we expect a big impact for the battery industry.
Speaker 3 (41:37):
When the news broke I saw that Tesla shares fell significantly.
Speaker 2 (41:41):
They're now up higher in this session.
Speaker 3 (41:43):
But one of the things I was thinking about is
for those US domestic battery manufacturers. I was at Panasonic
in Kansas earlier this week. There are some US based
producers of graphite.
Speaker 14 (41:52):
On there, Yeah, there are, and the domestic graphite production
is increasing. Among many other companies were lobbying against these
tariffs in the early stages, claiming that the graphic quality
or the graphic quantity was not at the stage that
they wanted at least at that stage. However, eventually these
(42:14):
GRAPHI terriffs are going to incentivize local production. But we
do remain to see whether this graphite is going to
be enough to meet demand and of low cost in
order to meet many cost targets that battery manufacturers and
automakers have in the US.
Speaker 2 (42:33):
Evelina.
Speaker 3 (42:35):
Right now, what is the biggest headwind or factor for
the EV battery supply chain? We focused on graphite, but
there are many other things happening around the world right now.
Speaker 7 (42:46):
Yeah.
Speaker 14 (42:46):
Absolutely, It's definitely a time where a lot of things
are changing when it comes to policy that is impacting
both EV's and batteries in the US. Right now, I
think the challenge is going to be figuring out the
supply chain and using suppliers in order to comply and
try to qualify for many of the important task credits.
As now there are new restrictions around where many of
(43:08):
these components can be can be sourced. So I think
this is going to be top of mind for a
lot of the players in the US because this push
to source everything domestically and to manufacture everything domestically might
come for with a cost to consumers.
Speaker 3 (43:25):
Evelina Stoiku, Bloomberg New Energy Finance, Bloomberg n EF. Great
to have you on the program. Thank you very much.
So that does it for this edition of Bloomberg Tech.
What a week it's been, from policy to politics, AI
to everything else in between. Don't forget to recap the
show on the podcast. You know where to find it.
It's on all the Bloomberg platforms as well as online
(43:46):
on Apple, Spotify, and iHeart chep said it just a
minute ago, But next week it's all eyes in Washington, DC.
Pay close attention and always do it here on Bloomberg Tech.
Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
from coast to coast with Caroline Hyde and New York
and Eva Low in San Francisco.
Speaker 2 (00:22):
This is Bloomberg Tech coming up.
Speaker 3 (00:24):
Netflix beats expectations for second quarter results, but the bars
high and it may not be enough to keep the
rally going. Plus, we'll hear from TSMC's CFO on business opportunities,
the impact of tariffs, and much more. In an exclusive
interview and a look at the expansion plans of defense
manufacturing company Hadrian to help build AI powered factories here
(00:45):
in America.
Speaker 2 (00:46):
We speak to the CEO. I want to get to
some news that broke in the last few minutes.
Speaker 3 (00:51):
JP Morgan, one of the biggest research shops on the street,
is expanding its coverage to private companies and that includes
some of the most important tech start up. Open ai
is where their debut research has launched.
Speaker 2 (01:03):
So interesting.
Speaker 3 (01:04):
The analysts on that note saying basically they can't defend
the moat that they have on llm's and in part
because of no profitability till twenty twenty nine, they're worried
about how much patience investors have. Really interesting development when
you track the private sector and the world's biggest startups.
Speaker 2 (01:22):
Let's get to earnings and Netflix.
Speaker 3 (01:24):
Netflix shares down significantly right now, five percent in the session.
That's the most since the beginning of April, as it
stands on an inter day basis. But they beat on
all of these classic financial metrics. Netflix has been saying
for ages, judge us, please Wall Street on these financial metrics,
and they did great in the second quarter, boosting their
(01:45):
outlook as well. The content slate looks strong, and the
ad supported cheer is going to grow doubling in twenty
twenty five.
Speaker 2 (01:51):
Let's get out to blue both. Lucas.
Speaker 3 (01:53):
Sure, he's a managing editor for screen Time. That's our
group that basically tracks the culture and our coverage of
media entertainment and what was not to light with Netflix, Right, Lucas,
this is just like a high bar that's been set
by Wall Street and the company did really well.
Speaker 4 (02:06):
Yeah, I think you nailed it with the high bar. Look,
there was nothing in the results to dislike. It's not
like they beat on any metric by some huge amount,
but they beat on everything. I think it's a stock
that has doubled over the last year. It's a stock
that had been up by forty to fifty percent so
far this year, and it's even though it is now
(02:27):
the most established and most valuable sort pure play entertainment
company out there, it still has this momentum behind it
where people think it has a lot of room to grow,
and so by most conventional you know, PD ratio metrics,
it's overvalued, and so if it only slightly beats, people
just aren't as excited.
Speaker 3 (02:46):
Netflix does this thing where it basically like pre records
its earnings cool and then dumps it as a YouTube video.
This is what Ted Surroundos had to say on AI.
Speaker 5 (02:55):
We remain convinced that AI represents an incredible opportunity to
help creators make films and series better, not just cheaper.
There are AI powered creator tools, so this is real
people doing real work with better tools. Our creators are
already seeing the benefits in production through pre visualization and
shot planning work and certainly visual effects.
Speaker 2 (03:20):
Lucause.
Speaker 3 (03:20):
I don't know how much attention the street was really
paying to that commentary on AI. There was a lot
of focus on the content slate, but do we learn
anything new about Netflix's strategy going forward?
