July 28, 2025 • 44 mins
Bloomberg’s Caroline Hyde and Ed Ludlow discuss Tesla’s plans to buy AI chips from Samsung in a new deal worth $16.5 billion. Plus, the US and EU reach a trade agreement that will see the European bloc face a 15% tariff on its exports, including cars and chips. And investors prepare for a busy week of tech earnings, as Microsoft, Meta, Apple, and Amazon all get ready to report results.
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news. Bloomberg Tech is live
from coast to coast with Caroline Hide in New York
and ever Low in San Francisco.
Speaker 2 (00:22):
This is Bloomberg Tech.
Speaker 3 (00:24):
Coming up, Samsung will produce AI chips for Tesla in Texas,
a new multi year deal worth sixteen point five billion dollars.
Speaker 4 (00:32):
PA's the US and E you agree on a deal
that we'll see the bloc face fifteen percent tariffs on
most of its exports, including chips and cars.
Speaker 3 (00:41):
And what to expect from the big tech earnings coming up?
With Microsoft, Meta, Apple, and Amazon all reporting this week.
Speaker 4 (00:49):
That is a huge market capitalization that we watch out
for in terms of those megacaps coming with earnings ed, we're.
Speaker 5 (00:56):
On ten hooks ahead of it. So we are fading
some of the.
Speaker 4 (00:58):
Rally that we've seen in big today, we're still clinging
on to gains and now's that one hundred and a
new record high. We're up a third of a percent,
But those rallies.
Speaker 5 (01:05):
That we saw in Europe have faded completely.
Speaker 4 (01:07):
We're in the red as that fifteen percent tariff looks
ugly on the EU side of things, but you're digging
into the micro stories today.
Speaker 3 (01:14):
Yeah, Tesla and Samsung in this arrangement to make AI
chips in Texas is driving markets. Tesla's gains have really
accelerated up three point eight almost four percent overnight in career.
Speaker 2 (01:25):
Look at Samsung shares.
Speaker 3 (01:27):
It's for the AI six chip, the next generation of
full self driving silicon that goes into the vehicles. Samsung
already does quite a lot with Tesla on prior generations,
and at the same time Tesla has some diversifying and
some hedge with TSMC. But this is a big one.
Elon must has been talking about it on X of course.
Speaker 5 (01:47):
Funny that.
Speaker 4 (01:48):
Well, let's get the inside track with Peter Elstrom, who
joins US now for more on this. This is a
vote of confidence in Samsung's chip manufacturing when it had
been losing market share.
Speaker 6 (01:57):
Peter, Yeah, that's exactly.
Speaker 7 (02:00):
Samsung, of course makes a whole bunch of things, including smartphones.
They've really made most of their profits, though recently, out
of their semiconductor business. They're the leading maker of most
memory chips out there, but they've been trying to build
this foundry business so that they could compete with TSMC,
compete for some of that high margin business from the
likes of Nvidia and Apple, and now what they've got
(02:21):
is really a marquee customer in Tesla where they can
point to them and say, hey, Tesla is trusting us
with the ability to make their high end chips, these
AI six chips, as Ed was mentioning earlier, which is
very important for their self driving technology, which they hope
to really bring on enforce next year and the year after.
Speaker 6 (02:39):
So for Samsung, this is a big step forward. It
is a decent amount of money.
Speaker 7 (02:44):
As we were talking about, it could increase their growth
in the foundry business by about ten percent. But probably
more importantly than that is the strategic importance of being
able to say they have this big marquee customer for
the foundry business.
Speaker 3 (02:56):
Bloomberg broke the story that it was Tesla that was
this at that time unnamed marquee customer, and it was
interesting because Elon Musk actually gave us a lot of
detail on social sixteen point five billion dollars over multiple years.
But Musk seems to be indicating it's bigger than that,
and also Peter, he talks about why it's important that
it's in Texas, he seems to be suggesting that his
(03:18):
proximity to the fab means that Tesla can be involved
in the engineering and the ramp, but that he himself
can wander the lines himself.
Speaker 6 (03:28):
Right, Yeah, how.
Speaker 7 (03:29):
Many businesses can Elon must get involved in Now apparently
he's going to do semiconductors too. Yeah, it's quite interesting
that he has said. He says that this deal allows
him to be able to be personally involved, intimately involved,
to be able to walk the lines and help with production.
I don't know how much he knows exactly about semi
conductor manufacturing, but you can imagine that having such an
(03:49):
important customer there on premises is going to put some
pressure on them to be able to build out quite quickly.
Now it's important to kind of step back here. Of course,
the US has been trying to rebuild their semi conductor
industry for a number of years. We saw the Biden
administration come out with the Chips Act that offered thirty
nine billion dollars in incentives. Samsung is one of the
big beneficiaries here, and one of the reasons that they're
(04:10):
expanding their capacity in Texas is specifically so that they
can supply US customers they're going to skirt their way
around the Trump tariffs if they're able to produce within
the country, and Elon Musk will be able to go
there to Texas to be able to try out some
of these things and then use them in the self
driving technology.
Speaker 6 (04:26):
So it is a step.
Speaker 7 (04:27):
Forward for that Chips Act and that effort to kind
of rebuild the domestic industry. TSMC and Intel are both
also beneficiaries of that effort.
Speaker 4 (04:35):
It is interesting, though, isn't it that it is overseas
manufacturers building in the US that are able to make
big tech win in terms of the chip supply chain.
What surprised me was also how integral, of course, Samsung
is once again to the COSPY. I think the costpy
the South Korean Index is one of the best performers
globally this year. Sk Heinex has a lot to thank
for it as well, though.
Speaker 6 (04:57):
Right yes, Skhynix has jumped out ahead.
Speaker 7 (05:00):
In the memory chips that are most used for AI,
these HBM memory chips. They've actually gotten quite a bit
of Samsung ahead of Samsung on that front, which is
a bit of a blow to Samsung, But Samsung is
making some progress kind of climbing its way back trying
to get authorization to be able to sell those HBM
chips to in Nvidia, which is the most important partner
at this point.
Speaker 6 (05:20):
But you've brought her a point.
Speaker 7 (05:21):
Yes, it's really TSMC has been leading the way in
advanced chip manufacturing. It gets that high margin business from
Nvidia and Apple right now and many other customers. There
were many hopes within Washington that the next competitor in
that foundry business would be Intel.
Speaker 6 (05:35):
They have not made that progress. We saw that last
week in the.
Speaker 7 (05:38):
Earnings report in Bhutan's questions about whether maybe he's going
to pursue that foundry business. But we're seeing that Samsung
is emerging is probably the strongest alternative to TSMC. Everybody
in the industry wants some competition in that market. They
don't want to just have TSMC making the most advanced
chips in the industry.
Speaker 6 (05:56):
They want to have some alternatives.
Speaker 7 (05:58):
Whether it's Samsung, whether it's Intel, there it's somebody else.
Speaker 3 (06:02):
Got a lot of questions about those alternatives have been
in both Peter Els from Thank you very much to
dive into all of this with Michael Green, chief investment
strategist and portfolio manager at Simplify Asset Management, which has
over eight billion dollars in assets under management. And it's interesting.
I want to take advantage of the timing, Michael. Last
time you were on, we were talking about Elon Musk
alienating himself from.
Speaker 2 (06:21):
Both political parties.
Speaker 3 (06:22):
If you remember, now, this is an example of a
leading American company, an individual, and Elon Musk doing a big,
big deal over multiple years with a foreign technology company
to onshore industry in this country. What do you make
of that in the economic opportunity it presents.
Speaker 8 (06:43):
Well, I think this is actually the tension that exists
right on shoring into America, particularly bringing back high value
added tech tech manufacturing like chips that's not going to
overly stress the labor force that has relatively low employment levels,
but a large fiscal impact and a large impact. This
is fantastic and it's exactly what we would hope to
(07:04):
see under a Trump administration, raising the costs of companies
doing business abroad and shipping stuff to the United States.
Speaker 2 (07:11):
How successful it's going to be.
Speaker 8 (07:13):
As was alluded to earlier, these are two companies that
are both kind of struggling in their respective fields that
have announced a major investment. Is it enough to bring
both companies significantly higher? Clearly the stock market thinks that
it's helpful. I don't see how it's not, but it
still is something that remains to be seen in terms
of its long term impact of.
Speaker 3 (07:35):
The contract manufacturers. We mentioned Samsung, TSMC, and Intel.
Speaker 2 (07:40):
Which do you like and why? Well?
Speaker 8 (07:43):
The quick answer is is that I'm a strategist. I
don't spend as much time on the individual securities. It's
very hard to argue with TSMC's overall technical lead in
the space. They have managed to build an extraordinary business
that has slowly taken out competitors like Intel and for
that matter, Samsung. You know, they're all extremely capable. This
is an industry with tremendous growth, But if you're putting
(08:05):
bets on change, you have to look at companies like
Samsung et cetera to undercut or Tesla. The whole story,
effectively is the increased competition is coming for both TSMC
and in video. I think that's probably the biggest takeaway
on this.
Speaker 5 (08:21):
Give us the.
Speaker 4 (08:22):
Broader context here then, as a strategist as well, Michael
as to how over exposed investors are written large on
the semiconductor space, semiconductor equipment. More broadly, I'm looking at
how Goldman at the moment is saying the US prime
book is really heavily weighted and overexposed to that, and
we've seen judge funds of particular dial back ahead of earnings.
Speaker 8 (08:43):
Yeah, you definitely have seen that. And one of the
factors that we've seen in this rally as it has
extended off of the April thows, has been extraordinary retail
participation and dramatic increase in the quantity of margin that
is being utilized, and equally important, a dramatic decline in
the quantity of short end That's really what's hitting the
hedge fund positioning because they tend to have that bias
(09:05):
of being long the more quality oriented name short the
shorted names. That's causing distress in the hedge fund space.
That I think it's causing them to take all exposures
down as compared to isolating to particular risk for those
leading companies. I think most people anticipate that this earnings
report this earning season is going to be relatively favorable,
(09:26):
if for no other reason than the stocks are near
all time highs. That lowers the incentive to introduce special
charges or anything else that you would classify. So I
think most people are actually expecting a pretty good earning season.
It's just market conditions are extraordinarily difficult for hedge funds
right now.
Speaker 4 (09:43):
They've got to be pretty perfect these earnings for us
to live up to the hype in a way, Michael.
But what's also so clear is that hedge funds have
been under exposed to software services.
Speaker 5 (09:53):
Does that change in the nattern.
Speaker 8 (09:55):
Well, I think ultimately that hedge funds are going to
follow whatever is working. So if it can take we
continue to see under performance in the high quality hardware space,
or the impressive performance that we're seeing from cyclicals right
now versus defensives, you will see hedge funds ultimately rotate
because they are more interested in making money than they
(10:15):
are in being right.
Speaker 4 (10:18):
Oh, there's always the quandary. Michael Green from Simplify Asset
Management putting it straight on where the focus has to
live for hedge funds right now? Coming up, We thank
him and we move over to Victoria espanel or the
Business Software Alliance, just talking about how software has been
a bit unloved.
