December 19, 2025 • 40 mins
Bloomberg’s Caroline Hyde discusses the plans for a US-majority-owned TikTok. Plus, former TikTok boss Kevin Mayer shares his thoughts on that deal and the broader media landscape. And Oracle shares rise as the company plays into some of the year's biggest deals.
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
from coast to coast with Caroline Hyde in New York
and Eva though in San Francisco.
Speaker 2 (00:21):
This is Bloomberg Tech coming up. The weight is it over?
Speaker 3 (00:25):
TikTok says it's signed agreements for the new US joint venture.
Plus who better to talk about the new TikTok era
than former CEO Kevin Meyer.
Speaker 2 (00:34):
He joins us at the top of the hour and.
Speaker 3 (00:36):
The latest reports on Opening Eyes potential valuation the Wall
Street Journal giving in an eight hundred and thirty billion.
Speaker 2 (00:42):
Dollar price tech. But first we go to our top story.
Speaker 3 (00:46):
The details are they there for a proposed TikTok deal.
Speaker 2 (00:49):
Grimos kirt Wagner, who covers social.
Speaker 3 (00:51):
Media, can talk us through the intricacies because we understand
that still byte Dance will be playing a role, but
a less than twenty percent role.
Speaker 4 (00:59):
That's right, so byte Dance will have an ownership stake
in this in this new US entity. We previously reported
as well that you know byite Dance will be the
licensing its content algorithm to this new US TikTok that
they would then use that licensed algorithm to build a
new one based on US user data. But you know,
the law, Caroline is pretty clear, which is that byte
(01:21):
Dance is not supposed to have any operational role in
this new US TikTok. And so this has sort of
been the complaint all along is that is Byteedance's involvement,
even if it's a small ownership stake or as a
licensing partner on the algorithm, is that considered too much.
I don't know if anyone is actually going to push
back and try and you know, fight this. No one
(01:42):
has to date, but those who are following the letter
of the law do have questions about whether this actually
follows the letter of the law.
Speaker 3 (01:49):
And also the players involve ka Oracle, which seems to
be everywhere at the moment, is playing an outsize role
with a fifteen percent holding, but they are of a
private equity involvement.
Speaker 2 (01:58):
There's Middle East an involvement, there.
Speaker 4 (02:01):
Is, and Oracle gets all the headlines because you know,
it's the large American tech company. It's also going to
have an outsized role in terms of sort of securing
that US data. You may recall that there was a
similar arrangement agreed upon a few years ago called the
Project Texas that was supposed to have Oracle at the
center of protecting this. What's interesting about that is that
(02:21):
at that time the arrangement with Oracle was not considered
to be a solution. Regulators in the US did not
feel that it went far enough to actually protect US data.
Now they're sort of pitching the same framework as they
did a few years ago, and again the question is
is anybody going to step up and actually push back
on this? But as you mentioned, there's several different parties involved.
Everyone is even ORCLE owns only fifteen percent of this,
(02:43):
so there will be a lot of sort of hands
in the pot.
Speaker 3 (02:46):
Here Brumbo's Kat Wagner, we thank you, extraordinary story, a
developing story. Let's talk about what we can expect from
a US majority owned TikTok. None other than Kevin Maher
here's co CEO of Candle Media. You're also with a
former top CEO. You're the COO of Byte Dance as well.
And it blows my mind to think that it was
August twenty twenty when you resigned because you couldn't see
(03:08):
a par forward of managing TikTok globally. Five years later,
here we are Kevin, what do you make of this
potential deal?
Speaker 5 (03:16):
Well, here we are, thanks for having me.
Speaker 6 (03:17):
I really appreciate it. Look, I think Kurt did a
good job of describing the deal. I think it works operationally.
I think having a company like Oracle, a very trusted
company run by Larry Elson, who was a trustworthy figure
obviously being in the center in charge of looking after
and securing the US data, that's crucial. And I think
(03:39):
they're licensing the algorithm from China, so Biteance will still
own the code. But I do think this license will
take another instance of the algorithm, all the code put
on Oracle service and then trained on the US data
that Oracle alone.
Speaker 5 (03:53):
Has access to.
Speaker 6 (03:54):
So I think it's going to end up having a
vastly different feed and sort of content rhythm then you'll
see around the world. So I think that that will work.
And I think that byte Dance will you know, it
is now below twenty percent ownership, in nineteen point nine
percent ownership. That's a substantial difference from status quo. And
I do think that by Dance has an operation role
commercializing TikTok, selling ads, making sure e commerce works, and
(04:17):
all the other commercialization factors but really it will be
run by a US board and be a separate US company.
Speaker 3 (04:25):
It works, It works, but the proof is in the
putting as to whether the algorithm is powerful. How do
you see, as someone who's in charge of content development
wanting to get your content out there in a marketing capacity,
do you have confidence there will be as good without
bytedoance as heavily involved.
Speaker 5 (04:42):
Well, I think it probably will be.
Speaker 6 (04:43):
There's a lot of intricacies and a lot of AI
as the word of the day, in that code, and
I think that code base being kept intact is crucial.
I think had they tried to recreate a new algorithm
from scratch because of security concerns, that would have been
exceedingly difficult. That has taken years and years and thousands
of engineers in China to develop as a very sophisticated
(05:06):
AI recommendation engine.
Speaker 5 (05:08):
So the fact that they all access to that it.
Speaker 6 (05:10):
Will remain interoperable with all the other TikTok instances around
the world, I think that matters quite a bit. And
I think just retraining that same code base, that same
algorithm with US data should provide a very robust solution.
Speaker 5 (05:22):
I think it will be seamless.
Speaker 2 (05:23):
Really interesting.
Speaker 3 (05:24):
That interoperability because as someone who can see the power
of TikTok, because you are able to get global content,
not just US focused content.
Speaker 2 (05:34):
Is that really going to work?
Speaker 3 (05:35):
Is that something that you think will It's still remain
a global business even though you're having this US part
hived off.
Speaker 6 (05:41):
It has to it has to remain global. I think
a social media platform, and I would call it TikTok
more social entertainment actually than social media, that has to
be global. If it were to be siphoned off and
cording off from the rest of the world and having
a US only presence, I think that would be a
big detriment to US users.
Speaker 5 (05:59):
As I understand it. That's not the case.
Speaker 6 (06:00):
It is interoperable, and I think from a user perspective,
be seamlessly accessing content from around the world and vice versa.
Just the recommendation that will be US based only.
Speaker 3 (06:10):
I mean, you just think about the entertainment element. I mean,
TikTok had its first red carbon moment yesterday doing awards.
I mean, this really is trying to be a juggernaut
of the way you and I consume our content going forward.
Speaker 2 (06:21):
Just from the national security.
Speaker 3 (06:23):
Perspective, How do you think that has been silenced in
terms of criticism because many fail that perhaps bite out
still has a bit too much involvement, particularly if it
gets some profits as well well.
Speaker 6 (06:33):
I think Byedan's deriving profits there do that. I mean
they built this entire ecosystem, this entire code base, the technology,
the app. They paid a lot of money in marketing
to get that app downloaded on hundreds of millions of
billions frankly of devices around the world. They've earned that
right to have a participation and profits, and I think
it's structured in such a way that's very fair. And
(06:54):
I do think that from a national security perspective, again,
having that data walled off may ensure that our potential
eversars outside of the US cannot access the algorithm. Again,
how that algorithm recommends content content moderation policies and the
actual data underneath it that drives the training of that algorithm,
The fact that that is controlled by Oracle. It is
(07:17):
like Project Texas, but I think Project Texas would have
worked as well. So I think this is going to
solve the whatever legitimate national security concerns that were now solved.
Speaker 3 (07:27):
The consumer has kind of cared less and less since
the first ruling. Since that first under the Biden administration,
desire to block us well to block TikTok, or at
least separating them from by Dance. Initially people were really
worried about the national security element, and now it seems
that has faded. Do you think consumers are going to
(07:47):
be interested in what they're now presented in terms of
the algorithm. It's so interesting, I now get a stem
element in TikTok. They've already tried to confront that feeling
that we're being dumb down versus perhaps what they're being
served by the competition in China.
Speaker 6 (08:01):
Yeah, I look, I think I think it's all just
pretty good news. I think that Americans will be well
served by having another voice, another platform. I think Americans
speaking to Americans on this platform and Americans speaking to
the world in the world back to us.
Speaker 5 (08:15):
It is healthy. It's a healthy dialogue to have.
Speaker 6 (08:17):
I think that if it's done in a way that
is protecting our interests, that's protecting our security, I think
that's very good news for consumers here, and I think
they'll be well served. So I think it's correct that
consumers should have now put this in the back of
their mind a little bit. This seems like a permanent solution.
The only element of doubt here and risk is that
China hasn't come out and explicitly the Chinese government hasn't
(08:40):
blessed the deal yet. I'd be a little concerned about that.
You know, back five years ago we almost had to
deal with Oracle you may recall, and the Chinese government
put an end to it. It looks like, by all
accounts in the Chinese media, the right words of being
said today and then in the last few days about
the deal looks good. Looks like China will approve it.
Little of flying the ointment, but again, wouldn't be too
(09:02):
concerned about it.
Speaker 5 (09:03):
Looks like it's going to happen.
Speaker 3 (09:05):
You're at the very cutting edge of where media is
moving to. You're sort of the lead architect behind Disney
Plus and how it was on failed. You're now thinking
about new areas of brands, and you're helping Coco mel
and get everywhere.
Speaker 2 (09:18):
In a cameo from.
Speaker 3 (09:19):
Kids, for example, what is TikTok in terms of its competition?
Because we're also considering a totally different media landscape. We're
thinking about whether a Netflix owning Warner Brothers would be
the real competition?
Speaker 2 (09:33):
Is YouTube is the real competition? TikTok? How do you
see this evolution right now?
Speaker 6 (09:38):
Well, there's a lot going on in the media business.
Now it's going to it looks a lot different than
it did even five years ago. There's young people and
even you know, people my age, and across the demographic spectrum.
