October 16, 2025 • 44 mins
Bloomberg’s Caroline Hyde and Ed Ludlow discuss TSMC's third-quarter results, which beat expectations and provided a positive outlook buoyed by strong AI demand. Plus, China unveils export controls on its rare-earth supply chain, sparking a global pushback. And the head of Apple’s ChatGPT-like search effort leaves in another blow to the company’s AI ambitions.
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
from coast to coast with Caroline Hide in New York
and Eva Low in San Francisco.
Speaker 2 (00:22):
This is Bloomberg Tech coming up.
Speaker 3 (00:24):
TSMC reports third quarter results, beating expectations and giving a
positive outlook, buoyed by strong AI demand.
Speaker 4 (00:31):
Glass's trade tensions re escalate between China and the US.
Speaker 5 (00:34):
Good president. She's rare US hardbules, but a global pushback.
Speaker 3 (00:38):
And yet another exec departure from Apple with its head
of the chat GPT. Like AI search efforts going to Meta.
Speaker 4 (00:47):
For first ed we dig into the market instead of
shaking off that trade anxiety and refocusing on the AI trade.
Speaker 5 (00:54):
Of course, you just just TSMC will dig into it.
Speaker 4 (00:56):
NASA up three quarters percent with trading higher for two
straight days. People focus on that and indeed potential talks
between President Putin and indeed the United States President.
Speaker 5 (01:06):
But what are we looking at underneath the hood?
Speaker 3 (01:08):
Yeah, TSMC the world's biggest and most important contract manufacturer
of semiconductors. The news is that it is hypedic sales
growth outlook for twenty twenty five for the second time
this year. Then we look at the shart we open
up two percent. We've given off some of those gains
if you read on the Bloomberg terminal or some of
the market stories. The early part of the morning was
(01:29):
TSMC driving US up positivity. But the trade story is
overtaking a little bit AI demand intact character.
Speaker 5 (01:36):
It is, let's just talk about that being an impact.
Speaker 4 (01:39):
Bloomos Peter Elstrom, who needs that tech coverage from the US, Europe,
in Asia, and Peter, look, TSMC did almost what ASML did.
Speaker 5 (01:46):
They said, Look, AI, the.
Speaker 4 (01:48):
Mega trends still there even if China pulls away in
terms of demand.
Speaker 2 (01:53):
Yeah, it's a little bit more than that.
Speaker 6 (01:54):
CC way, the CEO had this conference call after the
earnings results and as Ed was talking about, they hike
their forecast for twenty twenty five for the second time.
Just three months ago, they hike their forecast. And now
what CC, what you're saying is that this AI mega
trend is actually getting stronger. They of course are making
the chips for Nvidia and for many others too, and
(02:16):
what they're seeing is that the demand for those chips
is getting stronger. At this point, they're watching the capital
spending from some of the big customers out there, including
Open Ai. They realize that in Video is going to
have to supply those customers, and the trends are going
up from here. So we're starting to get a fuller
picture of what's going on in the chips business. We've
got preliminary results from Samsung earlier this week, and we
(02:37):
got ASML, the chip equipment maker after that, and now
we have TSMC, the biggest contract chip manufacturer, which is
giving us a very strong forecast too.
Speaker 3 (02:48):
That's kind of the demand side, right, Peter. But on
the supply side, there was lots of interesting information. The
two headlines that jump out at me are there massively
supply constrained. Capacity is tight, but they're moving really quick
to expand manufacturing capacity here in the United States.
Speaker 5 (03:05):
That's right.
Speaker 6 (03:06):
Yeah, Well, it takes a while to build these chip plants.
They've begun construction in the US a few years ago,
and they've now said that they want to build on
top of that. They want to expand even more than they.
Speaker 5 (03:17):
Have in the past.
Speaker 6 (03:18):
But they're trying to add capacity in the US while
they also build up their capacity in Taiwan right now.
So it's taken a while for them to bring those
fabs online and then meet this very strong demand that
they're getting from customers like Nvidia, also from Apple, they're
supplying a number. They also make the chips for AMD too,
as AMD tries to compete with Nvidia, so they're really
(03:39):
the big beneficiary. They're kind of the picks and shovels
that are helping with this AI boom.
Speaker 4 (03:43):
Look, we are looking at the ADRs a little lower, Peter.
They're at a record high in trading over in Asia.
Speaker 5 (03:49):
Is perhaps just a lot already priced in?
Speaker 6 (03:53):
Yeah, maybe, as Ed was talking about, there are a
lot of factors going on in the market right now.
The primary trading forum for TEA SMC shares is in Taiwan,
so we'll see how they do tomorrow as they open
up there. But the ADRs are getting buffeted a bit.
Probably there are some high expectations going into this. I
think investors did anticipate that there was going to be
some pretty strong numbers from TSMC, But on top of that,
(04:14):
there are a lot of trade factors that are playing
into this. The US China tension certainly kind of overlay
a lot of what we are seeing in the market
right now.
Speaker 3 (04:23):
The index Peter Alstrom, Thank you very much. Our next
story is trade tensions between China and the US. This
is what Treasury Secretary Scott Besson had to say about
how negotiations are going, and in particular about one top
Chinese trade official.
Speaker 7 (04:39):
We've had four rounds of talks Geneva, London, Stockholm, and Madrid,
and both sides approached them with great respect, and this
individual did not. He showed up uninvited and said, quote,
China will cause global chaos if if the poor shipping
(05:00):
fees go through. So I don't believe that China wants
to be an agent of chaos. And maybe maybe they
used to have the wolf warrior diplomats, so maybe he
thinks he's a wolf warrior.
Speaker 8 (05:15):
We don't know.
Speaker 2 (05:18):
This is happening.
Speaker 3 (05:18):
Is China's decision to unveil export controls and the rare
earth supply chain is now sparking a global pushback. Bloomberg
Senior Tech editor Mike Shepherd joins us to break it
all down. Based on what the Treasury Secretary was talking
about and recent reporting, China sees its hand with rare
earths as being leverage in a negotiation. There are two
(05:39):
sides and question Mike is whether China is or is
not overplaying that hand.
Speaker 9 (05:44):
Well, that is a big question right now in the market,
and certainly here in Washington where we're seeing the IMF
and World Bank meetings being held, in so many global
officials in town to watch these trade negotiations unfold on
in real time between the US and China with so
much at stake, and the question is how much of
(06:06):
an impact there will be on other economies in the
US is banking on other nations, other trading partners and
other allies also feeling that pain and joining the US
and trying to counter whatever China may try to do
in restricting the shipment and export of rare earth materials
from China to buyers outside China, and that is something
(06:28):
that will affect the European Union and other nations and Japan.
We have seen a push led by the US to
try to get the Group of Seven to somehow counter
and respond to China's intention here and look what we're
seeing is even as China is trying to exert some leverage,
the US is also expressing a little bit of skepticism
about whether this will actually go through. Jamison Greer, the
(06:48):
US Trade representatives said yesterday he doesn't think China will
actually take this step, owing to the geopolitical implications and
the fallout it would have on the global economy. And
we can see a sign of that step the sism
in the counteroffer that the US made at the US
is really only stepping forward with a longer pause and tariffs,
and that's not nearly enough for what Beijing had been
(07:10):
hoping for. They have been really angling to get a
relaxation of years of export controls as a result of
that leverage.
Speaker 4 (07:18):
That did seem to be real anger coming from Treasury,
Sectary Scott VESNT.
Speaker 5 (07:21):
Their MinC.
Speaker 4 (07:22):
And I'm interested as to reminding us how important the
hand is that China has when it comes to technology.
Speaker 5 (07:28):
The fact that they.
Speaker 4 (07:29):
Mine an awful lot of the rare earth, but the
main point is they also produce and refine most of
the rare earths.
Speaker 9 (07:37):
Well they do, they own, They really hold more than
half of the world's reserves, and they dominate the refining
and production of these elements are critical across the economy
and consumer electronics and automobiles, and in military equipment. Think
of night vision goggles. You can't run those without some
rare earths, and so the importance of this is something
(07:58):
that hits a nerve with trade officials around the world,
but especially with the US, because American officials had thought
the rare earth's issue have been settled during the last
round of trade talks, and here China goes, in their view,
reopening it and trying to use it as a last
minute bit of leverage heading into this all important meeting
between President Donald Trump and his counterpart Hijiping at the
(08:20):
end of the month, And rather than seeing a narrowing
list of trade issues to be resolved heading into that meeting,
we're actually seeing a growing list. And you heard the
Treasury Secretary talk about the sensitivity around shipping. And there
is also the question, Carol, of the US move to
expand coverage of sanctioned firms to include subsidiaries, and that's
(08:41):
something that hits some of the Chinese champions like Huawei
and SMIC, and that is something that Beijing also has
objected to. And we've seen this all play out just
in the last few weeks, and it raises questions, Carow,
about whether the two leaders can actually sort all of
this at the end of the month, if and when
they sit down.
Speaker 4 (09:00):
If is a big if right now, Mike Shephard, thank
you very much. Indeed, from DC, look amid this geopolitical tension,
you are still seeing the markets relatively calm. I'm looking
at the tech markets up sevent ten percent on the
nastat one hundred. We've been whipped a little bit about
the concerns on resurgence, trade frictions more broadly, but the
AI real feel factor is still there. Angeloukakafas is with
(09:21):
us seeing global investment strutres to Edward Jones.
Speaker 5 (09:23):
Today is AI winning out.
Speaker 10 (09:27):
It is a good tech for a good day for technology.
That the SMC results and guidance provide some confidence in
the durability of the AI theme. There's no AI related
slow down, at least not yet, and AI is going
to remain a kid driver for markets and Joe.
Speaker 3 (09:48):
One of the most read stories today on the Bloomberg
terminal and on the website is Ken Griffin, the founder
of hedge fund in Citadel saying that jen AI is
not helping hedge funds beat them market with astonishing returns.
Speaker 2 (10:01):
We're going to pull up what it is that he said.
Speaker 3 (10:03):
But as somebody that is in the markets as a strategist,
your reaction to that news story and also what Jeni
better than you in strategy.