Speaker 2 (10:33):
But where are we.
Speaker 4 (10:34):
Going to be seeing the differences in regulations across the globe.
How is that impacting software companies and the approach to AI?
Speaker 5 (10:40):
This is Bloomberg tech.
Speaker 6 (10:58):
So I just want to go grow you.
Speaker 7 (11:00):
I think it's I think it's great that we made
a deal today instead of playing games.
Speaker 2 (11:07):
And maybe not making a deal at all.
Speaker 5 (11:08):
I think it's I'm going to.
Speaker 9 (11:11):
Let you say, but I think it's the biggest deal
ever made.
Speaker 3 (11:15):
I was President Trump there speaking in Scotland. Many of
the details from the US EU trade deal are still
to be announced. The semiconductor industry, though, rallying on the
news that it will not face a separate tariff rate. Instead,
it will be included in the fifteen percent rate applied
to all EU goods exported to the United States. Want
to get out to Washington, d C. And Blumbo's klie
(11:36):
lyones give us the details of what we do know
what was agreed, and the President saying there it's the
best deal he's ever done.
Speaker 10 (11:44):
Yeah, the biggest deal ever made, to use the president's words,
ed I'll leave that up to determination as to whether
or not that is actually true. But of course this
is a big win for Europe, which was facing the
threat if a thirty percent tariff come Friday August first,
if this deal was not struck, fifteen percent obviously a
much lower rate than that, And key here is really
the fact that they got that fifteen percent rate to
(12:05):
apply to sectors in particular, not just automobiles, but as
you mentioned, also semiconductors and pharmaceutical tariffs, which of course
there is a Section two thirty two investigation underway into
both of those sectors already, in which the end result
could be that other non EU countries face a higher
teriff rate than that on those specific materials. Europe was
able to secure a fifteen percent rate that will be
(12:27):
applicable effectively across the board, but the exception still of
steel and aluminum, which of course faces a fifty percent tariff.
Key to doing so, we understand, though no details are
yet on paper, we haven't actually gotten a formal readout
or or full list of what this deal actually will
entail beyond what we've been told and what officials familiar
have told Bloomberg. But key, according to sources familiar with
(12:48):
the matter, was the fact that Europe has also agreed
to make more investment into the United States as part
of this deal including six hundred billion dollars investments into
the US and seven hundred and fifty billion dollars of
purchases of a American energy over the course of the
next several years, in addition to what President Trump described
as vast purchases of US military equipment. So all of
(13:08):
that is what we understand this deal to essentially look
like in the broadest of terms, but we're still waiting
for that granular detail.
Speaker 4 (13:15):
And of course we assume and understand that there's a
carve out for chip equipment in particular where they face
a zero taris and on the asml is on the
highest side, Kanie. What's really interesting is pushing us forward,
is what this fifteen percent number means for the China
negotiations that's actually happening in Sweden.
Speaker 10 (13:31):
We understand, Yeah, they're underway in Sweden right now. It
will be two days of talks spearheaded by Chinese Premier
to Le fun as well as the Treasury Secretary Scott Besson.
They are underway. China, of course, already is facing a
higher tariff rate than most Twenty percent is the level
specifically applied in retaliation for the trade of fent and
all that is going to be something specifically that we
(13:53):
understand is one of the focuses of the US at
these talks. They're going to be talking about whether or
not China is actually able to tamp down on the
flow of fentanel out of the country, though China obviously
disputes that, saying it's a US domestic problem. But in
addition to trying to get that terifright lower, which there
may or may not be progress on the real crux
of these talks, as has been for the previous iterations
of this, as we've seen multiple rounds in the last
(14:14):
several months, is going to be around export controls. On
the US side, of course, that includes export controls of
critical technology including semiconductor and equipment for the manufacturing that
we've already seen some easing of that with the allowance
of H twenty chips from Nvidia to start flowing back
into China for export. But on the Chinese side, it's
really about rare earth and critical minerals that of course
they have a choke hold on at this time, and
(14:35):
it was been the easing of the flow of that
allowing American importers to get the licenses to actually bring
those critical minerals in that has been critical for advancing
this at least deston shall we say forward, which is
also going to be one of the key pushes for
these talks. The Treasury Secretary Scott Best and indicating one
of the primary outcomes they're looking for here is an
extension of the current troops that is in place beyond
(14:58):
the deadline that currently stands of August.
Speaker 4 (15:00):
Twelfth, been important for in videos h twenties as well
to get back into China. Bloomberg's Kylee lines brilliant wrap
up of all things trade.
Speaker 5 (15:07):
But let's get.
Speaker 4 (15:08):
More on how these deals and indeed developing global regulations
for artificial intelligence really impacting developers. Victoria Espinel's with our
CEO the Business Software Alliance and the context here Victoria
is one of the AI Action Plan announce why the
US government really to take on China and the AI
race that the US wants to win from a regulatory perspective.
(15:29):
How do you think the US is winning.
Speaker 5 (15:31):
Or not.
Speaker 2 (15:33):
So?
Speaker 11 (15:35):
I think there's a lot of good that's in the
AI Action Plan, but here is one part. You know,
there's a lot of conversation about who's going to win
the AI race, and a lot of that focuses on
who's going to be at the cutting edge of innovation,
and that is obviously important. But a conversation that is
just starting to happen that I think is will potentially
have an even bigger impact is who is going to
(15:55):
win the race on AI adoption. By that, I mean
which are the countries that are going to figure out
how to use AI best, Because it is those countries
that are going to see the biggest economic benefit from AI.
That is the race, and that is that is largely
up for grabs right now. I think the United States
has an advantage there, and I think the AI Action
(16:17):
Plan has a number of aspects that are focused on adoption,
But that race is up for grabs, and I think
that is going to be a big indicator of where
we see the biggest economic benefit over the next decade.
Speaker 4 (16:32):
So we're not focused, therefore, from your perspective on AI adoption,
on training talent to ensure that in enterprise we're actually
getting banged from a bot productivity actually goes up into
the right.
Speaker 11 (16:43):
So there are a few aspects that I think are
critical to AI adoption, and actually at BSA, we released
an agenda just before the AI Action Plan came out
earlier last week. The focus is on three aspects. One
is talent and workforce, and that is critical. I think
there's no aspect more essential. The second is infrastructure and data,
and the third is the governance framework and making sure
(17:05):
that we get that right. And those three elements are
things that the United States, but governments around the world
need to be figuring out right now if they are
going to win the race on AI adoption Victoria.
Speaker 3 (17:18):
Last week on the program, Michael Kratzios, who leads to
the Office of Science and Tech at the White House,
came on and he talked about packages that he sees
America being a net exporter of everything in the stack,
from hardware through to the models themselves. You were talking
about adoption a moment ago. How does America is an
exporter of AI fit into that.
Speaker 11 (17:41):
I think that's a critical piece. So a lot of
the innovation has happening here in the United States for
governments to be able to adopt AI, to have their
private sector using AI in a way that they get
the most economic benefit. A big piece of that is
going to be AI exportation from the United States and
There was conversation last week about the data centers and
(18:02):
the chips, but obviously an important element of that is
the software and the cloud services.
Speaker 2 (18:07):
Because it is literally.
Speaker 11 (18:08):
Not possible to adopt AI unless you have cutting edge
cloud services, unless you have cutting edge software, and a
lot of that's going to be coming from right here
in the United States.
Speaker 3 (18:18):
There was also a discussion about copyright, and the President
talked about.
Speaker 2 (18:22):
This during his address.
Speaker 3 (18:24):
Given that you kind of represent more the software side
of the stack, how did you think about that, you know, Karen,
and I increasingly comes up in the show. Is a
point of priority, particularly for the frontier model or just
model makers generally.
Speaker 5 (18:38):
It's a big issue.
Speaker 11 (18:39):
It's an issue here in the United States and in
other markets as well. So, as you know, in the
white Hat and the AI action plan that was released
last week, there's not a lot of discussion of the
copyright issue specifically, but the President and his public remarks
spoke to it quite forcefully in terms of the importance
of training data and for the AI builders to be
(19:01):
able to get that training data and use it with
relative e So he was very very clear on that aspect,
and that's something that we are anticipating seeing the White
House say more about and the next year or so.
But the President was very clear in terms of his
opinion on the importance of training data and how important
that is for the United States to stay ahead of
(19:21):
the AI race with respect to China.
Speaker 4 (19:23):
Briefly, Victoria, today's day, we focus on the EU. It's
smarting today in terms of competitiveness. They're worried about fifteen
percent tariff. How much should they be worried about their
own EU AI act on competitiveness.
Speaker 11 (19:36):
So again, I think the EU has huge potential opportunity
to benefit from AI if it starts focusing on adoption,
and part of that is addressing some of the digital
sovereignty barriers that.
Speaker 5 (19:47):
The EU has put up. There are aspects of the
trade dealers.
Speaker 11 (19:51):
You know, the details of the trade deal are not
yet fully public, but Ambassador Greer was talking just this
morning about looking at things like mutual recognition of cybersecurity,
of streamlining regulations, of steps that Europe can take, and
those steps are important not just for US software providers
but for the EU if they are going to be
(20:12):
able to adopt and use AI effectively.
Speaker 3 (20:16):
Victoria Espinew, CEO of the Business Software Alliance. Thank you
very much. We have some breaking news crossing the Bloomberg terminal.
FIGMA is boosting the pricing of its IPO to thirty
to thirty two dollars a share, previously seen the IPO
at twenty five to twenty eight dollars per share. Remember,
Figma is trying to raise just above a billion dollars
and they had this kind of auction style process where
(20:38):
they went to prospective investors and said how many shares
do you want and how would you price them? The
logic being carro that they want to try and get
near to that twenty billion dollar valuation that Adobe had
valued becoming out when it had tried to buy it. Now,
the IPO, which we think will price on Wednesday to
recap pricing between thirty and thirty two dollars a share.
Speaker 2 (20:57):
We'll keep a close on it throughout the week.
Speaker 4 (20:59):
And that previously mark to range added at a market
cap of about sixteen billion at the top end, So
we do the math.
Speaker 5 (21:04):
Coming up AI competition.
Speaker 4 (21:06):
Sees the rapid releases of free open source models.
Speaker 5 (21:09):
More on that next. This is Bloomberg Tech.
Speaker 4 (21:20):
It is time now for talking tech and first up
open AI rival Jupu has released.
Speaker 5 (21:24):
Its biggest open source models to.
Speaker 4 (21:26):
Date, and the Chinese startup unveiled hybrid reasoning models GLM
four point five GLM four point five air. It's ready
to sto update to the company's of flagship models as
it joins a growing number of Chinese firms ramping up
free AI offerings.
Speaker 5 (21:39):
Plus PayPal well it's.
Speaker 4 (21:40):
Set to allow businesses to accept crypto at checkout. Over
the coming weeks, company will introduce more than one hundred
cryptocurrencies like Bitcoin and ethereum as payment options for merchants.
According to PayPal, the pay with crypto transactions settle instantly
will initially cost zero point ninety nine.
Speaker 5 (21:54):
Percent per transaction.