People are watching more short form entertainment. That's something that
TikTok actually in the beginning, YouTube, you know, pioneered short
form entertainment.
Speaker 5 (09:58):
It became a full screen.
Speaker 6 (10:00):
Vertical when with vertical phones when TikTok came along, and
now YouTube is doing that with shorts. I think there's
is a sea change in how people consume content, where
the influence comes from. I mean, if you look at
today the landscape and what's more central to the culture.
Is it Hollywood, is a TikTok? Is it YouTube? The
answer is it's a mix of all of the above.
(10:21):
And as usage patterns continue to evolve, I think there's
some challenges for Hollywood to catch up. My company, Candle
Media owned, We own a company called Moonbug, and you
mentioned cocomelon Cocomelon is centered on IP derived from YouTube.
It's on the YouTube ecosystem. We're on shorts, we're on
the traditional YouTube, you know video, and we have over
(10:42):
two hundred million subscribers to that one English language channel,
and we've been the biggest show on Netflix.
Speaker 5 (10:47):
So I think there is taking.
Speaker 6 (10:49):
Advantage of all the different platforms that people interact with,
you know, streaming page, streaming services, advertising for the streaming services.
The atrical windows wearing a Cocomelan movie come out in
twenty twenty seven, and YouTube and TikTok at the center
of that IP generation machine. That's the future of media,
and media companies that are really at the cutting edge
are really looking YouTube, TikTok short form video alongside the
(11:13):
long form traditional storytelling that has been their bread and
butter for decades.
Speaker 3 (11:17):
Do you have any anxiety for Hollywood for IP for
content creation? If indeed Netflix does take ownership a Warner
Brothers Discovery, if Paramount does for that example, indeed, what
it means for your old alma mater, which is.
Speaker 5 (11:30):
Disney, Well, Disney's in a great position.
Speaker 6 (11:33):
Disney has the IP of the franchises they have that
the brands that matter Disney, Star Wars, Marble, Pixar, Disney's
in a pretty unassailable position. Put them aside for a second.
What Hollywood needs is a healthy ecosystem. They need studios
that have another revenue to cover their costs, that are profitable,
and that are in a position to compete against these
(11:56):
mths like TikTok, like YouTube and Google. So a combination
there between Warner Brothers and one of Netflix or Paramount
is crucial. I think to maintain the health and the
profitability that ecosystems, it's better to have fewer competitors that
are more financially viable and can buy more product and
support a high production value than having a more buyers,
(12:18):
one more buyer being Warner Brothers being independently in a
reacer financial position.
Speaker 5 (12:22):
So I think that a combination is good.
Speaker 6 (12:25):
And even though Netflix won the first round, don't count
out the Ellisons. They're incredibly smart and aggressive. Don't count
out don't count out Jerry Cardinal at Redbird. These guys
are very serious. I think they're going to come back
with a higher bid.
Speaker 5 (12:38):
And when they.
Speaker 6 (12:38):
Approach, and remember shareholders still haven't spoken yet, I think
the likelihood of hear is that Marner Brothers ends up
with Paramount, and I think it's ultimately it is they
cost some jobs. Obviously in Hollywood, there's no getting around that,
but ultimately good for creators.
Speaker 3 (12:52):
I think one we might have to have you back
very soon as all of these stories unfold. Kevin Mayer,
What a joy to have you on Kindle Media co CEO,
former TikTok CEO and CEO of byde Dance. Now let's
get back to these markets that are in risk on
mode as we head towards the very shortened week next
week ahead of the holidays, and aslack is up one
(13:13):
point two percent. In fact, stocks arising even as traders
face the expiration of a record pile of options. Today,
we're seeing Bitcoin up three point three percent. We're also
looking at key names such as Oracle. We're up seven
percent as that TikTok deal is it near the closing?
What does it mean for Oracle's business model as its
cloud partner the subroomberg Tech.
Speaker 2 (13:43):
Take a look at Oracle shares.
Speaker 3 (13:44):
They're doing strongly today and everywhere you turn this week,
Oracle has dominated the headlines from anxiety around data center timetables,
data center leases along with mounting debt piles, ability to
raise financing for the Michigan project, not to mention Larry
Ellison's other potential bet some Warner Brothers, Discovery and now TikTok.
How is Oracle benefiting from this sale? How is it
(14:05):
affording all of it? Let's go to mannixing briefly is
global headed tech research, glue, meg intelligence.
Speaker 2 (14:10):
So why is the TikTok deal good? Why is all
of this good for Oracle or not?
Speaker 7 (14:16):
Well, right now, I think the concerns around Oracle stem
from the fact that they can finance that infrastructure build out.
But I think the TikTok news and just this Michigan
sort of build out happening is another sign that, you know,
things are moving incrementally, and they have given a revenue
guidance for the next four years. Even if you don't
(14:38):
believe there are RPO number you have, you know, intermedate bogies,
thirty two billion in is revenue for next year, you know,
seventy three billion the year after and for that they
have to build out infrastructure. Without that, that revenue won't
gonna come to fruition. So from that perspective, you know
these incremental steps are positive, and you know if the
(14:59):
fact that they can build out data center in Michigan,
to my mind, is another step towards you know, realizing
that thirty two billion in revenue next year.
Speaker 3 (15:09):
I hope you're around next week because I have a
feeling Oracle will also be on our minds. Then mandate
Seeing and Blue meg Intelligence. Thanks so much for all
of your coverage this week in your analysis. Let's get
more on the market's moves today. Sephanie Ali Algez with
US Global Market Strategies the JP Morgan. So we end
the week on a high, but wow, have we been
riddled with AI doubts?
Speaker 2 (15:27):
Where has your mind been app Yeah, it.
Speaker 8 (15:29):
Has been a really interesting tape in recent weeks and months.
I mean the debate around AI, the return on investment
around AI, around the quality of the balance sheets, the
war on the model front right between chat GBT and
Google's Gemini, and I think moving forward, markets are realizing
this is going to be less of a competition on
(15:51):
just the innovation, although the innovation is really important, but
also on balance sheets and you know, the show me
the money. This kind of desire for markets to really
see companies with AI tied cash generation, which is a
tricky environment to be in because if you want to
see growth from AI but cash, you might need to
(16:13):
actually let go of some cash in the near term
right to invest in some of these infrastructure buildouts to
ultimately get the growth that we're looking for.
Speaker 3 (16:20):
I mean, investor is being asked to be patient. The
word I've heard time in ten again this week is discerning.
Is that what you feel people are starting? It's not
all boats arising, We're picking.
Speaker 2 (16:29):
On winners, yes, right exactly.
Speaker 8 (16:31):
It's we had three years of AI providing this really
powerful tide, lifting a lot of boats, and this year
we've seen a lot more discernment right amongst these names.
Speaker 2 (16:41):
We think that that can continue. Now.
Speaker 8 (16:43):
It doesn't mean that AI isn't still this kind of
rising tide, but we're now seeing the different markets here,
the markets around models, the markets around cloud services, markets
around infrastructure, and now we want to see who are
going to be the leaders, Who are they going to
be the companies that actually capture the best economics in
each of these markets. So it's not necessarily zero sum,
but now competition is really ratcheting higher and balance sheets
(17:08):
are starting to fray A little bit. Right, we're tapping
into debt market, so companies are also seeing greater differentiation
amongst themselves.
Speaker 2 (17:15):
That way, you are a cross perspective.
Speaker 3 (17:18):
Should people be owning the debt of these big companies
cool propons as well as equity exposure?
Speaker 8 (17:23):
I mean, I guess it depends on what you're looking for.
You know, I think the Fed is lowering interest rates,
and you know, if you see interest rates move lower
more broadly, like, there is going to be demand for this,
this debt issuance, and we're expecting a lot of that.
There's also five hundred billion dollars in dry powder and
private credit, right, so I don't doubt that this capital
we'll find.
Speaker 2 (17:42):
You know, at home.
Speaker 8 (17:44):
But I think the question for investors is to just
make sure that you have some diversification to this seam
in your portfolio. Because as extraordinary and transformative as AI
is going to be, the last few weeks have reminded
us that it's going to be choppy along the way.
There can be surprises and knowns, So you want to
make sure your portfolio is built to withstand those choppier
waters while still benefiting from the secular opportunity that remains.
Speaker 3 (18:08):
What almost have been the theme of twenty twenty five
is how dominant the private sector, private sector names have
been on your maybe overexposure in your public portfolio. I
think of a nameline open AI. We think of SpaceX
and its valuation, open ai potentially being eight hundred and
thirty billion, just to pit the post on SpaceX's eight
hundred billion dollar valuation. How much are you seeing your
(18:30):
clients wanting more exposure to the private markets and how
is that going to translate to public in twenty twenty six.
Speaker 8 (18:35):
So key, and it's such a big difference from what
we saw in the Internet era, right when all of
these AI or sorry Internet startups were just going public
on day one, and today you have these AI native
companies reaching scale that we've never seen before in private markets.
And of course there are the big model developers, but
what's been actually most interesting for me has been seeing
(18:56):
the explosion in AI applications. If you think about out
who are the companies that are really at the center
of end user demand, selling to consumers, selling to businesses,
it's these more niche AI applications and they are growing
at scales that we've never seen before. Right the average
AI startup reaching one hundred million dollars in under twelve
(19:17):
months on average at take and startups about roughly.
Speaker 2 (19:20):
Ten years to achieve.
Speaker 8 (19:21):
You had Patrick McGoldrick here yesterday from our firm talking
about this dynamic. So absolutely like if you want some
of that growth exposure, you're going to need a look
in private markets. In our long term capital market assumptions,
we actually see that the long term return expectation in
private equity at ten point two versus large cap public
equities in the US six point seven. A big reason
(19:42):
for that is starting valuations in public equity markets. In
private markets you have that issue too, So selectivity is
going to be really really important. But we still think
there's a lot of opportunity.