Speaker 2 (03:30):
Nothing kind of Macro High Level.
Speaker 4 (03:33):
Ted has been pretty consistent on his views on AI,
which is that it is a tool, it will be used,
and it's not just about cost cutting. They think it
can make product better. But I think what was new
was him talking about using it on a show. Most
of these Hollywood companies have been very wary of kind
of sharing how they're using AI, unless it's in sort
(03:55):
of a gimmicky way, like they're going to dage someone
for a character nobody are from a movie or show.
But it gets two worked up about that. But this,
along with this Amazon show House of David, are probably
the two highest profile examples, just given how important Netflix
and Amazon art of the ecosystem.
Speaker 3 (04:11):
Lucas all over the socials is Stephen Colbert saying that
the Late Shows canceled?
Speaker 2 (04:17):
Do we know anything? What are the details here?
Speaker 4 (04:19):
Well, we know that the show is going to end
in May of next year, and it's not just the
you know, Stephen Colbert leaving the show. The Late Show,
which started in I believe nineteen ninety three, will cease
to exist. So it's the end of an era in
late night television and there will be a lot of
speculation as to what happens next to Jimmy Kimmel's Show,
or to the Night to the Tonight Show with Jimmy Fallon.
(04:39):
You know, CBS is really trying to position this as
a financial decision. I don't think it would surprise anyone
to know that ratings for late night shows have gone down,
the cost of doing it hasn't gone up or hasn't
gone down either, So you know, the profit made from
these types of shows is now very slim. Some might
even say they don't make money. But it's hard not
to believe that there is some political angle to this,
(05:02):
given what has happened between with the repair amount deal
and the Trump administration. But nobody has any hard reporting
on that.
Speaker 3 (05:08):
I know that was a jump from Netflix earnings to
the Late Show, but it's what everyone's talking about right
now online Bloombos. Lucashaw, who leads the screen Time team,
thank you very much. I want to stick with Netflix.
Dan kern Or Benchmarks Senior Anlyst joins us now. Benchmark
currently has a hold on Netflix. What we didn't get into,
Lucas was the ad supported tier. They're saying that that
(05:30):
is in sort of a revenue contribution terms it's going
to double in twenty twenty five. But did we learn
anything more beyond the financials on how the consumer is
engaging with that ad supported tier?
Speaker 6 (05:42):
Dan, Yeah, Can I actually just go back to something
Lucas said for a second. I think that there was
some bits to pick with relation to the report. I mean,
if you wanted to be negative on the stack, you
would basically say that almost all of the Guide inturies
came from FX and less from member growth and growth
and monetization, particularly in that ad supported chair that you
(06:04):
just mentioned. And in addition, their engagement grew by only
one percent, which while it's been stable for the last
two and a half years, you've had the rest of
Hollywood kind of pulling back on content spend, and so
why are they not growing their engagement faster as they
continue to spend I think sixteen eighteen billion dollars this
year and then growing that a little bit less than
revenue going forward. So that's just one point I'd make
(06:24):
on the ad supported side. Yes, I think we did
learn a little bit more last night. We learned that
retention remains strong. We learned that ad supported is now
more than fifty percent of new sign ups but we
also learned later in the call and the callback that
their pricing is improving on ad monetization, and so I
do think if you wanted to be more positive on
the story, you would say, okay. So even if most
(06:47):
of the guidance rays came from FX, they still be
it on member growth, which we thought would happened going
to the print. And they also improve monetization on the
ad supported, which is going to be the long tail
of the growth story, and so numbers for twenty twenty.
Speaker 2 (07:01):
Six should also then move slightly higher.
Speaker 3 (07:06):
There are gonna be lots of people watching bluebexs Het
right now saying hold on. If Netflix was so good,
why is the stock down five percent? And of course,
as of last night's close, it was a stock that
was up forty three percent, market cap of five hundred billion,
and that eclipses you know, your Disneys and your Warner
Brother Discoveries by some distance. Right, this is a company.
Would you say that's in good health?
Speaker 6 (07:29):
I think they're in fantastic health. I mean they're the
king of the streamers.
Speaker 2 (07:32):
Right.
Speaker 6 (07:32):
You can argue YouTube, and you can argue YouTube monetization.
You can argue how much room Netflix has to run,
but by almost all engagement metrics, by subscriber metrics, they're
dominating the streaming industry, and they're doing it as opposed
to all the rest of the companies that you mentioned.
They're doing it profitably and very much so. If anything else.
You know, they actually took up their operating margin guidance
(07:53):
this year and it continues to create higher and so
maybe that's one of the reasons why they're not splashing
out more cash on content spen. They're trying to do
it in a thoughtful manner, which we saw others do
in maybe a less thoughtful manner, and they're trying to
dig out of their holes. So Netflix is a terrific
position going forward. But as Lucas said, you know, expectations
are very elevated.
Speaker 3 (08:14):
Dan, what are you watching right now on Netflix and
what are you excited about in the content s Late.
Speaker 6 (08:21):
Squid Games three looks super exciting, the new animated stuff
they've got coming out since we talked about that. Really
interesting articles out today about how also kids content is
leading sort of the retention charge. So very interested to
see what they produce. Being a family guy here, really
interested to see what they produce downslate, but you know
(08:43):
there are gonna be some unique events fights in the
back half.