Speaker 4 (21:56):
And TDK, one of the biggest suppliers of iPhone batteries,
says it is closely monitoring the tariff impact globally due
to their worldwide operations and the importance of relative tariffs
compared to other countries, and the tdkco spoke exclusively to
Bloomberg about how the company is seeing the trade deal between.
Speaker 5 (22:12):
US and Japan.
Speaker 7 (22:14):
Who need to keep money done in the other cases,
not only you know needed to here in Japan, but
also the other countries.
Speaker 9 (22:22):
I hope that the impact right will be is going
to be minimized, but it's actually out of the contour.
Speaker 3 (22:31):
The TDK CEO then are coming up. Tech IPOs could
be making a comeback. We speak with mattwick Eler of
Wellington Management on the landscape for going public conversation that
you do not want to miss.
Speaker 2 (22:43):
That's right next, this is Bloomberg Tech.
Speaker 5 (22:55):
Welcome back to Bloomberg Tech.
Speaker 4 (22:56):
Quick checking on these markets that are still at record
highs when you think about the one hundred, but we
are fading this rally a little bit up three tens percent.
Speaker 5 (23:03):
We've got eleven trillion.
Speaker 4 (23:04):
Dollars worth of market capitalizations on.
Speaker 5 (23:06):
Deck this week in terms of earnings. We've also got microdata.
Not to mention trade when the August.
Speaker 4 (23:11):
First end of this week is that so called deadline
for the tariffs and we get in clarity on tariffs
with the EU fifteen percent. Germany it's smarting, it's feeling
that's anti competitive to some of its key industries. We're
off by a quarter of a percent, but dig into
some of the details and the individual movers. I want
to shine a light that the market capitalization in video
is once again climbing above that four trillion dollar level,
(23:31):
and it was a key contributed to the upside of
these benchmarks. Test of two in terms of points up
three point six percent, sixteen and a half billion dollar
deal to make chips via Samsung in Texas. The AI
six chip is on deck, and that is both embolding
in Tesla investors as well as Samsung today. But ASML
up two and a half percent key semiconductor equipment maker,
(23:53):
there's a carve out zero percent tariffs for these sorts
of parts of the chip sector, and we also get
clarity that look, semiconductors will fare that fifteen percent tara
for the time being.
Speaker 3 (24:02):
Ed on a Monday morning, sometimes you just got to
look at the calendar and just say, all right, what
am I in for this week? We'll investors are bracing
for a busy week of tech earnings, with Microsoft, Meta, Apple,
and Amazon all reporting in a forty eight hour twenty
four hour period.
Speaker 2 (24:19):
Bloombos, Carmen Rianky's with us and Carmen.
Speaker 3 (24:21):
I have to congratulate you as well because one of
the best headlines I've seen on the Bloomberg terminal s
and P five hundred rally faces eleven trillion dollar gauntlet
of big tech earnings. The headline tells us the story,
but we're braced for a very, very concentrated and busy period.
Speaker 12 (24:38):
Yeah, it's true. So we have Wednesday and Thursday or
the big days this week, and honestly, we're going to
see a little bit of the bifurcation I think that
we've seen in the meg seven this year really play
out this week. So on Wednesday, we have Microsoft and Meta,
which have been two of the biggest point leaders on
the SMP and really driven the rally, especially from sort
of that April traff that we saw.
Speaker 2 (24:57):
Those are going to report.
Speaker 12 (24:58):
On Wednesday, And then on Thursday we have Apple and Amazon,
and these two companies have been under a little bit
more scrutiny. Investors aren't quite as sure. Amazon I think
is about flat on the year, while Apple stock has
rallied a lot from April. It's down about fifteen percent
year to date. So people will really be watching to see,
especially what they say about AI, what their plan is
(25:18):
for using artificial intelligence going forward, and also what the
impact is with China. They are the company that has
the most exposure, especially out of the Magnificent seven so can.
Speaker 4 (25:28):
You common detail a little bit of how investors are
going into this week. We know that hedge funds have
actually been dialing back some of their exposure to some
of the big technas because they have been such windows
and because valuations are so high.
Speaker 5 (25:41):
Have we seen a little bit of more quotient coming
into this I think so.
Speaker 12 (25:44):
I mean, the bar is set so incredibly high, and
something that's interesting is that Earning's expectations have actually come
in a little bit for this group of companies from
the last report. I think they're expected to deliver Earning's
growth of about sixteen percent quarter or corder down from
nineteen percent. There is a little bit of a lower
bar in terms of like clearing it, but that makes
(26:04):
it all the more important that these companies do beat
in rais, especially to extend the rally in their stocks.
They really have to prove that they can deliver and
that their valuations are worth paying for. As you said,
they're very stretched. Some of these companies are at or
near all time highs. But we also have a second
group of companies that are not. Like I just said, Apple,
(26:25):
you know, is still fifteen percent office all time high.
Amazon is off its record high. Those companies also though,
have to deliver and they could be really important to
extending the rally in this S and P. You know,
Apple is one of the biggest companies in the index,
and so if it you know, think about where we
could be if it were to pick back up and
sort of see a reinvigoration in its stock. So people
(26:46):
are definitely really watching the earnings this week, and I
think just there is a very high bar as always
for these companies.
Speaker 3 (26:55):
Common just give me a little bit more on those
latter points. There's two charts in the story about the
points contraby of the key names to the upside and
the downside, which I think is hat a beautiful illustration
of the story, but also profit estimates mag seven stripped
out from the S and P five hundred. That just
sets a really high bar, Like, what if it all
goes wrong for Microsoft later in the week, then at
(27:15):
the index level, we're going to have some I don't know,
let's call it turmoil.
Speaker 12 (27:18):
Yeah, definitely. I mean, we know that these companies are
the heaviest weighted, they are the biggest point gainers. So
Microsoft and Meta I think are two in three, in
Vidia being number one so of course there could be
huge hamifigations if these companies don't deliver. We've also seen
from last week with Alphabet and Tesla that companies that
do beate and raise are getting rewarded. They're seeing their
(27:39):
shares go up. Well, companies that don't are getting punished
by investors, they're you know, selling off. So it's a
super important going forward and it'll be really interesting to
see how it plays out.
Speaker 4 (27:50):
Come and Ranicky, we thank you so much a week
to brace ourselves for Let's just stick with the public market.
So I talk about a potential newcomer. All ours are
on Figma going public this week. We're now seeing it's
IPO pricing between thirty to thirty two dollars a share,
increasing the size of its offering to about one point
two billion and a fully diluted value of as much
as roughly eighteen billion dollars.
Speaker 5 (28:10):
So I tech IPO is coming back. Let's discuss it.
Speaker 4 (28:13):
The Matt we've had it who leads late stage growth
at Wellington Management, which's got a cool one point three
trillion dollars in assets under management. Part of that is
private and that is under your remitt Are we going
to see the windows crack open broader because you sat
here in August at twenty twenty four and we were
hoping the same thing.
Speaker 13 (28:32):
We were hoping that and I think where we sit
today is the VC backed IPOs are coming and you
see it in FIGMA, and I think it's because we
really had three conditions met in the past year. The
first one was we had stability and interest rates that
kind of started at the end of last year when
the FED said that they're not going to raise anymore,
(28:52):
started to cut and now forecasting to cut some more.
So first thing was rate stability. I think the second
thing that we got was we had a public market
that is relatively stable and at records, yeah all at records,
and with a VIX that's at twelvemonth low almost so
stability in the public markets despite the bump in April.
(29:13):
And I think the third piece that we had was
we had companies actually go out and go out successfully.
We had Circle, we had Core Weave, both those are
up big. And we also had smaller companies companies like
e Toro and Almada Health that performed very well in
the public markets. And so those three conditions I think
set up for a really exciting backout of this year.
Speaker 4 (29:33):
A lot of those had flavors of regulatory tailwinds. When
I think a crypto or the AI trade that just
keeps on being a winning formula. Do you need those
within the portfolio companies to go public or do you
just need to be profitable revenue generated.
Speaker 13 (29:47):
I think you need to benefit from some of those
trends that you mentioned before. I mean, I'd coined to
a Figma, which, as you just discussed, raised its range.
It's not a pure AI play by any means, but
does will leverage AI in its capabilities, and I think
that that helps promote and will help pricing of these
companies as they go out.
Speaker 3 (30:08):
It's really great to have you back on the program.
We were just reflecting on the mechanism that Figma's using.
We're calling it an auction like mechanism where they go
to prospective investors and they say, well, how many shares
do you want to buy and what price would you set?
Which I'm not as familiar with. But if you are
like a late stage growth investor, right, you're almost like
an ancho investor going into some of these companies pre ipo.
Speaker 2 (30:30):
How do you respond to the auction, so to speak.
Speaker 13 (30:33):
Well, I think you have to respond to where the
market is setting the price. And I think that in
today's environment, with as we discussed, the market backdrop that
is kind of at all time highs, the response that
the collective group will make, I think is such that
it will continue to raise pricing expectations for high profile
companies that are benefiting from AI to some degree, like Figma.
Speaker 3 (30:58):
I called you an almost like anchor investor. When Wellington's
name comes up in my world, it's kind of like
that late stage that's pre IPO.
Speaker 2 (31:06):
Is that your strategy, Matt, that's right.
Speaker 13 (31:09):
Let's find the next generation of great public companies and
invest in them while they're private. Because these companies twenty
or thirty years ago, companies like Figma would have been public.
They would have gone public at a billion dollars in
market cap and grown to the eighteen billion that they're
now raising their expected market cap to and done that
in the public markets, not in the private markets. But
(31:29):
if you look at how the market's change, the market
has changed such that these companies are staying private longer,
not foregoing an IPO, just delaying the IPO. And that's
the role that we can play is to help those
companies go from great private companies.
Speaker 4 (31:42):
To great public I mean, Klana, we all still wait
and we watch, and that's in your portfolio business. But
what I'm really interested is as a late.
Speaker 5 (31:48):
Stage investor, what are the metrics now?
Speaker 4 (31:51):
Because these companies fueled by AI are growing at such
a rapid rate that suddenly they're already one hundred million
ARR generating.
Speaker 5 (31:58):
And but if you call it is what meets your criteria?
Speaker 13 (32:02):
I think it's a great question and something we talk
about a lot, because, as you point out, AI is
just fueling so much revenue growth at unprecedented pace. Do
you think about a company in the model space like Anthropic,
They're rumored to have gone from a billion of ARR
to four billion of ARR.
Speaker 2 (32:17):
In six months, so four.
Speaker 13 (32:18):
Exiting their business at scale?
Speaker 2 (32:20):
So what do we look for?
Speaker 13 (32:21):
We are really focused on companies in the AI space
that we think can be both durable and defensible. So
durable meaning can these companies be ongoing businesses not in
six or twelve months from now, but in five.
Speaker 2 (32:35):
Or six or ten years from now.
Speaker 13 (32:37):
And then defensible can they build on top of something
that is not easily copyable.
Speaker 4 (32:44):
And then I think of desiq, glean Vanta, some of
the rounds you have recently led a lot of us
in the enterprise. Is that really the sweet spot at
the moment, how we bring generative AI productivity into enterprise
rather than consumer For.