Speaker 3 (19:52):
What about opportunities for IPOs next year and those who
haven't golled the private exposure getting it when it goes public.
Speaker 8 (19:57):
Yeah, that's going to be really interesting because some of
these companies like open ai and SpaceX, at their private
market valuation, they would already be top fifteen companies in
the S and P five hundred, so they're not even
public yet. And when they do go public, investors, you know,
we're going to see what the demand is at that time.
But you're going to be getting into a company that
already looks kind of like a megacab, you know. And
(20:19):
I think these companies are then going to have to
stand against public market scrutiny like the scoreboard that these
companies actually have to really attest to. So it'll be
really interesting. I think if we get these IPOs next year,
it'll be a really powerful, really like referendum on the
AI ecosystem, which is an opportunity and a risk for
the broader space next year.
Speaker 3 (20:39):
Regulators we understand in China have yet to say whether
they'll approve the proposed sale and new structure for byte
Dance owned TikTok and decision required for the deal to
more forward. Now, the fate of TikTok has become a
key issue in the US China relations under the Trump administration,
putting meg Technology Editorim Washington, Michael Sheppard, you're joining us.
You can help remind us actually what isn't agreed to yet?
(21:01):
Because the market is pricing in a deal with new
US ownership and control and less than twenty percent held
by byteedowance of US TikTok. But what haven't we heard yet.
Speaker 9 (21:10):
Well, the loose end really is, you said, Caro, is
Chinese government approval, and we may never really hear a
full throat of blessing from Beijing for this transaction, and
the way we might ordinarily expect. We have heard from
the White House very clearly. We all remember September twenty fifth,
President Donald Trump very publicly signed the declaration the order
(21:32):
setting in motion the deal that was actually inked yesterday,
and announced it an internal memo to TikTok employees by
company CEO Shao Chu. Now, the interesting thing, Caro, when
you think about it, is that these are serious players.
When you think about Oracle, when you think about shaou Chu,
when you think about Silver Lake and MGX, the other
(21:52):
three main new investors here preparing to take a significant
chunk together, they would control about forty five percent of
the new US entity. They would not likely proceed unless
they had a very good sense that China was willing
to go along. Putting that pen to paper is a
significant step forward than actually just talking about it, which
(22:14):
is the stage we were at when we last heard
back in September, with Trumps signing.
Speaker 3 (22:19):
Mike remind us, though, what else is really at State
care between US and China, and Video is involved. We
think about the chip war, the tech war more broadly,
but also this week has been particularly concerning considering what's
happening in terms of arms deals with Taiwan.
Speaker 2 (22:33):
Can you just.
Speaker 3 (22:33):
Remind us really where the relationship lies at this moment.
Speaker 9 (22:37):
Well, there are all sorts of cross currents happening here
right now. You brought the Taiwan sale, and of course
that envelops an industry that we cover so closely, chips,
given that so many the lion's share of the advanced
AI chips are actually produced on the self governing island.
But the cross currents are so many you talked about
in Nvidia and the pending approval that President Donald Trump,
(22:59):
at least verbally on his truth social allowed the sales
of in Video's h two hundred chips to China. Jameson Greer,
the US trade representative, sat on Bloomberg TV this morning
that he sees that as separate. He sees it as
a separate issue within the China relationship. Perhaps TikTok in
a way is too. US officials have brought up export
(23:21):
controls and TikTok in their conversations with the Chinese, But
the question is are they able to break them away
from all the other questions surrounding things like rare earths
and also the tariffs that the Trump administration has been
threatening against Chinese goods. So how much separation do we
see all in all of that, and are we going
(23:42):
to see China offer something in return or the US
vice versa? Is the H two hundred perhaps the olive
branch that was needed to get China over the line
on TikTok.
Speaker 5 (23:54):
We don't know.
Speaker 9 (23:54):
We're still trying to find out more about all of
what went down, but we are looking ahead already to
your AD twenty second and that is when the deal
is scheduled to close.
Speaker 3 (24:03):
By Bloomberg's Mike Shepherd, a complete wrap from Washington.
Speaker 2 (24:08):
We thank you.
Speaker 3 (24:09):
Let's talk about TikTok ownership and how it is just
one of several points of tech friction between Washington and Beijing.
As Mike was outlining, Amy Webbs, your Future Today Strategy
Group says the US trying to race to develop and
control technology is set to define the future of AI,
of chips, of quantum, she joins us. Now, Amy, how
does TikTok and a potential agreement play into the relationship.
Speaker 2 (24:29):
Do you think I'm positive for that?
Speaker 10 (24:33):
Well, positive in terms of calming some of the concerns
that the Trump administration had. You know, I would imagine
that a lot of people didn't have Oracle on their
binging go card is the biggest tech disruptor in twenty
twenty five. But that's where we are, and that's because
Oracle is a bit of a mixed bag. It's not
on the forefront of innovation in critical technologies. This is
(24:54):
a company that moves slowly. But at the end of
the day, yep. But at the end of the day,
business is just about relationships. And Larry Ellison as a
friend of Donald Trump, and if we think about China
going forward, China is all about relationships and how that's
going to impact matches, the development of the artificial intelligence instant,
(25:15):
so many other critical technologies that are now fully intertwined
with business.
Speaker 3 (25:21):
Okay, I mean, so potentially it's a positive in the relationship,
the diplomatic relationship between US and China. But what more
broadly will dictate in twenty twenty six we keep on
talking about this undercurrent of a race really and in
one way, we have an olive branch for TikTok and
another we have still a desire to restrict very integral
technologies going to China and China and building up his
(25:43):
own chip supply chain and resilience away from the United States.
Speaker 10 (25:47):
Who's winning, right, So again, I think at the moment,
China's winning, which is a controversial view, but let me
tell you why I think this way. China has spent
years investing in infrastructure. The United States has really had
sort of a free wheeling innovation focus and the challenges.
We've got a handful of companies that are making through
(26:09):
roads in their innovation and different technologies, but we don't
have the physical infrastructure to support a lot of that,
which is why you hear so much about data centers
and energy consumption. China has been at the forefront of
totally transforming what energy transfer looks like. In March, the
CCP will have its meeting on China's annual five year Plan.
(26:30):
AI is the centerpiece of that, and there is a
very clearly outlined every five year look at how that
entire country is going to transform. We just don't have
that point of view in the United States. So again,
this is I think the TikTok thing is partially about competition,
but it also signals a challenge that we have in
the US going forward. We have to have some type
(26:50):
of coordinated effort if we're going to remain competitive, not
just from a business point of view, but when we
think about our national and international competitiveness, whether that comes
to talent or security or even geopolitics.
Speaker 3 (27:05):
Yeah, remind us what's at stake, because we all like
to talk about a race, but many of us forget
what the winning of it really means and why many
in Washington and more broadly in Silicon Valley and everywhere
are worried about China leading when it comes to artificial
general intelligence, or even superintelligence.
Speaker 10 (27:21):
So some of this has to do with the chipsets themselves,
the technology itself, and where China has made some of
those inroads. So we sort of moved beyond the point
where data is all that matter. Hardware matters very much
going forward because that has implications for everything from pharmaceuticals
to robotics. You know, it cuts across every industry, and
(27:45):
at the moment we are at a bit of a
disadvantage because China has pushed very far ahead in the
future of telecommunications and the hardware needed for that where
they are deploying throughout Africa. You know, all of this
is happening at a critical moment where the United States
is retreating from a global stage. You know, that just
(28:06):
sets us up for some significant challenges going forward, especially
because technology is now part and parcel of everything that
we do.
Speaker 3 (28:14):
And we haven't even mentioned why we're trying to see
twenty twenty nine go for quantum for example, how much
is that going to be something we talk about in
twenty twenty six.
Speaker 10 (28:22):
Well, there have been some significant breakthroughs already in twenty
twenty five, and you know that's come from sort of
the usual suspects. So Google had some pretty big breakthroughs,
as did Microsoft. And effectively, what this means is we're
moving from theory into actual use cases in practice. So
it does mean everybody's going to have a quantum computer
next year. It does mean that the application becomes more accessible.
(28:45):
But here too, we don't see a national perspective the
way that we do in China. You know, we just
have to start marshaling our resources in a cohesive direction. Again,
not such that it is state dictated, but so that
we have policy certainty, we have investment structures in place,
and we are all able to row the boat of
(29:07):
technology forward together well.
Speaker 3 (29:09):
Said Amy Webb, CEO of Future Future Today Strategy Groups.
Wonderful to have some time with you, Thank you very much. Indeed,
open ai is aiming to raise as much as one
hundred billion dollars to pay for ambitious growth plans. Now
that's according to the Wall Street Journal. The chatchypt maker
is in early fundraising talks that couldn't value the company
as much as eight hundred and thirty billion dollars. It
(29:30):
needs a huge amount of capital, of course to build
as AI models and stay competitive, but exuberants of AI
is waning a little and public companies in the space
seen investors pull back and show some anxiety around the
infrastructure build out. But otherwise we're looking at productivity and
deployment of open AI's chatchibt and the company is looking
to win over the next generations. Workers are becoming they
(29:51):
go to AI tool a choice in college now. According
to purchase orders reviewed by Bloomberg, the company has sold
more than seven hundred thousand chatchybet licenses too, about thirty
five public universities for use by students and faculty. It's
far more rivals like Microsoft need to tell us more,
as bluembgs Liam Knox who covers higher education, and I
mean remind me it was only about a year or
(30:13):
so ago that we saw this deep anxiety and concern
coming from faculty members from the future of education about
the deployment of AI.
Speaker 11 (30:22):
Absolutely, there's been a lot of consternation among professors among
educators about the effects of AI in the classroom, obviously
about its use for things like you know, cheating and plagiarism,
but also just its effect on learning outcomes for students.
Since then, obviously it's kind of become an ubiquitous part
(30:43):
of most classrooms, and so a lot has changed in
the past couple of years.
Speaker 2 (30:48):
Okay, so why is open ai wanting to really lean
in here?