Speaker 2 (08:45):
Of the year. I look forward to those.
Speaker 6 (08:47):
And then of course you've got the NFL Christmas Day
Games and who could miss those, right, that's.
Speaker 3 (08:53):
A great summary of both the produced and live content.
Dan khanas bench Mark Capital is seene around this. Great
to have you on the show. Now let's get some news. Overnight,
Meta hired a pair of key AI researchers from Apple,
not long after already poaching their former boss from the
iPhone maker. Sources say that Mark Lee and Tom Gunter
were hired for Meta's Superintelligence Labs team, and one of
(09:16):
them has even started the new job already. So a
part of a scramble for AI talent across the tech
industry lately, with Meta proving especially aggressive in its recruiting.
That was another Bloomberg exclusive overnight. Now coming up, we're
going to have to take a look at how uncertainty
over whether President Trump will fire fed chair your own
power is impacting technology investors.
Speaker 2 (09:36):
I also want to get out.
Speaker 3 (09:38):
To shares of crypto related stocks and take a look
at bitcoin. This is more about stable coin, but the
Genius Act has gone through the stable coin legislation. Coinbas
is actually office section highs up four percent circles bin volatle.
But what we know is that this will be sent
to the President's desk today and that they'll be as
signing ceremony later today.
Speaker 2 (09:59):
Stick with us. What im more on that this is
Bloomberg Tech.
Speaker 3 (10:14):
It's been another wild week in tech, particularly in financial markets,
lurching on every twist. In a saga around President Donald
Trump and FED Chair Jerome Powell, the President says he's
not firing Powell, but somehow that statement still felt like
a threat that chaos has very real consequences for policy
and for technology investors. Joining us now Joe Joub, managing
(10:35):
partner at Lenia Capito and crucially a former FED insider
and staffer who worked on markets and monetary policy inside
the belly of the beast. Joe, it's going to have
you back on Bloomberg Tech. You know what it's like
being inside the FED. You understand the independence of the FED,
But what have you made of this scenario as somebody
(10:55):
that's now left the FED behind and works principally as
a private markets stuff.
Speaker 7 (11:01):
Yeah.
Speaker 8 (11:01):
Look, I think the most direct relationship between FED policy
and technology investing adventure capital investing is the path of
interest rates, and in particular what that means is, you know,
interest rates have such a huge impact on valuations and
returns in private markets, especially as companies go public. So
so now, as an entrepreneurial investor running my own firm,
(11:24):
I don't you know, I don't think as much about
who's sort of driving the buzzer because ultimately macroeconomics is
a very much rules and and sort of a principle
based uh sort of a profession, and whether it's this
chair another chair, the path of interest rates between A
and B wouldn't be that much different just because for
(11:47):
a couple of reasons. One, if there's also eleven other
voting members in the room, and so so in my book,
you know rates are coming down, when whether they come
down in July or September the start of the cut,
it doesn't really significantly impact private markets valuations. Also, you
(12:07):
know in private market, if there's a lag of many
months before asset prices are just in the staff market,
that might impact plus IPO stocks a bit more. But
as to cut to sum it up, in private markets,
we're working at often the path of interest rates to
put into our financial models, and between you know, the
chair or another chair, that the delta wouldn't be significant.
Speaker 3 (12:31):
There's a difference, of course, of being a staffer or
working at the Federal Reserve and then being an appointed
official at the top of the Federal Reserve. But would
you just reflect a little bit like what it was
like to work their research there at the time, and
whether you or your colleagues would really pay any attention
to the politics of the day.
Speaker 8 (12:52):
You know, to be honest, you know, there's not much
that the staffers could do. And now at the board
level and the involuntate level often you know, the board
is you know, very influential, but there's still eleven other uh,
twelve other banks sort.
Speaker 7 (13:08):
Of in the room.
Speaker 8 (13:09):
And and so you know, I think the last thing
I'll say on this top, you know, because I worked
there ten more than ten years ago, and I was
there during the transition from burning into the yelling and
and and at that point you realize, whoever was you know,
if you were driving the bus, shouldn't impact MONITOR policy
that much because ultimately MONITOR policy is made on a
(13:30):
set of rules tailored the tailor rule you know, markets
and the GDP and inflation so so so. So that's
why as a result, as a staffer, you don't you
don't really pay that much attention to the politics. Now
on the private market side, I pay a little bit
more attention to the chair because that will impact sort
(13:51):
of the path of interest rates. But again it just
is not it's not significant to what we do.
Speaker 3 (13:58):
We've been using the phrase private markets, but you're also
almost all intensive purposes a venture capital investor, right. And
the way that it's always explained to me is when
you think about the makeup of the LPs. They might
be high network individuals or family offices. They have a
choice go with various assets where rates and the current
yield on any given treasury is one factor. But they
(14:19):
might also say, well, over a ten year horizon, I
want to get one hundred X on my investment or
something like that. Just explain the mechanics of how that
factor is in.
Speaker 8 (14:28):
Yeah, well, look, as a matter of principle, as an investor,
you know there's sort of average returns you sort of expect,
like if you can always get two to five percent
in money markets on average, because Fetch finds is two
percent on average, and you can go up to five
percent like in the last couple of years, and then
in terms of and then you can sort of go
into the higher risk assets like private credit, public credit,
(14:49):
getting in real estate getting eight twelve percent.
