December 24, 2025 • 43 mins
Bloomberg’s Katie Greifeld examines Intel as shares fall after reports emerge that Nvidia may be hitting pause on testing Intel’s chip production process. Plus, the Trump administration gets the go-ahead to move forward with a $100,000 fee on new H-1B visa applications. And Tesla faces renewed scrutiny over car doors, with the company confronting a new probe by the NHTSA.
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:04):
Bloomberg Tech is a lie from coast to coast, with
Caroline Hide in New York and Ed Lovelow in San Francisco.
Speaker 2 (00:14):
Welcome to Bloomberg Tech. I'm Katie Greifeld.
Speaker 3 (00:16):
Coming up on today's show.
Speaker 2 (00:17):
Intel shares fall on a report that in Vidia halted
tests to use Intel's.
Speaker 3 (00:22):
Methods in chip making. Plus, the federal.
Speaker 2 (00:24):
Judge gives the ok for the Trump administration to move
ahead on a one hundred thousand dollars fee on new
H one B visa applications. What that means for Silicon
Valley hiring and Tesla faces more regulatory scrutiny with a
new federal probe over its emergency door release. All that
and more coming up. Let's take a look at these markets.
It is Christmas Eve, there is no training volume to speak.
Speaker 3 (00:47):
Of, but you can see the S and P five.
Speaker 2 (00:48):
Hundred up slightly on this Wednesday, hier by about two
tenths of a percent. The NAZAQ one hundred underperforming. Will
tell you why in just a minute. The Philadelphia Semiconductor
and also green but really slight gains here. Volatility continuing
to drain out of these equity markets. The Vicks Trading
with a thirteen handle on this Christmas Eve. Meanwhile, let's
(01:11):
get to two specific names that are restraining what you're
seeing when it comes to the big tech complex, Intel
and Invidia. Intel down about one and a half percent,
in Vidia down nearly one percent. Given how big Nvidia is,
that is really acting as a weight on the overall benchmarks. Here,
let's bring in Bloomberg Equities reporter Ryan Blastelica for the
(01:33):
latest on what's going on here. The headline that I'm
reading on the terminal, Intel falling on a report that
Invidia has halted a production test of some of its
advanced chip making capacity.
Speaker 3 (01:44):
Here, Ryan, what do we know so far?
Speaker 4 (01:46):
Hey, good morning, Thanks for having me. So the background
for this is that for several years now, Intel has
really struggled against perception that it is falling behind in
chip manufacturing, especially through companies like PSMC overseas. Now, there
was a lot of hope this year following an investment
from Nvidia, following the government taking a stake that it
would be able to better finance this ambitious turnaround program
(02:09):
to sort of re establish its leadership position in chip manufacturing.
So this report basically says and in Nvidia try to
have some of the latest chip processing out of Intel,
and it's pausing that.
Speaker 3 (02:21):
So I don't think this will come.
Speaker 4 (02:22):
As a huge surprise, because there was seen as a
pretty significant gap between Intel and TSMC, you know, and
the other major chip manufacturers. However, this is probably just
enough of a cost for disappointment in Intel, which has
really been bid up quite dramatically this year on the
back of all this news that it's seen about the
investments and so forth.
Speaker 2 (02:41):
Right, absolutely, just to recap in Nvidia itself agreed to
invest five billion dollars into Intel in September. That followed
the US government announcing that it was also taking a
roughly ten per state ten percent stake in the company.
So there's a lot of hopes, as you say, for
a potential turnaround story here for Intel. We know that
they have new CEO as well, but just give us
(03:02):
some context here, you know, how this specific year's performance
compares to the last several years of disappointment for Intel.
Speaker 4 (03:09):
Yeah, So one thing I would just say is that
when Nvidia announced the stake in Intel, they did make
a point of saying that there wasn't any sort of
agreement that it would be using the chip manufacturing here,
but clearly they've been trying it out, they've been testing it,
and the fact that they are pausing here it's just
enough of the you know it sort of underlines how
Intel has really sort of fallen behind competitors in this
pretty significant area. Now, there is still a lot of
(03:31):
interest in building out domestic chip manufacturing. Ine building a
chip here, I believe it's in Ohio, TSMC has building
a chip that I think is in Arizona. There's a
lot of money surrounding this that Chipsas was involving this.
There's a lot of significance here, especially when it comes
to issues like national security here. So this is something
people are paying a lot of attention to. And certainly
(03:52):
if the news had been the opposite and Intel Nvidia
had come out and said that it is going to
be using Intel, I think that would be a pretty sick,
magnificant game change for Intel as we go into twenty
twenty six. The idea that is really re establishing itself
in manufacturing, I think would cause a lot of people
to reassess the stock in its prospects.
Speaker 2 (04:10):
Absolutely and tell definitely a story to keep an eye
on in twenty twenty six. Ryan, before I let you go,
you had a great story out on the terminal in
the past two days talking about how it's the boring
bets when it comes to tech that seems to be
working the best this year. Memory chips, hard disk drives
come to mind. What are some of the specific names
that really stood out in the tech space this year.
Speaker 4 (04:30):
Well, Micron especially has been a really big gainer this year.
It's memory chips, the high bandwidth memory that's a pretty
significant part of overall AI infrastructure. That stock is I
think roughly tripbolder. So this year it recently had results.
Results were very strong, the stock moved up even more.
And if you look beyond that, the companies that are
you know, typically don't get a ton of interest, companies
(04:51):
like sand Disk, Western Digital, Seagate Technology, makers of hard
disk drives, also a part of the AI infrastructure. This
is something that people were saying, was it fully appreciated?
Hard to make that case. Now some of these stocks
have doubled, tripled. They're some of the biggest gainers on
the S and P five hundred this year. And it
is you know, in I kind of bet ironically and
a part of the market that otherwise would be a
little bit too dull for most people to be excited about.
Speaker 2 (05:13):
Absolutely, Ryan really appreciate reporting this year. That is Bloomberg's
Ryan blast Elica. Meanwhile, let's get a broader look at
the tech markets and one investors are looking ahead to
in twenty twenty six with epec Oscar desh Kaya cis
quote senior market analyst. Great to have you with us.
So I actually want to start where we left off
with Ryan. It's really interesting that you think about what
(05:34):
really worked in twenty twenty five. It was the so
called boring parts of the AI trade. A lot of
these you know, memory disc makers, memory chip makers that is,
in the likes of Micron. I wonder you know whether
you expect that will be the momentum headed into twenty
twenty six.
Speaker 5 (05:51):
Well, it's pretty much explainable why these memory chips, boring
park yourself department of the market gain more than the
other exciting parts. One of the reasons for that is
that because the AI chip demand was so strong that
many manufacturers actually assass more capacity in producing these chips
in demand, and they reduce their capacity for producing other
(06:12):
and more boring podcasts off the market. That's one of
the reasons why what explains actually the rally that we've
seen in Standings and Seagate and Western Digital and likes
into twenty twenty six. We think that not only that
the boring, the most boring and undervalued pockets of the
market will be an investors' radar, but we will also
expect to see actually this technology and AI rarely broaden
(06:36):
towards the non technology podcasts off the market because the
AI productivity, AI cost efficiencies will also benefit to any
other sector out there, including banks, healthcare industries. And I
think that this is going to be the big story
of twenty twenty six.
Speaker 2 (06:52):
Yeah, absolutely, and we don't have much longer to it.
I want to talk a little bit about, you know
what didn't necessarily work when it comes to the overall
AI trade in twenty twenty five, and it's something to
talk about that as a monolith. But while memory chip
makers seem to have a great year, you take a
look at some of these software names. Adobe comes to mind,
for example, and it feels like some of these companies
(07:13):
just can't get their footing under them. Service now Salesforce
Force also examples there. I wonder, you know what you
make of what's going on in that sector.
Speaker 5 (07:22):
Well, these companies have come under the pressure of AI.
Speaker 6 (07:25):
You would expect that making.
Speaker 5 (07:27):
AI tools available to investors would boost their revenue, but
it actually had the exact opposite impact effect on these companies.
They have not been able to monetize and sell these
AI boosted models to investors as much as they wanted.
And actually the fact that other models, other AI models
came to the market to challenge these companies, have also
(07:48):
been a big problem for these companies. We think that
in terms of AI applications, the competition is going to
be quite rough in twenty twenty six because there are
a lot of AIMI some of them are going to
be where some of them are going.
Speaker 6 (08:02):
To be losers.
Speaker 5 (08:04):
But it's exactly the same story for the big AI
applications and the likes of AI A Dope for example,
or Shutter Circle. These companies that just integrated AI applications
on their products offering will have to face that competition.
I think that that's going to be also waiting on
the margins.
Speaker 2 (08:22):
Yeah, it's a good reminder of dure that there are
companies that are doing the disrupting and then there's companies
that the market thinks are being disrupted right now.
Speaker 3 (08:31):
But I also want to talk.
Speaker 2 (08:32):
A little bit about you know, what we're seeing when
it comes to Capex. That has remained one of the
dominant stories when it comes to you know, every three
months we get those earnings report, and we've seen it
start to really get expressed in certain companies. Oracle comes
to mind, both their equity and their debt. This pressure
to see some sort of ROI when it comes to spending.
(08:52):
I wonder if you see that pressure broadening out next
year EPEC of course.
Speaker 5 (08:57):
I mean since the last three months, since the last
earning season, what we have seen is that the headline
shiny headline figures were no longer impressive for investors. They
wanted to dig deeper into these reports. One, how are
the revenues are being accounted? And two what's happening with
the debt? Is the debt too high? Or is the
(09:18):
debt being uploaded? Was also one of the questions that
investors have been asking and have been worried about. So
what investors want today is to see slowing investment until
we see return on investment. The problem here with the
technology is that if there isn't overspending. The risk is
that this technology gets outdated by the time revenues start
(09:39):
coming in. So we really think that spending is going
to be one of the major issues and major major
talking points into twenty twenty six.
Speaker 6 (09:48):
And one way to go around this.
Speaker 5 (09:50):
Risk is to choose companies that are able to turn
this over spending into an immediate revenue opportunity, like the
ones that do have data center. Is that the ones
that are actually able to rent their chips out And
in this context what we see is Microsoft, Amazon, Aret
and Google are the three companies that could help investors
(10:10):
reduce this risk of overspending in AI and EPEC.
Speaker 2 (10:14):
I've less than a minute with you, but before I
let you go, I would love to hear heading into
twenty twenty six, what is your highest conviction.
Speaker 5 (10:21):
Well, the highest conviction right now is rotation again from
technology to non technology pockets off the market.
Speaker 6 (10:27):
I think it is important to note.
Speaker 5 (10:29):
That the macracinic backdrop remains positive for technology stocks as well,
so we think that the reley could continue, but it
might decelerate next year, and again the AI enthusiasm will
probably move toward the non technology pockets off the market.