Speaker 11 (30:53):
Well, there's a kind of tried and true, you know
strategy in the tech world.
Speaker 5 (30:59):
Google had had.
Speaker 11 (31:01):
A similar strategy around its chromebooks and its suite of
applications years ago when it offered free chromebooks and classes.
Open ai is really hoping to make inroads with what
they see as as their future customer base to put
their Chatchipeta and AI tools at the center of kind
of workforce preparation and skills training, and colleges are you
(31:25):
know there. It's already been used by students on Massa colleges,
so it's kind of an obvious place to start.
Speaker 3 (31:33):
Fascinating story open aiing's college deals, seizing early lead in education.
Speaker 2 (31:36):
Go read it.
Speaker 3 (31:37):
Bloom Meggs, Liam Knox, thank you, And let's talk about
the fintech billionaire and SpaceX astronaut Jared Issacman, who's finally
been confirmed as the next head of NASA. He's worked
with Blue meg Tech's own Ed Ludlow about US plans
to return to the Moon.
Speaker 12 (31:51):
This goes beyond just a recommitment to the Artemis program.
This is the next big leap. You know, We're not
just going back to the Moon under this space policy.
We're declaring we're going back and we're going to establish
the infrastructure. I mean, who doesn't what's space loving fan
out there doesn't want to see a lunar base. And
then we're going to invest in the technology that's going
to enable you know, frequent, long duration missions to Mars
(32:13):
and beyond, whether that be through nuclear propulsion or nuclear
surface power, which which obviously has a number of useful
applications be at the Moon or Mars. So it's an
exciting day. It's absolutely extraordinary national space policy and one
that I'm not surprised to see. Frankly, it was under
President Trump's first term that we returned American spaceflight capability
to the United States after a ten year hiatus. It's
(32:35):
when he kicked off the Artemis program, and now you know,
we're taking it to the next level.
Speaker 13 (32:41):
Administrator Isaacman jared. The question I get most for you
right now, in response to everything that's happened in the
last few weeks, is how is NASA still relevant right
in a world where the private sector is dominating activity,
it's dominant innovation.
Speaker 5 (33:01):
What is your answer to that question?
Speaker 12 (33:03):
Well, you know, that seems to be a common misconception.
I mean, you go back to the nineteen sixties and
NASA didn't go at it alone. I mean we had
McDonald Douglas, we had Boeing, we had Northrope. These were
all critical, critical vendors and contractors that helped us achieve
the near impossible of sending American astronauts to the Moon
(33:24):
and bring them back safely to night to Earth. I
mean some of these companies still exist and play a
huge part in the Artemis program. And then of course
there are some new companies, you know, like SpaceX, who's
given us rapid reusability their vehicles in Blue Origin and Stoke.
But it's the same thing. NASA is leading in the
ultimate high ground of space. And let's focus a little
(33:44):
bit more on science too.
Speaker 8 (33:45):
In that.
Speaker 12 (33:46):
I mean, there are as much as I would love
to see private companies and academic institutions building you know,
Hubble Telescopes in James Webb Space Telescope and putting rovers
on the Moon, that is squarely in the responsibility of NASA.
Speaker 3 (34:02):
Our own Ede Lalu is speaking with the new NASA administrator,
Jared Isaacman.
Speaker 2 (34:07):
Now, next up, we're going to be talking all things
twenty twenty six.
Speaker 3 (34:10):
Look ahead. Where are you in the world of tech?
Tiffany Wade joining us in Columbia, thread Needle. This is
Blumberg Tech. Welcome back to Bloomberg Tech. We check in
on these markets. The higher on the day, the higher
(34:32):
on the week. There on the year, we're up by
twenty percent. Lest you forget some of the recent volatility.
It has been a banner twenty twenty five. What about
twenty twenty six? What's what the outlook opportunities? Risks pleased
to say, Tiffany Wadeer is with our senior portfolio manager
at Columbia thread Needle Investments. You've got a call se
one hundred and fifteen billion dollars an assets under management.
How much is tech going to still be leading the
(34:52):
charge in next year?
Speaker 14 (34:54):
I think tech it's going to be good again next year.
I honestly think they set up for twenty twenty six
looks quite similar to this this last year. We'll see
another year of FED raid cutting. In general, the economy
looks pretty strong. Labor is a watch item for next year,
but you know labor has been weakening for the most
part of this year as well. And then we'll also
see fiscal stimulus next year, and that'll come from existing
(35:16):
stimulus continuing such as the IRA but also the tax bill.
And then AI is going to be a tailwind next year.
So I think it sets up well for tech and
growth generally.
Speaker 3 (35:24):
What needs to be proven now in twenty twenty six,
because I feel like twenty twenty five we've all needed
to understand the infrastructure needs, and then we've questioned the
ability to afford all of them. But twenty twenty six,
we're starting to see real needs to show signs of
productivity and actual growth here.
Speaker 2 (35:38):
Yeah.
Speaker 14 (35:38):
Yeah, I think we're just starting to see the use
cases build for AI, and we're starting to see it
across the economy.
Speaker 8 (35:43):
Right.
Speaker 14 (35:43):
Certainly tech is one of the early adopters for AI,
but we're seeing it across the consumer space, across financials
as well. And I think as that continues to build,
that continues to you know, increase the use cases and
the proof that AI is going to be ubiquitous across
the economy. But also I think, you know, similar to
a bit of the concerns we had earlier this year,
we need to see that companies still continue to invest
in AI and they still see the returns from that
(36:05):
being beneficial to continue the spending.
Speaker 3 (36:07):
Have you done much analysis and what that actually means
for the labor outlook, because we've had how Mark saying
this is sort of a disaster basically for the labor market.
Speaker 2 (36:14):
All of this AI for.
Speaker 3 (36:15):
Focus, but we've had perhaps what people call AI washing
and people liking to blame job cuts on AI, but
we're trying to actually discern how much it really is.
Speaker 14 (36:23):
Yeah, I think it's hard to say right now how
much of the job cuts so far have been related
to AI. There's some surveys, certainly that suggests that some
of the AI some of the job cuts have been.
Speaker 2 (36:32):
Specifically related to AI.
Speaker 14 (36:34):
I do think there will probably be a period of
digestion in the workforce. It's hard to say over in
the near term what the displacement is going to be.
Speaker 2 (36:42):
Over the long term.
Speaker 14 (36:43):
I imagine, like many sorts of technology innovations we've have
over time, that this will probably be in a positive
over a longer period of time.
Speaker 3 (36:49):
So you're looking at your portfolio aligning it for twenty
twenty six. Is it going to be the same winners.
Is it going to be the infrastructure play the in videos,
the chip makers, or is them mile more of a
shift for your mindset of getting into where the productivity
actually happens, where the applications happen.
Speaker 14 (37:05):
Yeah, I think we're very positive on the infrastructure spending
as well, more so on the hyperscalers and some of
the electrical equipment names that are involved in sort of
the physical infrastructure spending, and then also some of the
companies that are involved in helping to make AI scalable.
So thinking of technology companies that enable the usage, the deployment,
the security around AI. So I think that's where we
(37:27):
might see.
Speaker 2 (37:27):
Something like a Palan Networks, also.
Speaker 14 (37:31):
A Mango dB something like that. So the companies that
allow AI to be scalable, that allow companies to clean.
Speaker 2 (37:38):
Up their data to get it ready for AI.
Speaker 14 (37:39):
So that's something that we've heard from a lot of
companies is that the process of getting your data cleaned
up and ready to be put into AI is very
difficult and something that a lot of companies are working on.
I don't know that the productivity benefits. I think that's
something that's probably still a little farther out, but it
will be very widespread when it happens.
Speaker 3 (37:56):
What about the end of year concerns around of financing,
about exposure to open AI and whether or not it
can hit the revenue run rate that it's going to
and indeed odd desire to be even more discerning really
about specific names.
Speaker 2 (38:10):
Yeah, I actually think that the.
Speaker 14 (38:13):
You know, the market being discerning about these names is
a good indication that we're not sort of in a
bubble territory right now. Right if we think about what
happened back in the late nineties and two thousands, we
were not concerned about whether or not companies were generating
fee cash flow, what the returns were on their investments.
The fact that we're concerned about these, I think means
that the market is pretty healthy in the way it's
thinking about investing in AI. And also, I think over
(38:34):
the next couple of years, if you look at sort
of the Hyperscaler group in general, the amount of capex
that's expected to be spent on AI infrastructure and broadly
on AI, they're free cash flow dwarfs that by several times,
So I think that there's plenty of you know, of
return and cash flow available to keep the spending going.
Speaker 3 (38:52):
We've been talking a lot about the impact of the
private markets. Are you expecting that they will become public
next year? And how have your own client's been navigating
exposure to big private companies.
Speaker 14 (39:02):
Yeah, it's possible that we will see a number of
these companies come public next year. I think that's going
to be very interesting, especially for large cap investors. Certainly,
it's going to pack the indexes because these will most
certainly be included in a number of the indexes, possibly
in size, which we'll have implications for large gap investors
who may need to hold some of these names. And
you know, we'll see where the funding comes from out
(39:23):
of other parts of the economy.
Speaker 3 (39:25):
So we've got less than thirty seconds left. Do you
want more diversification globally or across different companies as well?
Speaker 14 (39:31):
Right now, I think we're still very comfortable the US.
You know, I think growth in the US still looks
much better than lots of other parts of the of
the globe. Certainly corporate earnings growth does as well as
GDP growth. So I think we're still very comfortable with
the US. And then again, you know, we still think
the tech and other names related to AI infrastructure look
very appealing for next year, as well as consumer spending
(39:52):
on the back of some of that stimulus. Stimulus we'll
see early next.
Speaker 3 (39:55):
Year come back any next year, we hope, Tiffany Wade,
We wish a very happy holidays, your portfolio manager over
at Columbia Thread Needle Investments. Are That does it for
this edition of Bloomberg Tech. Don't forget to check out
the podcast. Find it on the terminal, as well as
online on Apple, Spotify, and iHeart.