Speaker 13 (32:56):
You, I think that is a really key observation, which
which is how does the enterprise software stack benefit from
AI and really leverage AI?
Speaker 3 (33:07):
That was Hyler of Wellington Management. It's really good to
have you back on Bloomberg Tech. Really appreciate it. Now
coming up on the program, we're going to hear from
Ali Barba, Cloud founder Wang Jian as the company navigates
a global.
Speaker 2 (33:18):
AI talent war. You want to miss that one. This
is Bloomberg Tech.
Speaker 11 (33:38):
Now.
Speaker 4 (33:39):
And over the weekend, did you see it, China hosting
the World Heyhi conference in Shanghai. We've got to show
our audience robotics front and center. Some of them boxing
like we see here, some of them pretty messily dispensing drinks.
Speaker 5 (33:51):
They are even playing the piano.
Speaker 4 (33:52):
But like you're the person sitting down there with some
of the leading robotics and humanoid make us here in
the US. And it's interesting that in the story, really
are particulating. The US isn't there with a cost effective competitor.
Speaker 3 (34:04):
Right now, but with this event in China, right there's
the bit that's for show. It's just like CS or
GtC where you put all of this cool tech in
one place.
Speaker 2 (34:13):
But the forecasts are.
Speaker 3 (34:14):
That this is going to be an industry in the
trillions of dollars by twenty fifty, twenty thirty whatever.
Speaker 2 (34:20):
The skepticism in.
Speaker 3 (34:21):
The story, which I really appreciate, is like how much
is this is translatable to the real world. But China,
as we keep hearing from Jensen Wang and everyone else,
has has leading researchers in the field of AI and
an amazing supply chain for robotics because they can control
it domestically.
Speaker 2 (34:38):
That seems to be a big theme it is.
Speaker 4 (34:40):
I'm showing we didn't get too many backflipping dogs in
that VEO for you and some of those pictures, but
apparently they were there.
Speaker 2 (34:46):
Yeah, the robots are coming.
Speaker 3 (34:48):
The battle for AI talent is creating huge pay packages
as Silicon Valley and Beijing battle for AI dominance. Bloomberg's
Annimal Drulers spoke exclusively with Ali Barba Cloud founder Yang
Jian on the global AI talent war.
Speaker 9 (35:03):
I don't think it's it's the let's see, it's a
typical way of doing seeing it, Okay.
Speaker 6 (35:10):
I would say that.
Speaker 2 (35:11):
The reason very simple.
Speaker 9 (35:13):
You know, example, when I when I study, uh, the
the Alibaba cloud. You know, the first thing I did
that was in the Tucson eight. The first I did
to via the city media and to try to get tenant. Okay,
mm and uh and after talking to all the people
(35:34):
and you realize, actually we don't have much of talent
there because.
Speaker 2 (35:38):
It's new okay.
Speaker 9 (35:41):
So and also with some of the talents it's just
too expensive okay and uh to it film basically means okay, uh,
you don't know whether the cob bas is there. Why
need to hide? Why when need to hide these people?
So it's really about the innovation. So when you're in
(36:01):
the early stage of innovation, I don't seek the talent
is a problem because you know they have the only
thing you need to do is to get the right person,
not really the expensive person. Because if a new business,
if it's true innovation, that basically means talent, nobody care
about them. Okay, lot they're working on that. So for
(36:23):
the today, what happened for the matter is because they
are very much focused on the existing success of the
business and existing its average on technology.
Speaker 2 (36:36):
That's the that's that's that's that's.
Speaker 6 (36:38):
My real Okay.
Speaker 9 (36:40):
So I think we have a tremendous opportunity to look
at technology nobody knows today and these talent.
Speaker 2 (36:48):
These are talent.
Speaker 6 (36:49):
But but these are.
Speaker 9 (36:52):
I can't say it's cheap, but but it's you. It's
available for you.
Speaker 6 (36:56):
Okay.
Speaker 9 (36:57):
So that's really about the vision. You know, where you
want to, where you want to go, and there's a
lot of similar things you know, happened during the last
twenty years. Also, whenever everybody knows that these are talent
and it's better for you not to get in and listen,
(37:18):
that's not you, that's that's my That's much like personally
that I hide assulting now he had he's the leader
for the Queen. Okay, you probably met him, you know
when you're in Hantle. You know, I personally interview him,
you know, fifteen years ago.
Speaker 2 (37:35):
Have we got talent?
Speaker 6 (37:36):
Now he's leading the Queen.
Speaker 13 (37:39):
Yeah.
Speaker 2 (37:40):
So that that's so.
Speaker 10 (37:42):
There's not really there's not really any justification that it
sounds like you think for for such.
Speaker 9 (37:49):
That's not you know, what the mad you know, I'm
sorry that what what the what happened in Silicon Valley
is not the.
Speaker 6 (37:56):
Winning formula. That's what I that's what I believe, you know.
Speaker 4 (37:59):
Yeah, Ani a Bubba Cloud founder, Wang Jian there speaking
with Bloomberg's Annabel Drulers. And let's stay on those rather
expensive AI highs happening at Meta in his name, Shengjia Jao,
it's chief scientists for its new superintelligence AI group. Joao
joined Meta in June from over AI.
Speaker 2 (38:17):
For more.
Speaker 5 (38:17):
Let's bringing Kurt Wagner.
Speaker 4 (38:19):
And let's just go through the leadership here, because as
Alexander Wye Wang of Scale AI, then there's a chief scientist,
and Ya La Kum is somewhere as well.
Speaker 14 (38:29):
Yeah, that's right. It's been a total re or Caroline
in the last couple of months. So there's obviously Mark
Zuckerberg at the top, and I do mention him specifically
because he's incredibly hands on with it when it comes
to Meta's AI related to projects. Alexander Wang, the Scale
AI co founder who they just sort of brought over
in June after that massive investment they made in Scale AI,
shengjia Jao. You just mentioned the new chief scientists of
(38:51):
this super Intelligence Labs.
Speaker 2 (38:53):
Basically that's the group internally that's going to.
Speaker 14 (38:56):
Hopefully for Meta, develop this new model that will be
super intelligence, right, that will achieve that human level of capability.
And then Jan mccun is still at Meta. He is
still a chief scientist by title as well. He is
running the Fair Group, which is the AI research.
Speaker 2 (39:12):
Division of Meta.
Speaker 14 (39:13):
They were very clear over the weekend and on Friday
that lacun is still there, still doing the research for Meta.
Speaker 3 (39:21):
I'm grateful you. You talked about Zuckerberg's role right. This
announcement at the end of last week was on his
social media platforms and channels. Personally, do we know if
the team is finished like the Avenger has been assembled
and that they're done now or are they still out
there in the marketplace trying to find more people.
Speaker 14 (39:39):
I believe they're still hiring. When we originally broke this
story back in June that the super Intelligence Group was
being brought together, we had heard that they were going
to be around fifty people was the target. I've been
keeping a spreadsheet ed I'm up to like thirty or so,
so you know, we're maybe a little over halfway done.
But I do think clearly they're at a point where
they feel that they have a large enough group that
(40:01):
they can start talking about as publicly, start talking about
the chief scientists, things like that. But I don't think
we're necessarily at the end of the road for hiring.
I would think they would hire, you know, no matter
how many people they get, if they're getting good people.
I think Mark Zuckerberg has made clear this is a
collection of talent, and I'm not sure that he's going
to simply be like, oh, we've hit fifty, therefore we're
going to say no to other good people. I'm sure
(40:23):
they'll bring as many good people in the door as
they can.
Speaker 3 (40:26):
We're actually about talking a little bit more about earnings,
and lots of investors thinking that the cost of talent
is going to be something that comes up. Bloomberg's Kutwagner,
great reporting, Thank you very much. Now coming up, what
to expect from the big tech earnings that are coming
up later this week. There are many of them. They're important.
We'll be right back. This is Bloomberg Tech. Back to
(41:00):
the big week of tech earnings ahead and here so
talk about what to expect. Bloomberg's Ryan Lasleica and across
the equities team. We've done a lot on the terminal
this morning to get us ready for the week. Let's
just start with the calendar. What's coming our way over
the next four or five days.
Speaker 2 (41:15):
Hey, thanks for having me.
Speaker 15 (41:16):
So we have four real highlights coming out this week.
We have Microsoft, we have Meta, followed by Apple and
Amazon on Thursday, so four of the maxifice and seven
following Alphabet and Tessa last week. So obviously just a
huge week for earnings. We're going to get a lot
of detail about AI, about growth rates, We're going to
(41:36):
get some more insight into the impact of tariffs.
Speaker 2 (41:39):
It's going to be a lot going on this week.
Speaker 4 (41:41):
There is, and I'm wondering how analysts and investors are
like to set themselves up for what ultimately has to
be perfection. It feels like if you're an Alphabet or
Tesla or anything to read across.
Speaker 15 (41:50):
From So I would say that when it comes to
Microsoft and Meta, both of these companies have been performing
extremely well this year, and these are two companies that
are really seen being at the cutting edge of AI
and among the companies that are showing among the early
benefits in terms of an ROI and all their AI spending.
Now we're going to be also looking to see how
much these companies are spending going forward. Their CAPEX plants
(42:13):
are going to be a real focus this week. Last
week we did see Alphabet come out, come out and
really increase its CAPEX. Target markets seem pretty okay with that,
suggesting that if they're able to justify this level of spending,
they're not going to get dinged by that. So that's
a real focus for Meta and Microsoft, which I believe
both report on Wednesday.
Speaker 2 (42:30):
You also have a street.
Speaker 3 (42:31):
Wrap from the Terminal about the cell size sentiment toward Apple.
How is the feeling right now about the iPhone maker
head of later this week.
Speaker 15 (42:39):
Yeah, so Apple is the one where I'd say the
sentiment is by far the most negative. There are sort
of a lot of headwinds that are being stacked up
against it. It does not really have a strong AI
strategy or product. It faces the most exposure to TERRIF
related issues. It hasn't been growing, you know, certainly not
at the pace of some of its big tech peers
for quite an extent period of time, and the evaluation
(43:02):
is still on the higher end of things, especially for
a lot of two companies that are growing much faster,
So certainly the picture there is a lot more cautious.
I guess the flip side of this is maybe it's
a lower bar. Maybe expectations are so low that they're
able to kind of jump over there. But that's one
that I think there are a lot of question marks
on this quarter.
Speaker 4 (43:19):
Meanwhile, after the bettle tomorrow we get Spotify, which is
that fifty six percent Here today round Vaselica, we have
you across all the earnings. Thank you so much for
breaking it down. Meanwhile, that does it in this edition
of Bloomberg Tech.
Speaker 3 (43:30):
Ed, Yeah, I feel like there's a lot of tension
in the week, Like we've really set it up to
be huge recap some of that hype, maybe some of
that excitement to the week to come on the podcast.
You know where to find it and all the platforms,
it's everywhere.
Speaker 2 (43:43):
But I don't know, that's just how it feels. It
feels like everything's a little bit tense.
