April 21, 2025 • 41 mins
Bloomberg’s Caroline Hyde discusses the possible breakup of Google with former Nebraska Attorney General Doug Peterson. Plus, Michelle Giuda, CEO of the Krach Institute for Tech Diplomacy at Perdue, says TSMC has leverage to prevent its chips from ending up in China. And, Rich Greenfield from Lightshed Partners explains why Netflix’s global production gives it an advantage over competitors.
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news from the heart of
where innovation, money and power collide in Silicon Valley and beyond.
This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 2 (00:34):
Live from New York. This is Bloomberg Technology. Coming up.
Google heads back to court to take on the Department
of Justice over a search monopoly fix.
Speaker 3 (00:43):
Plus in an era of tariffs.
Speaker 2 (00:45):
Netflix stands out why Wall Streets is the stock as
recession proof, and TSMC warns there will be challenges limiting
China from its AI chips. Details this hour, but first
we check in on the markets, which once again are
under pressure. The Naza bears the brunt when NASAK one
hundred off by more than two point three let's call
it two point four percent on the day. We are
(01:05):
worried about the macro, about the future of j. Powell
at the Fed, and we see the impact on the
Magnificent seven.
Speaker 3 (01:11):
Not though on crypto.
Speaker 2 (01:12):
We see bitcoin bounce that as gold gets once again
that desire to get into a haven trade, so too.
There's a shorter end of the treasuries, but Bitcoin up
three point seven percent, the high sets we've seen since
the beginning of March eighty eight thousand, Move on and
have a look at some individual stocks, because Tesla, on
the downside, what off by more than six percent, one
of the key contributors in terms of points. Apple's falling
(01:33):
in video is falling, but Tesla too. Will dig into
why we're concerned kind of all important earnings this week
come Tuesday. Remember we've got a whole raft of earnings,
but we've already got a little bit of sentiment. Check
on what seems to be resilient in the face of
macro pressure. Netflix up two point eight percent, the best
performer on the Nasdaq one hundred from a points perspective.
But let's get to Ryanvstelica, who can join us now
(01:53):
on the weight that mag seven is feeling today. Seems
to be a macro one, seems to be one of
the fed. There are some standouts when it comes to earnings.
Speaker 4 (02:02):
Hey, good morning, thanks for having me.
Speaker 5 (02:04):
Yeah, there's still a lot of uncertainty out there, and
the new news surrounding you know, is Powell potentially at risk?
That is just adding to the level of uncertainty out there.
There's so much polity uncertainty in this broader sense that
maybe the US isn't the sort of safe haven economy
that it has been viewed as really for decades. So
that is a massive shift out there and causing a
(02:26):
lot of uncertainty.
Speaker 2 (02:27):
Netflix is, from an equity perspective, deemed a haven.
Speaker 3 (02:31):
We are going to hear from so many.
Speaker 2 (02:33):
CEOs this week, whether it's well some that have to
face the court but also have to fase earnings. I mean,
we know that we're going to be hearing from the
CEO of Google in that capacity.
Speaker 3 (02:44):
It's to capacity that being alphabet too.
Speaker 2 (02:46):
But also you've got intell, You've got IBM, you've got
Texas instruments.
Speaker 3 (02:49):
There's a lot that we can take a gauge of. Ryan.
Speaker 5 (02:53):
Yeah, absolutely so Netflix is maybe a little bit of
an anomaly compared to those other names you mentioned, not
quite as subject to the tear of risk as some
of the chip makers and hardware companies out there, which
have really been driving a lot of the selling this year.
It is also seen as a recession resistant company, given
the idea that you know, if people are pulling back,
by which I mean consumers, they're not likely to cut
(03:15):
their Netflix subscription in the way that they might be
pulling back on other kinds of discretionary spending. So it
seems like it has both offensive and defensive characteristics. That's
what one of the analyst notes I read this morning said.
So obviously a pretty positive company, a pretty positive earnings report,
and that stock has been doing well this year, especially
relative to the rest of the mag seven, the old fangs,
(03:35):
just the broader market.
Speaker 2 (03:37):
Certainly, and the moment only five names on the nasat
one hundred are in the green. One of the micro strategy,
the other Netflix, Key ran Vasselica.
Speaker 3 (03:45):
We thank you so much.
Speaker 2 (03:46):
Let's get more on the tech market sell off more broadly,
Scott Labner's with US Horizon Investments, and just at this moment, Scott,
within this uncertainty from a macro perspective, do you want
to be buying in some of this weakness and tech?
Speaker 6 (04:00):
Hey, Caroline, Yeah, I think you actually do.
Speaker 7 (04:02):
I mean, I think this is one place where you
can start putting some some money to work and some
some new money to work. Probably I'd be a little careful,
you know, as you guys are just talking about it's
probably not the time for the chips because of all
the tarif uncertainty. But you know, something more like like
an equal weight sort of tech play. You know, you
get you know, catch on the themes with AI. You know,
like if you remember, you know, the starting place before
all the tarif stuff, we're all talking about AI.
Speaker 6 (04:23):
Still because it was still a really big deal. It
will continue to be a big deal.
Speaker 7 (04:27):
It's just being overshadowed currently, and so you know, this
is probably a pretty good time to start putting money
to work towards that sector and towards that theme.
Speaker 2 (04:34):
Okay, but if it's not chips, how are you thinking
about the AI opportunity.
Speaker 6 (04:39):
Yeah, look, I think it's a little bit more nuanced
right now.
Speaker 7 (04:41):
You know that this is you know, you can think
about the AI trade as being or you know, the
AI investments broadly, as as following a couple of different phases.
Speaker 6 (04:48):
You know, we've been in mostly sort of.
Speaker 7 (04:50):
The infrastructure phase and that's and that's dominated obviously by chips,
by the hard work kind of kinds of things, just
like routers dominated the first part.
Speaker 6 (04:57):
Of the Internet cycle.
Speaker 7 (04:58):
We're getting now into more of the prove it stage
of AI, which is where you know, we're comps.