Speaker 10 (10:18):
I don't think we're quite there yet. We are still
in our view in the early stages of adoption. Of course,
there's a lot of spending going in now to make
this technology and incorporated. But thinking about major technology firms
and really many different businesses, including in finance, they are
all requiring their operating system to incorporate AI. So it
(10:40):
will take a little bit while to see productivity gains,
but we do think that these gains are on the way.
Of course, from an investment standpoint, we need to be
ware of complacency or euphoria. At some point that's going
to be increased competitions and overbuilding over capacity. We are
not quite there yet, but something to what's out for
(11:02):
and I think the reaction in the c SMC results
in the stock today, the meat reaction reflects the high expectations.
Speaker 3 (11:09):
So it's the two very distinct story, right, how market
participants use AI and then the impact of the ALI
story on markets. But you went there with TSMC, So
what did that sort of outlook from them tell you
about the staying power of this cycle?
Speaker 10 (11:25):
Yeah, I do think it provides confidence that this will continue,
especially thinking about the next six to twelve months only
the direction of travel force spending is higher, and there's
a lot of push for many different businesses and industries
to incorporate AI. So I think that the mega trend
of adoption remains alive and well. And yes, we can
(11:47):
debate all day about valuations, but the results speak for themselves,
especially as we enter a key earning season.
Speaker 4 (11:55):
We don't have all day, but let's debate where would
you go? Evaluations are high for some of the big names.
Speaker 2 (12:02):
So we favor a Barbel approach.
Speaker 10 (12:06):
So having continue to participate in this AI long term
secular theme as I would call it, but at the
same time, for especially new capital, start to complement portfolios
with areas of the market that have been left behind,
and that could include value style investments, small cap stocks
that may benefit from the Federal Reserve rebooting its rate
(12:29):
cutting cycle. So having this balanced approach and again avoid
chasing some of the unprofitable, more speculative parts of the market.
Speaker 4 (12:39):
What is the catalyst for those speculative parts of the
market to actually be popped? Do you think that we
can remain irrational for a little bit longer if you
see it that way, you know.
Speaker 10 (12:49):
As they say, you can only tell a bubble kind
of with the benefit of hindsight. But at the same time,
there's some key differences between now and the late nineties.
A lot of these companies that are doing all these
heavy spending, they are financing that from their own cast
from operations, so not that finance. They are very mature,
profitable businesses, and they have a diversified stream of revenue.
(13:12):
So we're not quite there yet. Valuations are not at extremes,
But at the same time, markets are going to be
sensitive to any news about return on investment from all
this spending that is taking place, and also paying attention
to science of euphoria, which we do not see yet.
Speaker 3 (13:31):
In this environment anger. I think we should continue to
talk about tariffs. The idea when the President took office
in January was that consumers would take on the burden
of tariffs, right because companies would raise prices across all
sorts of domains. That hasn't really materialized. What has been
impact impacted is the labor market in different ways. Are
(13:54):
the people of cutting back, how are you reading that
play out right now?
Speaker 10 (13:59):
Yeh, couple of things here about prices. As we navigated
the very period of high uncertainty, especially in April and May,
companies really try to absorb a lot of that and
not pass these increased costs to the consumer. Now that
we have a little more clarity, we may see a
little more even distribution of these increase in costs. We
(14:22):
have seen goods prices increase, but at the same time
they increase. The apptic in inflation remains manageable now as
it relates to the labor market. We remain in a
low hiring and low firing mode. The labor market remains balanced.
Corporate Corporate profits remain at record highs, even as we've
(14:43):
seen a significant slowdown in hiring, which to me applies
productivity gains, so we do not expect a major uptick
in unemployment. Companies have been very profitable, so they have
really no pressure to continue to cut costs to protect
margins because margins again aurt all time highs. But something
to monto, there's going to be some disruption from AI,
(15:06):
But so far it seems like only a small part
of that slowdown in the laboral market is because of AI,
or you know, Tarish for.
Speaker 3 (15:13):
That matter, and I take you, I ask you, that
takes us nicely into earning season that's about to hit
us hard next week. Angelocal cofas of Edward Jones, thank
you very very much. Indeed, Okay, coming up, Salesforce looks
to reinsure investors worried the company could lose out in
the AI boom. We have more on Salesforce next. This
is Bloomberg Tech.
Speaker 5 (15:45):
Salesforce shares.
Speaker 4 (15:46):
As you can see, they spite this morning after chief
financial and operating officer Robin Washington has said the company
expects to return to double digit revenue growth in the
coming years.
Speaker 5 (15:55):
More in the company's outlook.
Speaker 4 (15:56):
Let's bring in Bloomberg's Brodie Ford, who covers enterprise software companies.
It's still down a quarter so far this year in
terms of its market cap, but some reassuring points that
to reacceleration of growth exactly.
Speaker 11 (16:08):
I mean, this is a stock that was beat up
thirty percent year to date yesterday, and so it's up
seven today and that's pretty cool, but it's still investors
are a little anxious whether these kind of traditional application
leaders like Salesforce are going to be the ones to
successfully sell ai products. We got a decent outlook from
Salesforce yesterday, but you know, it's not a resounding celebration.
(16:31):
At this point.
Speaker 3 (16:33):
You've been reporting on the close relationship between open ai
and Oracle and how maybe the publicly traded and at
this stage slightly bigger of the two is helping that
company navigate chip export controls.
Speaker 2 (16:49):
What do we need to know? It's interesting.
Speaker 11 (16:51):
I mean, Oracle is kind of a famous lobbyist, right
they know Washington, They're pretty tight with the Trump admin
right now. And yesterday open ai said when we're having
trouble getting chips into UAE or Argentina, we call up
Oracle and they are the ones that have kind of
been able to help us get our chips around the world.
And we found that pretty interesting because our arcle is
(17:12):
playing an increasingly large role in open Aiyes in for
a bill.
Speaker 3 (17:15):
Out Bloomberg's Brady Ford across a lot of stories, thank
you very much. Another top top story, Apple can't catch
an AI break. The executive who is in charge of
developing a chat GPT like search feature within Apple is
stepping down and heading to Meta. That's according to sources.
For more, bloombergs Mark gunman who brokes that story joins us. Now,
(17:37):
who is this executive and how significant is it Mark
that he's jumping to Meta.
Speaker 2 (17:45):
Yeah, this is keying.
Speaker 8 (17:46):
And to give you an idea of how significant this is,
we've talked about maybe a dozen Apple AI departures over
the last few months. This is probably the most significant
or second most significant of that group. This person was
a direct purport to John g and Andrea, the senior
VP who runs all of AI at Apple. This person
(18:06):
was actually put into their role only a few weeks
ago when his predecessor, Robbie Walker left Apple. Walker had
been in charge of Siri, but he was removed from
being in charge of Siri in March after the major
delays and the blowback against Apple Intelligence.
Speaker 12 (18:23):
And then he.
Speaker 8 (18:24):
Started a new team called AKI Answers Knowledge and Information,
and that team is focused on AI powered web search tools,
so basically adding chat, GPT, perplexity, Gemini like functionality to
Siri and other parts of the Apple operating system. And
Yang he became in charge of that program just a
few weeks ago. Before that, he was running the search
(18:45):
related functionality, then he was running the whole thing. And
so now Apple's AI team is going through another major
reorganization in light of that significant departure.
Speaker 4 (18:54):
And a key line in your story is several of
the Apple team members think that this is going to
continue to happen, more departures to come.
Speaker 2 (19:02):
This is going to keep happening.
Speaker 8 (19:03):
I mean the core team developing the models underlying Apple Intelligence.
It's a team called AFM or Apple Foundation Models. They've
been breeding bleeding talent since July. The creator of that
team and the person who ran that team, Roman Paying.
He left for a two hundred and fifty million dollar
multi year pay package and is now a senior AI
(19:23):
executive at Meta. Since his departure, they've lost about a
dozen people. I'm told there's several other people on that
team continuing to interview. Other people are going to met
Us still. Other people are going to start ups Open
AI and Google. We've been reporting this out as these
departures have been happening, and these new companies have been
hiring these folks, and this is going to continue, given
(19:45):
the pay packages that these competitors are offering, and given
the embarrassments that Apple's AI AI efforts have become for
some of these people actually working on them.
Speaker 3 (19:55):
Mark you've come on Bloomberg Tech and you've broken all
these stories about people to Apple. A reasonable question and
we just have sixty seconds, is is there actually anyone
left at Apple of notes working on AI.
Speaker 12 (20:09):
Oh.
Speaker 8 (20:09):
Apple has tons of folks. They're working on acquisitions to
try to refuel the ranks there. John g and Andrea,
despite their being rumors and discussions about him stepping down,
are being pushed out of the company for several months now,
he remains in charge.
Speaker 2 (20:27):
He may not be.
Speaker 8 (20:28):
There for long, as I'm told that Apple has been
looking for outside replacements for him, but for now he's there.
Creig Federighi, who runs all software engineering, has now taken
an ownership role over all the AI.
Speaker 2 (20:41):
Strategy at Apple.
Speaker 8 (20:42):
Mike Rockwell, who created the Vision pro he's heavily involved
in the AI strategy there now too. So yeah, they
have definitely had folks, but it's just about refueling the
ranks and putting the right people in place. But certainly
this is another considerable setback to Meta's game potentially.
Speaker 5 (21:00):
As always, we thank you so much for joining us.
Speaker 4 (21:02):
Meanwhile, coming up potentially catastrophic breach of a US based
cybersecurity firm it's being blamed on Chinese state backed hackers.
Speaker 5 (21:10):
That detail and the fallout.
Speaker 4 (21:11):
Next, this is Bloomberg, Bloomberg Tech, and it's time now
for talking tech and first up. US cybersecurity provider F
five disclosed that Nation state hackers from.
Speaker 5 (21:33):
China breached its networks and gained.
Speaker 4 (21:35):
Long term, persistent access to certain systems, including source code now.
Speaker 5 (21:39):
The breach prompted warnings from the.
Speaker 4 (21:41):
US and UK authorities, describing the attack as a significant
cyber threat that could be used.
Speaker 5 (21:46):
To exploit vulnerabilities.