Speaker 2 (14:52):
But then you often go.
Speaker 8 (14:53):
Get the risk current and work for text acts and
venture capital seeking twenty percent returns a year now because
because the risk free rate is sort of the alternative,
the lower the rate, the more risk seeking the average
allocator becomes, and vice versas. So as rays are coming down,
you would expect this, all things equal, sort of allocators
(15:15):
should be allocating more into risk assets. This is sort
of the opposite of what happened during Q either. The
point of QUE was to suppress eels, to kind of
you know, enforcing investors to go into risk assets, and
so the last couple of years that kind of winning
reverse and now we're kind.
Speaker 2 (15:30):
Of getting back again. Joe, we're showing your portfolio earlier.
Speaker 3 (15:35):
One of the names you're in Scale AI or were
in I think your reaction and your summary of that
Meta superintelligence team and the Aquaharer Scale.
Speaker 8 (15:47):
Yeah, we're still a significant you know, investor in the company,
so as a as a as a a to take
step back. You know, in the last eighteen months, we've
deployed over nine figures of capital into the air foundational companies,
and some of them are listed. There's others we didn't
list on our website for for ada reasons, and Scale
is one of those investments. And so I sort of,
(16:09):
you know, I've read a lot about what's covered in
the present. My take is I still believe in the
long term potential of that business for a few reasons.
One is like it's business model is more of assass
and consulting, a business model where who's at the helm
impacts the company's future a bit less than if this
were at a large language model company where the leadership
(16:32):
team and the family and team and the engineers were
probably would account for this majority of the value. So
you know, Scale has many large, large contracts from the government,
from corporations, and these are recurring businesses. So after the
sort of the transaction by Wally, you know, we receive
some stream.
Speaker 3 (16:52):
Sorry real quick, we're short on time, but I really
wanted to ask you about this. We reported that JP
Morgan is moving into research a private company starting with
open AI. Do you have exposure to just thirty seconds,
but you're going to read that research.
Speaker 2 (17:07):
Honestly.
Speaker 8 (17:08):
Pubably market investors tend to less understand private markets a
bit more. I heard the show a little earlier. In
private markets, companies are supposed to be burning cash. They're
kind of like students in undergrad or in college. You
want to be burning cash in maximized growth. So to
whether the company becomes proper twenty twenty seven twenty twenty
nine is probably not as important as the public markets
(17:30):
invest research animals make it make the scene.
Speaker 3 (17:34):
Joe's out managing partner Millennia Capital on all of the
news of the week in the day.
Speaker 2 (17:39):
We really appreciate it. Thank you very much for coming up.
Speaker 3 (17:41):
We're going to hear from the CFO of TSMC about
the chip makers efforts to expand into the United States.
Speaker 2 (17:48):
That's coming up next. This is Bloomberg Tech.
Speaker 3 (18:04):
Taiwan Semiconductor Manufacturing says it plans to remain prudent about
spending this year even as the chip maker works to
build out production capacity in the US. TSMC CFO ween
to one set down exclusively with Bloomberg discuss some of
the risks for the Taiwanese company setting up in the US.
Speaker 9 (18:23):
The same problems that we faced before. You have a
culture difference, the generally more expensive here, all these things
they are facing.
Speaker 10 (18:35):
The same thing for suppliers that are considering from Taiwan
moving some operations to the US. What sort of assistance
can TSMC provide.
Speaker 9 (18:47):
We understand the challenges for these suppliers because we've been
through it. So we brought us these challenges to the
attention of the government about permit application and things like that,
(19:07):
the humor resources availability. That's what we can do to
urge the government try to solve this issue for these suppliers.
Speaker 3 (19:19):
That was TSMC CFO wend L Juan, who can check
out the entire interview on bloomberg dot com. Bloomberg's Annabelle
Drewlers joins us now after conducting that interview late night
in Taipei. There was so much more in it. What
were the other key themes?
Speaker 10 (19:35):
Yeah, I think if you were to sort of take
a step back and think, what was the key message
out of these earnings, and I think in one word,
it was conservative Because tsmcs we know, had a very
strong quarter. They managed to lift their full year growth forecast.
For instance, the thirty percent. That was up from around
twenty five percent, and even when you think about how
they performed in the first half of the year, their
(19:56):
guidance for the third quarter, it's very strong and it's
well that so the key question was sort of what
exactly is going to be happening in your fourth quarter
and just how bad could it get as well. But essentially,
Wendelwang he told me that they are just very concerned
about the macar uncertainties. That really relates to tariffs, of course,
and that also played into the Kapex story, which was
another big talking point in the interview, because they've kept
(20:18):
that at thirty eight to forty.
Speaker 7 (20:19):
Two billion dollars.
Speaker 10 (20:21):
He said that they're going to be sticking with that
again given those uncertainties. Even though he sat for a
company of that size, you don't expect it to have
any sort of big fluctuations year to year. So he
still does say it's sustainable.
Speaker 3 (20:32):
And I'm alsothing really key to understand about TSMC, Like
it's the crown jewel of Taiwan, right, but it operates
in Taiwanese dollars while booking its revenue in US dollars,
hence the FX impact. How did they explain that to
you and how it will manifest I guess throughout the
rest of the year.