Speaker 6 (05:02):
You're gonna have to figure out and prove to the
market that hey, I'm using this stuff. I know how
to make it.
Speaker 7 (05:06):
I know how to use it in my company to
dry productivity, dry processes, and to get higher margins ultimately,
which is really the name of the game for this.
And so you know, finding those companies that can help
deliver that type of margin expansion through through productivity growth
using AI is really is what we think is kind
of the next trade. And so that's why that that
more equal weight treatment we think is probably a better play.
Speaker 2 (05:26):
When we think about this week, though, Scott and the
amount of guidance we might get from earnings from CEOs,
whether it's the telecom sector that comes thick and fast,
whether you've got some of those chip names, whether it's
Intel or Texas Instruments, Are you expecting the guidance to
be lower?
Speaker 7 (05:42):
We expect the guidance to be completely fuzzy, Like, look,
I'm not sure who's who's gonna leave guidance.
Speaker 6 (05:48):
You know.
Speaker 7 (05:48):
Yeah, United Airlines come out, you know, last week and say, look,
here's our guidance for a recession. Here's our guidance for
non recession. Like that's not guidance, I mean, that's actually
it's just fairly useless. And so you know, what we're
really going to be focusing on is like how are
companies thinking operating? So, you know, in terms of the guidance,
like the numbers aren't really going to mean anything, nobody's
gonna believe them, But in terms of like philosophically, like
how are you operating in this environment through this uncertainty?
(06:09):
How are you thinking about cappex What sort of contingency
plans do you have in place? It's really gonna be
those types of things that the people are going to
be looking for. It's it's going to be a you know,
a kind of a tip of the cap towards good management.
You know, good management and thoughtful management will probably you know,
get a premium through this kind of cycle. Yeah, but
it's you know, it's gonna be really those types of
more squishy qualitative things that folks can be looking for
(06:30):
rather than focusing on the hard numbers this quarter.
Speaker 3 (06:32):
Let's go to the squishy CAPEX then, Scott, because what.
Speaker 2 (06:35):
Are you expecting in terms of companies commitment to continue
to spend? We're all questioning it from well, the hyperscale
is when it comes to in video investment, for example, you.
Speaker 7 (06:45):
Know, I think I think it's going to be a
time scale type of type of argument. So, you know,
I don't think like nobody's very confident in the next
few months, Like nobody has any visibility into what these policies.
Speaker 6 (06:55):
Are actually going to look like, what these serves are
actually going to look like.
Speaker 7 (06:57):
What we're really focusing on is like, what are folks
thinking about for the next two to three years and
are they actually being are they going to start executing
on some of those plans? So, you know, again, it's
it's just a tip towards the towards of management, towards
the guide you know, towards uh, you know, teams that
are proven that they can think through some of the
short term issues, manage through some of the short term issues,
and really focus more on the medium term stuff that
will like you know, that can have the benefits accrue
(07:19):
to them through time. It's you know, again, it's not
going to be a easy charge. I mean, this is
not going to be an easy earning season to figure
out and sort of bottom line for folks. It's really
going to be kind of a company by company, hand
to hand battle.
Speaker 2 (07:29):
What about global exposure versus domestic exposure? I think of
the telecoms names, and they've weathered relatively resiliently because they're
focused on a.
Speaker 3 (07:37):
Consumer here in the US.
Speaker 2 (07:39):
How do you think about opportunities to invest abroad or
companies that have exposure abroad right now?
Speaker 6 (07:44):
Scott, Yeah.
Speaker 7 (07:45):
I mean, look, if you're thinking about investing in broad
you know, it's really about two things right now for US.
One is, you know, we do think the dollar down
trend is going to be fairly strong and and fairly
persistent for the next couple of years.
Speaker 6 (07:57):
And you know that that in and of itself, it gives.
Speaker 7 (07:59):
You a pretty to a tailwind if you're an international
investor investing international equities. So you know that's that's a
starting place and so you've got to get the dollar
part right for that, and we do think that dollar
trend is lower.
Speaker 6 (08:09):
The other thing, though, is importantly the fiscal expansion.
Speaker 7 (08:13):
You know, like on fiscal thrust is now the realm
of internationals and not the realm of the United States,
you know, companies and or the United States governments. Sorry,
and you know that the market definitely rewards fiscal expansion.
Speaker 6 (08:25):
We saw that through COVID, We've seen that over the
last ten years.
Speaker 7 (08:27):
Really and so you know, the sort of the dual
thing of fiscal expansion internationally versus the US, and you know,
and and the dollar trending lower against most major trading partners.
You know, we think those two tailwinds are going to
you know, really really be to be to the benefit
of international equity investing for the next probably year or so.
Speaker 3 (08:43):
Most major trading partners.
Speaker 2 (08:45):
I don't know if you count China as one of
them any more, Scott, but what about China's investment the
fiscal stimulus and whether or not you want to me
in some of these Chinese internet names for.
Speaker 6 (08:53):
Example, yeah, Karion Lens.
Speaker 7 (08:55):
Really, it's obviously a pretty tricky one, you know. You know,
China we think is going to get it's kind of
getting bullied, just like Europe is kind of getting bullied
in into doing the fiscal expansion thing. We think China's
gonna get bullied a little bit by Trump into doing
uh sort of countercyclical fiscal expansion, countercyclical policies, which.
Speaker 6 (09:09):
They've really been resistant to for the last couple of years.
Speaker 7 (09:12):
You know, one thing that we think is pretty important,
especially for Chinese tech though, is you know, you premiere
she he's dropped the common prosperity language. We've not heard
common prosperity come out of his mouth or or in
written for him for many months now, and that you
know that when that common prosperity the language just started
to take hold, it's really the death note towards Chinese,
so towards Chinese equities and Chinese tech in particular. And
(09:32):
so you know that that language being dropped, we think
is important. And so you know, the combination of that
language being dropped, so he's signaling a changed uh, you know,
changing his mindset towards capitalism, changes his mindset towards those
Chinese tech companies. Plus what we think is going to
have to be some sort of fiscal countercyclical uh you
know response by the Chinese governments, you know, you know,
makes those you know, probably probably okay to invest in.