Speaker 4 (43:47):
Macro Micro Earnings got a little bit of tariff anxiety
coming into August the first It's plenty.
Speaker 5 (43:53):
To digest stick with us for the week. This is
BlueBag tech.
Bloomberg Audio Studios, Podcasts, radio news. Bloomberg Tech is live
from coast to coast with Caroline Hide in New York
and ever Low in San Francisco.
Speaker 2 (00:22):
This is Bloomberg Tech.
Speaker 3 (00:24):
Coming up, Samsung will produce AI chips for Tesla in Texas,
a new multi year deal worth sixteen point five billion dollars.
Speaker 4 (00:32):
PA's the US and E you agree on a deal
that we'll see the bloc face fifteen percent tariffs on
most of its exports, including chips and cars.
Speaker 3 (00:41):
And what to expect from the big tech earnings coming up?
With Microsoft, Meta, Apple, and Amazon all reporting this week.
Speaker 4 (00:49):
That is a huge market capitalization that we watch out
for in terms of those megacaps coming with earnings ed, we're.
Speaker 5 (00:56):
On ten hooks ahead of it. So we are fading
some of the.
Speaker 4 (00:58):
Rally that we've seen in big today, we're still clinging
on to gains and now's that one hundred and a
new record high. We're up a third of a percent,
But those rallies.
Speaker 5 (01:05):
That we saw in Europe have faded completely.
Speaker 4 (01:07):
We're in the red as that fifteen percent tariff looks
ugly on the EU side of things, but you're digging
into the micro stories today.
Speaker 3 (01:14):
Yeah, Tesla and Samsung in this arrangement to make AI
chips in Texas is driving markets. Tesla's gains have really
accelerated up three point eight almost four percent overnight in career.
Speaker 2 (01:25):
Look at Samsung shares.
Speaker 3 (01:27):
It's for the AI six chip, the next generation of
full self driving silicon that goes into the vehicles. Samsung
already does quite a lot with Tesla on prior generations,
and at the same time Tesla has some diversifying and
some hedge with TSMC. But this is a big one.
Elon must has been talking about it on X of course.
Speaker 5 (01:47):
Funny that.
Speaker 4 (01:48):
Well, let's get the inside track with Peter Elstrom, who
joins US now for more on this. This is a
vote of confidence in Samsung's chip manufacturing when it had
been losing market share.
Speaker 6 (01:57):
Peter, Yeah, that's exactly.
Speaker 7 (02:00):
Samsung, of course makes a whole bunch of things, including smartphones.
They've really made most of their profits, though recently, out
of their semiconductor business. They're the leading maker of most
memory chips out there, but they've been trying to build
this foundry business so that they could compete with TSMC,
compete for some of that high margin business from the
likes of Nvidia and Apple, and now what they've got
(02:21):
is really a marquee customer in Tesla where they can
point to them and say, hey, Tesla is trusting us
with the ability to make their high end chips, these
AI six chips, as Ed was mentioning earlier, which is
very important for their self driving technology, which they hope
to really bring on enforce next year and the year after.
Speaker 6 (02:39):
So for Samsung, this is a big step forward. It
is a decent amount of money.
Speaker 7 (02:44):
As we were talking about, it could increase their growth
in the foundry business by about ten percent. But probably
more importantly than that is the strategic importance of being
able to say they have this big marquee customer for
the foundry business.
Speaker 3 (02:56):
Bloomberg broke the story that it was Tesla that was
this at that time unnamed marquee customer, and it was
interesting because Elon Musk actually gave us a lot of
detail on social sixteen point five billion dollars over multiple years.
But Musk seems to be indicating it's bigger than that,
and also Peter, he talks about why it's important that
it's in Texas, he seems to be suggesting that his
(03:18):
proximity to the fab means that Tesla can be involved
in the engineering and the ramp, but that he himself
can wander the lines himself.
Speaker 6 (03:28):
Right, Yeah, how.
Speaker 7 (03:29):
Many businesses can Elon must get involved in Now apparently
he's going to do semiconductors too. Yeah, it's quite interesting
that he has said. He says that this deal allows
him to be able to be personally involved, intimately involved,
to be able to walk the lines and help with production.
I don't know how much he knows exactly about semi
conductor manufacturing, but you can imagine that having such an
(03:49):
important customer there on premises is going to put some
pressure on them to be able to build out quite quickly.
Now it's important to kind of step back here. Of course,
the US has been trying to rebuild their semi conductor
industry for a number of years. We saw the Biden
administration come out with the Chips Act that offered thirty
nine billion dollars in incentives. Samsung is one of the
big beneficiaries here, and one of the reasons that they're
(04:10):
expanding their capacity in Texas is specifically so that they
can supply US customers they're going to skirt their way
around the Trump tariffs if they're able to produce within
the country, and Elon Musk will be able to go
there to Texas to be able to try out some
of these things and then use them in the self
driving technology.
Speaker 6 (04:26):
So it is a step.
Speaker 7 (04:27):
Forward for that Chips Act and that effort to kind
of rebuild the domestic industry. TSMC and Intel are both
also beneficiaries of that effort.
Speaker 4 (04:35):
It is interesting, though, isn't it that it is overseas
manufacturers building in the US that are able to make
big tech win in terms of the chip supply chain.
What surprised me was also how integral, of course, Samsung
is once again to the COSPY. I think the costpy
the South Korean Index is one of the best performers
globally this year. Sk Heinex has a lot to thank
for it as well, though.
Speaker 6 (04:57):
Right yes, Skhynix has jumped out ahead.
Speaker 7 (05:00):
In the memory chips that are most used for AI,
these HBM memory chips. They've actually gotten quite a bit
of Samsung ahead of Samsung on that front, which is
a bit of a blow to Samsung, But Samsung is
making some progress kind of climbing its way back trying
to get authorization to be able to sell those HBM
chips to in Nvidia, which is the most important partner
at this point.
Speaker 6 (05:20):
But you've brought her a point.
Speaker 7 (05:21):
Yes, it's really TSMC has been leading the way in
advanced chip manufacturing. It gets that high margin business from
Nvidia and Apple right now and many other customers. There
were many hopes within Washington that the next competitor in
that foundry business would be Intel.
Speaker 6 (05:35):
They have not made that progress. We saw that last
week in the.
Speaker 7 (05:38):
Earnings report in Bhutan's questions about whether maybe he's going
to pursue that foundry business. But we're seeing that Samsung
is emerging is probably the strongest alternative to TSMC. Everybody
in the industry wants some competition in that market. They
don't want to just have TSMC making the most advanced
chips in the industry.
Speaker 6 (05:56):
They want to have some alternatives.
Speaker 7 (05:58):
Whether it's Samsung, whether it's Intel, there it's somebody else.
Speaker 3 (06:02):
Got a lot of questions about those alternatives have been
in both Peter Els from Thank you very much to
dive into all of this with Michael Green, chief investment
strategist and portfolio manager at Simplify Asset Management, which has
over eight billion dollars in assets under management. And it's interesting.
I want to take advantage of the timing, Michael. Last
time you were on, we were talking about Elon Musk
alienating himself from.
Speaker 2 (06:21):
Both political parties.
Speaker 3 (06:22):
If you remember, now, this is an example of a
leading American company, an individual, and Elon Musk doing a big,
big deal over multiple years with a foreign technology company
to onshore industry in this country. What do you make
of that in the economic opportunity it presents.
Speaker 8 (06:43):
Well, I think this is actually the tension that exists
right on shoring into America, particularly bringing back high value
added tech tech manufacturing like chips that's not going to
overly stress the labor force that has relatively low employment levels,
but a large fiscal impact and a large impact. This
is fantastic and it's exactly what we would hope to
(07:04):
see under a Trump administration, raising the costs of companies
doing business abroad and shipping stuff to the United States.
Speaker 2 (07:11):
How successful it's going to be.
Speaker 8 (07:13):
As was alluded to earlier, these are two companies that
are both kind of struggling in their respective fields that
have announced a major investment. Is it enough to bring
both companies significantly higher? Clearly the stock market thinks that
it's helpful. I don't see how it's not, but it
still is something that remains to be seen in terms
of its long term impact of.
Speaker 3 (07:35):
The contract manufacturers. We mentioned Samsung, TSMC, and Intel.
Speaker 2 (07:40):
Which do you like and why? Well?
Speaker 8 (07:43):
The quick answer is is that I'm a strategist. I
don't spend as much time on the individual securities. It's
very hard to argue with TSMC's overall technical lead in
the space. They have managed to build an extraordinary business
that has slowly taken out competitors like Intel and for
that matter, Samsung. You know, they're all extremely capable. This
is an industry with tremendous growth, But if you're putting
(08:05):
bets on change, you have to look at companies like
Samsung et cetera to undercut or Tesla. The whole story,
effectively is the increased competition is coming for both TSMC
and in video. I think that's probably the biggest takeaway
on this.
Speaker 5 (08:21):
Give us the.
Speaker 4 (08:22):
Broader context here then, as a strategist as well, Michael
as to how over exposed investors are written large on
the semiconductor space, semiconductor equipment. More broadly, I'm looking at
how Goldman at the moment is saying the US prime
book is really heavily weighted and overexposed to that, and
we've seen judge funds of particular dial back ahead of earnings.
Speaker 8 (08:43):
Yeah, you definitely have seen that. And one of the
factors that we've seen in this rally as it has
extended off of the April thows, has been extraordinary retail
participation and dramatic increase in the quantity of margin that
is being utilized, and equally important, a dramatic decline in
the quantity of short end That's really what's hitting the
hedge fund positioning because they tend to have that bias
(09:05):
of being long the more quality oriented name short the
shorted names. That's causing distress in the hedge fund space.
That I think it's causing them to take all exposures
down as compared to isolating to particular risk for those
leading companies. I think most people anticipate that this earnings
report this earning season is going to be relatively favorable,
(09:26):
if for no other reason than the stocks are near
all time highs. That lowers the incentive to introduce special
charges or anything else that you would classify. So I
think most people are actually expecting a pretty good earning season.
It's just market conditions are extraordinarily difficult for hedge funds
right now.
Speaker 4 (09:43):
They've got to be pretty perfect these earnings for us
to live up to the hype in a way, Michael.
But what's also so clear is that hedge funds have
been under exposed to software services.
Speaker 5 (09:53):
Does that change in the nattern.
Speaker 8 (09:55):
Well, I think ultimately that hedge funds are going to
follow whatever is working. So if it can take we
continue to see under performance in the high quality hardware space,
or the impressive performance that we're seeing from cyclicals right
now versus defensives, you will see hedge funds ultimately rotate
because they are more interested in making money than they
(10:15):
are in being right.
Speaker 4 (10:18):
Oh, there's always the quandary. Michael Green from Simplify Asset
Management putting it straight on where the focus has to
live for hedge funds right now? Coming up, We thank
him and we move over to Victoria espanel or the
Business Software Alliance, just talking about how software has been
a bit unloved.
Speaker 2 (10:33):
But where are we.
Speaker 4 (10:34):
Going to be seeing the differences in regulations across the globe.
How is that impacting software companies and the approach to AI?