Speaker 10 (20:54):
Yeah, that's it. I mean Taiwan or TSMC. As you said,
it is the major company in Taiwan. It's by far
the heaviest waiting on the local benchmark here. But as
you said, it's got basically one hundred percent of its
revenue and US dollars around seventy five percent of its costs,
its outgoings or in Taiwanese dollars, and in the past
few months there's been a rapid appreciation in the taiwan
(21:15):
dollars that's having a really big impact on the company
earnings because actually, if you had looked at them just
in usd figures, the numbers would have been even stronger,
but it was around a four and a half five
percent hit for the period. But in terms of how
they're managing this, we'll asked about sort of the different
hedging tools that are available to them. They said that
they do prefer vanilla strategies, but some of the things
(21:37):
they're doing that he spoke about included selling Taiwanese dollars
or US dollars rather in the spot market they're injecting money.
We've seen them injecting ten billion dollars for instance, recently
into TSMC Globals that's a subsidiary. Then they also use
forward contracts as well, so essentially just trying to manage
those risks.
Speaker 7 (21:55):
But were actually do un to stand.
Speaker 10 (21:57):
They're a very big Bloomberg customer as well, because they
are trying to manage these basically on a daily basis.
Speaker 2 (22:03):
Anabel's super quick summarize their AI demand.
Speaker 7 (22:08):
AI demand is super robust.
Speaker 10 (22:10):
I mean that was really really clear out of these
figures as well, and they're basically guiding for very strong
demand from some of their key customers. Of course, we
know that's in Video, we know that's Apple, and we
don't really see so much optimism from them generally. But
when they're saying things like robust demand, I mean, the
market really needs to be paying attention to that.
Speaker 3 (22:28):
Bloomberg's, Anabel Rulers and Taipei thank you very much. Now
coming up, we're going to continue the tech earnings discussion
with Martin Norton from Empower, a conversation that you do
want not want to miss because looking at that calendar,
my goodness, there's a lot to come. This is Bloomberg Tech.
(23:03):
Welcome back to Bloomberg Tech. Netflix is worth recapping right.
The stocks down almost five percent. That puts it on
track for its biggest drop since the first week of April.
Speaker 2 (23:11):
But it is a stock there was up more than.
Speaker 3 (23:13):
Forty percent so far this year in excess of five
hundred billion dollars market cap.
Speaker 2 (23:17):
Beat across the board.
Speaker 3 (23:18):
Strong forecast, but a very high bar and that's kind
of a big factor and the only real stock story
that's out there in the market right now, though for
a couple of more to come. Now, what happens next?
Big tech earnings on the docket Next week you have Tesla,
and then you have Alphabet, and then it just comes
thick and fast the week after with Apple, Amazon, and
(23:39):
then much later in August Nvidia. Earnings in the tech
space is back in focus. Thank goodness, what are we expecting?
Martin Norton, chief investment strategist at Enpower is with us.
It's my happy time, right, this is what we're so
excited about. We get that granular detail on capital expenditures,
on the big picture of what's happen happening with the
(24:00):
customer base, what is it that you're most focused in
on and zero in on this earnings period.
Speaker 11 (24:05):
Well, you know what's interesting when I reflect back on
it's been such a busy year, so much news. But
one of the things that I think has been maybe
appreciated by the market but not appreciated as much by
the commentators is what a reinforcing narrative we've seen around AI.
So of course we're focused on tariffs, We're focused on
everything that's happening at the FED. But if we roll
(24:27):
the clock back to the start of the year and
all the questions that we're surfacing around deep seek, let
alone concerns about where AI demand is, what we've really
seen as.
Speaker 7 (24:36):
The year has progressed, is.
Speaker 11 (24:38):
That capex, you know, continuing and then also these nascent
signs of AI demand in AI implementation, which has been
such a boon for the hyperscalers in particular. So I
think watching that AI narrative continue is especially important in
this in this earning season.
Speaker 3 (24:57):
A team in New York, let's bring back the calendar.
I just want to make one point on in video
because in VideA comes so late in the season. But
what I reflect on is that when in Nvidia hit
four trillion dollars of market cap. All of the research
I was reading was about how the data in the
ninety days prior to that had basically shown that Nvidia's
most important customers had that commitment that you just outlined
(25:19):
on capital expenditures. Take that forward into this next period
and bear with me. You know, is it just as
simple as you need to see Alphabet, Microsoft Meta continue
to say we're committed to this for in Nvidia, then
to have a great print when it comes around.
Speaker 11 (25:33):
Well, I think that's that's the first derivative if you
do want to see the customers showing that commitment kind
of reinforcing what they've suggested in terms of capex estimates,
which are very tremendous as we've seen. But then also
that second derivative, which is what I think of as
that AI implementation both within the tech sector but then
for the economy overall. And I think as you start
(25:54):
to see that that second derivative that demand come through,
I think that is reinforcement for the pick and shovels,
for the NVIDIAs of the.
Speaker 2 (26:01):
World, the world cord is tariffs.
Speaker 3 (26:04):
Well, how are the analysts on your desks kind of
thinking about that and modeling for that right now.
Speaker 11 (26:11):
Well, you know, it's so interesting because if we're taking
a look just at price performance since that bottom on
April eighth, if you're looking at it, you know, in particular,
it's a forty five percent run.
Speaker 7 (26:20):
There has been this massive.