But man, that is a tricky one.
Speaker 2 (09:54):
Scott Ladner, Horizon Investments, thanks so much for joining us today.
Speaker 3 (09:58):
Coming up, Alphabet heads to.
Speaker 2 (09:59):
Call as the government continues its push to split up Google.
Speaker 3 (10:04):
This is Blue Meg Technology today. Alphabet's Google.
Speaker 2 (10:16):
Well, it's in court of a US government prosal to
split up the company. It follows a ruling last year
that Google has an illegal monopoly in web search. Lumeg's
Michael Shepherd has the details in Washington, and last week
it was all about that landmark ad.
Speaker 3 (10:30):
Tech monopoly ruling.
Speaker 2 (10:31):
This week, when we're reminded of the search ruling, what
are the remedies that likely to be discussed?
Speaker 8 (10:36):
Chat Well, Carol, you're right that this is another front
in a broader antitrust push against Alphabet and a number
of other tech companies. But here we're talking about search,
and what the government is saying is that, look, Google
has this illegal monopoly per judges ruling back in August,
and these are the remedies that we would like to see.
(10:57):
This is the so called penalty a remedy phase, and
before the same judge who made that rolling back in August,
they are calling for a couple of big changes. One
is that Google should sell off its Chrome browser. Another
is that it should be licensing more data to its competitors,
and then finally, it should stop making all those billions
of dollars in payments to companies like Apple and others
(11:18):
to guarantee a good position on those platforms for its
search engine. Something that the judge found signaled anti competitive behavior.
Now Google has countered with saying that, look, making changes
like this will hinder innovation, it will put us at risk,
put the US at is at risk of losing a
(11:39):
competitive edge on the global stage. In essence, they are
saying that, look, the Justice Department's proposed fixes would seek
to break something that doesn't need fixing.
Speaker 2 (11:49):
What's really interesting is just the time that it's been
more than forty years since we got the breakup of
marbll AT and t is in twenty five years since
Microsoft was under the microscope chev What do we think
will actually be an outcome in any sort of time
horizon here.
Speaker 8 (12:07):
Well, they're talking about perhaps August to actually learn what
the judge's decision as far as the remedy goes. But
this will go on for years to come. This case
is not over now or in August. No matter what happens,
either a ruling in favor of the government again or
against the government, it will head to the Supreme Court
(12:27):
Foreign Appeal. Both sides have a lot at stake here,
and the US government is not showing any signs of
letting up in its anti trust push against the major
tech companies. We saw the Meta trial being pushed in
the case being pushed by the Federal Trade Commission proceeding
last week with testimony from Mark Zuckerberg and Cheryl Sandberg
about the company's alleged anti competitive behavior there and then
(12:50):
here in Google. As we were talking at the top
about the two front push there from the government against Alphabet,
and then there are other companies as well, Apple for
instance and Amazon are also under pressure over competitive practices
that the government has singled out is potentially harmful to
the market.
Speaker 2 (13:09):
Care not to mention on the EU's been looking at too.
Greenberg's Michael Shepherd with all things from Washington, let's discuss
this further the former Nebraska Attorney General Doug Peterson with
US currently at Keating O'Gara and Doug, it's really interesting
as to how much you with AG and Nebraska pushed
forward on this particular case or many others that surround
(13:31):
Alphabet at the moment, and it was under the previous
Trump administration that first kicked off in twenty twenty.
Speaker 3 (13:36):
What impact remind.
Speaker 2 (13:37):
Us does this have on the consumer, on the tech
industry at large, this sort of form of.
Speaker 9 (13:43):
Control, I think the biggest issue that as attorney generals.
Speaker 4 (13:48):
That we had concerned.
Speaker 9 (13:49):
About was that big tech was accumulating so much personal data,
and that data really presented the consumer almost as the product,
because the data was what fed search, it's what feeds AI.
And really we felt as AGS that we needed to
step forward because their privacy and the use of their
(14:11):
data for profit was a big concern.
Speaker 2 (14:13):
Let's talk about that for the consumer in this scenario,
because Google would counter that this is going to hurt
the consumer if you separate, for example, Chrome off suddenly
that seamless approach if you're an Android user, if you're
a Chrome user disintegrates. Does that ultimately hold firm in
your mind?
Speaker 6 (14:30):
You know, I don't think so.
Speaker 9 (14:31):
I think one of the biggest concerns we had was
that what Google did in maintaining and this is in
the judge's August opinion, in maintaining this monopoly, it basically
created this ecosystem where they entered into exclusionary contracts with
all the important players, had some revenue sharing with us,
which were very important, and then as a result they
create this basically this feedback loop that keeps everything contained
(14:57):
within Google, and the result of that is a disincentivize
anyone from the outside actually being able to get any
capital to challenge with a certain type of search engine
that may be a better product, may better protect privacy.
All of that is pretty much locked out because investors
weren't going to invest in someone who's going to go.
Speaker 4 (15:15):
Up against Google.
Speaker 9 (15:16):
And second of all, all the players within that loop
that they had through these exclusionary contracts, you know, we're
disincentivized to look at working with any other technologies. So frankly,
I think it's put a ten year hold on really
developing better search technology.
Speaker 3 (15:33):
Interesting.
Speaker 2 (15:33):
I mean, eddie q is going to be giving evidence
from Apple they get about twenty six billion dollars a
year in terms of payments to be offering that exclusive
nature of Google as a search option. But there are
other companies out there are the search options that actually
get money from Google too. What do you think we'll
hear in terms of some of the evidence given this week, Well.
Speaker 4 (15:54):
I think there's several things.
Speaker 6 (15:56):
One.
Speaker 9 (15:56):
I think the Court in its August opinion made some
really important five feeds about the effects of these revenue
sharing contracts. I think the Court also really realized the
importance of scale because having that data and Google being
able to acquire so much of that just builds a
scale that actually makes it very difficult for any competition
(16:16):
to occur. So I think we're going to once again
see evidence about how companies who wanted to develop products
in general search and also in the area of search
advertising text advertising will see evidence of how they've been
kept out of the market and how it's necessary, including
the divestiture of Chrome is an important element to balance
(16:36):
out competition in the market.