Speaker 4 (21:47):
Plus, Uber is giving some drivers in the US the
option to earn money by completing tasks related to the
companies new data labeling business. This is an area where
the rideshare giant sees an opportunity to shine in the
AI boom. And Microsoft is pushing Windows users to talk
to their computers. But the company is rolling out a
new AI voice feature activated by saying hey, Copilot. It's
(22:09):
part of a broader effort to rebuild Windows around AI,
including expanding use of tool including copalant Vision, which lets
software see what's on a user's screen.
Speaker 3 (22:19):
Ed Okay, coming out, We've got a riddle for you.
How do stocks get weaker? And more valuable. More on
how the AI boom is impacting equity dilution next, Also
quick look at markets right.
Speaker 2 (22:31):
The story has been.
Speaker 3 (22:32):
Split between the early part of the day where TSMC's
outlook was really boosting US, but TSMC US listed shares
at least have fallen away. The market is modestly higher.
There was some sort of nervousness and now calm about
what is happening in trade talks between US and China.
Will continue to track those stories throughout the range of
the show.
Speaker 2 (22:52):
This has been big Tech. Welcome back to bloombog Tech.
Speaker 3 (23:04):
Our top story is TSMC, the world's biggest, most important
contract manufacturer of semiconductors. It's US listed shares are now
down a percent. They had opened up two percent and
quickly fell away.
Speaker 2 (23:15):
The story is.
Speaker 3 (23:17):
That they have for the second time this year, hiked
their sales growth outlook to the mid thirty percent range
for twenty twenty five, and the writing on the Bloomberg
terminal is really clear. That's given the market at large
a lot of optimism about the outlook for AI and demand. Remember,
TSMC is the contract manufacturer of Nvidia chips as an example,
(23:37):
not doing much for their own US listed shares, though
it's an important one that will stick with.
Speaker 5 (23:41):
Caraen we will.
Speaker 4 (23:43):
Let's just turn our attention back to that riddle that
you left us with, ed because unusually, well usually we
see a company's equity gets diluted. We tend to see
investor Sara on the stock. But the AI boom has
turned that on its head. Take a look at Intel shares.
August is when the chip maker began selling newc to
the US government from SoftBank and Nvidia wanted to Bloomberg calculations.
(24:04):
That waters down the stake of existing investors by around
fourteen percent.
Speaker 5 (24:07):
So why are shares up so much?
Speaker 4 (24:10):
Markets reporter common Rhyinicky has been answering the red ule
and it's just all about the AI boom.
Speaker 12 (24:16):
Yeah, it really is. So it basically boils down to,
you know, Intel was really not doing very well. It stocked,
was very beaten down. There was a lot of worries
about how the company was going to turn itself around.
And this new influx, this new cash on the balance
sheet is really positive and investors are saying, basically, we'd
rather own eighty five percent of something than you know,
zero percent or one hundred percent of nothing. Right, So
(24:39):
it's basically this idea that this is going to help
the company grow more, that it's going to do better
in the future, and so taking a little bit of
dilution on the profits is okay for now.
Speaker 2 (24:50):
Commen.
Speaker 3 (24:51):
This is about hype and the golden tickets of AI.
Speaker 2 (24:54):
Right.
Speaker 3 (24:54):
You write in your story about AMD gets its partnership
with open AI, Intel gets its partnership and investment from Nvidia.
Speaker 2 (25:02):
The stock story is history from that point.
Speaker 12 (25:05):
Yeah, it's so true. And AMD shares are up, you know,
just as much forty three percent, you know, since that
deal was announced, and you know, Intel's been up ninety
percent just since the end of August. So we're seeing
so much enthusiasm about AI and all of these deals,
even though they're in such rapid succession, have been really beneficial.
Investors are excited about it. They want to be buying
into these shares, and they want to see the growth
(25:26):
going forward.
Speaker 3 (25:28):
Bloem moost Calm, and Ryan Key, thank you very much.
Meta has announced plans to build a new gigawatts scale
data center in Texas, committing more than one point five
billion dollars to the project. The investment marks the social
media giants twenty ninth data center and underscores it's pushed
to keep pace in the rapidly evolving AI race. The
news comes mid a wave of major data center announcements yesterday,
(25:51):
including a Microsoft ndscale partnership, a new collaboration between Coreweave
and Paul Side, and a forty billion dollar consortium acquisition
of a ligned data centers. Here to discuss their identity
center further, Nancy Tegler Laffer Tengler Investment CEO, who says, quote,
it's about the power stupid Okay, hit me with that thesis.
Speaker 13 (26:16):
Oh and do you always find the right nugget to
pull out?
Speaker 14 (26:19):
Yeah, Well, I mean, look, there's expected to be I
mean Open AI has said they need twenty gigawatts of power.
At sixteen billion per two gigawatts, that's a fair amount
of change. And then you have all of these just
using Texas as an example, you have all of these
companies opening data centers in Texas.
Speaker 13 (26:39):
It's kind of the perfect place.
Speaker 14 (26:41):
Horizon is the only one that comes with its own
power source, which is natural gas on the Mitchell family
Longfellow ranch. And so that's great news, but powers a
lot of power is going to be needed for the
rest and Texas already has a grid problem.
Speaker 13 (26:56):
So we are looking at Laffer Tangler, at names.
Speaker 14 (27:00):
To names that can that can solve some of the
data center problems and some of the grid problems that
are coming with this major buildout.
Speaker 13 (27:08):
And photonics is a hope. It's not yet.
Speaker 14 (27:10):
We're not yet there in reducing power consumption, and buildouts
are are critical. What we heard from Oracle recently, from
the co CEOs was that you know, it's not about
demand demand, it's about supply.
Speaker 13 (27:25):
They can't get these data centers built fast enough.
Speaker 4 (27:28):
Let's go to the promise of photonics, because you're already
looking at a particular company cohere. Remind us of what
the thesis is there, Nancy, and how quickly you think
it can become a reality.
Speaker 14 (27:38):
Yeah, so that's the question, Caroline, I mean, Coherent is
you know, really focused on building photonics around the quantum
computing needs, which is just going to add another layer
onto this whole power question. And so what we've done
we've launched a new strategy called Macrocycle Opportunities and we
have four themes space, robotics, quantum and nuclear and in
(28:04):
that we are trying to identify the companies that are
going to drive the next wave of transformation overlaid with
AI because it's essential to many of those themes, or
most of those themes.
Speaker 13 (28:15):
So coherence. One.
Speaker 14 (28:17):
One of the other names that is important to us
is not a photonics name, but is quantum services. We
own that in our twelfth best we own it in macrocycle,
and we own it in our growth portfolio. They've got
a thirty six billion dollar backlog in modernizing existing grids
or power providers.
Speaker 4 (28:36):
Nazi, You're doing what so much of the market is
having to do right now, which is have a lot
of hope baked into these forward looking not only promises
of the actual returns on investment in AI, but promise
of photonics, promise of quantum. What is the fundamental research
you bring to bear to be like? These are good bets.
Speaker 13 (28:55):
Well, so what we've done. And I didn't answer your
question on timing, I don't know, Caroline. I mean it
could be. The expectation is it could be a decade.
Speaker 14 (29:02):
But we've seen things accelerate so quickly, and the excellent
CEO at AI World yesterday said we're going to see
more transformation in the next ten years in the last
one hundred. But what we've done in constructing the portfolio
is we've established leaders and they are about forty to
fifty percent of the portfolio. So thinking quantum IBM, which
(29:24):
is a pretty low risk business model, and then the enablers,
which is a coherent and then the speculative names and
that would be Ion, q Righetti, all of those names.
So the objective is and that's ten to fifteen to
twenty percent, and then enablers are twenty to twenty five.
So we're trying to mitigate risk by existing build positions
(29:47):
in existing technologies that are already reproducing earnings and then
couple that with names that are speculative.
Speaker 3 (29:54):
Nan we started this conversation about the news of Meta's
latest or twenty ninth data center a gig or what
in Texas. You have the small if my Bloomberg terminal
data is correct position in Meta, but they are not
a hyperscaler, right, so how do you view that build
out that they're doing and the attractiveness in the broader
(30:16):
thesis you've just outlined to us.
Speaker 14 (30:18):
Well, so we do own a very small bit ed
but if you recall we've talked about this in the
past where we sold the majority of our holdings because
we felt like the business model and we were wrong
by the way. We felt like the business model of
advertising was not where we wanted to be, and then
they pivoted to AI and I think.
Speaker 13 (30:36):
That's what's driving these investments.
Speaker 14 (30:39):
And they've been pretty successful at attracting a number of
high leveled executives from many companies, but in particular Apple.
So I think that for us is you know, we
pivoted to Spotify. I think we actually did better with Spotify,
But the point is that we've we missed the meta
run and I think the question now is can they
(31:00):
convert it to revenues And I.
Speaker 13 (31:01):
Think that's going to be the challenge.
Speaker 14 (31:03):
However, Mark Mahaney just published a piece that shows EBIT
per employee in revenue per employee at Meta, Amazon, Microsoft,
and Google is up massively and that goes to the
bottom line. So I think the jury is still out
on how they're going to monetize all of this, but
we'll see. I mean, they're making the investments in people
(31:25):
and in capex.
Speaker 3 (31:28):
Nancy just very very quick is Elon's pay pack is
going to get voted through.
Speaker 14 (31:33):
I think so, I hope so. I like to be
aligned with the CEO as a shareholder.
Speaker 4 (31:39):
Nancy Tegler, we appreciate it so much. Lafa Tengra investments
great time on the show Coming up, the CEO of
Startup Upgrade joins us to discuss the company's leasest running
ground and what changed in the fintech market since his
day's running Lending Club isys.
Speaker 5 (31:53):
Bluembg tech.
Speaker 3 (32:10):
Fintech Startup Upgrade has just closed a one hundred and
sixty five million dollar Series G funding round that gives
the company a seven point three billion dollar pre money valuation. Upgrade,
which offers mobile banking, credit card and other financial services,
was founded by former Lending Club CEO and co founder
Reno Laplanche.
Speaker 2 (32:29):
He joins us now in San Francisco.
Speaker 3 (32:31):
Over the last couple of years, actually, Caroline and I've
tracked very closely the valuation of private I wouldn't even
say just fintech, you know, it's more specific modern banking services,
multi platform offering. But just to start, why raise that money,
what do you need it for?