Toward toward the sectors that actually do also use technology
(10:50):
that could be boosted by a IT tools.
Speaker 2 (10:52):
Absolutely, that rotation, especially from growth to value, has been
fascinating to watch over the past couple of weeks.
Speaker 3 (10:58):
Ipec Osker Deshkai.
Speaker 2 (11:00):
Of Swiss quote great to get some time with you.
Now coming up on B tech, a judge has ruled
in President Trump's favor upholding one hundred thousand dollars H
one B visa fees. Some of the most vulnerable companies are.
Speaker 3 (11:11):
In the tech sector, but the legal fight is an over.
Speaker 2 (11:14):
More on that.
Speaker 3 (11:15):
Next, this is Bloomberg Well, a federal judge says that the.
Speaker 2 (11:32):
Trump administration can move ahead with a one hundred thousand
dollar fee on new H one V visa applications. Now
that is adding pressure on US tech companies that rely
on hiring foreign skilled workers. Eric laws and Larson, he
covers legal affairs and politics for Bloomberg News, please to
say he joins me now on set. So Eric, give
us some context here. You know, we tend to talk
(11:53):
about tech companies when it comes to these visa fees,
but just how exposed is the industry to this potential
one hundred thousand dollars.
Speaker 1 (12:01):
Fee minor sending from these lawsuits that have been filed
and from the data we've seen is that they're pretty exposed. Notably,
these companies did not file lawsuits challenging the visa. It
was filed by other groups. The ruling we just got
was from the Chamber of Commerce. So maybe they're waiting
to see where this goes. But certainly the Trump administration
(12:23):
and other government officials say that these companies can afford them,
even though they do use them quite a bit and
they are pretty exposed. The government simply argues there are
plenty of American workers who they could be paying to
do the same job, just paying them more.
Speaker 2 (12:38):
Yeah, I mean, you think about some of these giant
tech companies with deep pockets. Talk to us about the
public sector though when it comes to healthcare and education,
because again we talk about tech all the time, but
these sectors also rely on H one B visas exactly.
Speaker 1 (12:52):
And there is another lawsuit that was filed by nineteen
Democratic attorneys general. Most of the Democratic led states are
part of this lawsuit, led by California, which has the
most of these visas are mostly in California, and these
states argue that they're suing on behalf of the public
sector because of healthcare. They say that they have to
(13:12):
look out for the healthcare industry, the residents and their states.
They say that the quality of healthcare will simply suffer
because there is a shortage of these skilled healthcare workers
who use these visas and won't necessarily be able to
afford one hundred thousand dollars fee from these hospitals. You know,
maybe the companies can afford that, but hospitals not so much.
So there's not really a carve out for them, and
(13:35):
the hospitals could suffer according to these states that sued
earlier this month, and there's a hearing in that case
in February, so remains to be seen how a judgabile
rule on that aspect.
Speaker 3 (13:45):
Well, that's the rub, right.
Speaker 2 (13:47):
You think about Amazon, Microsoft, Meta Apple, for example, if
they're playing millions of dollars potentially for specific AI talent,
a one hundred thousand dollar fee probably doesn't seem like
that much then.
Speaker 3 (13:58):
But to your point, you know, if it's.
Speaker 2 (14:00):
Hospital having to pony up that fee, it's a much
different conversation. Walk us through how you might expect the
legal fight to take shape next, because it seems like
there's a lot of different moving parts here.
Speaker 1 (14:11):
Sure, So the ruling that we just got was from
the lawsuit filed by the Chamber of Commerce in Federal
Court in Washington. That case is essentially over unless there's
an appeal. It was a summary judgment. The judge, who
was an Obama appointee, by the way, just ruled flat
out that the government was correct. The President had brought
authority to issue this under the powers given to him
(14:34):
by Congress in the Immigration and Nationality Act. But these
lawsuit filed by the Democratic led States, that is, like
I said, there will be a hearing on their motion
for an injunction against the visa in February. There isn't
a hearing set on the third lawsuit, which is filed
by unions, So this could take months to play out,
(14:54):
and as with so many of the other legal challenges
involving the president's policies and executive orders, it could end
up at the Supreme Court, and that could be quite
some time. The big question for employers and potential visa
holders is whether or not this program, this fee will
stay in place during the entire legal challenge. Right now,
it is, but these other lawsuits could result in different outcomes.
Speaker 3 (15:18):
All right, Eric, really appreciate your reporting.
Speaker 2 (15:20):
Great to see someone else in the office on Christmas
Eve as well.
Speaker 3 (15:23):
That is Bloomberg's Eric Larson.
Speaker 2 (15:25):
Meanwhile, another story that's tying together tech and politics is
that the Trump administration has imposed visa sanctions on former
European Union Commissioner Theory Breton, along with four other activists
who have pushed for regulations to online content moderation. Now
Secretary of State Marco Rubio said in a post on
x Quote, for far too long, ideologues in Europe have
(15:46):
led organized efforts to coerce American platforms to punish American
viewpoints they oppose. We stand ready and willing to expand.
This lifts this list if others do not reverse course
for more. Let's go now to bloom It's Laura Davison
live in Washington. So Laura, first, give us the reaction
that you're seeing and hearing. Was this move necessarily a surprise?
Speaker 7 (16:10):
This move was a surprise and really came as a
shock to both the people who were the subject of
these visa sanctions as well as to other European officials,
both at the EU level, and individual countries. There's been
a really a strong and forceful pushback saying that this
is a move that amounts to censorship and is very inappropriate.
On the US side, this is, you know, sort of
(16:30):
just a one prong and what has really become a
multifaceted cold war between the US and the EU, particularly
as it relates to tech companies and who has the
power to regulate and tax them.
Speaker 2 (16:41):
Yeah, and you know, we talk about, you know, this
censorship potentially of American viewpoints, what specific platforms, you know,
was the Trump administration holding up as an example where
censorship actually did take place.
Speaker 7 (16:54):
Yeah, So there's a couple different here. Largely the big
social media platform so Facebook, Instagram, and in particular Elon
Musk's platform has been the subject of a rather large
fine earlier this year for not allowing these content moderation
to feed out hate speech from the platform. So, you know,
X had to pay this fine. This has kind of
(17:15):
become this ongoing tit for tat war of you you know,
and you could almost see these visa sanctions coming from
the US as a response to that fine earlier this year.
Speaker 2 (17:22):
All Right, Laura really appreciate the update that is Bloomberg's
Laura Davison joining us from Washington, well as Warner Brothers
Discovery in Paramount Way. Their next moves media deal making
is back in focus. Joining us now is Stephen wolf Perira.
He is CEO and founder of Alpha, an independent AI
(17:45):
governance intelligence firm for board directors and C suite executives.
Great to have you with us, Stevens. So let's talk
about Warner Brothers. You had Larry Ellison coming out with
his personal guarantee of forty billion dollars for the Paramounts
guidance hostile bid. That is, do you think that that
goes far enough to address some of the Warner Brothers
(18:06):
board's concerns about financing.
Speaker 8 (18:10):
So it's great to be here, Happy holidays. But this
is very going to be a gift for the Ellsons
because if you think about what they are doing, they
are truly amassing one of the biggest and most important
collection of media assets in record time. And you know
whether the thirty dollars a share is going to be enough.
I think they're going to have to sweeten the deal.
But I think you need to look at this from
a larger advantage point because if you really look at
(18:33):
the assets that they're starting to consolidate. It really is
concerning on the one hand, exciting on the other. But
when you think about Paramount combined with potentially TikTok obviously
Warner Brothers Discovery, you just look at all the different
pieces of this puzzle. We're really seeing the reshaping of
the American media landscape right before our eyes.
Speaker 3 (18:51):
Let's talk through some of the concerns here.
Speaker 2 (18:53):
As you said, it's exciting, but there's also concerns.
Speaker 3 (18:57):
In highest order. What would you say tops the list?
Speaker 8 (19:01):
I mean, one is this really trying to understand what
really is going to be the governance and implications of
this when you think about the amount of data that
they are now going to have to be able to
train all their AI. Again, this is not just a
media company. Obviously, Larry Ellison with Oracle understanding the TikTok angle,
this is really connected to the dots and all these
AI companies are desperate for more data to train their models.
(19:24):
And so when you really look at this, this is
a truly incredible opportunity to consolidate data all under this
massive umbrella, which is really going to be Skydance, Paramount
and Oracle.
Speaker 2 (19:35):
Interesting, So you're saying that Oracle, you know, if we
actually see Paramount Skuiddance be able to win the Warner
Brothers Discovery bidding war, that Oracle might then potentially use
their content library for training for their models.
Speaker 8 (19:48):
I mean, again, you have one hundred percent control over Paramount,
you know, what's to say, what is the control going
to look like? You know, for one of Brother's Discovery.
Once it's under that umbrella, You're just going to have
a lot of ability to kind of blur the lines
and us really see who is going to be able
to have some type of guardrails governance guidelines around all
of this, And I think that that's something that shareholders
need to look into. Obviously, you want to have your
(20:10):
furniturey responsibilities as a shareholder, but certainly the board is
going to have to make some really tough decisions. I
think there is a really interesting reason why the board
has actually rejected the Ellisons repeatedly until they had to
go public with this hostile takeover.
Speaker 2 (20:24):
Yeah, it is a fascinating situation where you have the
Warner Brothers board saying that we've approved, we recommend the
Netflix offer. At the same time, you have Paramount basically
going directly to the shareholders with this tender offer.
Speaker 3 (20:36):
I mean, what do you make of it? How do
you see the investor.
Speaker 2 (20:39):
Base actually swaying here when it comes to what the
board is saying and what Paramount is saying.
Speaker 8 (20:46):
Look, the truth of the matter is you have a
very deluded shareholder base. Obviously, you're going to have the
large institutional investors, the Black Rocks, Vanguard, State Street, We're
controlling a lot of the shareholder count. But when you
really think about where investors are going to be, they're
going to really vote for what's going to be the
best return for them. And so I think you really
(21:06):
are going to see Netflix really trying to have to
up the ante. They obviously have a very clean, you
know kind of approach, They have a very clean deal,
obviously have a better credit rating. When you think about
what the levered company is going to look like, combined
with Paramount as well as one of our discovery, I
think it's going to be north of maybe six seven
times you know det Tim at DA. So just from
a capital perspective, it's going to be an extremely levered asset.
(21:30):
That's part of the reason why Larry Ellison is doing
the personal guarantee and.
Speaker 2 (21:33):
Steven, we have less than a minute here left with you.
But you know, when you look into your crystal ball,
how long do you think this saga will continue? How
long will it take to actually get a conclusion here?