Speaker 2 (16:38):
Alphabet shares currently act session laws by two and a
half percent. They've got their earnings later this week, So
Sono Pitch is a busy guy.
Speaker 3 (16:45):
Doug.
Speaker 2 (16:45):
I'm interested though, in the countering nature from Google also,
is this is backward looking. We suddenly got a lot
more competition in the search space because open AI is
there and all perplexity these other generative AI forms of search.
Speaker 3 (17:00):
Is that an interesting argument. Is the timing wrong here?
Speaker 10 (17:04):
Well?
Speaker 9 (17:04):
No, Actually, I think the timing's really important because I
think we both the Department of Justice and the state
Attorneys General recognize that technology is moving so quickly. AI
is moving very quickly. But what's the fuel of all
of that, once again is data, And so we think
actually part of what we're asking for in the remedy
(17:25):
is to ask the court to keep a monitoring process
going so that we can follow this as we go
into the AI world development because really from a vent diagram,
there's a lot of overlap, and so having an ongoing
monitoring ability by the court will allow us to address
some of the new technology challenges that might come forward.
Speaker 3 (17:45):
Back in private practice.
Speaker 2 (17:46):
But of course, the former Nebraska Attorney General Doug Peterson,
wonderful to have some time with you.
Speaker 3 (17:51):
Thank you.
Speaker 8 (18:00):
You.
Speaker 3 (18:00):
Look at Tessa shares.
Speaker 2 (18:01):
They're off by or more than seven percent, worst day
since April tenth for the stop the company's biggest falls.
One of them at least sent a start warning to investors.
Wedbush analyst d and I saying that this is code
read this moment for Tesla and the elol Musk needs
to pivot his focus from the Department of Government efficiency
to avoid lasting brand damage. Remberg's David Welch joins us, Now,
(18:21):
we've heard this revives before, but earnings come Tuesday.
Speaker 3 (18:24):
It's an important moment.
Speaker 11 (18:27):
That's right, and I think investors obviously Dan ives among them,
he's an analyst, course, but I want to hear that
Elon is going to come back. They want to hear
that there's a focus again on getting the sales going,
that you're going to coo or praise TV coming out.
And I think the big thing too that's kind of
kept the narrative going before this sort of politically related
(18:49):
route that they've had is what's going on with the
autonomous vehicle, with the whole AI and AV business that
Eon talked about a while back, and with him in
the government and cutting government costs with DOGE, Investors aren't
seeing a lot of that. This is the sort of
thing that goes back years right when investors were worried
(19:09):
Elon was spending too much time at SpaceX or with
the boring company and not enough time at Tesla, And
here he's basically spending most of his time at the government.
And they want to see that the guy who built
the company and who has steered it and made a
lot of people a lot of money is back and
focused on Tesla.
Speaker 3 (19:26):
And on innovation.
Speaker 2 (19:27):
Many looking towards other evs, particularly in China that are
speeding up with charging in c ATL, maybe having charges
that bring us to five minutes or less to full charge.
David just move us away from Also, where areas that
cars being impacted? Right now, I'm looking at Hurts, a
big investment coming into Hurts. Interestingly, they made a poor
decision around Tesla investments in the past, but now it
(19:50):
looks as though Pershing Square like what they're doing now.
Speaker 4 (19:54):
That's right.
Speaker 11 (19:54):
And remember in the fourth quarter Hurtz said that they
were done sewing down this Tesla bed that really caused
like two point nine billion dollars worth of losses last year.
So if that's behind them and the market still isn't
rewarding them for that, it was trading down below four
dollars a share before Acman bought in, it doesn't take
too much in terms of operating improvements for Hurts to
(20:16):
really start to move the needle and get things going
again in the right direction, assuming that there's no more
of a wicked tail here from the Tesla bet and
Acman mentioned that in his letter. And the other thing
too he's looking at is could this be a tariff
bet here? If tariffs drive up the prices of new cars,
it always has an impact brings up the price of
used cars as well. Herts has hundreds of thousands of
(20:39):
them in their fleets, and if they sell them at
a better price than they bottom for, that's just good
for the company and will help them pay down some
of their debts. So there are some potential tail winds
here and some potential operating improvements for Hurts and Actmen's
betting that the Tesla damage is behind the company and
it's all at least some kind of improvement going forward.
Speaker 2 (21:00):
To nineteen percent bet David Welch, thanks so much, and
all the things evs and Auto's welcome back to bloemag
Technology and Caroline Hide in New York. A quick check
on these markets that are once again on a downdraft.
Now we're seeing the NAZNAT one hundred feeling the brunt
(21:20):
of the sell off right now. We're off by two
and three quarters of a percent. In fact, on the
naszat one hundred and only five stocks we're actually in
the green, everything in the red. We move from the
micro anxiety of chip stocks, of worries about earnings, but
also to the macro perspective, what of J. Powell, what
of his future? We're currently on the downside. Move on
to some of the individual movers that we're keeping.
Speaker 3 (21:39):
An eye on.
Speaker 2 (21:40):
Nvidia is one of the key that is on the downside.
From the points perspective, we're currently seeing off by more
than five percent. For three straight days, we've seen losses.
It's wiped out almost four hundred billion dollars worth of
market cap in those three days. I'm also looking though
at TSMC off by three point three percent. They're putting
out a warning in an annual report saying, now, maybe
we're going to find it very hard to ensure that
(22:00):
the end users of our chips aren't Chinese. Let's talk
about that a little bit more with Ian King who
joins us now. And look, this is TSMC saying, look,
we hear you US government. We understand you want to
be limiting some of the exports to certain Chinese entities.
Speaker 3 (22:15):
We don't always know where they're going.
Speaker 12 (22:18):
Yeah, I mean this is obviously an attempt by them
to try to sort of shift the blame or shift
the focus. They're saying, look, hey, we just make these things.