Speaker 2 (32:50):
How does it help out with growth?
Speaker 15 (32:52):
Now? So we're in the fortunate situation of being cash
flow positive, so we didn't need might say that. Yes,
but as we think about the evolution of the company,
we're sort of getting closer to taking the company public.
This is probably our last sort of pre IPO raise,
so it's a good opportunity to sort of check on
(33:13):
where we stood in terms of building up Shaoulder value
and also create an opportunity for liquidity for existing employees
prior to an IPO.
Speaker 3 (33:23):
It's quite a definitive statement our last pre IPO raise.
So you have a plan in place in a roadmap
to do that.
Speaker 15 (33:32):
Yeah, I mean no certainty obviously, it always depends on
the market and on our own sort of growth in
the next twelve to eighty a month. But we're yeah,
we're feeling good about the direction a go, Nald.
Speaker 4 (33:44):
What's so interesting is the way in which Upgrade gets
new customers. In many ways, you're casually positive because in
many ways looking for that profitability metric because you don't
have to spend loads of marketing because you partner with
big businesses. Just tell us about how the business model
has help to weather what has been a real downturn
for other neobanks during the twenty twenty one earlier era
(34:05):
as well.
Speaker 15 (34:07):
That's right, Caroline. That's really what makes a great unique
is our mutile product, multi channel strategy. So we're fortunate
to have six different products, mobile banking, credit cards, personal loans,
and then sort of indirect products like BNPL, home improvement
financing and auto loans where we work with partners to
(34:30):
deliver financing at the point of seal. And increasingly these
sort of indirect products already of turning into good source
of customer acquisitions where we can acquire a customer for
a not a loan at a local dealer, of home
improvement financing, at a local roofer person who installed new windows,
(34:52):
and don't become upgreade customers, and we can self intern
sort of benefit from all of great products, including credit cards,
including mobile banking. So we really created that sort of
ecosystem that benefits from multiple products.
Speaker 4 (35:09):
And many know you from Lending Club. Was it those
relationships that helped you on the other side? Could you
repackage these loans, perhaps sell them in bulk to well
a community bank if it's relatively risk free, or onto
a private equity house if it's relatively risky, And I
think auto loans come to mind when we're thinking about risk.
Speaker 5 (35:25):
At this moment.
Speaker 15 (35:27):
That's right, right. So we've i think helped sort of
provide forty five billion in nouns since we started. It's
not all on our balance sheet. So we are certainly
sort of setting loans to loan buyers, and that include
a very broad range of buyers from small banks and
community banks and credit unions that are going to focus
(35:50):
on the sort of safest loans to sort of private
credit funds, securitization structures where you can allocate the risks
differently and where of investors might might be willing to
chase a higher yield.
Speaker 3 (36:07):
Reno jurisdictionally, would you just reflect on on the experience
of leading this company in this startup, What is it
like being a neo bank under the Trump administration?
Speaker 2 (36:16):
For example?
Speaker 3 (36:17):
Are they friendly and cooperative in the things that you
want to do versus their governance of traditional banks?
Speaker 9 (36:24):
Right?
Speaker 15 (36:24):
So, yeah, it's certainly a very business friendly environment right now.
But some of that translates into media a little bit
less stringent of regulations at the federal level, but lending
is also regulated at the state level, and I think
whatever relax relax standards where we're getting on the federal
(36:47):
h stage, where where we're not getting at a state level.
So so state regulators I think fielled that vacuum left
by federal regulators to to to a certain point. So
I don't think there's a sort of meaningful change in
how sort died the regulatory environment is.
Speaker 4 (37:07):
No memories are short, but I just want you to
reflect from an on lending club and what you learn
that briefly, because there were issues then.
Speaker 5 (37:15):
You did have to step down. I'm interested is to
what you've learned from it.
Speaker 15 (37:19):
Oh yeah, so much. Yeah, So I think the lending
club was really the first sort phase of fintech, right,
it was really sort of building up an entirely new industry.
We've so very uncertain. Regulatory and compliance framework upgrade ten
years later has really been part of that sort of
(37:42):
second phase of the industry, whereas more efforts of established framework,
established rules of the game, and I think we've we've
all been benefiting from from that, and the fintech industry
has been able to grow and and not really be
a sort of strong challenger.
Speaker 5 (38:00):
Truly.
Speaker 15 (38:01):
Some more traditional banking industry.
Speaker 4 (38:03):
Appreciate the answer, and O Laplanche come back, CEO of Upgrade,
We thank you now.
Speaker 5 (38:09):
Coming up.
Speaker 4 (38:10):
Anthropic reportedly looks to raise even more money, particularly from
the Middle East.
Speaker 5 (38:14):
We're on that next. As a Bloomberg Tech.
Speaker 3 (38:28):
Anthropic is reportedly in talks about a Debbi based investment
firm MGX to raise additional capital, just weeks after completing
a funding round that valued the AI startup at one
hundred and eighty three billion dollars all. According to sources,
CEO Dario m Oday met with MGF executives during a
recent tour of the Middle East, joining us as Bloomberg
(38:49):
Shering Gafari. This is something you and I have been
reporting out together. The way i'd summarize it, you give
us the details is need money, need compute, make some
friends across the Middle East.
Speaker 13 (39:02):
That's right.
Speaker 16 (39:02):
It's never too early, I think for these AI companies
to start thinking about the next funding round, even if
they're weeks before they've closed the last one, and you know,
we're talking about you know, the billions at this point.
Anthropics last round they raised thirteen billion at one hundred
and eighty three billion valuation. If you're thinking about what
kinds of pools of capital are out there at that scale.
The Middle East is increasingly sort of one of the
(39:24):
only remaining pools that's going to make those kinds of
investments at that level in the still unprofitable, still somewhat used, risky,
right AI companies Suan.
Speaker 4 (39:34):
What's interesting, and as you and Ed make clear in
the story is Katsa had been a pool of capital
for them previously, but they had to make amends for
previous choice words when it came to other Middle East
pools of capital.
Speaker 13 (39:47):
That's right.
Speaker 16 (39:48):
Zoanthropics CEO Dario Amedi has you know, in the past
made comments There is a memo to his own staff
saying that acknowledging that sort of fundraising in or that
they would be taking money in the Middle East and
there are trade offs there and that the company would
sort of have to come to terms with the fact
that not everything that they do will always be helping democracies,
(40:13):
that it may help dictators, and so of course with
the Middle East, you know, having a different sort of.
Speaker 13 (40:21):
Set of governments, that is a new reality.
Speaker 16 (40:24):
I think for these CEOs of AI companies that they
may be making deals with countries that have different and
maybe more undemocratic systems, right than here in the US.
Speaker 5 (40:32):
And they shrink fari. We thank you very much.
Speaker 4 (40:35):
And let's just say with Anthropic, because the AI startup
founded by former Open AI executives.
Speaker 5 (40:40):
Of course we just mentioned.
Speaker 4 (40:40):
Daria, there's also Daniella Ramade and a handful of others
is under a new scrutiny from the White House as
it doubles down on its mission of building safe, steerable AI.
White House ais are that David Sachs took to ex
acusing Anthropic of running a sophisticated regulatory capture strategy based
on fear mungery and blaming the company for a few
a state regulatory frenzy that's hurting startups topic of Dave
(41:04):
Lee's leader's Bloomberg opinion article and he joins US now.
And David sax was responding to a recent essay written
by another co founder of Anthropic could come from Open AI,
and let's just talk about what Jack had been posted.
Speaker 17 (41:17):
Yes, this is Jack Clark, one of the co founders,
their current head of policy as well.
Speaker 10 (41:22):
And in this essay, you.
Speaker 17 (41:23):
Know, he goes over some of his fears about AI
and he may sort of metaphors around sort of being
scared of the of the Dark essentially as a kid
and sort of comparing the future of AI in some
ways to the dark and not quite knowing you know,
what shape it's going to take, what the risks are.
And it seems, you know, this is this isn't the
first time David Sachs has kind of spoken badly off
anthropic and what it's doing is scratching this itch to
(41:45):
David sax And it seems the White House has the
anthropic is it's kind of separate from the tech world
in a lot of this, you know, we're not seeing
anthropic leadership at many of these White House events. They're
not going to you know, the been released with Trump
in the same that as Jensen Huang has. They're certainly
not handing him a small trophy like Tim Cook did
in the Over Office recently, and that now has kind
(42:06):
of put a bit of a target on their back.
I think is this sort of standalone AI company that
likes to think it has perhaps stronger principles on safety
than Open Ai and so many others.
Speaker 3 (42:17):
Dave, this is a story that's in the zeitgeist. To
borrow Tom keenism. It's playing out on social media. There
are other people beyond David Sachs weighing in on it again,
it's a little bit repetitive, but just explain the grievance
the issue here that these kind of tech figures have
with Jack and his essay and an Anthropic.
Speaker 17 (42:39):
Well, look, there was for the longest time these sort
of two camps in AI that one would say, you know,
slow this down, let's do this deliberately, do bit safely.
The others say, no, let's be accelerationist. Let's just innovate
as quickly as we can and treat the problems as
they come and solve some of so many problems with AI.
And the way that's going to manifested in a more
practical sense is that you have states like California that
(43:01):
have recently made into law several bills related to AI.
One in particular was Senate Bill fifty three, which is
about transparency, is about protecting whistleblowers. Anthropic stood alone in
endorsing that bill. Open a Eye sort of begrudgingly said
they could live with it after the fact, but Anthropic
was the only company to say, yes, we think this
(43:21):
is a good idea. Now, their preference would be for
a federal law that would stop there being individual laws
in different states around the country, and that's obviously what
David sax wants as well. But Anthropic are saying, look,
if you want to do a federal law, let's see it,
let's have it in Congress, let's see what that is.
Until then, we're happy to back what little legislation is
(43:42):
happening in California, even if that means it might make
things more complicated for the AI companies.
Speaker 3 (43:48):
Bloomberg Opinion columnist Davely with the latest Thank you very much.
That does it for this edition of Bloomberg Tech. Carra
what an addition it was.
Speaker 4 (43:56):
It was, and yet more focus on data centers and
indeed growth of AI.
Speaker 5 (44:00):
Do not forget to check out our podcast.