Speaker 11 (26:22):
Enthusiasm where the market is beginning to appreciate what's happening
with AI and maybe sigh of relief in terms of
the resilience of the economy. But I think when we're
taking a look at terrifs, we haven't really seen the
full force of those costs come into effect, and so
of course we want to see what happens with corporate
earnings in Q two. But as I think about longer
(26:43):
term and kind of this rollback of globalization, I guess
my thought is, you know, longer term, what does.
Speaker 7 (26:48):
This mean for corporate profitability?
Speaker 11 (26:50):
And you know, there's a revenue that the government is
collecting that's coming from corporations, and so what that looks
like That is kind of the wild card in terms
of how that weighs on you too, But longer term
what that means for earnings Marty.
Speaker 3 (27:04):
I really appreciated you you going back to reference that
kind of deep Seak moment in April where long story
short markets were roiled by the performance of deep Seats
model and the cost of it getting there. But one
of the things was happened was there was a kind
of a valuation reset on the MAG seven. Have they
climbed back to a level where you're still like or
is there some some interest to look at the MAG
(27:25):
seven in a portfolio right now?
Speaker 7 (27:27):
Well, that's what jumps out to me.
Speaker 11 (27:28):
So when we're taking a look at valuations, what we
really want to focus on is the extremes. So for example, technology,
if we're looking at its valuations, price to forward earnings
over kind of a history for that particular sector, it
is in those extremes.
Speaker 7 (27:42):
It's in those ninth tenth defiles.
Speaker 11 (27:44):
But when we're looking at the MAG seven, we don't
see that same I guess extreme valuation picture. So I
think it's really that once you punch that we saw
for the MAG seven, first getting hit by the deep
seat questions, then getting hit on the tariff that have
made those those companies a little bit more approachable in valuation.
And when you think about the health of these companies,
(28:05):
kind of their their ties to AI and their general
kind of strength within the overall economy. It's hard not
to consider the MAG seven a bit of an opportunity,
at least offering a bit more margin of safety than
some of the other tech related names.
Speaker 3 (28:19):
Marta, I'm going to go to a question I've not
had the opportunity to ask for many months now, how
good which is how are you you using AI in
each of your sort of daily tasks?
Speaker 2 (28:29):
It works seriously? And which tools do you rely on?
Speaker 7 (28:32):
Well, you know, it's a good question.
Speaker 11 (28:34):
I am a slow adapter, so you know, I'm definitely
representing more of the tail or more the average of
the investment community. And I do you know, I'll use
chat GPT on the regular just to get a quick
summary view of what things look like. Hey, give me
the lay of the land in this, give me the
lay of the land in that. And more increasingly beginning
to think about what we can do to automate tasks,
(28:56):
especially that spreadsheet build those deeper analytical fis. What can
we do to make that faster so that we can
get the heart of the questions sooner and spend more
time on the analysis. So I'm really thrilled about it,
despite the fact that I'm a late adapter in most things.
I think this is something that is really opening up
the bandwidth to explore the more interesting stuff of my job.
Speaker 2 (29:18):
I really appreciate the answer.
Speaker 3 (29:19):
It's like a lot of our audience are facing the
same questions with themselves. Something we reported earlier in the
program is that JP Morgan, basically the biggest research shop
right on the street, is expanding its research coverage to
private companies, and they're starting with open AI.
Speaker 2 (29:35):
What I wanted to ask you about that.
Speaker 3 (29:36):
Was like almost as like a private proxy when you
think about your own portfolio management, would you read research
of those private companies to kind of think about the
exposure your public companies have to that name open AI,
or just to inform like future investment opportunity, you know.
Speaker 11 (29:54):
I think that convergence of public private is really important
for the investment community. I think it's really tempting to say,
you know, on the private equity side, are we looking
at a market peak or you know.
Speaker 7 (30:05):
Begetting tactical with it.
Speaker 11 (30:07):
But the reality is that so much of the US
market is actually private at this point, and so for
us to really understand the dynamics of the public market,
we have to have better understanding of the private market
and getting those you know, those bits of information. It's
it's kind of an inefficient market at this point. So
the more that we can dig in, the more systems
that we can build, the more landscape that we can view,
(30:30):
combining the public and the private, I think that will
inform our analysis all the better.
Speaker 3 (30:35):
Martin Norton Empower Chief Investment Strategy, is great to have
you back on the show.
Speaker 2 (30:38):
Thank you very much.
Speaker 3 (30:40):
Now, coming up, manufacturing company Hadrian announces expansion plans to
help build out AI powered factories here in America. This
is the defense use case. We're going to speak to
CEO Chris Power. Next, this is Bloomberg Tech. Defense manufacturing
(31:08):
company Hadrian has announced it's raised the two hundred and
sixty million dollar Series C that will be used to
expand its footprint in California and Arizona. The company's building
AI and robot automated factories across the US, utilized heavily
in the aerospace and defense industries. Chris Powers, Hadrian, CEO,
joins US now and Chris, welcome to Bloomberg Tech. It's
(31:29):
really great to have you on. One of your investors
says that the product is the factory. Just explain that.
Speaker 12 (31:38):
So we view our job as to reindustrialize the country
and from the seventies to the twenty twenties, we really
like offshot everything we possibly could. And it's this whole
system of both our software powered by Opus as well
as this new American workforce that creates this factory system,
and that that is the real output to our customers.
It's like, what are we producing, how accurate it is,
how on time it is, and this full stack factory
(31:59):
of time and the new American workforce we're enabling with
that alongside is the most important thing we're building. And
that's why we think the factory system that we're building
with people and technology combined is the product sizeable round.