You know, the companies that design them, the companies that
sell them, they're the ones that kind of should know
where they're going. They're the ones that are sort of
more directly involved. And then maybe it's the computer makers
who actually take them and then put them in computers
(22:40):
or cell phones or whatever that So this is, as
you say, there's a heightened environment of like, look, how
are these chips getting to China?
Speaker 6 (22:48):
We need to know.
Speaker 12 (22:49):
And this is TSMC saying, hey, it wasn't us.
Speaker 2 (22:52):
What's interesting is TSMC itself has been trying to appease
the administration more investment into the United States. I've just
come back from Arizona. Is all about the investment they're
making in that state, but it's costing.
Speaker 3 (23:03):
Them more in yeah, it is.
Speaker 12 (23:05):
I mean, this is the whole point behind the Chipsack
was to say, look, we need to make the price
of doing business in the US of building these giant,
massively expensive factories equivalent to what it would be to
make them in Taiwan or make them in South Korea
or China for that matter. And the delta has always
been government support. That's the Chipsack. That's what TSMC wants
(23:29):
more of. But frankly, whether that's absolutely the case, whether
it can still get the same level of economics, that's
still a challenge.
Speaker 2 (23:36):
Ian King always brilliant to have you, thank you more
on a semiconductor sector now I'm in this geopolitical uncertainty
and welcome back to the show, Michelle geider Kirk Institute
for Tech Diplomacy at Purdue CEO there.
Speaker 3 (23:48):
Michelle.
Speaker 2 (23:49):
Always great to have your voice, and let's just talk
about what you're hearing from semiconductor companies at the moment.
Are we still seeing the administration getting what it wants.
Speaker 13 (24:00):
I think we are seeing a tightening of export controls,
which has been the trajectory for the past few years,
and I think it speaks to the strategic nature of
semiconductors because they're powering consumer technologies and they're also powering
defense tech at the same time. So if you look
at American chip companies like Nvidia, like AMD, or allied
(24:21):
chip companies like TSMC, they have a very strategic role
to play. They're at the front lines of geopolitical competition,
and so they are not passive but active players and
making sure that the US and the free world maintains
technological leadership. And so these increasing export controls are a
reflection of that.
Speaker 2 (24:40):
When TSMC puts out an annual report saying.
Speaker 3 (24:43):
We're going to struggle with this, when they're trying to.
Speaker 2 (24:45):
Own the fact that they perhaps don't always understand the
exact end user. Of course, there was reports that TSMC
chips ended up in Huawei products.
Speaker 3 (24:55):
How do you rate that acknowledgement from a company.
Speaker 13 (25:00):
Well, I'd say the great opportunity for a company like
TSMC is the fact that TSMC produces ninety percent of
the world's most advanced semiconductors, and so if you look
at the leverage that they have, if they were to
issue guidance requiring more disclosure, more transparency and understanding downstream
who the end users are of the chips that they're making,
(25:20):
I think they would see that their customers would be
highly responsive to that because of the leadership role that
they play, and that's an important thing here. Companies can't
just be passive bystanders, waiting for governments to issue regulations
and then comply. There's actually a leadership opportunity here for
companies who are on the ground, who are operating in
this environment, to play a key role in shaping what
(25:41):
the disclosures need to look like, so we all make
sure that these chips don't end up in the hands
of our adversaries.
Speaker 2 (25:47):
Disclosure is one thing, but designing new types of chips
to abide by changing rules is another, and Nvidia has
been trying to do that. Every time the rules have changed,
they've designed a different type of chip that China is
allowed access.
Speaker 3 (26:00):
And now the crack down on the H twenty.
Speaker 2 (26:02):
How do you think Jensen Wang has navigated this thus far?
Speaker 13 (26:07):
Well, I think it's worth taking a step back and
looking at the bigger picture here, which is, if you
have to modify your product so that a totalitarian customer
isn't using it to undermine your country's national security, something's wrong.
So how do you take a look at what the
overall business strategy is and national security strategy is and
(26:29):
start to think about what is a long game here?
And for American chip companies in China, it's not going
to be a long game because China has declared that
it wants to be self sufficient in critical technology. Semiconductors
is one of them in all critical technologies by twenty
thirty five. And so the clock is ticking on American
chip companies right now. And whether it is the company
leaving the market on its own terms, or it's a
(26:51):
US government issuing new export control regulations, or ultimately China
creating its own national champions like Huawei and then ousting
American companies, the opportunities for a business leader to decide
now whether they want to get out on their own
terms or have it be dictated by China.
Speaker 3 (27:08):
But then Jensenwang, as the crackdown on.
Speaker 2 (27:11):
H twenties happened, goes to Beijing, is in China reconfirming
his commitment to the country. How did you assess that
particular level of diplomacy from the company.
Speaker 13 (27:22):
Well, I think it was equally important that he also
went to Japan thereafter. And look, China's a significant market
for Nvidian, for other chip companies. I think it's their
fourth largest by sales, so I'm not surprising that he
went there. But at the end of the day, we've
got to make sure that American companies, not just chip companies,
but companies and all critical tech sectors are working with
(27:42):
trusted partners and trusted allies in order to advance our
collective national and international security. And the fact that he
was in Japan emphasizing the need for increased energy and resources,
Japan's been a trusted partner in technology. Those types of conversations,
that type of tech diplomacy is really important, and you know,
you see Vice President advances in India today as well.
(28:03):
Working with democratic partners like that is going to be
even more better news for US national security.
Speaker 2 (28:10):
When we have the idea though, that necessity is the
mother of all invention, our and indeed innovation, Michelle, are
we just pushing China to go and build it themselves
at a faster rate?
Speaker 13 (28:23):
They're going to do it anyway, So you know, the
alternative would be, well, let's hand them our critical technologies
and save them some time. The argument doesn't really stand.
America's got to be focused on innovating faster and smarter
and better and being the leader in all critical areas
of technology and addressing what competitors and adversaries like China
or Russia or Iran or doing in these sectors. But
(28:46):
the imperative for the United States is to focus on
innovation first and make sure we maintain a global leadership position.
China is going to continue doing that on its own.
So the more that we focus on winning what we
do best, which is innovation and enterprise, the better will be.