Speaker 2 (40:09):
Have yourself a wonderful weekend. I'll see you back, same place,
same time on Monday. This is Bloomberg Tech
Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
from coast to coast with Caroline Hyde in New York
and Eva though in San Francisco.
Speaker 2 (00:21):
This is Bloomberg Tech coming up. The weight is it over?
Speaker 3 (00:25):
TikTok says it's signed agreements for the new US joint venture.
Plus who better to talk about the new TikTok era
than former CEO Kevin Meyer.
Speaker 2 (00:34):
He joins us at the top of the hour and.
Speaker 3 (00:36):
The latest reports on Opening Eyes potential valuation the Wall
Street Journal giving in an eight hundred and thirty billion.
Speaker 2 (00:42):
Dollar price tech. But first we go to our top story.
Speaker 3 (00:46):
The details are they there for a proposed TikTok deal.
Speaker 2 (00:49):
Grimos kirt Wagner, who covers social.
Speaker 3 (00:51):
Media, can talk us through the intricacies because we understand
that still byte Dance will be playing a role, but
a less than twenty percent role.
Speaker 4 (00:59):
That's right, so byte Dance will have an ownership stake
in this in this new US entity. We previously reported
as well that you know byite Dance will be the
licensing its content algorithm to this new US TikTok that
they would then use that licensed algorithm to build a
new one based on US user data. But you know,
the law, Caroline is pretty clear, which is that byte
(01:21):
Dance is not supposed to have any operational role in
this new US TikTok. And so this has sort of
been the complaint all along is that is Byteedance's involvement,
even if it's a small ownership stake or as a
licensing partner on the algorithm, is that considered too much.
I don't know if anyone is actually going to push
back and try and you know, fight this. No one
(01:42):
has to date, but those who are following the letter
of the law do have questions about whether this actually
follows the letter of the law.
Speaker 3 (01:49):
And also the players involve ka Oracle, which seems to
be everywhere at the moment, is playing an outsize role
with a fifteen percent holding, but they are of a
private equity involvement.
Speaker 2 (01:58):
There's Middle East an involvement, there.
Speaker 4 (02:01):
Is, and Oracle gets all the headlines because you know,
it's the large American tech company. It's also going to
have an outsized role in terms of sort of securing
that US data. You may recall that there was a
similar arrangement agreed upon a few years ago called the
Project Texas that was supposed to have Oracle at the
center of protecting this. What's interesting about that is that
(02:21):
at that time the arrangement with Oracle was not considered
to be a solution. Regulators in the US did not
feel that it went far enough to actually protect US data.
Now they're sort of pitching the same framework as they
did a few years ago, and again the question is
is anybody going to step up and actually push back
on this? But as you mentioned, there's several different parties involved.
Everyone is even ORCLE owns only fifteen percent of this,
(02:43):
so there will be a lot of sort of hands
in the pot.
Speaker 3 (02:46):
Here Brumbo's Kat Wagner, we thank you, extraordinary story, a
developing story. Let's talk about what we can expect from
a US majority owned TikTok. None other than Kevin Maher
here's co CEO of Candle Media. You're also with a
former top CEO. You're the COO of Byte Dance as well.
And it blows my mind to think that it was
August twenty twenty when you resigned because you couldn't see
(03:08):
a par forward of managing TikTok globally. Five years later,
here we are Kevin, what do you make of this
potential deal?
Speaker 5 (03:16):
Well, here we are, thanks for having me.
Speaker 6 (03:17):
I really appreciate it. Look, I think Kurt did a
good job of describing the deal. I think it works operationally.
I think having a company like Oracle, a very trusted
company run by Larry Elson, who was a trustworthy figure
obviously being in the center in charge of looking after
and securing the US data, that's crucial. And I think
(03:39):
they're licensing the algorithm from China, so Biteance will still
own the code. But I do think this license will
take another instance of the algorithm, all the code put
on Oracle service and then trained on the US data
that Oracle alone.
Speaker 5 (03:53):
Has access to.
Speaker 6 (03:54):
So I think it's going to end up having a
vastly different feed and sort of content rhythm then you'll
see around the world. So I think that that will work.
And I think that byte Dance will you know, it
is now below twenty percent ownership, in nineteen point nine
percent ownership. That's a substantial difference from status quo. And
I do think that by Dance has an operation role
commercializing TikTok, selling ads, making sure e commerce works, and
(04:17):
all the other commercialization factors but really it will be
run by a US board and be a separate US company.
Speaker 3 (04:25):
It works, It works, but the proof is in the
putting as to whether the algorithm is powerful. How do
you see, as someone who's in charge of content development
wanting to get your content out there in a marketing capacity,
do you have confidence there will be as good without
bytedoance as heavily involved.
Speaker 5 (04:42):
Well, I think it probably will be.
Speaker 6 (04:43):
There's a lot of intricacies and a lot of AI
as the word of the day, in that code, and
I think that code base being kept intact is crucial.
I think had they tried to recreate a new algorithm
from scratch because of security concerns, that would have been
exceedingly difficult. That has taken years and years and thousands
of engineers in China to develop as a very sophisticated
(05:06):
AI recommendation engine.
Speaker 5 (05:08):
So the fact that they all access to that it.
Speaker 6 (05:10):
Will remain interoperable with all the other TikTok instances around
the world, I think that matters quite a bit. And
I think just retraining that same code base, that same
algorithm with US data should provide a very robust solution.
Speaker 5 (05:22):
I think it will be seamless.
Speaker 2 (05:23):
Really interesting.
Speaker 3 (05:24):
That interoperability because as someone who can see the power
of TikTok, because you are able to get global content,
not just US focused content.
Speaker 2 (05:34):
Is that really going to work?
Speaker 3 (05:35):
Is that something that you think will It's still remain
a global business even though you're having this US part
hived off.
Speaker 6 (05:41):
It has to it has to remain global. I think
a social media platform, and I would call it TikTok
more social entertainment actually than social media, that has to
be global. If it were to be siphoned off and
cording off from the rest of the world and having
a US only presence, I think that would be a
big detriment to US users.
Speaker 5 (05:59):
As I understand it. That's not the case.
Speaker 6 (06:00):
It is interoperable, and I think from a user perspective,
be seamlessly accessing content from around the world and vice versa.
Just the recommendation that will be US based only.
Speaker 3 (06:10):
I mean, you just think about the entertainment element. I mean,
TikTok had its first red carbon moment yesterday doing awards.
I mean, this really is trying to be a juggernaut
of the way you and I consume our content going forward.
Speaker 2 (06:21):
Just from the national security.
Speaker 3 (06:23):
Perspective, How do you think that has been silenced in
terms of criticism because many fail that perhaps bite out
still has a bit too much involvement, particularly if it
gets some profits as well well.
Speaker 6 (06:33):
I think Byedan's deriving profits there do that. I mean
they built this entire ecosystem, this entire code base, the technology,
the app. They paid a lot of money in marketing
to get that app downloaded on hundreds of millions of
billions frankly of devices around the world. They've earned that
right to have a participation and profits, and I think
it's structured in such a way that's very fair. And
(06:54):
I do think that from a national security perspective, again,
having that data walled off may ensure that our potential
eversars outside of the US cannot access the algorithm. Again,
how that algorithm recommends content content moderation policies and the
actual data underneath it that drives the training of that algorithm,
The fact that that is controlled by Oracle. It is
(07:17):
like Project Texas, but I think Project Texas would have
worked as well. So I think this is going to
solve the whatever legitimate national security concerns that were now solved.
Speaker 3 (07:27):
The consumer has kind of cared less and less since
the first ruling. Since that first under the Biden administration,
desire to block us well to block TikTok, or at
least separating them from by Dance. Initially people were really
worried about the national security element, and now it seems
that has faded. Do you think consumers are going to
(07:47):
be interested in what they're now presented in terms of
the algorithm. It's so interesting, I now get a stem
element in TikTok. They've already tried to confront that feeling
that we're being dumb down versus perhaps what they're being
served by the competition in China.
Speaker 6 (08:01):
Yeah, I look, I think I think it's all just
pretty good news. I think that Americans will be well
served by having another voice, another platform. I think Americans
speaking to Americans on this platform and Americans speaking to
the world in the world back to us.
Speaker 5 (08:15):
It is healthy. It's a healthy dialogue to have.
Speaker 6 (08:17):
I think that if it's done in a way that
is protecting our interests, that's protecting our security, I think
that's very good news for consumers here, and I think
they'll be well served. So I think it's correct that
consumers should have now put this in the back of
their mind a little bit. This seems like a permanent solution.
The only element of doubt here and risk is that
China hasn't come out and explicitly the Chinese government hasn't
(08:40):
blessed the deal yet. I'd be a little concerned about that.
You know, back five years ago we almost had to
deal with Oracle you may recall, and the Chinese government
put an end to it. It looks like, by all
accounts in the Chinese media, the right words of being
said today and then in the last few days about
the deal looks good. Looks like China will approve it.
Little of flying the ointment, but again, wouldn't be too
(09:02):
concerned about it.
Speaker 5 (09:03):
Looks like it's going to happen.
Speaker 3 (09:05):
You're at the very cutting edge of where media is
moving to. You're sort of the lead architect behind Disney
Plus and how it was on failed. You're now thinking
about new areas of brands, and you're helping Coco mel
and get everywhere.
Speaker 2 (09:18):
In a cameo from.
Speaker 3 (09:19):
Kids, for example, what is TikTok in terms of its competition?
Because we're also considering a totally different media landscape. We're
thinking about whether a Netflix owning Warner Brothers would be
the real competition?
Speaker 2 (09:33):
Is YouTube is the real competition? TikTok? How do you
see this evolution right now?
Speaker 6 (09:38):
Well, there's a lot going on in the media business.
Now it's going to it looks a lot different than
it did even five years ago. There's young people and
even you know, people my age, and across the demographic spectrum.
People are watching more short form entertainment. That's something that
TikTok actually in the beginning, YouTube, you know, pioneered short
form entertainment.