Speaker 8 (21:44):
I mean, obviously they pushed out the shreword of vote
down to January twenty first, and then you're going to
have obviously all the regulatory you know, kind of theater
that you're going to have to go through. But I
feel like this is just the beginning, because this is
now the reshaping of American media. And when you really
understand what is happening, this is a data play, and
when you really connect the dots, this is truly going
(22:05):
to reshape the way that all the AI companies are
going to be able to have access to data. Who
is controlling that? And where are the government s guardrails
around it?
Speaker 6 (22:13):
All?
Speaker 2 (22:13):
Right? Stephen, really appreciate your time.
Speaker 3 (22:15):
That is Stephen wolf Perrera.
Speaker 2 (22:17):
He is the CEO and founder of Alpha. Let's take
a look at these markets on this Christmas seve the
S and P five hundred, A little bit of green
on the screen. As I said at the top, no
trading volume to speak of, but you can see we're
drifting about three tenths of a percent higher. Tech not
(22:38):
quite outperforming today at the NASAQ one hundred higher by
just about two tenths of a percent. You can see
the Philadelphia Semiconductor Index a little bit below that as well.
Very quiet though when it comes to volatility as measured
by the VIS, you can see we are down about
forty seven ball points and trading with a thirteen handle.
Let's talk about why you can see the NAZAQ one
(23:00):
hundred underd performing. A lot of that comes back to Nvidia,
and it comes back to Intel. Reuter's reporting this morning
that basically in Nvidia has halted a test to use
Intel's production process to make advanced chips. That is adding
to pressure on Intel down about one point four percent.
In Vidia shares also in the red as well. For
more on this story, let's bring in Bloomberg Television Markets
(23:22):
correspondent Normal Linda sitting to my left.
Speaker 3 (23:25):
So, Nora, what do we know so.
Speaker 2 (23:27):
Far about this so called eighteen A process.
Speaker 9 (23:30):
Well, the fact that Nvidia is halting using Intel's eighteen
A manufacturing process, it actually is concerning for a lot
of investors because we know that this is critical to
Intel's turnaround story, especially as it tries to scale and
really compete against the likes of say TSMC. They are
a global competitor, and people are really concerned right now
as to whether or not Intel is really able to
(23:51):
display the fact that it's able to keep up in
this space.
Speaker 2 (23:54):
And so talk to us about the Nvidia of it
all and how it comes in. We know that in
Vidia agreed to invest five billion dollars into Intel two September,
So how are the two companies fortunes kind of aligned here.
Speaker 9 (24:07):
Yeah, it's a bit of a complex relationship between Nvidia
and Intel, because it's not that Intel is necessarily giving
in Nvidia is not necessarily a customer of Intel. In
video actually works primarily with TSMC. But the fact that
Nvidia was able to test out the eighteen A from Intel,
people are really seeing this essentially as a marquee player
in the mix, actually co signing this company and essentially
(24:30):
giving more legitimacy, validity to a name that we know
we've seen the US government coming in trying to back
taking a ten percent stake in this company. As we're
really trying to see more production in the chip space
here in the United States.
Speaker 2 (24:42):
And what sense do we have of why, you know,
Intel and the market in general is reacting in.
Speaker 3 (24:48):
This way to this news.
Speaker 2 (24:49):
It seems to be some sensitivity here, even though there
wasn't necessarily a contract between these two companies.
Speaker 9 (24:54):
It wasn't necessarily a contract between the two companies, But
this still raises doubts about the fact of Nvidia stepping
away from this partnership here, especially because in video sorry
excuse me, investors are looking for proof that Intel can
essentially attract top tier customers. So that's what's really key
here in this moment. The Nvidia name is what's really
helping to elevate Intel in this moment, and to see
(25:16):
in Nvidia potentially stepping away from that test run of
the eighteen A manufacturing process is essentially giving investors some concern.
Speaker 2 (25:24):
All right, great reporting, Nora, I'll be seeing you in
just about thirty minutes time. Nora and I will take
you through the close this early Close today from twelve
to two pm on BTV. But let's keep this conversation
going right now, because twenty twenty five has been a
landmark year for ETFs, with actively managed funds taking the
baton to surpass passive funds for the first time. Let's
(25:46):
bring in Sylvia Jablonski. She is CEO and CIO over
at Defiance ETFs.
Speaker 3 (25:52):
Sylvia, great to talk to you on this Christmas eve.
Speaker 2 (25:54):
And it's certainly the case that active ETFs have been
on fire for the past several years twenty two twenty five,
no exception, and we're seeing a lot of activity, a
lot of interest from investors in these leverage single stock
ETFs which do count as actively managed products. We know
that Defiance, of course is involved in that space. Talk
(26:14):
us through you know how you see that interest evolving,
if at all in twenty twenty six.
Speaker 6 (26:20):
Yeah, hy Katie.
Speaker 10 (26:20):
Great to be with you today and happy holidays, Merry
Christmas and happy New Year. Yeah, I think you know
it's it's been a stellar year for levertytfs in general,
both index based and.
Speaker 6 (26:31):
Single name funds.
Speaker 10 (26:32):
You know, we've seen billions of dollars of assets flowing
into those funds and to your point, to active funds.
And so what I think has happened over the last
couple of years, and you and I have talked about
this a bunch, is you know, we went through this
period of time where it was it was all passive,
and a lot of the ideas that were coming out
resembled the others. So there were a lot of me
too products out there, whether it.
Speaker 6 (26:51):
Was the Mattos or anything else.
Speaker 10 (26:53):
And really over the last two years, we've seen a
lot of innovation, and we've seen that in single name
leverage stocks, and we've seen that in option and space products,
so a lot of single names that pay income, for example.
And I think that, you know, you've seen huge amounts
of growth in that because investors we're looking for that,
right And so what I expect to happen in the
next couple of years is to see that transition with
(27:15):
new and exciting names coming out in the single name
leverage space, some of the new you know, picks and
shovels of AI for example, quantum names, some of the
themes that are really popular and growing into the next year.
Speaker 6 (27:29):
And then I think we'll see other things grow out too.
Speaker 10 (27:31):
I think we'll see new thematics as some of these
AI themes, quantum themes, you know, infrastructure, anything related to
the advancement of tech really kind of change and grow.
So investors are getting very comfortable with ETFs and expect
that to continue.
Speaker 2 (27:46):
And stepping back a bit, I always wonder, you know,
if you're managing a stable of you know, single stock ets,
you know that some will probably take off be very popular.
There are certain names that retail investors in particular, just
seem to gravitate to. But at the other end of
the spectrum, there's some names that you know probably aren't
going to garner that same interest.
Speaker 3 (28:05):
Ever, And I wonder, you know, as an.
Speaker 2 (28:07):
Issuer of ETFs, do you basically just hope you get
a few hits when it comes to the single names
and hope that that sort of subsidizes the rest of
the lineup, which may or may not take off.
Speaker 10 (28:19):
Well, I think as an issuer, we you know, we
do a lot of due diligence on this, right. We
research the names that we're interested in launching, and we
kind of look and see, you know, what is their beta,
what is their sort of volatility score, what kind of
interest there is in social media, what kind of interest
there is amongst institutional clients, what kind of interest there
(28:40):
is just in general media press research on certain topics.
So we do a lot of work before we actually
bring a product to market, so we have high conviction
and everything that we're launching, as I would think most
etfishuers do.
Speaker 6 (28:51):
Right to your.
Speaker 10 (28:52):
Point, some of them just don't hit, and you know,
and that's disappointing. But the way we view this is,
you know, we essentially just just move on and just
try to make sure that we're capturing the right trends
and the right themes that investors are looking at. And
if products, you know, if some products are unprofitable, then
that's a result of this moment in time and it
can only change.
Speaker 6 (29:13):
Right.
Speaker 10 (29:13):
We've seen products that sat for two years and did
nothing take off three years later.
Speaker 3 (29:17):
So yeah, allanges No, it's a good point.
Speaker 2 (29:20):
And I think a Bloomberg intelligence has some unofficial Lazarus
list where you know, a name does nothing for a
couple of years and ETF does nothing and then all
of a sudden it rises from the dead, if you will.
But in any case, I do wonder, you know, when
we talk about themes. Obviously AI has been a big
theme when it comes to equity ETFs, but then you
think about what's happening in the bond markets right now
(29:42):
and sort of the AI debt deluge if you will,
has definitely emerged as a theme when it comes to
credit markets in twenty twenty five. Would you ever consider
launching a fixed income thematic ETF or is that something
that maybe they're just isn't a market for.
Speaker 10 (29:59):
Well, I think that there could be a market for
different fixed income products, and you know, I would suspect
that issuers such as ourselves are doing research in the space,
and you know, there could be some some opportunities there.
It's you know, it's it's something that we're always looking at.
And I think, you know, to your point, yes, there
(30:19):
is you know, sort of that debt issue with AI.
There's also a concentration issue growing with AI. Right, I
think a lot of the big eats are out there
in the space.
Speaker 6 (30:28):
But I actually think there's more to come.
Speaker 10 (30:29):
You know, you saw on December twentieth, actually the Trump
administration just announced that they're going to be putting a
big agenda and a big priority on researching and building
out six G so that the United States has leadership
in that space. Right, and so that's an area that
we're super excited about. Like we have a six G
ETF and that hasn't been talked to me you know,
to the point of like ETFs being popular.
Speaker 6 (30:49):
At different times.
Speaker 10 (30:50):
Five G was all the rage, and here we are now,
you know, oh, we have to focus on this because
of our AI build out and because of our quantum
build out, and so you know, there's always different directions
to grow in terms of the matt at ETF's weather
fixed incomer equity based.
Speaker 2 (31:02):
Well, let's talk about one ETF that did get a
lot of interest of yours in twenty twenty five, and
that was your quantum ETF.
Speaker 3 (31:09):
The ticker there is qt um, and.
Speaker 2 (31:12):
It's all a pretty steady stream of inflows all throughout
the year, but especially starting in about Midsummer or so.
When you think about the quantum space and the different
names that populated, what is your view heading into next year.
Speaker 10 (31:25):
Yeah, so the viewing quantum is you know, kind of
very much the same, and it's evolving. You know, we
view this as a long term investment, and in the
last year, I think the reason that we've seen so
much interest and so much inflow into the space is
because you've started to get these proof points of reality
and commercialization, right, whether it was the bond pricing example
with HSBC or you know, some of the big kind
(31:47):
of quality balance sheet mag seven or just you know,
large tech companies like IBM and Cisco and Oracle in
addition to the Max seven investing in the space and
producing you know, products there and having quantum services available
through clouds and Amazon and things like this. So I
think as it becomes more commercial and scalable and you know,
(32:10):
proves itself as a technology that investors are really buying into,
you know, you could potentially see some performance in those names.