Speaker 3 (29:00):
Michelle. It's great to have you back. Thank you.
Speaker 2 (29:02):
Michelle Geider at the Crack Institute for Tech Diplomacy now
coming up. Netflix's record profit is giving investors something to
cling to amid of all this economic uncertainty and challenges
for traditional TV and movie businesses.
Speaker 3 (29:15):
More on that.
Speaker 2 (29:15):
Next, this is Bluemot Technology quick check in on Netflix
shares because they had been holding onto gains and in
fact one of the only stocks in the green on
the last that one hundred are up two point eight
percent after the streaming giant reported.
Speaker 3 (29:35):
A record profit to start the year.
Speaker 2 (29:37):
And I see the company business as resilient amid a
tougher macro environment. Blubogs luca sure can break it down. First,
we got the numbers on Thursday evening, and of course
then the markets went on holiday. So today they react,
Lucas and they like it.
Speaker 6 (29:50):
They like it a lot.
Speaker 14 (29:51):
I mean, there had been a belief among investors, analysts,
and I think everyone that Netflix was a company that
was not particularly at because of the current uncertainty, trade
war and the like. And it's also just a company
that continues to operate on all cylinders.
Speaker 4 (30:08):
Right.
Speaker 14 (30:08):
It is excelling, even if there are some people who
think that it's slowed down in terms of subscribers in
the first quarter of the year.
Speaker 4 (30:15):
At least in the US and Canada.
Speaker 14 (30:17):
The numbers that it is now reporting revenue and profit
both look really good. I mean, the thing where Netflix
has continued to over deliver for investors has been its
free cash flow and its profit over the last.
Speaker 4 (30:28):
Couple of years.
Speaker 14 (30:29):
It's kind of crazy to think that there was a
time in which people were worried that they might collapse
under debt.
Speaker 4 (30:34):
Are never make any money.
Speaker 2 (30:36):
The fact that first quarter earnings are up twenty five percent,
the fact that they're talking about resiliency in the face
of potentially.
Speaker 3 (30:42):
Weakened consumer lucas.
Speaker 2 (30:45):
Are they continuing, though, to double down on the commitment
to produce abroad, to continue to roll out when new movies,
new content.
Speaker 6 (30:51):
Yeah, I mean that.
Speaker 14 (30:52):
They actually had a whole section in their letter to
shareholders last week talking about the investment they're making in
international production. I think they said that they're now producing
in something like fifty countries.
Speaker 4 (31:03):
It might be even even north of that.
Speaker 14 (31:05):
You know, they have started to increase their programming budget
after it being flat for a couple of years.
Speaker 4 (31:09):
I think they're up to eighteen billion dollars a year.
Speaker 14 (31:12):
They still produce and release more programming than any streaming
service by a mile, and yeah, they see an opportunity.
I mean, if people do get more cost conscious and
look to cut their streaming services, every service would experience
a higher cancelation rate what's known in the industry as churn.
But Netflix has the industry best and I think would
continue to because of all that you get for it. Right,
(31:33):
Whereas there are other services that if you only watch
one or two shows you might say, I can cut
this for a month, I think it's a lot harder
for the average person to cut Netflix.
Speaker 2 (31:41):
Luka sure on all things Arnings, Thanks so much for that,
And let's just stick a little bit longer with Netflix.
Speaker 3 (31:47):
Bring in Rich Greenfield of light Shed.
Speaker 2 (31:49):
You really pointed to the fact that they're producing content
in so many countries.
Speaker 3 (31:54):
Does that help with the weakening dollar?
Speaker 15 (31:57):
I mean, look, I think first of all, you know,
having pretuction resources all over the world, I mean, more
than anything else, Carolyn, it makes it cheaper to make content.
You know, the cost of making an hour drama in
the US, I mean you can run, you know, you
look at something like you know, take a Yellowstone or
an eighteen eighty three like those can cost twenty five
plus million dollars an episode. When you're producing overseas, you're
(32:19):
taking advantage of generally far lower cost production environments, but
you're also creating content that caters very much to local tastes.
And so what Netflix has been really unique about is
not just creating great content in the US it's exported
around the world, but.
Speaker 10 (32:34):
Creating great content all around the world.
Speaker 15 (32:36):
I mean, whether it's a squid game or a loop
pen in France, like really figuring out how to produce
at scale all around the world. And I think that's
becoming an increasing advantage versus the peer set. Nobody else
is producing the way Netflix is producing around the world,
and I think it's becoming a bigger and bigger advantage,
especially as you have you know, you just listen to
(32:57):
Lucas talk about, you know, sort of the pressure that
everyone's going to be facing from a weakening economy. You know,
if you think about the way a lot of these
big media companies, legacy media companies are pulling back on
their spending, really retrenching, focusing on just their top projects,
it's giving Netflix a greater advantage versus the peer set.
Speaker 2 (33:14):
And interestingly, they're catering to more than seven hundred million
uses worldwide. They get Korean viewers for squid games, but
also it becomes an international hit too.
Speaker 3 (33:23):
Is that going to be the recipe for the future.
Speaker 15 (33:26):
Look, you know, there's no perfect formula for how you
get a hit, but I will say when you look
at Netflix, whether it's a squid game from Korea, look
at adolescents, it's a you know, four episode, it's a
few hours of content, it's a global sensation out of
the UK. You need to take shots on goal to
(33:47):
have successes. I mean there's no doubt, you know, the
successes overall. I'd say, you know, huge pieces of content
are fewer and further between now for everybody.
Speaker 10 (33:57):
But you need to take shots on goal.
Speaker 15 (33:59):
And Netflix is taking more shots on goal by a
pretty wide margin than everybody else. And I think that
has sort of been the key advantage is nobody is
spending on this much content the way Netflix is, and.
Speaker 10 (34:11):
You can see it.
Speaker 15 (34:12):
I mean every quarter, basically, certainly every six months, it
feels like there's one big show that sort of breaks
out on Netflix. The other services are just struggling to
make really big hits, and part of it is they
don't have enough users, Like they don't have enough daily engagement.