Speaker 5 (10:40):
This is Bloomberg tech.
Speaker 6 (10:58):
So I just want to go grow you.
Speaker 7 (11:00):
I think it's I think it's great that we made
a deal today instead of playing games.
Speaker 2 (11:07):
And maybe not making a deal at all.
Speaker 5 (11:08):
I think it's I'm going to.
Speaker 9 (11:11):
Let you say, but I think it's the biggest deal
ever made.
Speaker 3 (11:15):
I was President Trump there speaking in Scotland. Many of
the details from the US EU trade deal are still
to be announced. The semiconductor industry, though, rallying on the
news that it will not face a separate tariff rate. Instead,
it will be included in the fifteen percent rate applied
to all EU goods exported to the United States. Want
to get out to Washington, d C. And Blumbo's klie
(11:36):
lyones give us the details of what we do know
what was agreed, and the President saying there it's the
best deal he's ever done.
Speaker 10 (11:44):
Yeah, the biggest deal ever made, to use the president's words,
ed I'll leave that up to determination as to whether
or not that is actually true. But of course this
is a big win for Europe, which was facing the
threat if a thirty percent tariff come Friday August first,
if this deal was not struck, fifteen percent obviously a
much lower rate than that, And key here is really
the fact that they got that fifteen percent rate to
(12:05):
apply to sectors in particular, not just automobiles, but as
you mentioned, also semiconductors and pharmaceutical tariffs, which of course
there is a Section two thirty two investigation underway into
both of those sectors already, in which the end result
could be that other non EU countries face a higher
teriff rate than that on those specific materials. Europe was
able to secure a fifteen percent rate that will be
(12:27):
applicable effectively across the board, but the exception still of
steel and aluminum, which of course faces a fifty percent tariff.
Key to doing so, we understand, though no details are
yet on paper, we haven't actually gotten a formal readout
or or full list of what this deal actually will
entail beyond what we've been told and what officials familiar
have told Bloomberg. But key, according to sources familiar with
(12:48):
the matter, was the fact that Europe has also agreed
to make more investment into the United States as part
of this deal including six hundred billion dollars investments into
the US and seven hundred and fifty billion dollars of
purchases of a American energy over the course of the
next several years, in addition to what President Trump described
as vast purchases of US military equipment. So all of
(13:08):
that is what we understand this deal to essentially look
like in the broadest of terms, but we're still waiting
for that granular detail.
Speaker 4 (13:15):
And of course we assume and understand that there's a
carve out for chip equipment in particular where they face
a zero taris and on the asml is on the
highest side, Kanie. What's really interesting is pushing us forward,
is what this fifteen percent number means for the China
negotiations that's actually happening in Sweden.
Speaker 10 (13:31):
We understand, Yeah, they're underway in Sweden right now. It
will be two days of talks spearheaded by Chinese Premier
to Le fun as well as the Treasury Secretary Scott Besson.
They are underway. China, of course, already is facing a
higher tariff rate than most Twenty percent is the level
specifically applied in retaliation for the trade of fent and
all that is going to be something specifically that we
(13:53):
understand is one of the focuses of the US at
these talks. They're going to be talking about whether or
not China is actually able to tamp down on the
flow of fentanel out of the country, though China obviously
disputes that, saying it's a US domestic problem. But in
addition to trying to get that terifright lower, which there
may or may not be progress on the real crux
of these talks, as has been for the previous iterations
of this, as we've seen multiple rounds in the last
(14:14):
several months, is going to be around export controls. On
the US side, of course, that includes export controls of
critical technology including semiconductor and equipment for the manufacturing that
we've already seen some easing of that with the allowance
of H twenty chips from Nvidia to start flowing back
into China for export. But on the Chinese side, it's
really about rare earth and critical minerals that of course
they have a choke hold on at this time, and
(14:35):
it was been the easing of the flow of that
allowing American importers to get the licenses to actually bring
those critical minerals in that has been critical for advancing
this at least deston shall we say forward, which is
also going to be one of the key pushes for
these talks. The Treasury Secretary Scott Best and indicating one
of the primary outcomes they're looking for here is an
extension of the current troops that is in place beyond
(14:58):
the deadline that currently stands of August.
Speaker 4 (15:00):
Twelfth, been important for in videos h twenties as well
to get back into China. Bloomberg's Kylee lines brilliant wrap
up of all things trade.
Speaker 5 (15:07):
But let's get.
Speaker 4 (15:08):
More on how these deals and indeed developing global regulations
for artificial intelligence really impacting developers. Victoria Espinel's with our
CEO the Business Software Alliance and the context here Victoria
is one of the AI Action Plan announce why the
US government really to take on China and the AI
race that the US wants to win from a regulatory perspective.
(15:29):
How do you think the US is winning.
Speaker 5 (15:31):
Or not.
Speaker 2 (15:33):
So?
Speaker 11 (15:35):
I think there's a lot of good that's in the
AI Action Plan, but here is one part. You know,
there's a lot of conversation about who's going to win
the AI race, and a lot of that focuses on
who's going to be at the cutting edge of innovation,
and that is obviously important. But a conversation that is
just starting to happen that I think is will potentially
have an even bigger impact is who is going to
(15:55):
win the race on AI adoption. By that, I mean
which are the countries that are going to figure out
how to use AI best, Because it is those countries
that are going to see the biggest economic benefit from AI.
That is the race, and that is that is largely
up for grabs right now. I think the United States
has an advantage there, and I think the AI Action
(16:17):
Plan has a number of aspects that are focused on adoption,
But that race is up for grabs, and I think
that is going to be a big indicator of where
we see the biggest economic benefit over the next decade.
Speaker 4 (16:32):
So we're not focused, therefore, from your perspective on AI adoption,
on training talent to ensure that in enterprise we're actually
getting banged from a bot productivity actually goes up into
the right.
Speaker 11 (16:43):
So there are a few aspects that I think are
critical to AI adoption, and actually at BSA, we released
an agenda just before the AI Action Plan came out
earlier last week. The focus is on three aspects. One
is talent and workforce, and that is critical. I think
there's no aspect more essential. The second is infrastructure and data,
and the third is the governance framework and making sure
(17:05):
that we get that right. And those three elements are
things that the United States, but governments around the world
need to be figuring out right now if they are
going to win the race on AI adoption Victoria.
Speaker 3 (17:18):
Last week on the program, Michael Kratzios, who leads to
the Office of Science and Tech at the White House,
came on and he talked about packages that he sees
America being a net exporter of everything in the stack,
from hardware through to the models themselves. You were talking
about adoption a moment ago. How does America is an
exporter of AI fit into that.
Speaker 11 (17:41):
I think that's a critical piece. So a lot of
the innovation has happening here in the United States for
governments to be able to adopt AI, to have their
private sector using AI in a way that they get
the most economic benefit. A big piece of that is
going to be AI exportation from the United States and
There was conversation last week about the data centers and
(18:02):
the chips, but obviously an important element of that is
the software and the cloud services.
Speaker 2 (18:07):
Because it is literally.
Speaker 11 (18:08):
Not possible to adopt AI unless you have cutting edge
cloud services, unless you have cutting edge software, and a
lot of that's going to be coming from right here
in the United States.
Speaker 3 (18:18):
There was also a discussion about copyright, and the President
talked about.
Speaker 2 (18:22):
This during his address.
Speaker 3 (18:24):
Given that you kind of represent more the software side
of the stack, how did you think about that, you know, Karen,
and I increasingly comes up in the show. Is a
point of priority, particularly for the frontier model or just
model makers generally.
Speaker 5 (18:38):
It's a big issue.
Speaker 11 (18:39):
It's an issue here in the United States and in
other markets as well. So, as you know, in the
white Hat and the AI action plan that was released
last week, there's not a lot of discussion of the
copyright issue specifically, but the President and his public remarks
spoke to it quite forcefully in terms of the importance
of training data and for the AI builders to be
(19:01):
able to get that training data and use it with
relative e So he was very very clear on that aspect,
and that's something that we are anticipating seeing the White
House say more about and the next year or so.
But the President was very clear in terms of his
opinion on the importance of training data and how important
that is for the United States to stay ahead of
(19:21):
the AI race with respect to China.
Speaker 4 (19:23):
Briefly, Victoria, today's day, we focus on the EU. It's
smarting today in terms of competitiveness. They're worried about fifteen
percent tariff. How much should they be worried about their
own EU AI act on competitiveness.
Speaker 11 (19:36):
So again, I think the EU has huge potential opportunity
to benefit from AI if it starts focusing on adoption,
and part of that is addressing some of the digital
sovereignty barriers that.
Speaker 5 (19:47):
The EU has put up. There are aspects of the
trade dealers.
Speaker 11 (19:51):
You know, the details of the trade deal are not
yet fully public, but Ambassador Greer was talking just this
morning about looking at things like mutual recognition of cybersecurity,
of streamlining regulations, of steps that Europe can take, and
those steps are important not just for US software providers
but for the EU if they are going to be
(20:12):
able to adopt and use AI effectively.
Speaker 3 (20:16):
Victoria Espinew, CEO of the Business Software Alliance. Thank you
very much. We have some breaking news crossing the Bloomberg terminal.
FIGMA is boosting the pricing of its IPO to thirty
to thirty two dollars a share, previously seen the IPO
at twenty five to twenty eight dollars per share. Remember,
Figma is trying to raise just above a billion dollars
and they had this kind of auction style process where
(20:38):
they went to prospective investors and said how many shares
do you want and how would you price them? The
logic being carro that they want to try and get
near to that twenty billion dollar valuation that Adobe had
valued becoming out when it had tried to buy it. Now,
the IPO, which we think will price on Wednesday to
recap pricing between thirty and thirty two dollars a share.
Speaker 2 (20:57):
We'll keep a close on it throughout the week.
Speaker 4 (20:59):
And that previously mark to range added at a market
cap of about sixteen billion at the top end, So
we do the math.
Speaker 5 (21:04):
Coming up AI competition.
Speaker 4 (21:06):
Sees the rapid releases of free open source models.
Speaker 5 (21:09):
More on that next. This is Bloomberg Tech.
Speaker 4 (21:20):
It is time now for talking tech and first up
open AI rival Jupu has released.
Speaker 5 (21:24):
Its biggest open source models to.
Speaker 4 (21:26):
Date, and the Chinese startup unveiled hybrid reasoning models GLM
four point five GLM four point five air. It's ready
to sto update to the company's of flagship models as
it joins a growing number of Chinese firms ramping up
free AI offerings.
Speaker 5 (21:39):
Plus PayPal well it's.
Speaker 4 (21:40):
Set to allow businesses to accept crypto at checkout. Over
the coming weeks, company will introduce more than one hundred
cryptocurrencies like Bitcoin and ethereum as payment options for merchants.
According to PayPal, the pay with crypto transactions settle instantly
will initially cost zero point ninety nine.
Speaker 5 (21:54):
Percent per transaction.
Speaker 4 (21:56):
And TDK, one of the biggest suppliers of iPhone batteries,
says it is closely monitoring the tariff impact globally due
to their worldwide operations and the importance of relative tariffs
compared to other countries, and the tdkco spoke exclusively to
Bloomberg about how the company is seeing the trade deal between.