Speaker 3 (32:13):
Interesting group of investors, founders, fund in rees and Luxe capital.
Why the size of the round, the difficulty or not
in raising it, and what you plan to do with it, Chris.
Speaker 12 (32:24):
We're very lucky that we're open and shut within a
small handful of weeks, less than a month. Really, that's
just a credit to a fundraising ability of the market.
It's just the team's hard work over the last year.
What we will do with this capital is expand into
Arizona with a new factory for our customers that's four
times a size, as well as use that capital to
(32:45):
hire more people so we can ship more manufacturing capabilities
to our customers, both in aerospace and defense sectors, commercial manufacturing,
and obviously you know the d D as well.
Speaker 3 (32:55):
In January of this year, I was with the Anderill
team in Ohio when they announced and confirmed that would
be the side of Arsenal one, and part of the
discussion I had with Palmer Lucky was why not California.
You know, Hadrian also has this big footprint in California,
but you've looked to Arizona for your expansion. I think
that's really worth discussing.
Speaker 12 (33:18):
Yeah, we all have you know, R and D in California,
and we're not moving out of California. But one of
the most important things is that we're creating thousands and
thousands of new manufacturing jobs in every state. Arizona's been
great to work with on the practical stuff like permitting workforce,
getting energy connected to the building, all these basic things
that are harder to do in some states. So we're
(33:38):
really happy to expand into Arizona. But it also won't
be the last. You know, our goal is to have
factories in every state and creating you know, millions of
new manufacturing jobs along the way.
Speaker 3 (33:48):
Because something that I think was kind of missed from
your post and the announcement was what you're expanding into
welding casting additive, is that just because that's where the
demand is, particularly from the DoD and the the defense
apparatus of this country.
Speaker 2 (34:03):
That's right.
Speaker 12 (34:03):
I think if you look at you know, pretty public
information from the Secretary of the Navy or the Army
in areas like shipbuilding, the nuclear force, munitions, there's these
huge lack of skills in the country. You know, we
need millions of world as, we need millions of machinists,
we need millions of quality inspectors in all these manufacturing
capability areas, and we just don't have the skilled workforce
(34:26):
of that volume anymore. And this is what we're really
doing with factories as the service, which is combining technology
to make people ten times more efficient and enabling them.
It's not about replacing workforce and manufacturing, because we just
don't have a manufacturing workforce anymore in this country. So
we really need to combine the two things that America
is best at, you know, American software, in the American spirit,
(34:46):
to get this ten times advantage over our global competitors.
And yeah, we're working on those categories primarily because they're
so important for areas like shipbuilding.
Speaker 3 (34:55):
Chris, when your peers come on this program, you know Castellian,
Saronic vanavar Land or the Aerill team, they frame it
in the context of China, China's manufacturing prowess, its competence
in areas like software and hardware. How do you think
about China and what is the sort of Hadrian mission
statement with regards to China, if indeed you take it
(35:17):
into consideration.
Speaker 12 (35:20):
Yeah, we think that the arsenal of inventory is not deterrence.
It's the ability to produce fast and onshore, not just
in areas of defense, but in pharmaceuticals. And that's why
you have to reindustrialize the country.
Speaker 2 (35:31):
And I agree.
Speaker 12 (35:32):
You know, we've given the farm away to the CCP
by letting them have all our manufacturing capability of the
last three decades, and now we're in a position where
that really degraded the skill set of the trades in
the US. And this is why, you know, building ships,
building munitions, building machine components in this country is very
difficult because we kind of offshore that talent of the Chinese.
(35:52):
I certainly think that, you know, the US needs to
be the strongest industrial power, like we werest World War
two again in order to to prevent or meet that threat.
Speaker 3 (36:04):
Chris, is your ceiling limited just by the idea that
your core customer is the DoD or in the future,
do you do business with these other primes and other
startups as well?
Speaker 2 (36:13):
Very quick?
Speaker 12 (36:14):
So all of our customers are you know, a defense
startup or a stage startup from day one up to
all the mega primes through that whole chain. The deity
is I think we've been recently a part of our business,
but we are working with the vast majority of hardware
startups all the way through to the megacap, public prime
and everything in the middle.
Speaker 2 (36:34):
Chris Power, Adrian CEO, really grateful for your time on
Bloomberg Tech. Thank you very much. Now I want to
get to a story out of China.
Speaker 3 (36:40):
China's top venture capital firms are back in the market,
raising over two billion dollars in new dollars denominated funds.
Light Speed China is targeting four hundred million dollars for
deep Tech.
Speaker 2 (36:52):
Monolith, which backs.
Speaker 3 (36:53):
Moonshot AI, plans a second fund worth at least two
hundred and sixty five million dollars at least six major firms,
according overseas investors, signaling renewed global interests in China's startup
ecosystem from AI to consumer tech. Okay, coming up, President
Trump is set to release new AI guardelines. We're gonna
have all the details on that. Next, this is Bloomberg Tech.
(37:30):
President Trump is expected to announce you AI policy guidelines
calling for an easing of regulation and an expansion to
energy sources for its data centers. For more, I want
to get out to bloombergs Mike Shephard in Washington, DC.
What's the need to know here, Mike, Well.
Speaker 13 (37:45):
The thing we need to know is that this will
be the administration's most significant policy statement to date on
artificial intelligence. It's been in the works for about six months.