Speaker 5 (09:58):
It became a full screen.
Speaker 6 (10:00):
Vertical when with vertical phones when TikTok came along, and
now YouTube is doing that with shorts. I think there's
is a sea change in how people consume content, where
the influence comes from. I mean, if you look at
today the landscape and what's more central to the culture.
Is it Hollywood, is a TikTok? Is it YouTube? The
answer is it's a mix of all of the above.
(10:21):
And as usage patterns continue to evolve, I think there's
some challenges for Hollywood to catch up. My company, Candle
Media owned, We own a company called Moonbug, and you
mentioned cocomelon Cocomelon is centered on IP derived from YouTube.
It's on the YouTube ecosystem. We're on shorts, we're on
the traditional YouTube, you know video, and we have over
(10:42):
two hundred million subscribers to that one English language channel,
and we've been the biggest show on Netflix.
Speaker 5 (10:47):
So I think there is taking.
Speaker 6 (10:49):
Advantage of all the different platforms that people interact with,
you know, streaming page, streaming services, advertising for the streaming services.
The atrical windows wearing a Cocomelan movie come out in
twenty twenty seven, and YouTube and TikTok at the center
of that IP generation machine. That's the future of media,
and media companies that are really at the cutting edge
are really looking YouTube, TikTok short form video alongside the
(11:13):
long form traditional storytelling that has been their bread and
butter for decades.
Speaker 3 (11:17):
Do you have any anxiety for Hollywood for IP for
content creation? If indeed Netflix does take ownership a Warner
Brothers Discovery, if Paramount does for that example, indeed, what
it means for your old alma mater, which is.
Speaker 5 (11:30):
Disney, Well, Disney's in a great position.
Speaker 6 (11:33):
Disney has the IP of the franchises they have that
the brands that matter Disney, Star Wars, Marble, Pixar, Disney's
in a pretty unassailable position. Put them aside for a second.
What Hollywood needs is a healthy ecosystem. They need studios
that have another revenue to cover their costs, that are profitable,
and that are in a position to compete against these
(11:56):
mths like TikTok, like YouTube and Google. So a combination
there between Warner Brothers and one of Netflix or Paramount
is crucial. I think to maintain the health and the
profitability that ecosystems, it's better to have fewer competitors that
are more financially viable and can buy more product and
support a high production value than having a more buyers,
(12:18):
one more buyer being Warner Brothers being independently in a
reacer financial position.
Speaker 5 (12:22):
So I think that a combination is good.
Speaker 6 (12:25):
And even though Netflix won the first round, don't count
out the Ellisons. They're incredibly smart and aggressive. Don't count
out don't count out Jerry Cardinal at Redbird. These guys
are very serious. I think they're going to come back
with a higher bid.
Speaker 5 (12:38):
And when they.
Speaker 6 (12:38):
Approach, and remember shareholders still haven't spoken yet, I think
the likelihood of hear is that Marner Brothers ends up
with Paramount, and I think it's ultimately it is they
cost some jobs. Obviously in Hollywood, there's no getting around that,
but ultimately good for creators.
Speaker 3 (12:52):
I think one we might have to have you back
very soon as all of these stories unfold. Kevin Mayer,
What a joy to have you on Kindle Media co CEO,
former TikTok CEO and CEO of byde Dance. Now let's
get back to these markets that are in risk on
mode as we head towards the very shortened week next
week ahead of the holidays, and aslack is up one
(13:13):
point two percent. In fact, stocks arising even as traders
face the expiration of a record pile of options. Today,
we're seeing Bitcoin up three point three percent. We're also
looking at key names such as Oracle. We're up seven
percent as that TikTok deal is it near the closing?
What does it mean for Oracle's business model as its
cloud partner the subroomberg Tech.
Speaker 2 (13:43):
Take a look at Oracle shares.
Speaker 3 (13:44):
They're doing strongly today and everywhere you turn this week,
Oracle has dominated the headlines from anxiety around data center timetables,
data center leases along with mounting debt piles, ability to
raise financing for the Michigan project, not to mention Larry
Ellison's other potential bet some Warner Brothers, Discovery and now TikTok.
How is Oracle benefiting from this sale? How is it
(14:05):
affording all of it? Let's go to mannixing briefly is
global headed tech research, glue, meg intelligence.
Speaker 2 (14:10):
So why is the TikTok deal good? Why is all
of this good for Oracle or not?
Speaker 7 (14:16):
Well, right now, I think the concerns around Oracle stem
from the fact that they can finance that infrastructure build out.
But I think the TikTok news and just this Michigan
sort of build out happening is another sign that, you know,
things are moving incrementally, and they have given a revenue
guidance for the next four years. Even if you don't
(14:38):
believe there are RPO number you have, you know, intermedate bogies,
thirty two billion in is revenue for next year, you know,
seventy three billion the year after and for that they
have to build out infrastructure. Without that, that revenue won't
gonna come to fruition. So from that perspective, you know
these incremental steps are positive, and you know if the
(14:59):
fact that they can build out data center in Michigan,
to my mind, is another step towards you know, realizing
that thirty two billion in revenue next year.
Speaker 3 (15:09):
I hope you're around next week because I have a
feeling Oracle will also be on our minds. Then mandate
Seeing and Blue meg Intelligence. Thanks so much for all
of your coverage this week in your analysis. Let's get
more on the market's moves today. Sephanie Ali Algez with
US Global Market Strategies the JP Morgan. So we end
the week on a high, but wow, have we been
riddled with AI doubts?
Speaker 2 (15:27):
Where has your mind been app Yeah, it.
Speaker 8 (15:29):
Has been a really interesting tape in recent weeks and months.
I mean the debate around AI, the return on investment
around AI, around the quality of the balance sheets, the
war on the model front right between chat GBT and
Google's Gemini, and I think moving forward, markets are realizing
this is going to be less of a competition on
(15:51):
just the innovation, although the innovation is really important, but
also on balance sheets and you know, the show me
the money. This kind of desire for markets to really
see companies with AI tied cash generation, which is a
tricky environment to be in because if you want to
see growth from AI but cash, you might need to
(16:13):
actually let go of some cash in the near term
right to invest in some of these infrastructure buildouts to
ultimately get the growth that we're looking for.
Speaker 3 (16:20):
I mean, investor is being asked to be patient. The
word I've heard time in ten again this week is discerning.
Is that what you feel people are starting? It's not
all boats arising, We're picking.
Speaker 2 (16:29):
On winners, yes, right exactly.
Speaker 8 (16:31):
It's we had three years of AI providing this really
powerful tide, lifting a lot of boats, and this year
we've seen a lot more discernment right amongst these names.
Speaker 2 (16:41):
We think that that can continue. Now.
Speaker 8 (16:43):
It doesn't mean that AI isn't still this kind of
rising tide, but we're now seeing the different markets here,
the markets around models, the markets around cloud services, markets
around infrastructure, and now we want to see who are
going to be the leaders, Who are they going to
be the companies that actually capture the best economics in
each of these markets. So it's not necessarily zero sum,
but now competition is really ratcheting higher and balance sheets
(17:08):
are starting to fray A little bit. Right, we're tapping
into debt market, so companies are also seeing greater differentiation
amongst themselves.
Speaker 2 (17:15):
That way, you are a cross perspective.
Speaker 3 (17:18):
Should people be owning the debt of these big companies
cool propons as well as equity exposure?
Speaker 8 (17:23):
I mean, I guess it depends on what you're looking for.
You know, I think the Fed is lowering interest rates,
and you know, if you see interest rates move lower
more broadly, like, there is going to be demand for this,
this debt issuance, and we're expecting a lot of that.
There's also five hundred billion dollars in dry powder and
private credit, right, so I don't doubt that this capital
we'll find.
Speaker 2 (17:42):
You know, at home.
Speaker 8 (17:44):
But I think the question for investors is to just
make sure that you have some diversification to this seam
in your portfolio. Because as extraordinary and transformative as AI
is going to be, the last few weeks have reminded
us that it's going to be choppy along the way.
There can be surprises and knowns, So you want to
make sure your portfolio is built to withstand those choppier
waters while still benefiting from the secular opportunity that remains.
Speaker 3 (18:08):
What almost have been the theme of twenty twenty five
is how dominant the private sector, private sector names have
been on your maybe overexposure in your public portfolio. I
think of a nameline open AI. We think of SpaceX
and its valuation, open ai potentially being eight hundred and
thirty billion, just to pit the post on SpaceX's eight
hundred billion dollar valuation. How much are you seeing your
(18:30):
clients wanting more exposure to the private markets and how
is that going to translate to public in twenty twenty six.
Speaker 8 (18:35):
So key, and it's such a big difference from what
we saw in the Internet era, right when all of
these AI or sorry Internet startups were just going public
on day one, and today you have these AI native
companies reaching scale that we've never seen before in private markets.
And of course there are the big model developers, but
what's been actually most interesting for me has been seeing
(18:56):
the explosion in AI applications. If you think about out
who are the companies that are really at the center
of end user demand, selling to consumers, selling to businesses,
it's these more niche AI applications and they are growing
at scales that we've never seen before. Right the average
AI startup reaching one hundred million dollars in under twelve
(19:17):
months on average at take and startups about roughly.
Speaker 2 (19:20):
Ten years to achieve.
Speaker 8 (19:21):
You had Patrick McGoldrick here yesterday from our firm talking
about this dynamic. So absolutely like if you want some
of that growth exposure, you're going to need a look
in private markets. In our long term capital market assumptions,
we actually see that the long term return expectation in
private equity at ten point two versus large cap public
equities in the US six point seven. A big reason
(19:42):
for that is starting valuations in public equity markets. In
private markets you have that issue too, So selectivity is
going to be really really important. But we still think
there's a lot of opportunity.
Speaker 3 (19:52):
What about opportunities for IPOs next year and those who
haven't golled the private exposure getting it when it goes public.