Netflix wants you on Netflix every single day, and so
there's always something new bringing.
Speaker 10 (34:33):
You back to the service.
Speaker 15 (34:35):
And again that point of making it so you have
reason a to pay more and be not to churn
rich shots on goal?
Speaker 3 (34:43):
Now, tell me have the shots been on goal when.
Speaker 2 (34:45):
It comes to live content, Because yes, from a grand perspective,
everyone's loving ww law, but sometimes just the technology hasn't
been there to service the amountious scale of demand to
watch all at the same time.
Speaker 15 (34:58):
Look, there's no doubt that live streaming of content with
mass audiences is not an exact science.
Speaker 10 (35:05):
You saw that with the Tyson fight, the Tyson Paul
fight last year.
Speaker 15 (35:09):
I think if you were to look at, you know,
the NFL on Christmas Day, it worked incredibly well.
Speaker 10 (35:13):
The WWE has not had problems. But I mean, look,
you've seen YouTube TV and Hulu Live.
Speaker 15 (35:18):
Those things have certainly gone out at you know, at
specific moments. You've seen every one of these services have
problems at scale.
Speaker 10 (35:25):
Live streaming is hard.
Speaker 15 (35:27):
I think Netflix has learned a tremendous amount over the
last year and is getting better and better at it.
But I don't think anybody who is in the live
sports streaming where there is massive instantaneous demand. I don't
think you're ever going to see perfection. It's the Internet.
It is fallible, it has problems. But I do think
that Netflix is building up very strong muscle skills in
understanding how to do it.
Speaker 10 (35:48):
But I don't.
Speaker 15 (35:48):
But I also don't think, Carolyn, I don't think sports
is ever going to be the core of Netflix. I
think they really see it as a global entertainment service
where sports has a place and they live has a place,
especially as they build out the advertising side of the equation.
But I'd be surprised if sports became critical the way
sports is critical to a peacock, or critical obviously to
(36:09):
an ESPN.
Speaker 10 (36:10):
I don't think sports is going to be the winner.
Speaker 15 (36:13):
Lose for Netflix anytime over the course of the next
five plus years.
Speaker 3 (36:17):
What becomes the win for the shares right now?
Speaker 2 (36:19):
Rich Because we're up, as we can see on the screen,
more than eleven percent over the course of year to date,
we're up close to record highs for the stock in
this macro environment.
Speaker 3 (36:28):
Are we going to be able to juce any further?
Speaker 15 (36:31):
Look, the big growth from here it really comes from
two things. I mean, obviously, having pricing power in the US.
There's no doubt that whether that's from driving the subscription
price higher or whether it's actually being able to put
the right ad to the right person at the right
time and driving the advertising revenue from the increasingly large
base of advertising supported subscribers on the platform. But the
(36:52):
real gwin, Carolyn, as you look at over the next
five years, is going to be Asia.
Speaker 10 (36:55):
You know, there's still relatively small.
Speaker 15 (36:57):
They' stopped proporting subscriber numbers, but we know that the
apecific numbers are still small. When you look at the scale,
you know they could ten x the size of their
subscriber base in Asia and still not be fully penetrated.
So there is massive room to run and I think
the next the story over the next five to ten
years is going to be how they execute and build
in Asia the way they've been successful in the US,
(37:19):
Latin America and Europe.
Speaker 2 (37:21):
Rich, so it's great to check in with you. Thanks
so much, Rich. Greenfields of Light shed on all things Netflix, Chat,
what arena, the crowdsourced site, ranking AI models, but a
sufficient becoming a company betting there's big business in benchmarking
(37:42):
for more. Blommerg's Rachel Metz joins us now and before
this has been sort of the passion project of academics,
and now it's becoming formal.
Speaker 6 (37:50):
Yeah.
Speaker 16 (37:50):
I mean, this was the project formed by academics at
EC Berkeley, and they had been working on this. It
had got super popular. Companies use it to test new
and unreleased models. A lot of people use it to
try out the latest and hopefully greatest models, and.
Speaker 17 (38:07):
They wanted to make it more than just an academic project.
Speaker 16 (38:09):
They wanted to scale up. To do that, you need
to get money. To do that, you often need to
be a company. So yeah, it's growing up in a sense.
Speaker 2 (38:17):
Growing up, and more and more people are using it.
You've got on this graphic two p eight million user votes.
How are people approaching it and making the most of
the well the recommendations that it offers.
Speaker 16 (38:29):
So people I think who are individuals are using it
to try things out, get a sense of what they.
Speaker 17 (38:36):
Like what they don't. I mean, really this is sort
of vibe spaced ranking.
Speaker 16 (38:41):
I guess I would say one of the key things
that you can do on this website is try two
different chatbots.
Speaker 17 (38:46):
You are not knowing what they are.
Speaker 16 (38:48):
You type in a prompt and then you rate which
answer you like better, and based on that the chatbots
will go up or they will go down on the
leaderboard there. I think companies increasingly see this as a
really important marker of how well users like their models,
and so that could be really valuable to them a
kind of data. Typically, this data is actually really hard
(39:09):
for companies to get on their own, so having it
be available publicly is quite useful open ai.
Speaker 2 (39:15):
I think GPT four oh it released it on the
arena before it went out more broadly.
Speaker 16 (39:21):
Right, So what some companies are doing is they will
put models on there and they'll have code names, so
you won't know exactly what they are.
Speaker 17 (39:30):
Perhaps, I mean, you might be able to guess pretty well.
Speaker 16 (39:33):
I mean there have been some that I've seen on
there that I'm like, I know where you're coming from.
Speaker 17 (39:38):
But yeah, it's really increasingly valuable and open.
Speaker 16 (39:41):
Ai has done this a number of times, put up
models that are unreleased and people can try them out.
They might not know where they're coming from, but they
might be from open ai.
Speaker 2 (39:50):
And just tell us about the people that you see
Berkeley that are behind this, and whether they become the
executives and now what will be a company.
Speaker 3 (39:56):
A formal one.
Speaker 6 (39:58):
Yeah.