But I do you think it's like AI, right, It's
very much in its infancy. AI is maybe a toddler.
Quantum is still just learning to call right. So it's
a long term buy and hold, and I think that
investors understand that and they're in it for the long run.
Speaker 3 (32:31):
Yeah, it is really interesting.
Speaker 2 (32:32):
I feel like quantum it's just starting to get socialized
right now. But as you said, I don't think it exactly.
Speaker 3 (32:38):
Knows how to walk yet.
Speaker 2 (32:39):
But Sylvia, I mean you make the point that this
is a buy and hold investment when it comes to
your lineup, and you know, you have a broad array
of funds ranging from Quantum, which of course, as you say,
is buy and hold, and then you have again those
leverage single stock ETFs. What is the profile of the
investors coming into your lineup? Is it safe to say
it's broadly retail.
Speaker 10 (33:01):
It's not necessarily broadly retail. There's a good mix of
retail and institutional clients. What I would say is there
are different risk profiles for our clients. So clients that
are in the thematic products tend to be long term conservative,
you know, buy and hold, looking to allocate to their
portfolios for longer periods of time, whether institutional or retail.
Speaker 6 (33:21):
In terms of the single name stocks.
Speaker 10 (33:22):
It tends to be sophisticated. Whether it's an institution or
it's a retail day trader, it's a sophisticated trader who
understands that these are meant to be traded and not held,
that you know, you're getting returned for a period of time,
not beyond one day, and you know kind of user
beware and understand how these products work over time.
Speaker 6 (33:42):
And so it's just a different risk profile.
Speaker 10 (33:44):
But there's a mix of both types of clients, retail
and institutional, across all the product suites.
Speaker 2 (33:49):
All right, Sylvia, great to get some time with you.
Happy holidays. That is Sylvia Jablonski of Defiance ETPs.
Speaker 3 (33:55):
Now, coming up on.
Speaker 2 (33:56):
B Tech, we'll discuss the outlook for Tesla. It's sure
price has been on a tear, but what challenges all wait?
In twenty twenty six, Steve Wesley, founder of the Wesley Group,
he joins us. Next, this is Bloomberg Tech. Well, Tesla
(34:24):
has had quite a year. It shares have soared, its
CEO secured a record pay package. It's robotaxis launched in
a limited way in Austin and San Francisco. But on
the horizon are challenges, among them declining sales, shrinking profits,
and moves by global regulators. Sources telling us here at
Bloomberg that the company is facing a new US government
(34:44):
probe over the door handles of its Model three sedans.
Steve Wesley, he is a former Tesla board member and
managing partner of the Wesley Group, joins us. Now, Steve,
great to have you with us. Let's start again with
these door handles. We have had a month's long investmentgation
over here at Bloomberg. We know that the NHTSA has
opened an investigation in September, and I wonder what you
(35:07):
make of how this is evolving and the reputational damage
that this could inflict on Tesla.
Speaker 11 (35:13):
Look, it's a serious issue, but a lot of other
auto companies have had similarities, for Volkswagen General Motors.
Speaker 12 (35:20):
But it's not a simple software fix.
Speaker 11 (35:21):
So here's a time where Tesla's really got to be
firing on all cylinders to fix this.
Speaker 2 (35:27):
And I mean, from what you can tell the company's
public posture, do you think that they are treating this
with the appropriate degree of seriousness.
Speaker 11 (35:36):
Well, we'll see, this is not a simple software fix,
so they're going to have to go in re engineers
and things. The cost is probably going to take a while,
but it's not the first time it's happened.
Speaker 12 (35:45):
It's happened with other auto companies.
Speaker 11 (35:46):
But I think everybody in the sector is going to
be focused in on this one. Tesla, as you know,
has had some other brand challenges, so they want to
come out. They're trying to position themselves and look like
a testnology leader, not just an auto company. Fixing this
sweep top of that priority list absolutely.
Speaker 2 (36:03):
Well, let's talk about the year for Tesla more broadly,
because shares are up about nineteen percent on a total
return basis, we know that that has come with a
lot of volatility.
Speaker 3 (36:12):
You think about where we stand right now.
Speaker 2 (36:14):
Sure, shares have surged in the past few months, but
sales continue to be an issue. You think about the US,
you think about Europe. You mentioned that Tesla wants to
be positioned as a technology company here, but this feels
like a pretty fundamental issue that is going to need attention.
Speaker 11 (36:29):
Look, this is a huge issue in twenty twenty six
is going to be a pivotal year. Share price at
record highs one point six trillion dollar market cap. That's astonishing.
But Tesla's latency. It's second year in a row of
declining sales and shrinking profits. So the robotaxi approval it
has got in Austin is great. They no longer need
drivers in the cars. That still leaves them way behind Weymouth.
(36:51):
So Tesla's really got to get into a higher gear
on regulatory approval. They've got to get into more cities faster,
and they need to get revenue growth to keep that
share price up.
Speaker 12 (37:00):
Let's see how well they do.
Speaker 2 (37:02):
Yeah, absolutely, I mean you mentioned Weaimo, and you think
about the gap. Weymol obviously has that first mover advantage
Tesla trying to close it here? Do you think that
that is actually achievable when you think about how far
out Weimo is and all the different markets it has
already entered.
Speaker 11 (37:18):
Well, it's going to be tough for Tessa to catch
up because look, Waimo's already in six cities operational Large City,
San Francisco, Los Angeles, Phoenix, Miami, Atlanta. But they've announced
another sixteen cities they're going into. They'll do twelve million
to fourteen million rides by the end of this year
next week, but next year, I think they're looking at
(37:40):
a number close to thirty five million. They're already making
plants way international. They're doing trials now at London, Tokyo,
New York City. Waimo's got a huge lead. Tesla's got
its work cutout for it to catch up. If you're
positioning yourself as a technology company, they've got to get
in the race and go toe to toe with Weimo and.
Speaker 3 (37:58):
See if we've got just about a minute left.
Speaker 2 (38:00):
We've talked about door handles, we've talked about sales, we've talked.
Speaker 3 (38:03):
About the robotaxis.
Speaker 2 (38:04):
What else should Tesla be focusing on in twenty twenty six.
Speaker 11 (38:08):
Well, I think there's two things. The key one is
their energy division is booming. And say what you want
about Tesla needing new models and maybe being behind in
full self driving, but every out of company in the
world today is also an energy company, and Tesla provides
three products. Power walls you probably see them in garages, megapacks,
(38:29):
energy blocks for utilities. The takeaway is there's a revolution
AI and data centers forcing utilities to look for new
power suppliers.
Speaker 12 (38:37):
Tesla's filling that void.
Speaker 11 (38:39):
Their energy division will grow from ten billion and twenty
twenty four, so I think about fourteen billion this year.
They can provide forty percent year of a year growth.
That's going to help, all right.
Speaker 2 (38:49):
Steve really enjoyed this conversation. Happy Holidays. That is Steve Wesley.
He is CEO of the Wesley Group. Service Now reaching
an agreement to buy cybersecurity startup Armists in a cash
deal valued at seven point seventy five billion dollars, marking
its biggest acquisition today. I caught up with Service Now
(39:11):
president and COO on Zaveri yesterday take.
Speaker 13 (39:14):
A lesson when we saw this opportunity and seeing the
way that AI adoption is going. This is a great
opportunity for us to continue expanding in our security space.
So today our security business has crossed billion dollars at
service now and addition of Armies will allow us to
now get into more new capabilities with customers are demanding
from us, as well as allow us to really be
(39:36):
differentiated as we add AI data workflow with all of
it being around security and making sure that no breaches
customers have to deal with. So that's really the thinking
and Armies is a very innovative company, very well regarded,
great team, very good domain expertise, and the combination of
US and them can really change the game in the
cybersecurity space and build a cybersecurity automation abilties very fast.
Speaker 14 (40:01):
It gets to this idea too. I mean you mentioned
sort of the potential addition to revenue. I think they
talked about a three hundred million dollar a run rate
right now that they're sort of dealing with. This isn't
obviously just about the additional revenue that you get specifically
from Armies. I assume this is also about bringing in
new clients and more importantly keeping the clients you have there.
Speaker 13 (40:21):
Yeah, this is very strategic play. I mean, we are
very confident of our own revenue plans, right, We don't
depend on armies to deliver our fifty plus rule of
fifty plus right, which is twenty plus percent as subscription
revenue growth and for thirty plus percent in terms of
having free cash flow margins. So we've been fifty plus
the last ten years and we keep on delivering that
and we're not dependent on armies to deliver on what
(40:43):
we have been sharing with the street. So this is
much more of a strategic play. They are three hundred
and forty million in revenue already growing at fifty percent.
But the key thing is the technology and the IP
we're bringing in together with Service now capabilities as well
as a lot of the joint customers, we can go
together with and really provide them a full capability around
cybersecurity and help them with all the issues they're dealing
(41:07):
with from one platform perspective.
Speaker 2 (41:08):
Right.
Speaker 13 (41:09):
They have OURMISS has a lot of data around all
the assets company has, the physical assets. If you look
at now physical AI is coming into play as well
robotics and other things like that. That information combined with
our service NOWS Confrigation Management database which has access around
software and hardware. We can really give you full security
(41:29):
posture management and really give you the exposure guarantee that
nothing can go wrong.
Speaker 2 (41:34):
And I want to talk about your dealmaking posture overall,
because we're talking about armists today. But you rewind the
clock to March, you struck an agreement to buy move
Works for about two point eighty five billion dollars.
Speaker 3 (41:46):
Should we expect to see more.
Speaker 2 (41:48):
M and A from Service Now in twenty twenty six.
Speaker 13 (41:51):
No, I think we have all the assets we require.
I think this is an opportunity for Service Now to
really get into spaces where customers are asking us to
get quicker, so wrote myp ACS plus scaled capabilities will require.
But I think we are very confident with all the
things we have announced so far as the core things
we require from our portfolio perspective and execration we need
to do. We always can do continue doing what we've
(42:12):
been doing before around tukens and small IP purchases. But
from the security perspective, I think we have what we
need to become the premium security platform provider in the
market today.
Speaker 2 (42:24):
That was Service Now President on Itt Zavari. Now, before
we go, it's time for talking tech. First up, Bitcoin
missing out on the Christmas chair, currently trading around eighty
seven thousand today. That comes after a brutal sell off
in October, not from record highs. Token on track for
its worst quarterly performance since twenty twenty two. Plus, ads
could be coming to chat GBT. Open Ai is said
(42:46):
to be working out the details.
Speaker 3 (42:47):
To integrate ads into its.