Speaker 4 (44:02):
Find it on the terminal as well as online on Apple, Spotify,
and iHeart from New York.
Speaker 5 (44:07):
For San Francisco. This is Bluemberg Tech
Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
from coast to coast with Caroline Hide in New York
and Eva Low in San Francisco.
Speaker 2 (00:22):
This is Bloomberg Tech coming up.
Speaker 3 (00:24):
TSMC reports third quarter results, beating expectations and giving a
positive outlook, buoyed by strong AI demand.
Speaker 4 (00:31):
Glass's trade tensions re escalate between China and the US.
Speaker 5 (00:34):
Good president. She's rare US hardbules, but a global pushback.
Speaker 3 (00:38):
And yet another exec departure from Apple with its head
of the chat GPT. Like AI search efforts going to Meta.
Speaker 4 (00:47):
For first ed we dig into the market instead of
shaking off that trade anxiety and refocusing on the AI trade.
Speaker 5 (00:54):
Of course, you just just TSMC will dig into it.
Speaker 4 (00:56):
NASA up three quarters percent with trading higher for two
straight days. People focus on that and indeed potential talks
between President Putin and indeed the United States President.
Speaker 5 (01:06):
But what are we looking at underneath the hood?
Speaker 3 (01:08):
Yeah, TSMC the world's biggest and most important contract manufacturer
of semiconductors. The news is that it is hypedic sales
growth outlook for twenty twenty five for the second time
this year. Then we look at the shart we open
up two percent. We've given off some of those gains
if you read on the Bloomberg terminal or some of
the market stories. The early part of the morning was
(01:29):
TSMC driving US up positivity. But the trade story is
overtaking a little bit AI demand intact character.
Speaker 5 (01:36):
It is, let's just talk about that being an impact.
Speaker 4 (01:39):
Bloomos Peter Elstrom, who needs that tech coverage from the US, Europe,
in Asia, and Peter, look, TSMC did almost what ASML did.
Speaker 5 (01:46):
They said, Look, AI, the.
Speaker 4 (01:48):
Mega trends still there even if China pulls away in
terms of demand.
Speaker 2 (01:53):
Yeah, it's a little bit more than that.
Speaker 6 (01:54):
CC way, the CEO had this conference call after the
earnings results and as Ed was talking about, they hike
their forecast for twenty twenty five for the second time.
Just three months ago, they hike their forecast. And now
what CC, what you're saying is that this AI mega
trend is actually getting stronger. They of course are making
the chips for Nvidia and for many others too, and
(02:16):
what they're seeing is that the demand for those chips
is getting stronger. At this point, they're watching the capital
spending from some of the big customers out there, including
Open Ai. They realize that in Video is going to
have to supply those customers, and the trends are going
up from here. So we're starting to get a fuller
picture of what's going on in the chips business. We've
got preliminary results from Samsung earlier this week, and we
(02:37):
got ASML, the chip equipment maker after that, and now
we have TSMC, the biggest contract chip manufacturer, which is
giving us a very strong forecast too.
Speaker 3 (02:48):
That's kind of the demand side, right, Peter. But on
the supply side, there was lots of interesting information. The
two headlines that jump out at me are there massively
supply constrained. Capacity is tight, but they're moving really quick
to expand manufacturing capacity here in the United States.
Speaker 5 (03:05):
That's right.
Speaker 6 (03:06):
Yeah, Well, it takes a while to build these chip plants.
They've begun construction in the US a few years ago,
and they've now said that they want to build on
top of that. They want to expand even more than they.
Speaker 5 (03:17):
Have in the past.
Speaker 6 (03:18):
But they're trying to add capacity in the US while
they also build up their capacity in Taiwan right now.
So it's taken a while for them to bring those
fabs online and then meet this very strong demand that
they're getting from customers like Nvidia, also from Apple, they're
supplying a number. They also make the chips for AMD too,
as AMD tries to compete with Nvidia, so they're really
(03:39):
the big beneficiary. They're kind of the picks and shovels
that are helping with this AI boom.
Speaker 4 (03:43):
Look, we are looking at the ADRs a little lower, Peter.
They're at a record high in trading over in Asia.
Speaker 5 (03:49):
Is perhaps just a lot already priced in?
Speaker 6 (03:53):
Yeah, maybe, as Ed was talking about, there are a
lot of factors going on in the market right now.
The primary trading forum for TEA SMC shares is in Taiwan,
so we'll see how they do tomorrow as they open
up there. But the ADRs are getting buffeted a bit.
Probably there are some high expectations going into this. I
think investors did anticipate that there was going to be
some pretty strong numbers from TSMC, But on top of that,
(04:14):
there are a lot of trade factors that are playing
into this. The US China tension certainly kind of overlay
a lot of what we are seeing in the market
right now.
Speaker 3 (04:23):
The index Peter Alstrom, Thank you very much. Our next
story is trade tensions between China and the US. This
is what Treasury Secretary Scott Besson had to say about
how negotiations are going, and in particular about one top
Chinese trade official.
Speaker 7 (04:39):
We've had four rounds of talks Geneva, London, Stockholm, and Madrid,
and both sides approached them with great respect, and this
individual did not. He showed up uninvited and said, quote,
China will cause global chaos if if the poor shipping
(05:00):
fees go through. So I don't believe that China wants
to be an agent of chaos. And maybe maybe they
used to have the wolf warrior diplomats, so maybe he
thinks he's a wolf warrior.
Speaker 8 (05:15):
We don't know.
Speaker 2 (05:18):
This is happening.
Speaker 3 (05:18):
Is China's decision to unveil export controls and the rare
earth supply chain is now sparking a global pushback. Bloomberg
Senior Tech editor Mike Shepherd joins us to break it
all down. Based on what the Treasury Secretary was talking
about and recent reporting, China sees its hand with rare
earths as being leverage in a negotiation. There are two
(05:39):
sides and question Mike is whether China is or is
not overplaying that hand.
Speaker 9 (05:44):
Well, that is a big question right now in the market,
and certainly here in Washington where we're seeing the IMF
and World Bank meetings being held, in so many global
officials in town to watch these trade negotiations unfold on
in real time between the US and China with so
much at stake, and the question is how much of
(06:06):
an impact there will be on other economies in the
US is banking on other nations, other trading partners and
other allies also feeling that pain and joining the US
and trying to counter whatever China may try to do
in restricting the shipment and export of rare earth materials
from China to buyers outside China, and that is something
(06:28):
that will affect the European Union and other nations and Japan.
We have seen a push led by the US to
try to get the Group of Seven to somehow counter
and respond to China's intention here and look what we're
seeing is even as China is trying to exert some leverage,
the US is also expressing a little bit of skepticism
about whether this will actually go through. Jamison Greer, the
(06:48):
US Trade representatives said yesterday he doesn't think China will
actually take this step, owing to the geopolitical implications and
the fallout it would have on the global economy. And
we can see a sign of that step the sism
in the counteroffer that the US made at the US
is really only stepping forward with a longer pause and tariffs,
and that's not nearly enough for what Beijing had been
(07:10):
hoping for. They have been really angling to get a
relaxation of years of export controls as a result of
that leverage.
Speaker 4 (07:18):
That did seem to be real anger coming from Treasury,
Sectary Scott VESNT.
Speaker 5 (07:21):
Their MinC.
Speaker 4 (07:22):
And I'm interested as to reminding us how important the
hand is that China has when it comes to technology.
Speaker 5 (07:28):
The fact that they.
Speaker 4 (07:29):
Mine an awful lot of the rare earth, but the
main point is they also produce and refine most of
the rare earths.
Speaker 9 (07:37):
Well they do, they own, They really hold more than
half of the world's reserves, and they dominate the refining
and production of these elements are critical across the economy
and consumer electronics and automobiles, and in military equipment. Think
of night vision goggles. You can't run those without some
rare earths, and so the importance of this is something
(07:58):
that hits a nerve with trade officials around the world,
but especially with the US, because American officials had thought
the rare earth's issue have been settled during the last
round of trade talks, and here China goes, in their view,
reopening it and trying to use it as a last
minute bit of leverage heading into this all important meeting
between President Donald Trump and his counterpart Hijiping at the
(08:20):
end of the month, And rather than seeing a narrowing
list of trade issues to be resolved heading into that meeting,
we're actually seeing a growing list. And you heard the
Treasury Secretary talk about the sensitivity around shipping. And there
is also the question, Carol, of the US move to
expand coverage of sanctioned firms to include subsidiaries, and that's
(08:41):
something that hits some of the Chinese champions like Huawei
and SMIC, and that is something that Beijing also has
objected to. And we've seen this all play out just
in the last few weeks, and it raises questions, Carow,
about whether the two leaders can actually sort all of
this at the end of the month, if and when
they sit down.
Speaker 4 (09:00):
If is a big if right now, Mike Shephard, thank
you very much. Indeed, from DC, look amid this geopolitical tension,
you are still seeing the markets relatively calm. I'm looking
at the tech markets up sevent ten percent on the
nastat one hundred. We've been whipped a little bit about
the concerns on resurgence, trade frictions more broadly, but the
AI real feel factor is still there. Angeloukakafas is with
(09:21):
us seeing global investment strutres to Edward Jones.
Speaker 5 (09:23):
Today is AI winning out.
Speaker 10 (09:27):
It is a good tech for a good day for technology.
That the SMC results and guidance provide some confidence in
the durability of the AI theme. There's no AI related
slow down, at least not yet, and AI is going
to remain a kid driver for markets and Joe.
Speaker 3 (09:48):
One of the most read stories today on the Bloomberg
terminal and on the website is Ken Griffin, the founder
of hedge fund in Citadel saying that jen AI is
not helping hedge funds beat them market with astonishing returns.
Speaker 2 (10:01):
We're going to pull up what it is that he said.
Speaker 3 (10:03):
But as somebody that is in the markets as a strategist,
your reaction to that news story and also what Jeni
better than you in strategy.
Speaker 10 (10:18):
I don't think we're quite there yet. We are still
in our view in the early stages of adoption. Of course,
there's a lot of spending going in now to make
this technology and incorporated. But thinking about major technology firms
and really many different businesses, including in finance, they are
all requiring their operating system to incorporate AI. So it
(10:40):
will take a little bit while to see productivity gains,
but we do think that these gains are on the way.