This is one of the first things the presidents set
out to do upon taking office. We tap David Sachs,
the venture capitalist, somebody who's been on this program even
just this week to talk about artificial intelligence, to lead
(38:08):
this effort along with Michael Kratzios, another regular guest on
these airwaves, and together they have been trying to turn
away from what have been seen as a rules heavy
approach under the prior administration. They want to do something
that will do more to ensure and speed adoption of
this technology while also still trying to set a few
(38:29):
rules of the road. We're expecting the President to deliver
remarks on AI at an event at the White House
on Wednesday, July twenty third. David Sachs will be here.
It's an event that's being put together with the folks
from the All In podcasts, where David Sachs is one
of the co hosts. And we're also expecting the President
to be signing a few executive orders connected with all
(38:51):
of that. It's not going to be as far reaching
a statement on the technology itselfless to be focused more
on executive branch actions, yet it still will carry some weight.
We'll be watching it very closely here.
Speaker 2 (39:03):
All eyes on Washington next week. I think that's fair
to say.
Speaker 3 (39:05):
I see some breaking news this morning, which is that
the House Select Committee on China essentially criticizing or reprimanding
the president allowing chip makers and Vidia the focus in
being able to resume some limited chip sales back into China.
Speaker 13 (39:21):
What do we know, Well, we're hearing from the top
Republican on the committee, one of the toughest China hawks
in town, really raising questions about this decision to allow
Nvidia to resume sales of the H twenty AI chip
in China. Remember, the Trump administration have barred sales and
shipments of that chip to China over national security concerns
(39:44):
just back in April. But in the past week or so,
we have seen that restriction lifted, and that was a
huge win for Nvidia, but it prompted questions from John Molnar,
the Michigan Republican who heads this committee, focused on the
competition and with China and the challenge that the world's
second largest economy poses to the US. Now Mullinara is
(40:07):
raising the concern that look, if we allow these age
twenty chips to be sold once again in China, this
will simply allow Beijing to acquire more capabilities and artificial intelligence,
including some that could go to fuel its military and
intelligence complex.
Speaker 3 (40:24):
In Bloomberg's Mike Shepard, thank you very much. Staying in Washington,
the US Commerce Department is set to impose preliminary anti
dumping duties of ninety three point five percent on imports
of Chinese graphite that's a key component of battery manufacturing.
I want to get out to Evelyna Stoikeu of Bloomberg
ne ef Evelina. You kind of lead our analysis and
(40:45):
in house research of the battery supply chain as a start,
Why would this penalty on graphite have impact?
Speaker 2 (40:52):
Why do we need to know about this?
Speaker 14 (40:55):
Well, as you mentioned that graphite is a key component
for batteries and these terrorists would basically increase the cost
of making battery cells in the US now. Batteries are
important for a variety of sectors, including evs and stationary storage,
and as the US is pushing for more domestic production
for battery cells is a key component around energy, we're
(41:19):
going to see likely increased cost. Most of graphite is
coming from China, and in the US around seventy five
percent of synthetic graphite imports, which is the type of
graphite that is mostly used for batteries, is coming from China.
So we expect a big impact for the battery industry.
Speaker 3 (41:37):
When the news broke I saw that Tesla shares fell significantly.
Speaker 2 (41:41):
They're now up higher in this session.
Speaker 3 (41:43):
But one of the things I was thinking about is
for those US domestic battery manufacturers. I was at Panasonic
in Kansas earlier this week. There are some US based
producers of graphite.
Speaker 14 (41:52):
On there, Yeah, there are, and the domestic graphite production
is increasing. Among many other companies were lobbying against these
tariffs in the early stages, claiming that the graphic quality
or the graphic quantity was not at the stage that
they wanted at least at that stage. However, eventually these
(42:14):
GRAPHI terriffs are going to incentivize local production. But we
do remain to see whether this graphite is going to
be enough to meet demand and of low cost in
order to meet many cost targets that battery manufacturers and
automakers have in the US.
Speaker 2 (42:33):
Evelina.
Speaker 3 (42:35):
Right now, what is the biggest headwind or factor for
the EV battery supply chain? We focused on graphite, but
there are many other things happening around the world right now.
Speaker 7 (42:46):
Yeah.
Speaker 14 (42:46):
Absolutely, It's definitely a time where a lot of things
are changing when it comes to policy that is impacting
both EV's and batteries in the US. Right now, I
think the challenge is going to be figuring out the
supply chain and using suppliers in order to comply and
try to qualify for many of the important task credits.
As now there are new restrictions around where many of
(43:08):
these components can be can be sourced. So I think
this is going to be top of mind for a
lot of the players in the US because this push
to source everything domestically and to manufacture everything domestically might
come for with a cost to consumers.
Speaker 3 (43:25):
Evelina Stoiku, Bloomberg New Energy Finance, Bloomberg n EF. Great
to have you on the program. Thank you very much.
So that does it for this edition of Bloomberg Tech.
What a week it's been, from policy to politics, AI
to everything else in between. Don't forget to recap the
show on the podcast. You know where to find it.
It's on all the Bloomberg platforms as well as online
(43:46):
on Apple, Spotify, and iHeart chep said it just a
minute ago, But next week it's all eyes in Washington, DC.
Pay close attention and always do it here on Bloomberg Tech.
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