Speaker 2 (42:49):
AI chatbot, according to a report from The Information and
Alphabet's WEAMO says it's updating software across its fleet to
better handle power outages. The move comes after self driving
taxis froze and costs a traffic jam during major power
failure last weekend in San Francisco. Beck does it for
this edition of Bloomberg Tech. Don't forget to check out
(43:11):
our podcast This is Bloomberg
Bloomberg Tech is a lie from coast to coast, with
Caroline Hide in New York and Ed Lovelow in San Francisco.
Speaker 2 (00:14):
Welcome to Bloomberg Tech. I'm Katie Greifeld.
Speaker 3 (00:16):
Coming up on today's show.
Speaker 2 (00:17):
Intel shares fall on a report that in Vidia halted
tests to use Intel's.
Speaker 3 (00:22):
Methods in chip making. Plus, the federal.
Speaker 2 (00:24):
Judge gives the ok for the Trump administration to move
ahead on a one hundred thousand dollars fee on new
H one B visa applications. What that means for Silicon
Valley hiring and Tesla faces more regulatory scrutiny with a
new federal probe over its emergency door release. All that
and more coming up. Let's take a look at these markets.
It is Christmas Eve, there is no training volume to speak.
Speaker 3 (00:47):
Of, but you can see the S and P five.
Speaker 2 (00:48):
Hundred up slightly on this Wednesday, hier by about two
tenths of a percent. The NAZAQ one hundred underperforming. Will
tell you why in just a minute. The Philadelphia Semiconductor
and also green but really slight gains here. Volatility continuing
to drain out of these equity markets. The Vicks Trading
with a thirteen handle on this Christmas Eve. Meanwhile, let's
(01:11):
get to two specific names that are restraining what you're
seeing when it comes to the big tech complex, Intel
and Invidia. Intel down about one and a half percent,
in Vidia down nearly one percent. Given how big Nvidia is,
that is really acting as a weight on the overall benchmarks. Here,
let's bring in Bloomberg Equities reporter Ryan Blastelica for the
(01:33):
latest on what's going on here. The headline that I'm
reading on the terminal, Intel falling on a report that
Invidia has halted a production test of some of its
advanced chip making capacity.
Speaker 3 (01:44):
Here, Ryan, what do we know so far?
Speaker 4 (01:46):
Hey, good morning, Thanks for having me. So the background
for this is that for several years now, Intel has
really struggled against perception that it is falling behind in
chip manufacturing, especially through companies like PSMC overseas. Now, there
was a lot of hope this year following an investment
from Nvidia, following the government taking a stake that it
would be able to better finance this ambitious turnaround program
(02:09):
to sort of re establish its leadership position in chip manufacturing.
So this report basically says and in Nvidia try to
have some of the latest chip processing out of Intel,
and it's pausing that.
Speaker 3 (02:21):
So I don't think this will come.
Speaker 4 (02:22):
As a huge surprise, because there was seen as a
pretty significant gap between Intel and TSMC, you know, and
the other major chip manufacturers. However, this is probably just
enough of a cost for disappointment in Intel, which has
really been bid up quite dramatically this year on the
back of all this news that it's seen about the
investments and so forth.
Speaker 2 (02:41):
Right, absolutely, just to recap in Nvidia itself agreed to
invest five billion dollars into Intel in September. That followed
the US government announcing that it was also taking a
roughly ten per state ten percent stake in the company.
So there's a lot of hopes, as you say, for
a potential turnaround story here for Intel. We know that
they have new CEO as well, but just give us
(03:02):
some context here, you know, how this specific year's performance
compares to the last several years of disappointment for Intel.
Speaker 4 (03:09):
Yeah, So one thing I would just say is that
when Nvidia announced the stake in Intel, they did make
a point of saying that there wasn't any sort of
agreement that it would be using the chip manufacturing here,
but clearly they've been trying it out, they've been testing it,
and the fact that they are pausing here it's just
enough of the you know it sort of underlines how
Intel has really sort of fallen behind competitors in this
pretty significant area. Now, there is still a lot of
(03:31):
interest in building out domestic chip manufacturing. Ine building a
chip here, I believe it's in Ohio, TSMC has building
a chip that I think is in Arizona. There's a
lot of money surrounding this that Chipsas was involving this.
There's a lot of significance here, especially when it comes
to issues like national security here. So this is something
people are paying a lot of attention to. And certainly
(03:52):
if the news had been the opposite and Intel Nvidia
had come out and said that it is going to
be using Intel, I think that would be a pretty sick,
magnificant game change for Intel as we go into twenty
twenty six. The idea that is really re establishing itself
in manufacturing, I think would cause a lot of people
to reassess the stock in its prospects.
Speaker 2 (04:10):
Absolutely and tell definitely a story to keep an eye
on in twenty twenty six. Ryan, before I let you go,
you had a great story out on the terminal in
the past two days talking about how it's the boring
bets when it comes to tech that seems to be
working the best this year. Memory chips, hard disk drives
come to mind. What are some of the specific names
that really stood out in the tech space this year.
Speaker 4 (04:30):
Well, Micron especially has been a really big gainer this year.
It's memory chips, the high bandwidth memory that's a pretty
significant part of overall AI infrastructure. That stock is I
think roughly tripbolder. So this year it recently had results.
Results were very strong, the stock moved up even more.
And if you look beyond that, the companies that are
you know, typically don't get a ton of interest, companies
(04:51):
like sand Disk, Western Digital, Seagate Technology, makers of hard
disk drives, also a part of the AI infrastructure. This
is something that people were saying, was it fully appreciated?
Hard to make that case. Now some of these stocks
have doubled, tripled. They're some of the biggest gainers on
the S and P five hundred this year. And it
is you know, in I kind of bet ironically and
a part of the market that otherwise would be a
little bit too dull for most people to be excited about.
Speaker 2 (05:13):
Absolutely, Ryan really appreciate reporting this year. That is Bloomberg's
Ryan blast Elica. Meanwhile, let's get a broader look at
the tech markets and one investors are looking ahead to
in twenty twenty six with epec Oscar desh Kaya cis
quote senior market analyst. Great to have you with us.
So I actually want to start where we left off
with Ryan. It's really interesting that you think about what
(05:34):
really worked in twenty twenty five. It was the so
called boring parts of the AI trade. A lot of
these you know, memory disc makers, memory chip makers that is,
in the likes of Micron. I wonder you know whether
you expect that will be the momentum headed into twenty
twenty six.
Speaker 5 (05:51):
Well, it's pretty much explainable why these memory chips, boring
park yourself department of the market gain more than the
other exciting parts. One of the reasons for that is
that because the AI chip demand was so strong that
many manufacturers actually assass more capacity in producing these chips
in demand, and they reduce their capacity for producing other
(06:12):
and more boring podcasts off the market. That's one of
the reasons why what explains actually the rally that we've
seen in Standings and Seagate and Western Digital and likes
into twenty twenty six. We think that not only that
the boring, the most boring and undervalued pockets of the
market will be an investors' radar, but we will also
expect to see actually this technology and AI rarely broaden
(06:36):
towards the non technology podcasts off the market because the
AI productivity, AI cost efficiencies will also benefit to any
other sector out there, including banks, healthcare industries. And I
think that this is going to be the big story
of twenty twenty six.
Speaker 2 (06:52):
Yeah, absolutely, and we don't have much longer to it.
I want to talk a little bit about, you know
what didn't necessarily work when it comes to the overall
AI trade in twenty twenty five, and it's something to
talk about that as a monolith. But while memory chip
makers seem to have a great year, you take a
look at some of these software names. Adobe comes to mind,
for example, and it feels like some of these companies
(07:13):
just can't get their footing under them. Service now Salesforce
Force also examples there. I wonder, you know what you
make of what's going on in that sector.
Speaker 5 (07:22):
Well, these companies have come under the pressure of AI.
Speaker 6 (07:25):
You would expect that making.
Speaker 5 (07:27):
AI tools available to investors would boost their revenue, but
it actually had the exact opposite impact effect on these companies.
They have not been able to monetize and sell these
AI boosted models to investors as much as they wanted.
And actually the fact that other models, other AI models
came to the market to challenge these companies, have also
(07:48):
been a big problem for these companies. We think that
in terms of AI applications, the competition is going to
be quite rough in twenty twenty six because there are
a lot of AIMI some of them are going to
be where some of them are going.
Speaker 6 (08:02):
To be losers.
Speaker 5 (08:04):
But it's exactly the same story for the big AI
applications and the likes of AI A Dope for example,
or Shutter Circle. These companies that just integrated AI applications
on their products offering will have to face that competition.
I think that that's going to be also waiting on
the margins.
Speaker 2 (08:22):
Yeah, it's a good reminder of dure that there are
companies that are doing the disrupting and then there's companies
that the market thinks are being disrupted right now.
Speaker 3 (08:31):
But I also want to talk.
Speaker 2 (08:32):
A little bit about you know, what we're seeing when
it comes to Capex. That has remained one of the
dominant stories when it comes to you know, every three
months we get those earnings report, and we've seen it
start to really get expressed in certain companies. Oracle comes
to mind, both their equity and their debt. This pressure
to see some sort of ROI when it comes to spending.
(08:52):
I wonder if you see that pressure broadening out next
year EPEC of course.
Speaker 5 (08:57):
I mean since the last three months, since the last
earning season, what we have seen is that the headline
shiny headline figures were no longer impressive for investors. They
wanted to dig deeper into these reports. One, how are
the revenues are being accounted? And two what's happening with
the debt? Is the debt too high? Or is the
(09:18):
debt being uploaded? Was also one of the questions that
investors have been asking and have been worried about. So
what investors want today is to see slowing investment until
we see return on investment. The problem here with the
technology is that if there isn't overspending. The risk is
that this technology gets outdated by the time revenues start
(09:39):
coming in. So we really think that spending is going
to be one of the major issues and major major
talking points into twenty twenty six.
Speaker 6 (09:48):
And one way to go around this.
Speaker 5 (09:50):
Risk is to choose companies that are able to turn
this over spending into an immediate revenue opportunity, like the
ones that do have data center. Is that the ones
that are actually able to rent their chips out And
in this context what we see is Microsoft, Amazon, Aret
and Google are the three companies that could help investors
(10:10):
reduce this risk of overspending in AI and EPEC.
Speaker 2 (10:14):
I've less than a minute with you, but before I
let you go, I would love to hear heading into
twenty twenty six, what is your highest conviction.
Speaker 5 (10:21):
Well, the highest conviction right now is rotation again from
technology to non technology pockets off the market.
Speaker 6 (10:27):
I think it is important to note.
Speaker 5 (10:29):
That the macracinic backdrop remains positive for technology stocks as well,
so we think that the reley could continue, but it
might decelerate next year, and again the AI enthusiasm will
probably move toward the non technology pockets off the market.
Toward toward the sectors that actually do also use technology
(10:50):
that could be boosted by a IT tools.