Speaker 8 (19:57):
Yeah, that's going to be really interesting because some of
these companies like open ai and SpaceX, at their private
market valuation, they would already be top fifteen companies in
the S and P five hundred, so they're not even
public yet. And when they do go public, investors, you know,
we're going to see what the demand is at that time.
But you're going to be getting into a company that
already looks kind of like a megacab, you know. And
(20:19):
I think these companies are then going to have to
stand against public market scrutiny like the scoreboard that these
companies actually have to really attest to. So it'll be
really interesting. I think if we get these IPOs next year,
it'll be a really powerful, really like referendum on the
AI ecosystem, which is an opportunity and a risk for
the broader space next year.
Speaker 3 (20:39):
Regulators we understand in China have yet to say whether
they'll approve the proposed sale and new structure for byte
Dance owned TikTok and decision required for the deal to
more forward. Now, the fate of TikTok has become a
key issue in the US China relations under the Trump administration,
putting meg Technology Editorim Washington, Michael Sheppard, you're joining us.
You can help remind us actually what isn't agreed to yet?
(21:01):
Because the market is pricing in a deal with new
US ownership and control and less than twenty percent held
by byteedowance of US TikTok. But what haven't we heard yet.
Speaker 9 (21:10):
Well, the loose end really is, you said, Caro, is
Chinese government approval, and we may never really hear a
full throat of blessing from Beijing for this transaction, and
the way we might ordinarily expect. We have heard from
the White House very clearly. We all remember September twenty fifth,
President Donald Trump very publicly signed the declaration the order
(21:32):
setting in motion the deal that was actually inked yesterday,
and announced it an internal memo to TikTok employees by
company CEO Shao Chu. Now, the interesting thing, Caro, when
you think about it, is that these are serious players.
When you think about Oracle, when you think about shaou Chu,
when you think about Silver Lake and MGX, the other
(21:52):
three main new investors here preparing to take a significant
chunk together, they would control about forty five percent of
the new US entity. They would not likely proceed unless
they had a very good sense that China was willing
to go along. Putting that pen to paper is a
significant step forward than actually just talking about it, which
(22:14):
is the stage we were at when we last heard
back in September, with Trumps signing.
Speaker 3 (22:19):
Mike remind us, though, what else is really at State
care between US and China, and Video is involved. We
think about the chip war, the tech war more broadly,
but also this week has been particularly concerning considering what's
happening in terms of arms deals with Taiwan.
Speaker 2 (22:33):
Can you just.
Speaker 3 (22:33):
Remind us really where the relationship lies at this moment.
Speaker 9 (22:37):
Well, there are all sorts of cross currents happening here
right now. You brought the Taiwan sale, and of course
that envelops an industry that we cover so closely, chips,
given that so many the lion's share of the advanced
AI chips are actually produced on the self governing island.
But the cross currents are so many you talked about
in Nvidia and the pending approval that President Donald Trump,
(22:59):
at least verbally on his truth social allowed the sales
of in Video's h two hundred chips to China. Jameson Greer,
the US trade representative, sat on Bloomberg TV this morning
that he sees that as separate. He sees it as
a separate issue within the China relationship. Perhaps TikTok in
a way is too. US officials have brought up export
(23:21):
controls and TikTok in their conversations with the Chinese, But
the question is are they able to break them away
from all the other questions surrounding things like rare earths
and also the tariffs that the Trump administration has been
threatening against Chinese goods. So how much separation do we
see all in all of that, and are we going
(23:42):
to see China offer something in return or the US
vice versa? Is the H two hundred perhaps the olive
branch that was needed to get China over the line
on TikTok.
Speaker 5 (23:54):
We don't know.
Speaker 9 (23:54):
We're still trying to find out more about all of
what went down, but we are looking ahead already to
your AD twenty second and that is when the deal
is scheduled to close.
Speaker 3 (24:03):
By Bloomberg's Mike Shepherd, a complete wrap from Washington.
Speaker 2 (24:08):
We thank you.
Speaker 3 (24:09):
Let's talk about TikTok ownership and how it is just
one of several points of tech friction between Washington and Beijing.
As Mike was outlining, Amy Webbs, your Future Today Strategy
Group says the US trying to race to develop and
control technology is set to define the future of AI,
of chips, of quantum, she joins us. Now, Amy, how
does TikTok and a potential agreement play into the relationship.
Speaker 2 (24:29):
Do you think I'm positive for that?
Speaker 10 (24:33):
Well, positive in terms of calming some of the concerns
that the Trump administration had. You know, I would imagine
that a lot of people didn't have Oracle on their
binging go card is the biggest tech disruptor in twenty
twenty five. But that's where we are, and that's because
Oracle is a bit of a mixed bag. It's not
on the forefront of innovation in critical technologies. This is
(24:54):
a company that moves slowly. But at the end of
the day, yep. But at the end of the day,
business is just about relationships. And Larry Ellison as a
friend of Donald Trump, and if we think about China
going forward, China is all about relationships and how that's
going to impact matches, the development of the artificial intelligence instant,
(25:15):
so many other critical technologies that are now fully intertwined
with business.
Speaker 3 (25:21):
Okay, I mean, so potentially it's a positive in the relationship,
the diplomatic relationship between US and China. But what more
broadly will dictate in twenty twenty six we keep on
talking about this undercurrent of a race really and in
one way, we have an olive branch for TikTok and
another we have still a desire to restrict very integral
technologies going to China and China and building up his
(25:43):
own chip supply chain and resilience away from the United States.
Speaker 10 (25:47):
Who's winning, right, So again, I think at the moment,
China's winning, which is a controversial view, but let me
tell you why I think this way. China has spent
years investing in infrastructure. The United States has really had
sort of a free wheeling innovation focus and the challenges.
We've got a handful of companies that are making through
(26:09):
roads in their innovation and different technologies, but we don't
have the physical infrastructure to support a lot of that,
which is why you hear so much about data centers
and energy consumption. China has been at the forefront of
totally transforming what energy transfer looks like. In March, the
CCP will have its meeting on China's annual five year Plan.
(26:30):
AI is the centerpiece of that, and there is a
very clearly outlined every five year look at how that
entire country is going to transform. We just don't have
that point of view in the United States. So again,
this is I think the TikTok thing is partially about competition,
but it also signals a challenge that we have in
the US going forward. We have to have some type
(26:50):
of coordinated effort if we're going to remain competitive, not
just from a business point of view, but when we
think about our national and international competitiveness, whether that comes
to talent or security or even geopolitics.
Speaker 3 (27:05):
Yeah, remind us what's at stake, because we all like
to talk about a race, but many of us forget
what the winning of it really means and why many
in Washington and more broadly in Silicon Valley and everywhere
are worried about China leading when it comes to artificial
general intelligence, or even superintelligence.
Speaker 10 (27:21):
So some of this has to do with the chipsets themselves,
the technology itself, and where China has made some of
those inroads. So we sort of moved beyond the point
where data is all that matter. Hardware matters very much
going forward because that has implications for everything from pharmaceuticals
to robotics. You know, it cuts across every industry, and
(27:45):
at the moment we are at a bit of a
disadvantage because China has pushed very far ahead in the
future of telecommunications and the hardware needed for that where
they are deploying throughout Africa. You know, all of this
is happening at a critical moment where the United States
is retreating from a global stage. You know, that just
(28:06):
sets us up for some significant challenges going forward, especially
because technology is now part and parcel of everything that
we do.
Speaker 3 (28:14):
And we haven't even mentioned why we're trying to see
twenty twenty nine go for quantum for example, how much
is that going to be something we talk about in
twenty twenty six.
Speaker 10 (28:22):
Well, there have been some significant breakthroughs already in twenty
twenty five, and you know that's come from sort of
the usual suspects. So Google had some pretty big breakthroughs,
as did Microsoft. And effectively, what this means is we're
moving from theory into actual use cases in practice. So
it does mean everybody's going to have a quantum computer
next year. It does mean that the application becomes more accessible.
(28:45):
But here too, we don't see a national perspective the
way that we do in China. You know, we just
have to start marshaling our resources in a cohesive direction. Again,
not such that it is state dictated, but so that
we have policy certainty, we have investment structures in place,
and we are all able to row the boat of
(29:07):
technology forward together well.
Speaker 3 (29:09):
Said Amy Webb, CEO of Future Future Today Strategy Groups.
Wonderful to have some time with you, Thank you very much. Indeed,
open ai is aiming to raise as much as one
hundred billion dollars to pay for ambitious growth plans. Now
that's according to the Wall Street Journal. The chatchypt maker
is in early fundraising talks that couldn't value the company
as much as eight hundred and thirty billion dollars. It
(29:30):
needs a huge amount of capital, of course to build
as AI models and stay competitive, but exuberants of AI
is waning a little and public companies in the space
seen investors pull back and show some anxiety around the
infrastructure build out. But otherwise we're looking at productivity and
deployment of open AI's chatchibt and the company is looking
to win over the next generations. Workers are becoming they
(29:51):
go to AI tool a choice in college now. According
to purchase orders reviewed by Bloomberg, the company has sold
more than seven hundred thousand chatchybet licenses too, about thirty
five public universities for use by students and faculty. It's
far more rivals like Microsoft need to tell us more,
as bluembgs Liam Knox who covers higher education, and I
mean remind me it was only about a year or
(30:13):
so ago that we saw this deep anxiety and concern
coming from faculty members from the future of education about
the deployment of AI.
Speaker 11 (30:22):
Absolutely, there's been a lot of consternation among professors among
educators about the effects of AI in the classroom, obviously
about its use for things like you know, cheating and plagiarism,
but also just its effect on learning outcomes for students.
Since then, obviously it's kind of become an ubiquitous part
(30:43):
of most classrooms, and so a lot has changed in
the past couple of years.
Speaker 2 (30:48):
Okay, so why is open ai wanting to really lean
in here?
Speaker 11 (30:53):
Well, there's a kind of tried and true, you know
strategy in the tech world.
Speaker 5 (30:59):
Google had had.