Of course, from an investment standpoint, we need to be
ware of complacency or euphoria. At some point that's going
to be increased competitions and overbuilding over capacity. We are
not quite there yet, but something to what's out for
(11:02):
and I think the reaction in the c SMC results
in the stock today, the meat reaction reflects the high expectations.
Speaker 3 (11:09):
So it's the two very distinct story, right, how market
participants use AI and then the impact of the ALI
story on markets. But you went there with TSMC, So
what did that sort of outlook from them tell you
about the staying power of this cycle?
Speaker 10 (11:25):
Yeah, I do think it provides confidence that this will continue,
especially thinking about the next six to twelve months only
the direction of travel force spending is higher, and there's
a lot of push for many different businesses and industries
to incorporate AI. So I think that the mega trend
of adoption remains alive and well. And yes, we can
(11:47):
debate all day about valuations, but the results speak for themselves,
especially as we enter a key earning season.
Speaker 4 (11:55):
We don't have all day, but let's debate where would
you go? Evaluations are high for some of the big names.
Speaker 2 (12:02):
So we favor a Barbel approach.
Speaker 10 (12:06):
So having continue to participate in this AI long term
secular theme as I would call it, but at the
same time, for especially new capital, start to complement portfolios
with areas of the market that have been left behind,
and that could include value style investments, small cap stocks
that may benefit from the Federal Reserve rebooting its rate
(12:29):
cutting cycle. So having this balanced approach and again avoid
chasing some of the unprofitable, more speculative parts of the market.
Speaker 4 (12:39):
What is the catalyst for those speculative parts of the
market to actually be popped? Do you think that we
can remain irrational for a little bit longer if you
see it that way, you know.
Speaker 10 (12:49):
As they say, you can only tell a bubble kind
of with the benefit of hindsight. But at the same time,
there's some key differences between now and the late nineties.
A lot of these companies that are doing all these
heavy spending, they are financing that from their own cast
from operations, so not that finance. They are very mature,
profitable businesses, and they have a diversified stream of revenue.
(13:12):
So we're not quite there yet. Valuations are not at extremes,
But at the same time, markets are going to be
sensitive to any news about return on investment from all
this spending that is taking place, and also paying attention
to science of euphoria, which we do not see yet.
Speaker 3 (13:31):
In this environment anger. I think we should continue to
talk about tariffs. The idea when the President took office
in January was that consumers would take on the burden
of tariffs, right because companies would raise prices across all
sorts of domains. That hasn't really materialized. What has been
impact impacted is the labor market in different ways. Are
(13:54):
the people of cutting back, how are you reading that
play out right now?
Speaker 10 (13:59):
Yeh, couple of things here about prices. As we navigated
the very period of high uncertainty, especially in April and May,
companies really try to absorb a lot of that and
not pass these increased costs to the consumer. Now that
we have a little more clarity, we may see a
little more even distribution of these increase in costs. We
(14:22):
have seen goods prices increase, but at the same time
they increase. The apptic in inflation remains manageable now as
it relates to the labor market. We remain in a
low hiring and low firing mode. The labor market remains balanced.
Corporate Corporate profits remain at record highs, even as we've
(14:43):
seen a significant slowdown in hiring, which to me applies
productivity gains, so we do not expect a major uptick
in unemployment. Companies have been very profitable, so they have
really no pressure to continue to cut costs to protect
margins because margins again aurt all time highs. But something
to monto, there's going to be some disruption from AI,
(15:06):
But so far it seems like only a small part
of that slowdown in the laboral market is because of AI,
or you know, Tarish for.
Speaker 3 (15:13):
That matter, and I take you, I ask you, that
takes us nicely into earning season that's about to hit
us hard next week. Angelocal cofas of Edward Jones, thank
you very very much. Indeed, Okay, coming up, Salesforce looks
to reinsure investors worried the company could lose out in
the AI boom. We have more on Salesforce next. This
is Bloomberg Tech.
Speaker 5 (15:45):
Salesforce shares.
Speaker 4 (15:46):
As you can see, they spite this morning after chief
financial and operating officer Robin Washington has said the company
expects to return to double digit revenue growth in the
coming years.
Speaker 5 (15:55):
More in the company's outlook.
Speaker 4 (15:56):
Let's bring in Bloomberg's Brodie Ford, who covers enterprise software companies.
It's still down a quarter so far this year in
terms of its market cap, but some reassuring points that
to reacceleration of growth exactly.
Speaker 11 (16:08):
I mean, this is a stock that was beat up
thirty percent year to date yesterday, and so it's up
seven today and that's pretty cool, but it's still investors
are a little anxious whether these kind of traditional application
leaders like Salesforce are going to be the ones to
successfully sell ai products. We got a decent outlook from
Salesforce yesterday, but you know, it's not a resounding celebration.
(16:31):
At this point.
Speaker 3 (16:33):
You've been reporting on the close relationship between open ai
and Oracle and how maybe the publicly traded and at
this stage slightly bigger of the two is helping that
company navigate chip export controls.
Speaker 2 (16:49):
What do we need to know? It's interesting.
Speaker 11 (16:51):
I mean, Oracle is kind of a famous lobbyist, right
they know Washington, They're pretty tight with the Trump admin
right now. And yesterday open ai said when we're having
trouble getting chips into UAE or Argentina, we call up
Oracle and they are the ones that have kind of
been able to help us get our chips around the world.
And we found that pretty interesting because our arcle is
(17:12):
playing an increasingly large role in open Aiyes in for
a bill.
Speaker 3 (17:15):
Out Bloomberg's Brady Ford across a lot of stories, thank
you very much. Another top top story, Apple can't catch
an AI break. The executive who is in charge of
developing a chat GPT like search feature within Apple is
stepping down and heading to Meta. That's according to sources.
For more, bloombergs Mark gunman who brokes that story joins us. Now,
(17:37):
who is this executive and how significant is it Mark
that he's jumping to Meta.
Speaker 2 (17:45):
Yeah, this is keying.
Speaker 8 (17:46):
And to give you an idea of how significant this is,
we've talked about maybe a dozen Apple AI departures over
the last few months. This is probably the most significant
or second most significant of that group. This person was
a direct purport to John g and Andrea, the senior
VP who runs all of AI at Apple. This person
(18:06):
was actually put into their role only a few weeks
ago when his predecessor, Robbie Walker left Apple. Walker had
been in charge of Siri, but he was removed from
being in charge of Siri in March after the major
delays and the blowback against Apple Intelligence.
Speaker 12 (18:23):
And then he.
Speaker 8 (18:24):
Started a new team called AKI Answers Knowledge and Information,
and that team is focused on AI powered web search tools,
so basically adding chat, GPT, perplexity, Gemini like functionality to
Siri and other parts of the Apple operating system. And
Yang he became in charge of that program just a
few weeks ago. Before that, he was running the search
(18:45):
related functionality, then he was running the whole thing. And
so now Apple's AI team is going through another major
reorganization in light of that significant departure.
Speaker 4 (18:54):
And a key line in your story is several of
the Apple team members think that this is going to
continue to happen, more departures to come.
Speaker 2 (19:02):
This is going to keep happening.
Speaker 8 (19:03):
I mean the core team developing the models underlying Apple Intelligence.
It's a team called AFM or Apple Foundation Models. They've
been breeding bleeding talent since July. The creator of that
team and the person who ran that team, Roman Paying.
He left for a two hundred and fifty million dollar
multi year pay package and is now a senior AI
(19:23):
executive at Meta. Since his departure, they've lost about a
dozen people. I'm told there's several other people on that
team continuing to interview. Other people are going to met
Us still. Other people are going to start ups Open
AI and Google. We've been reporting this out as these
departures have been happening, and these new companies have been
hiring these folks, and this is going to continue, given
(19:45):
the pay packages that these competitors are offering, and given
the embarrassments that Apple's AI AI efforts have become for
some of these people actually working on them.
Speaker 3 (19:55):
Mark you've come on Bloomberg Tech and you've broken all
these stories about people to Apple. A reasonable question and
we just have sixty seconds, is is there actually anyone
left at Apple of notes working on AI.
Speaker 12 (20:09):
Oh.
Speaker 8 (20:09):
Apple has tons of folks. They're working on acquisitions to
try to refuel the ranks there. John g and Andrea,
despite their being rumors and discussions about him stepping down,
are being pushed out of the company for several months now,
he remains in charge.
Speaker 2 (20:27):
He may not be.
Speaker 8 (20:28):
There for long, as I'm told that Apple has been
looking for outside replacements for him, but for now he's there.
Creig Federighi, who runs all software engineering, has now taken
an ownership role over all the AI.
Speaker 2 (20:41):
Strategy at Apple.
Speaker 8 (20:42):
Mike Rockwell, who created the Vision pro he's heavily involved
in the AI strategy there now too. So yeah, they
have definitely had folks, but it's just about refueling the
ranks and putting the right people in place. But certainly
this is another considerable setback to Meta's game potentially.
Speaker 5 (21:00):
As always, we thank you so much for joining us.
Speaker 4 (21:02):
Meanwhile, coming up potentially catastrophic breach of a US based
cybersecurity firm it's being blamed on Chinese state backed hackers.
Speaker 5 (21:10):
That detail and the fallout.
Speaker 4 (21:11):
Next, this is Bloomberg, Bloomberg Tech, and it's time now
for talking tech and first up. US cybersecurity provider F
five disclosed that Nation state hackers from.
Speaker 5 (21:33):
China breached its networks and gained.
Speaker 4 (21:35):
Long term, persistent access to certain systems, including source code now.
Speaker 5 (21:39):
The breach prompted warnings from the.
Speaker 4 (21:41):
US and UK authorities, describing the attack as a significant
cyber threat that could be used.
Speaker 5 (21:46):
To exploit vulnerabilities.
Speaker 4 (21:47):
Plus, Uber is giving some drivers in the US the
option to earn money by completing tasks related to the
companies new data labeling business. This is an area where
the rideshare giant sees an opportunity to shine in the
AI boom. And Microsoft is pushing Windows users to talk
to their computers. But the company is rolling out a
new AI voice feature activated by saying hey, Copilot. It's
(22:09):
part of a broader effort to rebuild Windows around AI,
including expanding use of tool including copalant Vision, which lets
software see what's on a user's screen.