Speaker 2 (10:52):
Absolutely, that rotation, especially from growth to value, has been
fascinating to watch over the past couple of weeks.
Speaker 3 (10:58):
Ipec Osker Deshkai.
Speaker 2 (11:00):
Of Swiss quote great to get some time with you.
Now coming up on B tech, a judge has ruled
in President Trump's favor upholding one hundred thousand dollars H
one B visa fees. Some of the most vulnerable companies are.
Speaker 3 (11:11):
In the tech sector, but the legal fight is an over.
Speaker 2 (11:14):
More on that.
Speaker 3 (11:15):
Next, this is Bloomberg Well, a federal judge says that the.
Speaker 2 (11:32):
Trump administration can move ahead with a one hundred thousand
dollar fee on new H one V visa applications. Now
that is adding pressure on US tech companies that rely
on hiring foreign skilled workers. Eric laws and Larson, he
covers legal affairs and politics for Bloomberg News, please to
say he joins me now on set. So Eric, give
us some context here. You know, we tend to talk
(11:53):
about tech companies when it comes to these visa fees,
but just how exposed is the industry to this potential
one hundred thousand dollars.
Speaker 1 (12:01):
Fee minor sending from these lawsuits that have been filed
and from the data we've seen is that they're pretty exposed. Notably,
these companies did not file lawsuits challenging the visa. It
was filed by other groups. The ruling we just got
was from the Chamber of Commerce. So maybe they're waiting
to see where this goes. But certainly the Trump administration
(12:23):
and other government officials say that these companies can afford them,
even though they do use them quite a bit and
they are pretty exposed. The government simply argues there are
plenty of American workers who they could be paying to
do the same job, just paying them more.
Speaker 2 (12:38):
Yeah, I mean, you think about some of these giant
tech companies with deep pockets. Talk to us about the
public sector though when it comes to healthcare and education,
because again we talk about tech all the time, but
these sectors also rely on H one B visas exactly.
Speaker 1 (12:52):
And there is another lawsuit that was filed by nineteen
Democratic attorneys general. Most of the Democratic led states are
part of this lawsuit, led by California, which has the
most of these visas are mostly in California, and these
states argue that they're suing on behalf of the public
sector because of healthcare. They say that they have to
(13:12):
look out for the healthcare industry, the residents and their states.
They say that the quality of healthcare will simply suffer
because there is a shortage of these skilled healthcare workers
who use these visas and won't necessarily be able to
afford one hundred thousand dollars fee from these hospitals. You know,
maybe the companies can afford that, but hospitals not so much.
So there's not really a carve out for them, and
(13:35):
the hospitals could suffer according to these states that sued
earlier this month, and there's a hearing in that case
in February, so remains to be seen how a judgabile
rule on that aspect.
Speaker 3 (13:45):
Well, that's the rub, right.
Speaker 2 (13:47):
You think about Amazon, Microsoft, Meta Apple, for example, if
they're playing millions of dollars potentially for specific AI talent,
a one hundred thousand dollar fee probably doesn't seem like
that much then.
Speaker 3 (13:58):
But to your point, you know, if it's.
Speaker 2 (14:00):
Hospital having to pony up that fee, it's a much
different conversation. Walk us through how you might expect the
legal fight to take shape next, because it seems like
there's a lot of different moving parts here.
Speaker 1 (14:11):
Sure, So the ruling that we just got was from
the lawsuit filed by the Chamber of Commerce in Federal
Court in Washington. That case is essentially over unless there's
an appeal. It was a summary judgment. The judge, who
was an Obama appointee, by the way, just ruled flat
out that the government was correct. The President had brought
authority to issue this under the powers given to him
(14:34):
by Congress in the Immigration and Nationality Act. But these
lawsuit filed by the Democratic led States, that is, like
I said, there will be a hearing on their motion
for an injunction against the visa in February. There isn't
a hearing set on the third lawsuit, which is filed
by unions, So this could take months to play out,
(14:54):
and as with so many of the other legal challenges
involving the president's policies and executive orders, it could end
up at the Supreme Court, and that could be quite
some time. The big question for employers and potential visa
holders is whether or not this program, this fee will
stay in place during the entire legal challenge. Right now,
it is, but these other lawsuits could result in different outcomes.
Speaker 3 (15:18):
All right, Eric, really appreciate your reporting.
Speaker 2 (15:20):
Great to see someone else in the office on Christmas
Eve as well.
Speaker 3 (15:23):
That is Bloomberg's Eric Larson.
Speaker 2 (15:25):
Meanwhile, another story that's tying together tech and politics is
that the Trump administration has imposed visa sanctions on former
European Union Commissioner Theory Breton, along with four other activists
who have pushed for regulations to online content moderation. Now
Secretary of State Marco Rubio said in a post on
x Quote, for far too long, ideologues in Europe have
(15:46):
led organized efforts to coerce American platforms to punish American
viewpoints they oppose. We stand ready and willing to expand.
This lifts this list if others do not reverse course
for more. Let's go now to bloom It's Laura Davison
live in Washington. So Laura, first, give us the reaction
that you're seeing and hearing. Was this move necessarily a surprise?
Speaker 7 (16:10):
This move was a surprise and really came as a
shock to both the people who were the subject of
these visa sanctions as well as to other European officials,
both at the EU level, and individual countries. There's been
a really a strong and forceful pushback saying that this
is a move that amounts to censorship and is very inappropriate.
On the US side, this is, you know, sort of
(16:30):
just a one prong and what has really become a
multifaceted cold war between the US and the EU, particularly
as it relates to tech companies and who has the
power to regulate and tax them.
Speaker 2 (16:41):
Yeah, and you know, we talk about, you know, this
censorship potentially of American viewpoints, what specific platforms, you know,
was the Trump administration holding up as an example where
censorship actually did take place.
Speaker 7 (16:54):
Yeah, So there's a couple different here. Largely the big
social media platform so Facebook, Instagram, and in particular Elon
Musk's platform has been the subject of a rather large
fine earlier this year for not allowing these content moderation
to feed out hate speech from the platform. So, you know,
X had to pay this fine. This has kind of
(17:15):
become this ongoing tit for tat war of you you know,
and you could almost see these visa sanctions coming from
the US as a response to that fine earlier this year.
Speaker 2 (17:22):
All Right, Laura really appreciate the update that is Bloomberg's
Laura Davison joining us from Washington, well as Warner Brothers
Discovery in Paramount Way. Their next moves media deal making
is back in focus. Joining us now is Stephen wolf Perira.
He is CEO and founder of Alpha, an independent AI
(17:45):
governance intelligence firm for board directors and C suite executives.
Great to have you with us, Stevens. So let's talk
about Warner Brothers. You had Larry Ellison coming out with
his personal guarantee of forty billion dollars for the Paramounts
guidance hostile bid. That is, do you think that that
goes far enough to address some of the Warner Brothers
(18:06):
board's concerns about financing.
Speaker 8 (18:10):
So it's great to be here, Happy holidays. But this
is very going to be a gift for the Ellsons
because if you think about what they are doing, they
are truly amassing one of the biggest and most important
collection of media assets in record time. And you know
whether the thirty dollars a share is going to be enough.
I think they're going to have to sweeten the deal.
But I think you need to look at this from
a larger advantage point because if you really look at
(18:33):
the assets that they're starting to consolidate. It really is
concerning on the one hand, exciting on the other. But
when you think about Paramount combined with potentially TikTok obviously
Warner Brothers Discovery, you just look at all the different
pieces of this puzzle. We're really seeing the reshaping of
the American media landscape right before our eyes.
Speaker 3 (18:51):
Let's talk through some of the concerns here.
Speaker 2 (18:53):
As you said, it's exciting, but there's also concerns.
Speaker 3 (18:57):
In highest order. What would you say tops the list?
Speaker 8 (19:01):
I mean, one is this really trying to understand what
really is going to be the governance and implications of
this when you think about the amount of data that
they are now going to have to be able to
train all their AI. Again, this is not just a
media company. Obviously, Larry Ellison with Oracle understanding the TikTok angle,
this is really connected to the dots and all these
AI companies are desperate for more data to train their models.
(19:24):
And so when you really look at this, this is
a truly incredible opportunity to consolidate data all under this
massive umbrella, which is really going to be Skydance, Paramount
and Oracle.
Speaker 2 (19:35):
Interesting, So you're saying that Oracle, you know, if we
actually see Paramount Skuiddance be able to win the Warner
Brothers Discovery bidding war, that Oracle might then potentially use
their content library for training for their models.
Speaker 8 (19:48):
I mean, again, you have one hundred percent control over Paramount,
you know, what's to say, what is the control going
to look like? You know, for one of Brother's Discovery.
Once it's under that umbrella, You're just going to have
a lot of ability to kind of blur the lines
and us really see who is going to be able
to have some type of guardrails governance guidelines around all
of this, And I think that that's something that shareholders
need to look into. Obviously, you want to have your
(20:10):
furniturey responsibilities as a shareholder, but certainly the board is
going to have to make some really tough decisions. I
think there is a really interesting reason why the board
has actually rejected the Ellisons repeatedly until they had to
go public with this hostile takeover.
Speaker 2 (20:24):
Yeah, it is a fascinating situation where you have the
Warner Brothers board saying that we've approved, we recommend the
Netflix offer. At the same time, you have Paramount basically
going directly to the shareholders with this tender offer.
Speaker 3 (20:36):
I mean, what do you make of it? How do
you see the investor.
Speaker 2 (20:39):
Base actually swaying here when it comes to what the
board is saying and what Paramount is saying.
Speaker 8 (20:46):
Look, the truth of the matter is you have a
very deluded shareholder base. Obviously, you're going to have the
large institutional investors, the Black Rocks, Vanguard, State Street, We're
controlling a lot of the shareholder count. But when you
really think about where investors are going to be, they're
going to really vote for what's going to be the
best return for them. And so I think you really
(21:06):
are going to see Netflix really trying to have to
up the ante. They obviously have a very clean, you
know kind of approach, They have a very clean deal,
obviously have a better credit rating. When you think about
what the levered company is going to look like, combined
with Paramount as well as one of our discovery, I
think it's going to be north of maybe six seven
times you know det Tim at DA. So just from
a capital perspective, it's going to be an extremely levered asset.
(21:30):
That's part of the reason why Larry Ellison is doing
the personal guarantee and.
Speaker 2 (21:33):
Steven, we have less than a minute here left with you.
But you know, when you look into your crystal ball,
how long do you think this saga will continue? How
long will it take to actually get a conclusion here?
Speaker 8 (21:44):
I mean, obviously they pushed out the shreword of vote
down to January twenty first, and then you're going to
have obviously all the regulatory you know, kind of theater
that you're going to have to go through. But I
feel like this is just the beginning, because this is
now the reshaping of American media. And when you really
understand what is happening, this is a data play, and
when you really connect the dots, this is truly going
(22:05):
to reshape the way that all the AI companies are
going to be able to have access to data. Who
is controlling that? And where are the government s guardrails
around it?