Speaker 5 (22:12):
US and Japan.
Speaker 7 (22:14):
Who need to keep money done in the other cases,
not only you know needed to here in Japan, but
also the other countries.
Speaker 9 (22:22):
I hope that the impact right will be is going
to be minimized, but it's actually out of the contour.
Speaker 3 (22:31):
The TDK CEO then are coming up. Tech IPOs could
be making a comeback. We speak with mattwick Eler of
Wellington Management on the landscape for going public conversation that
you do not want to miss.
Speaker 2 (22:43):
That's right next, this is Bloomberg Tech.
Speaker 5 (22:55):
Welcome back to Bloomberg Tech.
Speaker 4 (22:56):
Quick checking on these markets that are still at record
highs when you think about the one hundred, but we
are fading this rally a little bit up three tens percent.
Speaker 5 (23:03):
We've got eleven trillion.
Speaker 4 (23:04):
Dollars worth of market capitalizations on.
Speaker 5 (23:06):
Deck this week in terms of earnings. We've also got microdata.
Not to mention trade when the August.
Speaker 4 (23:11):
First end of this week is that so called deadline
for the tariffs and we get in clarity on tariffs
with the EU fifteen percent. Germany it's smarting, it's feeling
that's anti competitive to some of its key industries. We're
off by a quarter of a percent, but dig into
some of the details and the individual movers. I want
to shine a light that the market capitalization in video
is once again climbing above that four trillion dollar level,
(23:31):
and it was a key contributed to the upside of
these benchmarks. Test of two in terms of points up
three point six percent, sixteen and a half billion dollar
deal to make chips via Samsung in Texas. The AI
six chip is on deck, and that is both embolding
in Tesla investors as well as Samsung today. But ASML
up two and a half percent key semiconductor equipment maker,
(23:53):
there's a carve out zero percent tariffs for these sorts
of parts of the chip sector, and we also get
clarity that look, semiconductors will fare that fifteen percent tara
for the time being.
Speaker 3 (24:02):
Ed on a Monday morning, sometimes you just got to
look at the calendar and just say, all right, what
am I in for this week? We'll investors are bracing
for a busy week of tech earnings, with Microsoft, Meta, Apple,
and Amazon all reporting in a forty eight hour twenty
four hour period.
Speaker 2 (24:19):
Bloombos, Carmen Rianky's with us and Carmen.
Speaker 3 (24:21):
I have to congratulate you as well because one of
the best headlines I've seen on the Bloomberg terminal s
and P five hundred rally faces eleven trillion dollar gauntlet
of big tech earnings. The headline tells us the story,
but we're braced for a very, very concentrated and busy period.
Speaker 12 (24:38):
Yeah, it's true. So we have Wednesday and Thursday or
the big days this week, and honestly, we're going to
see a little bit of the bifurcation I think that
we've seen in the meg seven this year really play
out this week. So on Wednesday, we have Microsoft and Meta,
which have been two of the biggest point leaders on
the SMP and really driven the rally, especially from sort
of that April traff that we saw.
Speaker 2 (24:57):
Those are going to report.
Speaker 12 (24:58):
On Wednesday, And then on Thursday we have Apple and Amazon,
and these two companies have been under a little bit
more scrutiny. Investors aren't quite as sure. Amazon I think
is about flat on the year, while Apple stock has
rallied a lot from April. It's down about fifteen percent
year to date. So people will really be watching to see,
especially what they say about AI, what their plan is
(25:18):
for using artificial intelligence going forward, and also what the
impact is with China. They are the company that has
the most exposure, especially out of the Magnificent seven so can.
Speaker 4 (25:28):
You common detail a little bit of how investors are
going into this week. We know that hedge funds have
actually been dialing back some of their exposure to some
of the big technas because they have been such windows
and because valuations are so high.
Speaker 5 (25:41):
Have we seen a little bit of more quotient coming
into this I think so.
Speaker 12 (25:44):
I mean, the bar is set so incredibly high, and
something that's interesting is that Earning's expectations have actually come
in a little bit for this group of companies from
the last report. I think they're expected to deliver Earning's
growth of about sixteen percent quarter or corder down from
nineteen percent. There is a little bit of a lower
bar in terms of like clearing it, but that makes
(26:04):
it all the more important that these companies do beat
in rais, especially to extend the rally in their stocks.
They really have to prove that they can deliver and
that their valuations are worth paying for. As you said,
they're very stretched. Some of these companies are at or
near all time highs. But we also have a second
group of companies that are not. Like I just said, Apple,
(26:25):
you know, is still fifteen percent office all time high.
Amazon is off its record high. Those companies also though,
have to deliver and they could be really important to
extending the rally in this S and P. You know,
Apple is one of the biggest companies in the index,
and so if it you know, think about where we
could be if it were to pick back up and
sort of see a reinvigoration in its stock. So people
(26:46):
are definitely really watching the earnings this week, and I
think just there is a very high bar as always
for these companies.
Speaker 3 (26:55):
Common just give me a little bit more on those
latter points. There's two charts in the story about the
points contraby of the key names to the upside and
the downside, which I think is hat a beautiful illustration
of the story, but also profit estimates mag seven stripped
out from the S and P five hundred. That just
sets a really high bar, Like, what if it all
goes wrong for Microsoft later in the week, then at
(27:15):
the index level, we're going to have some I don't know,
let's call it turmoil.
Speaker 12 (27:18):
Yeah, definitely. I mean, we know that these companies are
the heaviest weighted, they are the biggest point gainers. So
Microsoft and Meta I think are two in three, in
Vidia being number one so of course there could be
huge hamifigations if these companies don't deliver. We've also seen
from last week with Alphabet and Tesla that companies that
do beate and raise are getting rewarded. They're seeing their
(27:39):
shares go up. Well, companies that don't are getting punished
by investors, they're you know, selling off. So it's a
super important going forward and it'll be really interesting to
see how it plays out.
Speaker 4 (27:50):
Come and Ranicky, we thank you so much a week
to brace ourselves for Let's just stick with the public market.
So I talk about a potential newcomer. All ours are
on Figma going public this week. We're now seeing it's
IPO pricing between thirty to thirty two dollars a share,
increasing the size of its offering to about one point
two billion and a fully diluted value of as much
as roughly eighteen billion dollars.
Speaker 5 (28:10):
So I tech IPO is coming back. Let's discuss it.
Speaker 4 (28:13):
The Matt we've had it who leads late stage growth
at Wellington Management, which's got a cool one point three
trillion dollars in assets under management. Part of that is
private and that is under your remitt Are we going
to see the windows crack open broader because you sat
here in August at twenty twenty four and we were
hoping the same thing.
Speaker 13 (28:32):
We were hoping that and I think where we sit
today is the VC backed IPOs are coming and you
see it in FIGMA, and I think it's because we
really had three conditions met in the past year. The
first one was we had stability and interest rates that
kind of started at the end of last year when
the FED said that they're not going to raise anymore,
(28:52):
started to cut and now forecasting to cut some more.
So first thing was rate stability. I think the second
thing that we got was we had a public market
that is relatively stable and at records, yeah all at records,
and with a VIX that's at twelvemonth low almost so
stability in the public markets despite the bump in April.
(29:13):
And I think the third piece that we had was
we had companies actually go out and go out successfully.
We had Circle, we had Core Weave, both those are
up big. And we also had smaller companies companies like
e Toro and Almada Health that performed very well in
the public markets. And so those three conditions I think
set up for a really exciting backout of this year.
Speaker 4 (29:33):
A lot of those had flavors of regulatory tailwinds. When
I think a crypto or the AI trade that just
keeps on being a winning formula. Do you need those
within the portfolio companies to go public or do you
just need to be profitable revenue generated.
Speaker 13 (29:47):
I think you need to benefit from some of those
trends that you mentioned before. I mean, I'd coined to
a Figma, which, as you just discussed, raised its range.
It's not a pure AI play by any means, but
does will leverage AI in its capabilities, and I think
that that helps promote and will help pricing of these
companies as they go out.
Speaker 3 (30:08):
It's really great to have you back on the program.
We were just reflecting on the mechanism that Figma's using.
We're calling it an auction like mechanism where they go
to prospective investors and they say, well, how many shares
do you want to buy and what price would you set?
Which I'm not as familiar with. But if you are
like a late stage growth investor, right, you're almost like
an ancho investor going into some of these companies pre ipo.
Speaker 2 (30:30):
How do you respond to the auction, so to speak.
Speaker 13 (30:33):
Well, I think you have to respond to where the
market is setting the price. And I think that in
today's environment, with as we discussed, the market backdrop that
is kind of at all time highs, the response that
the collective group will make, I think is such that
it will continue to raise pricing expectations for high profile
companies that are benefiting from AI to some degree, like Figma.
Speaker 3 (30:58):
I called you an almost like anchor investor. When Wellington's
name comes up in my world, it's kind of like
that late stage that's pre IPO.
Speaker 2 (31:06):
Is that your strategy, Matt, that's right.
Speaker 13 (31:09):
Let's find the next generation of great public companies and
invest in them while they're private. Because these companies twenty
or thirty years ago, companies like Figma would have been public.
They would have gone public at a billion dollars in
market cap and grown to the eighteen billion that they're
now raising their expected market cap to and done that
in the public markets, not in the private markets. But
(31:29):
if you look at how the market's change, the market
has changed such that these companies are staying private longer,
not foregoing an IPO, just delaying the IPO. And that's
the role that we can play is to help those
companies go from great private companies.
Speaker 4 (31:42):
To great public I mean, Klana, we all still wait
and we watch, and that's in your portfolio business. But
what I'm really interested is as a late.
Speaker 5 (31:48):
Stage investor, what are the metrics now?
Speaker 4 (31:51):
Because these companies fueled by AI are growing at such
a rapid rate that suddenly they're already one hundred million
ARR generating.
Speaker 5 (31:58):
And but if you call it is what meets your criteria?
Speaker 13 (32:02):
I think it's a great question and something we talk
about a lot, because, as you point out, AI is
just fueling so much revenue growth at unprecedented pace. Do
you think about a company in the model space like Anthropic,
They're rumored to have gone from a billion of ARR
to four billion of ARR.
Speaker 2 (32:17):
In six months, so four.
Speaker 13 (32:18):
Exiting their business at scale?
Speaker 2 (32:20):
So what do we look for?
Speaker 13 (32:21):
We are really focused on companies in the AI space
that we think can be both durable and defensible. So
durable meaning can these companies be ongoing businesses not in
six or twelve months from now, but in five.
Speaker 2 (32:35):
Or six or ten years from now.
Speaker 13 (32:37):
And then defensible can they build on top of something
that is not easily copyable.
Speaker 4 (32:44):
And then I think of desiq, glean Vanta, some of
the rounds you have recently led a lot of us
in the enterprise. Is that really the sweet spot at
the moment, how we bring generative AI productivity into enterprise
rather than consumer For.
Speaker 13 (32:56):
You, I think that is a really key observation, which
which is how does the enterprise software stack benefit from
AI and really leverage AI?