Speaker 3 (22:19):
Ed Okay, coming out, We've got a riddle for you.
How do stocks get weaker? And more valuable. More on
how the AI boom is impacting equity dilution next, Also
quick look at markets right.
Speaker 2 (22:31):
The story has been.
Speaker 3 (22:32):
Split between the early part of the day where TSMC's
outlook was really boosting US, but TSMC US listed shares
at least have fallen away. The market is modestly higher.
There was some sort of nervousness and now calm about
what is happening in trade talks between US and China.
Will continue to track those stories throughout the range of
the show.
Speaker 2 (22:52):
This has been big Tech. Welcome back to bloombog Tech.
Speaker 3 (23:04):
Our top story is TSMC, the world's biggest, most important
contract manufacturer of semiconductors. It's US listed shares are now
down a percent. They had opened up two percent and
quickly fell away.
Speaker 2 (23:15):
The story is.
Speaker 3 (23:17):
That they have for the second time this year, hiked
their sales growth outlook to the mid thirty percent range
for twenty twenty five, and the writing on the Bloomberg
terminal is really clear. That's given the market at large
a lot of optimism about the outlook for AI and demand. Remember,
TSMC is the contract manufacturer of Nvidia chips as an example,
(23:37):
not doing much for their own US listed shares, though
it's an important one that will stick with.
Speaker 5 (23:41):
Caraen we will.
Speaker 4 (23:43):
Let's just turn our attention back to that riddle that
you left us with, ed because unusually, well usually we
see a company's equity gets diluted. We tend to see
investor Sara on the stock. But the AI boom has
turned that on its head. Take a look at Intel shares.
August is when the chip maker began selling newc to
the US government from SoftBank and Nvidia wanted to Bloomberg calculations.
(24:04):
That waters down the stake of existing investors by around
fourteen percent.
Speaker 5 (24:07):
So why are shares up so much?
Speaker 4 (24:10):
Markets reporter common Rhyinicky has been answering the red ule
and it's just all about the AI boom.
Speaker 12 (24:16):
Yeah, it really is. So it basically boils down to,
you know, Intel was really not doing very well. It stocked,
was very beaten down. There was a lot of worries
about how the company was going to turn itself around.
And this new influx, this new cash on the balance
sheet is really positive and investors are saying, basically, we'd
rather own eighty five percent of something than you know,
zero percent or one hundred percent of nothing. Right, So
(24:39):
it's basically this idea that this is going to help
the company grow more, that it's going to do better
in the future, and so taking a little bit of
dilution on the profits is okay for now.
Speaker 2 (24:50):
Commen.
Speaker 3 (24:51):
This is about hype and the golden tickets of AI.
Speaker 2 (24:54):
Right.
Speaker 3 (24:54):
You write in your story about AMD gets its partnership
with open AI, Intel gets its partnership and investment from Nvidia.
Speaker 2 (25:02):
The stock story is history from that point.
Speaker 12 (25:05):
Yeah, it's so true. And AMD shares are up, you know,
just as much forty three percent, you know, since that
deal was announced, and you know, Intel's been up ninety
percent just since the end of August. So we're seeing
so much enthusiasm about AI and all of these deals,
even though they're in such rapid succession, have been really beneficial.
Investors are excited about it. They want to be buying
into these shares, and they want to see the growth
(25:26):
going forward.
Speaker 3 (25:28):
Bloem moost Calm, and Ryan Key, thank you very much.
Meta has announced plans to build a new gigawatts scale
data center in Texas, committing more than one point five
billion dollars to the project. The investment marks the social
media giants twenty ninth data center and underscores it's pushed
to keep pace in the rapidly evolving AI race. The
news comes mid a wave of major data center announcements yesterday,
(25:51):
including a Microsoft ndscale partnership, a new collaboration between Coreweave
and Paul Side, and a forty billion dollar consortium acquisition
of a ligned data centers. Here to discuss their identity
center further, Nancy Tegler Laffer Tengler Investment CEO, who says, quote,
it's about the power stupid Okay, hit me with that thesis.
Speaker 13 (26:16):
Oh and do you always find the right nugget to
pull out?
Speaker 14 (26:19):
Yeah, Well, I mean, look, there's expected to be I
mean Open AI has said they need twenty gigawatts of power.
At sixteen billion per two gigawatts, that's a fair amount
of change. And then you have all of these just
using Texas as an example, you have all of these
companies opening data centers in Texas.
Speaker 13 (26:39):
It's kind of the perfect place.
Speaker 14 (26:41):
Horizon is the only one that comes with its own
power source, which is natural gas on the Mitchell family
Longfellow ranch. And so that's great news, but powers a
lot of power is going to be needed for the
rest and Texas already has a grid problem.
Speaker 13 (26:56):
So we are looking at Laffer Tangler, at names.
Speaker 14 (27:00):
To names that can that can solve some of the
data center problems and some of the grid problems that
are coming with this major buildout.
Speaker 13 (27:08):
And photonics is a hope. It's not yet.
Speaker 14 (27:10):
We're not yet there in reducing power consumption, and buildouts
are are critical. What we heard from Oracle recently, from
the co CEOs was that you know, it's not about
demand demand, it's about supply.
Speaker 13 (27:25):
They can't get these data centers built fast enough.
Speaker 4 (27:28):
Let's go to the promise of photonics, because you're already
looking at a particular company cohere. Remind us of what
the thesis is there, Nancy, and how quickly you think
it can become a reality.
Speaker 14 (27:38):
Yeah, so that's the question, Caroline, I mean, Coherent is
you know, really focused on building photonics around the quantum
computing needs, which is just going to add another layer
onto this whole power question. And so what we've done
we've launched a new strategy called Macrocycle Opportunities and we
have four themes space, robotics, quantum and nuclear and in
(28:04):
that we are trying to identify the companies that are
going to drive the next wave of transformation overlaid with
AI because it's essential to many of those themes, or
most of those themes.
Speaker 13 (28:15):
So coherence. One.
Speaker 14 (28:17):
One of the other names that is important to us
is not a photonics name, but is quantum services. We
own that in our twelfth best we own it in macrocycle,
and we own it in our growth portfolio. They've got
a thirty six billion dollar backlog in modernizing existing grids
or power providers.
Speaker 4 (28:36):
Nazi, You're doing what so much of the market is
having to do right now, which is have a lot
of hope baked into these forward looking not only promises
of the actual returns on investment in AI, but promise
of photonics, promise of quantum. What is the fundamental research
you bring to bear to be like? These are good bets.
Speaker 13 (28:55):
Well, so what we've done. And I didn't answer your
question on timing, I don't know, Caroline. I mean it
could be. The expectation is it could be a decade.
Speaker 14 (29:02):
But we've seen things accelerate so quickly, and the excellent
CEO at AI World yesterday said we're going to see
more transformation in the next ten years in the last
one hundred. But what we've done in constructing the portfolio
is we've established leaders and they are about forty to
fifty percent of the portfolio. So thinking quantum IBM, which
(29:24):
is a pretty low risk business model, and then the enablers,
which is a coherent and then the speculative names and
that would be Ion, q Righetti, all of those names.
So the objective is and that's ten to fifteen to
twenty percent, and then enablers are twenty to twenty five.
So we're trying to mitigate risk by existing build positions
(29:47):
in existing technologies that are already reproducing earnings and then
couple that with names that are speculative.
Speaker 3 (29:54):
Nan we started this conversation about the news of Meta's
latest or twenty ninth data center a gig or what
in Texas. You have the small if my Bloomberg terminal
data is correct position in Meta, but they are not
a hyperscaler, right, so how do you view that build
out that they're doing and the attractiveness in the broader
(30:16):
thesis you've just outlined to us.
Speaker 14 (30:18):
Well, so we do own a very small bit ed
but if you recall we've talked about this in the
past where we sold the majority of our holdings because
we felt like the business model and we were wrong
by the way. We felt like the business model of
advertising was not where we wanted to be, and then
they pivoted to AI and I think.
Speaker 13 (30:36):
That's what's driving these investments.
Speaker 14 (30:39):
And they've been pretty successful at attracting a number of
high leveled executives from many companies, but in particular Apple.
So I think that for us is you know, we
pivoted to Spotify. I think we actually did better with Spotify,
But the point is that we've we missed the meta
run and I think the question now is can they
(31:00):
convert it to revenues And I.
Speaker 13 (31:01):
Think that's going to be the challenge.
Speaker 14 (31:03):
However, Mark Mahaney just published a piece that shows EBIT
per employee in revenue per employee at Meta, Amazon, Microsoft,
and Google is up massively and that goes to the
bottom line. So I think the jury is still out
on how they're going to monetize all of this, but
we'll see. I mean, they're making the investments in people
(31:25):
and in capex.
Speaker 3 (31:28):
Nancy just very very quick is Elon's pay pack is
going to get voted through.
Speaker 14 (31:33):
I think so, I hope so. I like to be
aligned with the CEO as a shareholder.
Speaker 4 (31:39):
Nancy Tegler, we appreciate it so much. Lafa Tengra investments
great time on the show Coming up, the CEO of
Startup Upgrade joins us to discuss the company's leasest running
ground and what changed in the fintech market since his
day's running Lending Club isys.
Speaker 5 (31:53):
Bluembg tech.
Speaker 3 (32:10):
Fintech Startup Upgrade has just closed a one hundred and
sixty five million dollar Series G funding round that gives
the company a seven point three billion dollar pre money valuation. Upgrade,
which offers mobile banking, credit card and other financial services,
was founded by former Lending Club CEO and co founder
Reno Laplanche.
Speaker 2 (32:29):
He joins us now in San Francisco.
Speaker 3 (32:31):
Over the last couple of years, actually, Caroline and I've
tracked very closely the valuation of private I wouldn't even
say just fintech, you know, it's more specific modern banking services,
multi platform offering. But just to start, why raise that money,
what do you need it for?
Speaker 2 (32:50):
How does it help out with growth?
Speaker 15 (32:52):
Now? So we're in the fortunate situation of being cash
flow positive, so we didn't need might say that. Yes,
but as we think about the evolution of the company,
we're sort of getting closer to taking the company public.