Speaker 6 (22:13):
All?
Speaker 2 (22:13):
Right? Stephen, really appreciate your time.
Speaker 3 (22:15):
That is Stephen wolf Perrera.
Speaker 2 (22:17):
He is the CEO and founder of Alpha. Let's take
a look at these markets on this Christmas seve the
S and P five hundred, A little bit of green
on the screen. As I said at the top, no
trading volume to speak of, but you can see we're
drifting about three tenths of a percent higher. Tech not
(22:38):
quite outperforming today at the NASAQ one hundred higher by
just about two tenths of a percent. You can see
the Philadelphia Semiconductor Index a little bit below that as well.
Very quiet though when it comes to volatility as measured
by the VIS, you can see we are down about
forty seven ball points and trading with a thirteen handle.
Let's talk about why you can see the NAZAQ one
(23:00):
hundred underd performing. A lot of that comes back to Nvidia,
and it comes back to Intel. Reuter's reporting this morning
that basically in Nvidia has halted a test to use
Intel's production process to make advanced chips. That is adding
to pressure on Intel down about one point four percent.
In Vidia shares also in the red as well. For
more on this story, let's bring in Bloomberg Television Markets
(23:22):
correspondent Normal Linda sitting to my left.
Speaker 3 (23:25):
So, Nora, what do we know so.
Speaker 2 (23:27):
Far about this so called eighteen A process.
Speaker 9 (23:30):
Well, the fact that Nvidia is halting using Intel's eighteen
A manufacturing process, it actually is concerning for a lot
of investors because we know that this is critical to
Intel's turnaround story, especially as it tries to scale and
really compete against the likes of say TSMC. They are
a global competitor, and people are really concerned right now
as to whether or not Intel is really able to
(23:51):
display the fact that it's able to keep up in
this space.
Speaker 2 (23:54):
And so talk to us about the Nvidia of it
all and how it comes in. We know that in
Vidia agreed to invest five billion dollars into Intel two September,
So how are the two companies fortunes kind of aligned here.
Speaker 9 (24:07):
Yeah, it's a bit of a complex relationship between Nvidia
and Intel, because it's not that Intel is necessarily giving
in Nvidia is not necessarily a customer of Intel. In
video actually works primarily with TSMC. But the fact that
Nvidia was able to test out the eighteen A from Intel,
people are really seeing this essentially as a marquee player
in the mix, actually co signing this company and essentially
(24:30):
giving more legitimacy, validity to a name that we know
we've seen the US government coming in trying to back
taking a ten percent stake in this company. As we're
really trying to see more production in the chip space
here in the United States.
Speaker 2 (24:42):
And what sense do we have of why, you know,
Intel and the market in general is reacting in.
Speaker 3 (24:48):
This way to this news.
Speaker 2 (24:49):
It seems to be some sensitivity here, even though there
wasn't necessarily a contract between these two companies.
Speaker 9 (24:54):
It wasn't necessarily a contract between the two companies, But
this still raises doubts about the fact of Nvidia stepping
away from this partnership here, especially because in video sorry
excuse me, investors are looking for proof that Intel can
essentially attract top tier customers. So that's what's really key
here in this moment. The Nvidia name is what's really
helping to elevate Intel in this moment, and to see
(25:16):
in Nvidia potentially stepping away from that test run of
the eighteen A manufacturing process is essentially giving investors some concern.
Speaker 2 (25:24):
All right, great reporting, Nora, I'll be seeing you in
just about thirty minutes time. Nora and I will take
you through the close this early Close today from twelve
to two pm on BTV. But let's keep this conversation
going right now, because twenty twenty five has been a
landmark year for ETFs, with actively managed funds taking the
baton to surpass passive funds for the first time. Let's
(25:46):
bring in Sylvia Jablonski. She is CEO and CIO over
at Defiance ETFs.
Speaker 3 (25:52):
Sylvia, great to talk to you on this Christmas eve.
Speaker 2 (25:54):
And it's certainly the case that active ETFs have been
on fire for the past several years twenty two twenty five,
no exception, and we're seeing a lot of activity, a
lot of interest from investors in these leverage single stock
ETFs which do count as actively managed products. We know
that Defiance, of course is involved in that space. Talk
(26:14):
us through you know how you see that interest evolving,
if at all in twenty twenty six.
Speaker 6 (26:20):
Yeah, hy Katie.
Speaker 10 (26:20):
Great to be with you today and happy holidays, Merry
Christmas and happy New Year. Yeah, I think you know
it's it's been a stellar year for levertytfs in general,
both index based and.
Speaker 6 (26:31):
Single name funds.
Speaker 10 (26:32):
You know, we've seen billions of dollars of assets flowing
into those funds and to your point, to active funds.
And so what I think has happened over the last
couple of years, and you and I have talked about
this a bunch, is you know, we went through this
period of time where it was it was all passive,
and a lot of the ideas that were coming out
resembled the others. So there were a lot of me
too products out there, whether it.
Speaker 6 (26:51):
Was the Mattos or anything else.
Speaker 10 (26:53):
And really over the last two years, we've seen a
lot of innovation, and we've seen that in single name
leverage stocks, and we've seen that in option and space products,
so a lot of single names that pay income, for example.
And I think that, you know, you've seen huge amounts
of growth in that because investors we're looking for that,
right And so what I expect to happen in the
next couple of years is to see that transition with
(27:15):
new and exciting names coming out in the single name
leverage space, some of the new you know, picks and
shovels of AI for example, quantum names, some of the
themes that are really popular and growing into the next year.
Speaker 6 (27:29):
And then I think we'll see other things grow out too.
Speaker 10 (27:31):
I think we'll see new thematics as some of these
AI themes, quantum themes, you know, infrastructure, anything related to
the advancement of tech really kind of change and grow.
So investors are getting very comfortable with ETFs and expect
that to continue.
Speaker 2 (27:46):
And stepping back a bit, I always wonder, you know,
if you're managing a stable of you know, single stock ets,
you know that some will probably take off be very popular.
There are certain names that retail investors in particular, just
seem to gravitate to. But at the other end of
the spectrum, there's some names that you know probably aren't
going to garner that same interest.
Speaker 3 (28:05):
Ever, And I wonder, you know, as an.
Speaker 2 (28:07):
Issuer of ETFs, do you basically just hope you get
a few hits when it comes to the single names
and hope that that sort of subsidizes the rest of
the lineup, which may or may not take off.
Speaker 10 (28:19):
Well, I think as an issuer, we you know, we
do a lot of due diligence on this, right. We
research the names that we're interested in launching, and we
kind of look and see, you know, what is their beta,
what is their sort of volatility score, what kind of
interest there is in social media, what kind of interest
there is amongst institutional clients, what kind of interest there
(28:40):
is just in general media press research on certain topics.
So we do a lot of work before we actually
bring a product to market, so we have high conviction
and everything that we're launching, as I would think most
etfishuers do.
Speaker 6 (28:51):
Right to your.
Speaker 10 (28:52):
Point, some of them just don't hit, and you know,
and that's disappointing. But the way we view this is,
you know, we essentially just just move on and just
try to make sure that we're capturing the right trends
and the right themes that investors are looking at. And
if products, you know, if some products are unprofitable, then
that's a result of this moment in time and it
can only change.
Speaker 6 (29:13):
Right.
Speaker 10 (29:13):
We've seen products that sat for two years and did
nothing take off three years later.
Speaker 3 (29:17):
So yeah, allanges No, it's a good point.
Speaker 2 (29:20):
And I think a Bloomberg intelligence has some unofficial Lazarus
list where you know, a name does nothing for a
couple of years and ETF does nothing and then all
of a sudden it rises from the dead, if you will.
But in any case, I do wonder, you know, when
we talk about themes. Obviously AI has been a big
theme when it comes to equity ETFs, but then you
think about what's happening in the bond markets right now
(29:42):
and sort of the AI debt deluge if you will,
has definitely emerged as a theme when it comes to
credit markets in twenty twenty five. Would you ever consider
launching a fixed income thematic ETF or is that something
that maybe they're just isn't a market for.
Speaker 10 (29:59):
Well, I think that there could be a market for
different fixed income products, and you know, I would suspect
that issuers such as ourselves are doing research in the space,
and you know, there could be some some opportunities there.
It's you know, it's it's something that we're always looking at.
And I think, you know, to your point, yes, there
(30:19):
is you know, sort of that debt issue with AI.
There's also a concentration issue growing with AI. Right, I
think a lot of the big eats are out there
in the space.
Speaker 6 (30:28):
But I actually think there's more to come.
Speaker 10 (30:29):
You know, you saw on December twentieth, actually the Trump
administration just announced that they're going to be putting a
big agenda and a big priority on researching and building
out six G so that the United States has leadership
in that space. Right, and so that's an area that
we're super excited about. Like we have a six G
ETF and that hasn't been talked to me you know,
to the point of like ETFs being popular.
Speaker 6 (30:49):
At different times.
Speaker 10 (30:50):
Five G was all the rage, and here we are now,
you know, oh, we have to focus on this because
of our AI build out and because of our quantum
build out, and so you know, there's always different directions
to grow in terms of the matt at ETF's weather
fixed incomer equity based.
Speaker 2 (31:02):
Well, let's talk about one ETF that did get a
lot of interest of yours in twenty twenty five, and
that was your quantum ETF.
Speaker 3 (31:09):
The ticker there is qt um, and.
Speaker 2 (31:12):
It's all a pretty steady stream of inflows all throughout
the year, but especially starting in about Midsummer or so.
When you think about the quantum space and the different
names that populated, what is your view heading into next year.
Speaker 10 (31:25):
Yeah, so the viewing quantum is you know, kind of
very much the same, and it's evolving. You know, we
view this as a long term investment, and in the
last year, I think the reason that we've seen so
much interest and so much inflow into the space is
because you've started to get these proof points of reality
and commercialization, right, whether it was the bond pricing example
with HSBC or you know, some of the big kind
(31:47):
of quality balance sheet mag seven or just you know,
large tech companies like IBM and Cisco and Oracle in
addition to the Max seven investing in the space and
producing you know, products there and having quantum services available
through clouds and Amazon and things like this. So I
think as it becomes more commercial and scalable and you know,
(32:10):
proves itself as a technology that investors are really buying into,
you know, you could potentially see some performance in those names.
But I do you think it's like AI, right, It's
very much in its infancy. AI is maybe a toddler.
Quantum is still just learning to call right. So it's
a long term buy and hold, and I think that
investors understand that and they're in it for the long run.
Speaker 3 (32:31):
Yeah, it is really interesting.