Speaker 3 (33:07):
That was Hyler of Wellington Management. It's really good to
have you back on Bloomberg Tech. Really appreciate it. Now
coming up on the program, we're going to hear from
Ali Barba, Cloud founder Wang Jian as the company navigates
a global.
Speaker 2 (33:18):
AI talent war. You want to miss that one. This
is Bloomberg Tech.
Speaker 11 (33:38):
Now.
Speaker 4 (33:39):
And over the weekend, did you see it, China hosting
the World Heyhi conference in Shanghai. We've got to show
our audience robotics front and center. Some of them boxing
like we see here, some of them pretty messily dispensing drinks.
Speaker 5 (33:51):
They are even playing the piano.
Speaker 4 (33:52):
But like you're the person sitting down there with some
of the leading robotics and humanoid make us here in
the US. And it's interesting that in the story, really
are particulating. The US isn't there with a cost effective competitor.
Speaker 3 (34:04):
Right now, but with this event in China, right there's
the bit that's for show. It's just like CS or
GtC where you put all of this cool tech in
one place.
Speaker 2 (34:13):
But the forecasts are.
Speaker 3 (34:14):
That this is going to be an industry in the
trillions of dollars by twenty fifty, twenty thirty whatever.
Speaker 2 (34:20):
The skepticism in.
Speaker 3 (34:21):
The story, which I really appreciate, is like how much
is this is translatable to the real world. But China,
as we keep hearing from Jensen Wang and everyone else,
has has leading researchers in the field of AI and
an amazing supply chain for robotics because they can control
it domestically.
Speaker 2 (34:38):
That seems to be a big theme it is.
Speaker 4 (34:40):
I'm showing we didn't get too many backflipping dogs in
that VEO for you and some of those pictures, but
apparently they were there.
Speaker 2 (34:46):
Yeah, the robots are coming.
Speaker 3 (34:48):
The battle for AI talent is creating huge pay packages
as Silicon Valley and Beijing battle for AI dominance. Bloomberg's
Annimal Drulers spoke exclusively with Ali Barba Cloud founder Yang
Jian on the global AI talent war.
Speaker 9 (35:03):
I don't think it's it's the let's see, it's a
typical way of doing seeing it, Okay.
Speaker 6 (35:10):
I would say that.
Speaker 2 (35:11):
The reason very simple.
Speaker 9 (35:13):
You know, example, when I when I study, uh, the
the Alibaba cloud. You know, the first thing I did
that was in the Tucson eight. The first I did
to via the city media and to try to get tenant. Okay,
mm and uh and after talking to all the people
(35:34):
and you realize, actually we don't have much of talent
there because.
Speaker 2 (35:38):
It's new okay.
Speaker 9 (35:41):
So and also with some of the talents it's just
too expensive okay and uh to it film basically means okay, uh,
you don't know whether the cob bas is there. Why
need to hide? Why when need to hide these people?
So it's really about the innovation. So when you're in
(36:01):
the early stage of innovation, I don't seek the talent
is a problem because you know they have the only
thing you need to do is to get the right person,
not really the expensive person. Because if a new business,
if it's true innovation, that basically means talent, nobody care
about them. Okay, lot they're working on that. So for
(36:23):
the today, what happened for the matter is because they
are very much focused on the existing success of the
business and existing its average on technology.
Speaker 2 (36:36):
That's the that's that's that's that's.
Speaker 6 (36:38):
My real Okay.
Speaker 9 (36:40):
So I think we have a tremendous opportunity to look
at technology nobody knows today and these talent.
Speaker 2 (36:48):
These are talent.
Speaker 6 (36:49):
But but these are.
Speaker 9 (36:52):
I can't say it's cheap, but but it's you. It's
available for you.
Speaker 6 (36:56):
Okay.
Speaker 9 (36:57):
So that's really about the vision. You know, where you
want to, where you want to go, and there's a
lot of similar things you know, happened during the last
twenty years. Also, whenever everybody knows that these are talent
and it's better for you not to get in and listen,
(37:18):
that's not you, that's that's my That's much like personally
that I hide assulting now he had he's the leader
for the Queen. Okay, you probably met him, you know
when you're in Hantle. You know, I personally interview him,
you know, fifteen years ago.
Speaker 2 (37:35):
Have we got talent?
Speaker 6 (37:36):
Now he's leading the Queen.
Speaker 13 (37:39):
Yeah.
Speaker 2 (37:40):
So that that's so.
Speaker 10 (37:42):
There's not really there's not really any justification that it
sounds like you think for for such.
Speaker 9 (37:49):
That's not you know, what the mad you know, I'm
sorry that what what the what happened in Silicon Valley
is not the.
Speaker 6 (37:56):
Winning formula. That's what I that's what I believe, you know.
Speaker 4 (37:59):
Yeah, Ani a Bubba Cloud founder, Wang Jian there speaking
with Bloomberg's Annabel Drulers. And let's stay on those rather
expensive AI highs happening at Meta in his name, Shengjia Jao,
it's chief scientists for its new superintelligence AI group. Joao
joined Meta in June from over AI.
Speaker 2 (38:17):
For more.
Speaker 5 (38:17):
Let's bringing Kurt Wagner.
Speaker 4 (38:19):
And let's just go through the leadership here, because as
Alexander Wye Wang of Scale AI, then there's a chief scientist,
and Ya La Kum is somewhere as well.
Speaker 14 (38:29):
Yeah, that's right. It's been a total re or Caroline
in the last couple of months. So there's obviously Mark
Zuckerberg at the top, and I do mention him specifically
because he's incredibly hands on with it when it comes
to Meta's AI related to projects. Alexander Wang, the Scale
AI co founder who they just sort of brought over
in June after that massive investment they made in Scale AI,
shengjia Jao. You just mentioned the new chief scientists of
(38:51):
this super Intelligence Labs.
Speaker 2 (38:53):
Basically that's the group internally that's going to.
Speaker 14 (38:56):
Hopefully for Meta, develop this new model that will be
super intelligence, right, that will achieve that human level of capability.
And then Jan mccun is still at Meta. He is
still a chief scientist by title as well. He is
running the Fair Group, which is the AI research.
Speaker 2 (39:12):
Division of Meta.
Speaker 14 (39:13):
They were very clear over the weekend and on Friday
that lacun is still there, still doing the research for Meta.
Speaker 3 (39:21):
I'm grateful you. You talked about Zuckerberg's role right. This
announcement at the end of last week was on his
social media platforms and channels. Personally, do we know if
the team is finished like the Avenger has been assembled
and that they're done now or are they still out
there in the marketplace trying to find more people.
Speaker 14 (39:39):
I believe they're still hiring. When we originally broke this
story back in June that the super Intelligence Group was
being brought together, we had heard that they were going
to be around fifty people was the target. I've been
keeping a spreadsheet ed I'm up to like thirty or so,
so you know, we're maybe a little over halfway done.
But I do think clearly they're at a point where
they feel that they have a large enough group that
(40:01):
they can start talking about as publicly, start talking about
the chief scientists, things like that. But I don't think
we're necessarily at the end of the road for hiring.
I would think they would hire, you know, no matter
how many people they get, if they're getting good people.
I think Mark Zuckerberg has made clear this is a
collection of talent, and I'm not sure that he's going
to simply be like, oh, we've hit fifty, therefore we're
going to say no to other good people. I'm sure
(40:23):
they'll bring as many good people in the door as
they can.
Speaker 3 (40:26):
We're actually about talking a little bit more about earnings,
and lots of investors thinking that the cost of talent
is going to be something that comes up. Bloomberg's Kutwagner,
great reporting, Thank you very much. Now coming up, what
to expect from the big tech earnings that are coming
up later this week. There are many of them. They're important.
We'll be right back. This is Bloomberg Tech. Back to
(41:00):
the big week of tech earnings ahead and here so
talk about what to expect. Bloomberg's Ryan Lasleica and across
the equities team. We've done a lot on the terminal
this morning to get us ready for the week. Let's
just start with the calendar. What's coming our way over
the next four or five days.
Speaker 2 (41:15):
Hey, thanks for having me.
Speaker 15 (41:16):
So we have four real highlights coming out this week.
We have Microsoft, we have Meta, followed by Apple and
Amazon on Thursday, so four of the maxifice and seven
following Alphabet and Tessa last week. So obviously just a
huge week for earnings. We're going to get a lot
of detail about AI, about growth rates, We're going to
(41:36):
get some more insight into the impact of tariffs.
Speaker 2 (41:39):
It's going to be a lot going on this week.
Speaker 4 (41:41):
There is, and I'm wondering how analysts and investors are
like to set themselves up for what ultimately has to
be perfection. It feels like if you're an Alphabet or
Tesla or anything to read across.
Speaker 15 (41:50):
From So I would say that when it comes to
Microsoft and Meta, both of these companies have been performing
extremely well this year, and these are two companies that
are really seen being at the cutting edge of AI
and among the companies that are showing among the early
benefits in terms of an ROI and all their AI spending.
Now we're going to be also looking to see how
much these companies are spending going forward. Their CAPEX plants
(42:13):
are going to be a real focus this week. Last
week we did see Alphabet come out, come out and
really increase its CAPEX. Target markets seem pretty okay with that,
suggesting that if they're able to justify this level of spending,
they're not going to get dinged by that. So that's
a real focus for Meta and Microsoft, which I believe
both report on Wednesday.
Speaker 2 (42:30):
You also have a street.
Speaker 3 (42:31):
Wrap from the Terminal about the cell size sentiment toward Apple.
How is the feeling right now about the iPhone maker
head of later this week.
Speaker 15 (42:39):
Yeah, so Apple is the one where I'd say the
sentiment is by far the most negative. There are sort
of a lot of headwinds that are being stacked up
against it. It does not really have a strong AI
strategy or product. It faces the most exposure to TERRIF
related issues. It hasn't been growing, you know, certainly not
at the pace of some of its big tech peers
for quite an extent period of time, and the evaluation
(43:02):
is still on the higher end of things, especially for
a lot of two companies that are growing much faster,
So certainly the picture there is a lot more cautious.
I guess the flip side of this is maybe it's
a lower bar. Maybe expectations are so low that they're
able to kind of jump over there. But that's one
that I think there are a lot of question marks
on this quarter.
Speaker 4 (43:19):
Meanwhile, after the bettle tomorrow we get Spotify, which is
that fifty six percent Here today round Vaselica, we have
you across all the earnings. Thank you so much for
breaking it down. Meanwhile, that does it in this edition
of Bloomberg Tech.
Speaker 3 (43:30):
Ed, Yeah, I feel like there's a lot of tension
in the week, Like we've really set it up to
be huge recap some of that hype, maybe some of
that excitement to the week to come on the podcast.
You know where to find it and all the platforms,
it's everywhere.
Speaker 2 (43:43):
But I don't know, that's just how it feels. It
feels like everything's a little bit tense.
Speaker 4 (43:47):
Macro Micro Earnings got a little bit of tariff anxiety
coming into August the first It's plenty.
Speaker 5 (43:53):
To digest stick with us for the week. This is
BlueBag tech.
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