This is probably our last sort of pre IPO raise,
so it's a good opportunity to sort of check on
(33:13):
where we stood in terms of building up Shaoulder value
and also create an opportunity for liquidity for existing employees
prior to an IPO.
Speaker 3 (33:23):
It's quite a definitive statement our last pre IPO raise.
So you have a plan in place in a roadmap
to do that.
Speaker 15 (33:32):
Yeah, I mean no certainty obviously, it always depends on
the market and on our own sort of growth in
the next twelve to eighty a month. But we're yeah,
we're feeling good about the direction a go, Nald.
Speaker 4 (33:44):
What's so interesting is the way in which Upgrade gets
new customers. In many ways, you're casually positive because in
many ways looking for that profitability metric because you don't
have to spend loads of marketing because you partner with
big businesses. Just tell us about how the business model
has help to weather what has been a real downturn
for other neobanks during the twenty twenty one earlier era
(34:05):
as well.
Speaker 15 (34:07):
That's right, Caroline. That's really what makes a great unique
is our mutile product, multi channel strategy. So we're fortunate
to have six different products, mobile banking, credit cards, personal loans,
and then sort of indirect products like BNPL, home improvement
financing and auto loans where we work with partners to
(34:30):
deliver financing at the point of seal. And increasingly these
sort of indirect products already of turning into good source
of customer acquisitions where we can acquire a customer for
a not a loan at a local dealer, of home
improvement financing, at a local roofer person who installed new windows,
(34:52):
and don't become upgreade customers, and we can self intern
sort of benefit from all of great products, including credit cards,
including mobile banking. So we really created that sort of
ecosystem that benefits from multiple products.
Speaker 4 (35:09):
And many know you from Lending Club. Was it those
relationships that helped you on the other side? Could you
repackage these loans, perhaps sell them in bulk to well
a community bank if it's relatively risk free, or onto
a private equity house if it's relatively risky, And I
think auto loans come to mind when we're thinking about risk.
Speaker 5 (35:25):
At this moment.
Speaker 15 (35:27):
That's right, right. So we've i think helped sort of
provide forty five billion in nouns since we started. It's
not all on our balance sheet. So we are certainly
sort of setting loans to loan buyers, and that include
a very broad range of buyers from small banks and
community banks and credit unions that are going to focus
(35:50):
on the sort of safest loans to sort of private
credit funds, securitization structures where you can allocate the risks
differently and where of investors might might be willing to
chase a higher yield.
Speaker 3 (36:07):
Reno jurisdictionally, would you just reflect on on the experience
of leading this company in this startup, What is it
like being a neo bank under the Trump administration?
Speaker 2 (36:16):
For example?
Speaker 3 (36:17):
Are they friendly and cooperative in the things that you
want to do versus their governance of traditional banks?
Speaker 9 (36:24):
Right?
Speaker 15 (36:24):
So, yeah, it's certainly a very business friendly environment right now.
But some of that translates into media a little bit
less stringent of regulations at the federal level, but lending
is also regulated at the state level, and I think
whatever relax relax standards where we're getting on the federal
(36:47):
h stage, where where we're not getting at a state level.
So so state regulators I think fielled that vacuum left
by federal regulators to to to a certain point. So
I don't think there's a sort of meaningful change in
how sort died the regulatory environment is.
Speaker 4 (37:07):
No memories are short, but I just want you to
reflect from an on lending club and what you learn
that briefly, because there were issues then.
Speaker 5 (37:15):
You did have to step down. I'm interested is to
what you've learned from it.
Speaker 15 (37:19):
Oh yeah, so much. Yeah, So I think the lending
club was really the first sort phase of fintech, right,
it was really sort of building up an entirely new industry.
We've so very uncertain. Regulatory and compliance framework upgrade ten
years later has really been part of that sort of
(37:42):
second phase of the industry, whereas more efforts of established framework,
established rules of the game, and I think we've we've
all been benefiting from from that, and the fintech industry
has been able to grow and and not really be
a sort of strong challenger.
Speaker 5 (38:00):
Truly.
Speaker 15 (38:01):
Some more traditional banking industry.
Speaker 4 (38:03):
Appreciate the answer, and O Laplanche come back, CEO of Upgrade,
We thank you now.
Speaker 5 (38:09):
Coming up.
Speaker 4 (38:10):
Anthropic reportedly looks to raise even more money, particularly from
the Middle East.
Speaker 5 (38:14):
We're on that next. As a Bloomberg Tech.
Speaker 3 (38:28):
Anthropic is reportedly in talks about a Debbi based investment
firm MGX to raise additional capital, just weeks after completing
a funding round that valued the AI startup at one
hundred and eighty three billion dollars all. According to sources,
CEO Dario m Oday met with MGF executives during a
recent tour of the Middle East, joining us as Bloomberg
(38:49):
Shering Gafari. This is something you and I have been
reporting out together. The way i'd summarize it, you give
us the details is need money, need compute, make some
friends across the Middle East.
Speaker 13 (39:02):
That's right.
Speaker 16 (39:02):
It's never too early, I think for these AI companies
to start thinking about the next funding round, even if
they're weeks before they've closed the last one, and you know,
we're talking about you know, the billions at this point.
Anthropics last round they raised thirteen billion at one hundred
and eighty three billion valuation. If you're thinking about what
kinds of pools of capital are out there at that scale.
The Middle East is increasingly sort of one of the
(39:24):
only remaining pools that's going to make those kinds of
investments at that level in the still unprofitable, still somewhat used, risky,
right AI companies Suan.
Speaker 4 (39:34):
What's interesting, and as you and Ed make clear in
the story is Katsa had been a pool of capital
for them previously, but they had to make amends for
previous choice words when it came to other Middle East
pools of capital.
Speaker 13 (39:47):
That's right.
Speaker 16 (39:48):
Zoanthropics CEO Dario Amedi has you know, in the past
made comments There is a memo to his own staff
saying that acknowledging that sort of fundraising in or that
they would be taking money in the Middle East and
there are trade offs there and that the company would
sort of have to come to terms with the fact
that not everything that they do will always be helping democracies,
(40:13):
that it may help dictators, and so of course with
the Middle East, you know, having a different sort of.
Speaker 13 (40:21):
Set of governments, that is a new reality.
Speaker 16 (40:24):
I think for these CEOs of AI companies that they
may be making deals with countries that have different and
maybe more undemocratic systems, right than here in the US.
Speaker 5 (40:32):
And they shrink fari. We thank you very much.
Speaker 4 (40:35):
And let's just say with Anthropic, because the AI startup
founded by former Open AI executives.
Speaker 5 (40:40):
Of course we just mentioned.
Speaker 4 (40:40):
Daria, there's also Daniella Ramade and a handful of others
is under a new scrutiny from the White House as
it doubles down on its mission of building safe, steerable AI.
White House ais are that David Sachs took to ex
acusing Anthropic of running a sophisticated regulatory capture strategy based
on fear mungery and blaming the company for a few
a state regulatory frenzy that's hurting startups topic of Dave
(41:04):
Lee's leader's Bloomberg opinion article and he joins US now.
And David sax was responding to a recent essay written
by another co founder of Anthropic could come from Open AI,
and let's just talk about what Jack had been posted.
Speaker 17 (41:17):
Yes, this is Jack Clark, one of the co founders,
their current head of policy as well.
Speaker 10 (41:22):
And in this essay, you.
Speaker 17 (41:23):
Know, he goes over some of his fears about AI
and he may sort of metaphors around sort of being
scared of the of the Dark essentially as a kid
and sort of comparing the future of AI in some
ways to the dark and not quite knowing you know,
what shape it's going to take, what the risks are.
And it seems, you know, this is this isn't the
first time David Sachs has kind of spoken badly off
anthropic and what it's doing is scratching this itch to
(41:45):
David sax And it seems the White House has the
anthropic is it's kind of separate from the tech world
in a lot of this, you know, we're not seeing
anthropic leadership at many of these White House events. They're
not going to you know, the been released with Trump
in the same that as Jensen Huang has. They're certainly
not handing him a small trophy like Tim Cook did
in the Over Office recently, and that now has kind
(42:06):
of put a bit of a target on their back.
I think is this sort of standalone AI company that
likes to think it has perhaps stronger principles on safety
than Open Ai and so many others.
Speaker 3 (42:17):
Dave, this is a story that's in the zeitgeist. To
borrow Tom keenism. It's playing out on social media. There
are other people beyond David Sachs weighing in on it again,
it's a little bit repetitive, but just explain the grievance
the issue here that these kind of tech figures have
with Jack and his essay and an Anthropic.
Speaker 17 (42:39):
Well, look, there was for the longest time these sort
of two camps in AI that one would say, you know,
slow this down, let's do this deliberately, do bit safely.
The others say, no, let's be accelerationist. Let's just innovate
as quickly as we can and treat the problems as
they come and solve some of so many problems with AI.
And the way that's going to manifested in a more
practical sense is that you have states like California that
(43:01):
have recently made into law several bills related to AI.
One in particular was Senate Bill fifty three, which is
about transparency, is about protecting whistleblowers. Anthropic stood alone in
endorsing that bill. Open a Eye sort of begrudgingly said
they could live with it after the fact, but Anthropic
was the only company to say, yes, we think this
(43:21):
is a good idea. Now, their preference would be for
a federal law that would stop there being individual laws
in different states around the country, and that's obviously what
David sax wants as well. But Anthropic are saying, look,
if you want to do a federal law, let's see it,
let's have it in Congress, let's see what that is.
Until then, we're happy to back what little legislation is
(43:42):
happening in California, even if that means it might make
things more complicated for the AI companies.
Speaker 3 (43:48):
Bloomberg Opinion columnist Davely with the latest Thank you very much.
That does it for this edition of Bloomberg Tech. Carra
what an addition it was.
Speaker 4 (43:56):
It was, and yet more focus on data centers and
indeed growth of AI.
Speaker 5 (44:00):
Do not forget to check out our podcast.
Speaker 4 (44:02):
Find it on the terminal as well as online on Apple, Spotify,
and iHeart from New York.
Speaker 5 (44:07):
For San Francisco. This is Bluemberg Tech
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