Speaker 2 (32:32):
I feel like quantum it's just starting to get socialized
right now. But as you said, I don't think it exactly.
Speaker 3 (32:38):
Knows how to walk yet.
Speaker 2 (32:39):
But Sylvia, I mean you make the point that this
is a buy and hold investment when it comes to
your lineup, and you know, you have a broad array
of funds ranging from Quantum, which of course, as you say,
is buy and hold, and then you have again those
leverage single stock ETFs. What is the profile of the
investors coming into your lineup? Is it safe to say
it's broadly retail.
Speaker 10 (33:01):
It's not necessarily broadly retail. There's a good mix of
retail and institutional clients. What I would say is there
are different risk profiles for our clients. So clients that
are in the thematic products tend to be long term conservative,
you know, buy and hold, looking to allocate to their
portfolios for longer periods of time, whether institutional or retail.
Speaker 6 (33:21):
In terms of the single name stocks.
Speaker 10 (33:22):
It tends to be sophisticated. Whether it's an institution or
it's a retail day trader, it's a sophisticated trader who
understands that these are meant to be traded and not held,
that you know, you're getting returned for a period of time,
not beyond one day, and you know kind of user
beware and understand how these products work over time.
Speaker 6 (33:42):
And so it's just a different risk profile.
Speaker 10 (33:44):
But there's a mix of both types of clients, retail
and institutional, across all the product suites.
Speaker 2 (33:49):
All right, Sylvia, great to get some time with you.
Happy holidays. That is Sylvia Jablonski of Defiance ETPs.
Speaker 3 (33:55):
Now, coming up on.
Speaker 2 (33:56):
B Tech, we'll discuss the outlook for Tesla. It's sure
price has been on a tear, but what challenges all wait?
In twenty twenty six, Steve Wesley, founder of the Wesley Group,
he joins us. Next, this is Bloomberg Tech. Well, Tesla
(34:24):
has had quite a year. It shares have soared, its
CEO secured a record pay package. It's robotaxis launched in
a limited way in Austin and San Francisco. But on
the horizon are challenges, among them declining sales, shrinking profits,
and moves by global regulators. Sources telling us here at
Bloomberg that the company is facing a new US government
(34:44):
probe over the door handles of its Model three sedans.
Steve Wesley, he is a former Tesla board member and
managing partner of the Wesley Group, joins us. Now, Steve,
great to have you with us. Let's start again with
these door handles. We have had a month's long investmentgation
over here at Bloomberg. We know that the NHTSA has
opened an investigation in September, and I wonder what you
(35:07):
make of how this is evolving and the reputational damage
that this could inflict on Tesla.
Speaker 11 (35:13):
Look, it's a serious issue, but a lot of other
auto companies have had similarities, for Volkswagen General Motors.
Speaker 12 (35:20):
But it's not a simple software fix.
Speaker 11 (35:21):
So here's a time where Tesla's really got to be
firing on all cylinders to fix this.
Speaker 2 (35:27):
And I mean, from what you can tell the company's
public posture, do you think that they are treating this
with the appropriate degree of seriousness.
Speaker 11 (35:36):
Well, we'll see, this is not a simple software fix,
so they're going to have to go in re engineers
and things. The cost is probably going to take a while,
but it's not the first time it's happened.
Speaker 12 (35:45):
It's happened with other auto companies.
Speaker 11 (35:46):
But I think everybody in the sector is going to
be focused in on this one. Tesla, as you know,
has had some other brand challenges, so they want to
come out. They're trying to position themselves and look like
a testnology leader, not just an auto company. Fixing this
sweep top of that priority list absolutely.
Speaker 2 (36:03):
Well, let's talk about the year for Tesla more broadly,
because shares are up about nineteen percent on a total
return basis, we know that that has come with a
lot of volatility.
Speaker 3 (36:12):
You think about where we stand right now.
Speaker 2 (36:14):
Sure, shares have surged in the past few months, but
sales continue to be an issue. You think about the US,
you think about Europe. You mentioned that Tesla wants to
be positioned as a technology company here, but this feels
like a pretty fundamental issue that is going to need attention.
Speaker 11 (36:29):
Look, this is a huge issue in twenty twenty six
is going to be a pivotal year. Share price at
record highs one point six trillion dollar market cap. That's astonishing.
But Tesla's latency. It's second year in a row of
declining sales and shrinking profits. So the robotaxi approval it
has got in Austin is great. They no longer need
drivers in the cars. That still leaves them way behind Weymouth.
(36:51):
So Tesla's really got to get into a higher gear
on regulatory approval. They've got to get into more cities faster,
and they need to get revenue growth to keep that
share price up.
Speaker 12 (37:00):
Let's see how well they do.
Speaker 2 (37:02):
Yeah, absolutely, I mean you mentioned Weaimo, and you think
about the gap. Weymol obviously has that first mover advantage
Tesla trying to close it here? Do you think that
that is actually achievable when you think about how far
out Weimo is and all the different markets it has
already entered.
Speaker 11 (37:18):
Well, it's going to be tough for Tessa to catch
up because look, Waimo's already in six cities operational Large City,
San Francisco, Los Angeles, Phoenix, Miami, Atlanta. But they've announced
another sixteen cities they're going into. They'll do twelve million
to fourteen million rides by the end of this year
next week, but next year, I think they're looking at
(37:40):
a number close to thirty five million. They're already making
plants way international. They're doing trials now at London, Tokyo,
New York City. Waimo's got a huge lead. Tesla's got
its work cutout for it to catch up. If you're
positioning yourself as a technology company, they've got to get
in the race and go toe to toe with Weimo and.
Speaker 3 (37:58):
See if we've got just about a minute left.
Speaker 2 (38:00):
We've talked about door handles, we've talked about sales, we've talked.
Speaker 3 (38:03):
About the robotaxis.
Speaker 2 (38:04):
What else should Tesla be focusing on in twenty twenty six.
Speaker 11 (38:08):
Well, I think there's two things. The key one is
their energy division is booming. And say what you want
about Tesla needing new models and maybe being behind in
full self driving, but every out of company in the
world today is also an energy company, and Tesla provides
three products. Power walls you probably see them in garages, megapacks,
(38:29):
energy blocks for utilities. The takeaway is there's a revolution
AI and data centers forcing utilities to look for new
power suppliers.
Speaker 12 (38:37):
Tesla's filling that void.
Speaker 11 (38:39):
Their energy division will grow from ten billion and twenty
twenty four, so I think about fourteen billion this year.
They can provide forty percent year of a year growth.
That's going to help, all right.
Speaker 2 (38:49):
Steve really enjoyed this conversation. Happy Holidays. That is Steve Wesley.
He is CEO of the Wesley Group. Service Now reaching
an agreement to buy cybersecurity startup Armists in a cash
deal valued at seven point seventy five billion dollars, marking
its biggest acquisition today. I caught up with Service Now
(39:11):
president and COO on Zaveri yesterday take.
Speaker 13 (39:14):
A lesson when we saw this opportunity and seeing the
way that AI adoption is going. This is a great
opportunity for us to continue expanding in our security space.
So today our security business has crossed billion dollars at
service now and addition of Armies will allow us to
now get into more new capabilities with customers are demanding
from us, as well as allow us to really be
(39:36):
differentiated as we add AI data workflow with all of
it being around security and making sure that no breaches
customers have to deal with. So that's really the thinking
and Armies is a very innovative company, very well regarded,
great team, very good domain expertise, and the combination of
US and them can really change the game in the
cybersecurity space and build a cybersecurity automation abilties very fast.
Speaker 14 (40:01):
It gets to this idea too. I mean you mentioned
sort of the potential addition to revenue. I think they
talked about a three hundred million dollar a run rate
right now that they're sort of dealing with. This isn't
obviously just about the additional revenue that you get specifically
from Armies. I assume this is also about bringing in
new clients and more importantly keeping the clients you have there.
Speaker 13 (40:21):
Yeah, this is very strategic play. I mean, we are
very confident of our own revenue plans, right, We don't
depend on armies to deliver our fifty plus rule of
fifty plus right, which is twenty plus percent as subscription
revenue growth and for thirty plus percent in terms of
having free cash flow margins. So we've been fifty plus
the last ten years and we keep on delivering that
and we're not dependent on armies to deliver on what
(40:43):
we have been sharing with the street. So this is
much more of a strategic play. They are three hundred
and forty million in revenue already growing at fifty percent.
But the key thing is the technology and the IP
we're bringing in together with Service now capabilities as well
as a lot of the joint customers, we can go
together with and really provide them a full capability around
cybersecurity and help them with all the issues they're dealing
(41:07):
with from one platform perspective.
Speaker 2 (41:08):
Right.
Speaker 13 (41:09):
They have OURMISS has a lot of data around all
the assets company has, the physical assets. If you look
at now physical AI is coming into play as well
robotics and other things like that. That information combined with
our service NOWS Confrigation Management database which has access around
software and hardware. We can really give you full security
(41:29):
posture management and really give you the exposure guarantee that
nothing can go wrong.
Speaker 2 (41:34):
And I want to talk about your dealmaking posture overall,
because we're talking about armists today. But you rewind the
clock to March, you struck an agreement to buy move
Works for about two point eighty five billion dollars.
Speaker 3 (41:46):
Should we expect to see more.
Speaker 2 (41:48):
M and A from Service Now in twenty twenty six.
Speaker 13 (41:51):
No, I think we have all the assets we require.
I think this is an opportunity for Service Now to
really get into spaces where customers are asking us to
get quicker, so wrote myp ACS plus scaled capabilities will require.
But I think we are very confident with all the
things we have announced so far as the core things
we require from our portfolio perspective and execration we need
to do. We always can do continue doing what we've
(42:12):
been doing before around tukens and small IP purchases. But
from the security perspective, I think we have what we
need to become the premium security platform provider in the
market today.
Speaker 2 (42:24):
That was Service Now President on Itt Zavari. Now, before
we go, it's time for talking tech. First up, Bitcoin
missing out on the Christmas chair, currently trading around eighty
seven thousand today. That comes after a brutal sell off
in October, not from record highs. Token on track for
its worst quarterly performance since twenty twenty two. Plus, ads
could be coming to chat GBT. Open Ai is said
(42:46):
to be working out the details.
Speaker 3 (42:47):
To integrate ads into its.
Speaker 2 (42:49):
AI chatbot, according to a report from The Information and
Alphabet's WEAMO says it's updating software across its fleet to
better handle power outages. The move comes after self driving
taxis froze and costs a traffic jam during major power
failure last weekend in San Francisco. Beck does it for
this edition of Bloomberg Tech. Don't forget to check out
(43:11):
our podcast This is Bloomberg
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
The Bobby Bones Show
Listen to 'The Bobby Bones Show' by downloading the daily full replay.