Speaker 11 (31:01):
A similar strategy around its chromebooks and its suite of
applications years ago when it offered free chromebooks and classes.
Open ai is really hoping to make inroads with what
they see as as their future customer base to put
their Chatchipeta and AI tools at the center of kind
of workforce preparation and skills training, and colleges are you
(31:25):
know there. It's already been used by students on Massa colleges,
so it's kind of an obvious place to start.
Speaker 3 (31:33):
Fascinating story open aiing's college deals, seizing early lead in education.
Speaker 2 (31:36):
Go read it.
Speaker 3 (31:37):
Bloom Meggs, Liam Knox, thank you, And let's talk about
the fintech billionaire and SpaceX astronaut Jared Issacman, who's finally
been confirmed as the next head of NASA. He's worked
with Blue meg Tech's own Ed Ludlow about US plans
to return to the Moon.
Speaker 12 (31:51):
This goes beyond just a recommitment to the Artemis program.
This is the next big leap. You know, We're not
just going back to the Moon under this space policy.
We're declaring we're going back and we're going to establish
the infrastructure. I mean, who doesn't what's space loving fan
out there doesn't want to see a lunar base. And
then we're going to invest in the technology that's going
to enable you know, frequent, long duration missions to Mars
(32:13):
and beyond, whether that be through nuclear propulsion or nuclear
surface power, which which obviously has a number of useful
applications be at the Moon or Mars. So it's an
exciting day. It's absolutely extraordinary national space policy and one
that I'm not surprised to see. Frankly, it was under
President Trump's first term that we returned American spaceflight capability
to the United States after a ten year hiatus. It's
(32:35):
when he kicked off the Artemis program, and now you know,
we're taking it to the next level.
Speaker 13 (32:41):
Administrator Isaacman jared. The question I get most for you
right now, in response to everything that's happened in the
last few weeks, is how is NASA still relevant right
in a world where the private sector is dominating activity,
it's dominant innovation.
Speaker 5 (33:01):
What is your answer to that question?
Speaker 12 (33:03):
Well, you know, that seems to be a common misconception.
I mean, you go back to the nineteen sixties and
NASA didn't go at it alone. I mean we had
McDonald Douglas, we had Boeing, we had Northrope. These were
all critical, critical vendors and contractors that helped us achieve
the near impossible of sending American astronauts to the Moon
(33:24):
and bring them back safely to night to Earth. I
mean some of these companies still exist and play a
huge part in the Artemis program. And then of course
there are some new companies, you know, like SpaceX, who's
given us rapid reusability their vehicles in Blue Origin and Stoke.
But it's the same thing. NASA is leading in the
ultimate high ground of space. And let's focus a little
(33:44):
bit more on science too.
Speaker 8 (33:45):
In that.
Speaker 12 (33:46):
I mean, there are as much as I would love
to see private companies and academic institutions building you know,
Hubble Telescopes in James Webb Space Telescope and putting rovers
on the Moon, that is squarely in the responsibility of NASA.
Speaker 3 (34:02):
Our own Ede Lalu is speaking with the new NASA administrator,
Jared Isaacman.
Speaker 2 (34:07):
Now, next up, we're going to be talking all things
twenty twenty six.
Speaker 3 (34:10):
Look ahead. Where are you in the world of tech?
Tiffany Wade joining us in Columbia, thread Needle. This is
Blumberg Tech. Welcome back to Bloomberg Tech. We check in
on these markets. The higher on the day, the higher
(34:32):
on the week. There on the year, we're up by
twenty percent. Lest you forget some of the recent volatility.
It has been a banner twenty twenty five. What about
twenty twenty six? What's what the outlook opportunities? Risks pleased
to say, Tiffany Wadeer is with our senior portfolio manager
at Columbia thread Needle Investments. You've got a call se
one hundred and fifteen billion dollars an assets under management.
How much is tech going to still be leading the
(34:52):
charge in next year?
Speaker 14 (34:54):
I think tech it's going to be good again next year.
I honestly think they set up for twenty twenty six
looks quite similar to this this last year. We'll see
another year of FED raid cutting. In general, the economy
looks pretty strong. Labor is a watch item for next year,
but you know labor has been weakening for the most
part of this year as well. And then we'll also
see fiscal stimulus next year, and that'll come from existing
(35:16):
stimulus continuing such as the IRA but also the tax bill.
And then AI is going to be a tailwind next year.
So I think it sets up well for tech and
growth generally.
Speaker 3 (35:24):
What needs to be proven now in twenty twenty six,
because I feel like twenty twenty five we've all needed
to understand the infrastructure needs, and then we've questioned the
ability to afford all of them. But twenty twenty six,
we're starting to see real needs to show signs of
productivity and actual growth here.
Speaker 2 (35:38):
Yeah.
Speaker 14 (35:38):
Yeah, I think we're just starting to see the use
cases build for AI, and we're starting to see it
across the economy.
Speaker 8 (35:43):
Right.
Speaker 14 (35:43):
Certainly tech is one of the early adopters for AI,
but we're seeing it across the consumer space, across financials
as well. And I think as that continues to build,
that continues to you know, increase the use cases and
the proof that AI is going to be ubiquitous across
the economy. But also I think, you know, similar to
a bit of the concerns we had earlier this year,
we need to see that companies still continue to invest
in AI and they still see the returns from that
(36:05):
being beneficial to continue the spending.
Speaker 3 (36:07):
Have you done much analysis and what that actually means
for the labor outlook, because we've had how Mark saying
this is sort of a disaster basically for the labor market.
Speaker 2 (36:14):
All of this AI for.
Speaker 3 (36:15):
Focus, but we've had perhaps what people call AI washing
and people liking to blame job cuts on AI, but
we're trying to actually discern how much it really is.
Speaker 14 (36:23):
Yeah, I think it's hard to say right now how
much of the job cuts so far have been related
to AI. There's some surveys, certainly that suggests that some
of the AI some of the job cuts have been.
Speaker 2 (36:32):
Specifically related to AI.
Speaker 14 (36:34):
I do think there will probably be a period of
digestion in the workforce. It's hard to say over in
the near term what the displacement is going to be.
Speaker 2 (36:42):
Over the long term.
Speaker 14 (36:43):
I imagine, like many sorts of technology innovations we've have
over time, that this will probably be in a positive
over a longer period of time.
Speaker 3 (36:49):
So you're looking at your portfolio aligning it for twenty
twenty six. Is it going to be the same winners.
Is it going to be the infrastructure play the in videos,
the chip makers, or is them mile more of a
shift for your mindset of getting into where the productivity
actually happens, where the applications happen.
Speaker 14 (37:05):
Yeah, I think we're very positive on the infrastructure spending
as well, more so on the hyperscalers and some of
the electrical equipment names that are involved in sort of
the physical infrastructure spending, and then also some of the
companies that are involved in helping to make AI scalable.
So thinking of technology companies that enable the usage, the deployment,
the security around AI. So I think that's where we
(37:27):
might see.
Speaker 2 (37:27):
Something like a Palan Networks, also.
Speaker 14 (37:31):
A Mango dB something like that. So the companies that
allow AI to be scalable, that allow companies to clean.
Speaker 2 (37:38):
Up their data to get it ready for AI.
Speaker 14 (37:39):
So that's something that we've heard from a lot of
companies is that the process of getting your data cleaned
up and ready to be put into AI is very
difficult and something that a lot of companies are working on.
I don't know that the productivity benefits. I think that's
something that's probably still a little farther out, but it
will be very widespread when it happens.
Speaker 3 (37:56):
What about the end of year concerns around of financing,
about exposure to open AI and whether or not it
can hit the revenue run rate that it's going to
and indeed odd desire to be even more discerning really
about specific names.
Speaker 2 (38:10):
Yeah, I actually think that the.
Speaker 14 (38:13):
You know, the market being discerning about these names is
a good indication that we're not sort of in a
bubble territory right now. Right if we think about what
happened back in the late nineties and two thousands, we
were not concerned about whether or not companies were generating
fee cash flow, what the returns were on their investments.
The fact that we're concerned about these, I think means
that the market is pretty healthy in the way it's
thinking about investing in AI. And also, I think over
(38:34):
the next couple of years, if you look at sort
of the Hyperscaler group in general, the amount of capex
that's expected to be spent on AI infrastructure and broadly
on AI, they're free cash flow dwarfs that by several times,
So I think that there's plenty of you know, of
return and cash flow available to keep the spending going.
Speaker 3 (38:52):
We've been talking a lot about the impact of the
private markets. Are you expecting that they will become public
next year? And how have your own client's been navigating
exposure to big private companies.
Speaker 14 (39:02):
Yeah, it's possible that we will see a number of
these companies come public next year. I think that's going
to be very interesting, especially for large cap investors. Certainly,
it's going to pack the indexes because these will most
certainly be included in a number of the indexes, possibly
in size, which we'll have implications for large gap investors
who may need to hold some of these names. And
you know, we'll see where the funding comes from out
(39:23):
of other parts of the economy.
Speaker 3 (39:25):
So we've got less than thirty seconds left. Do you
want more diversification globally or across different companies as well?
Speaker 14 (39:31):
Right now, I think we're still very comfortable the US.
You know, I think growth in the US still looks
much better than lots of other parts of the of
the globe. Certainly corporate earnings growth does as well as
GDP growth. So I think we're still very comfortable with
the US. And then again, you know, we still think
the tech and other names related to AI infrastructure look
very appealing for next year, as well as consumer spending
(39:52):
on the back of some of that stimulus. Stimulus we'll
see early next.
Speaker 3 (39:55):
Year come back any next year, we hope, Tiffany Wade,
We wish a very happy holidays, your portfolio manager over
at Columbia Thread Needle Investments. Are That does it for
this edition of Bloomberg Tech. Don't forget to check out
the podcast. Find it on the terminal, as well as
online on Apple, Spotify, and iHeart.
Speaker 2 (40:09):
Have yourself a wonderful weekend. I'll see you back, same place,
same time on Monday. This is Bloomberg Tech
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