Speaker 16 (39:58):
So this was a the project out of Jan Stouyker's
Sky Computing Lab at UC Berkeley, and a bunch of
graduate students worked on it and undergraduate students helped with
it as well. And a number of the graduate students
along with Yan are going to be the co founders
of it.
Speaker 17 (40:17):
And I think they're still trying to figure.
Speaker 16 (40:19):
Out who's going to have what role in the company,
but yeah, some of them will have sea level titles.
Speaker 2 (40:24):
Rachel Mattz, it's a great story. Thanks for bringing it
to us on all things general to AI. And that
does it for this edition of BlueBag Technology. Let's just
keep our eyes on these markets though, because it is
once again another day down day for the nastat one hundred,
off by more than three percent. Now we're hitting session lows.
Nearly every stock is in the red. TESA in particular,
off by more than seven percent. Earnings coming out Tuesday, remember,
(40:45):
are thick and faster with earnings throughout the week. We
got Alphabet coming Thursday, We've got Texas Instruments, We've got
Intel IBM. Much to be digested from these CEOs and
executives but Tesla. On the downside, we've got bitcoin up
though three point four percent, eighty eight thousand, hitting the
high since March. This as we see a move into
havens such as gold. Maybe digital gold is being seen
(41:06):
as the haven choice when it comes to bitcoin. And
indeed you're seeing money move into short term treasury, so
the two year gets to the bid.
Speaker 3 (41:13):
The ten year is still being sold off.
Speaker 2 (41:15):
But do check out of Bloomberg Technology podcasts as well.
Speaker 3 (41:18):
You can find it on the terminal as well as
online on Apple, Spotify, and iHeart. From New York, this
is Blue Beg Technology
Bloomberg Audio Studios, podcasts, radio news from the heart of
where innovation, money and power collide in Silicon Valley and beyond.
This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 2 (00:34):
Live from New York. This is Bloomberg Technology. Coming up.
Google heads back to court to take on the Department
of Justice over a search monopoly fix.
Speaker 3 (00:43):
Plus in an era of tariffs.
Speaker 2 (00:45):
Netflix stands out why Wall Streets is the stock as
recession proof, and TSMC warns there will be challenges limiting
China from its AI chips. Details this hour, but first
we check in on the markets, which once again are
under pressure. The Naza bears the brunt when NASAK one
hundred off by more than two point three let's call
it two point four percent on the day. We are
(01:05):
worried about the macro, about the future of j. Powell
at the Fed, and we see the impact on the
Magnificent seven.
Speaker 3 (01:11):
Not though on crypto.
Speaker 2 (01:12):
We see bitcoin bounce that as gold gets once again
that desire to get into a haven trade, so too.
There's a shorter end of the treasuries, but Bitcoin up
three point seven percent, the high sets we've seen since
the beginning of March eighty eight thousand, Move on and
have a look at some individual stocks, because Tesla, on
the downside, what off by more than six percent, one
of the key contributors in terms of points. Apple's falling
(01:33):
in video is falling, but Tesla too. Will dig into
why we're concerned kind of all important earnings this week
come Tuesday. Remember we've got a whole raft of earnings,
but we've already got a little bit of sentiment. Check
on what seems to be resilient in the face of
macro pressure. Netflix up two point eight percent, the best
performer on the Nasdaq one hundred from a points perspective.
But let's get to Ryanvstelica, who can join us now
(01:53):
on the weight that mag seven is feeling today. Seems
to be a macro one, seems to be one of
the fed. There are some standouts when it comes to earnings.
Speaker 4 (02:02):
Hey, good morning, thanks for having me.
Speaker 5 (02:04):
Yeah, there's still a lot of uncertainty out there, and
the new news surrounding you know, is Powell potentially at risk?
That is just adding to the level of uncertainty out there.
There's so much polity uncertainty in this broader sense that
maybe the US isn't the sort of safe haven economy
that it has been viewed as really for decades. So
that is a massive shift out there and causing a
(02:26):
lot of uncertainty.
Speaker 2 (02:27):
Netflix is, from an equity perspective, deemed a haven.
Speaker 3 (02:31):
We are going to hear from so many.
Speaker 2 (02:33):
CEOs this week, whether it's well some that have to
face the court but also have to fase earnings. I mean,
we know that we're going to be hearing from the
CEO of Google in that capacity.
Speaker 3 (02:44):
It's to capacity that being alphabet too.
Speaker 2 (02:46):
But also you've got intell, You've got IBM, you've got
Texas instruments.
Speaker 3 (02:49):
There's a lot that we can take a gauge of. Ryan.
Speaker 5 (02:53):
Yeah, absolutely so Netflix is maybe a little bit of
an anomaly compared to those other names you mentioned, not
quite as subject to the tear of risk as some
of the chip makers and hardware companies out there, which
have really been driving a lot of the selling this year.
It is also seen as a recession resistant company, given
the idea that you know, if people are pulling back,
by which I mean consumers, they're not likely to cut
(03:15):
their Netflix subscription in the way that they might be
pulling back on other kinds of discretionary spending. So it
seems like it has both offensive and defensive characteristics. That's
what one of the analyst notes I read this morning said.
So obviously a pretty positive company, a pretty positive earnings report,
and that stock has been doing well this year, especially
relative to the rest of the mag seven, the old fangs,
(03:35):
just the broader market.
Speaker 2 (03:37):
Certainly, and the moment only five names on the nasat
one hundred are in the green. One of the micro strategy,
the other Netflix, Key ran Vasselica.
Speaker 3 (03:45):
We thank you so much.
Speaker 2 (03:46):
Let's get more on the tech market sell off more broadly,
Scott Labner's with US Horizon Investments, and just at this moment, Scott,
within this uncertainty from a macro perspective, do you want
to be buying in some of this weakness and tech?
Speaker 6 (04:00):
Hey, Caroline, Yeah, I think you actually do.
Speaker 7 (04:02):
I mean, I think this is one place where you
can start putting some some money to work and some
some new money to work. Probably I'd be a little careful,
you know, as you guys are just talking about it's
probably not the time for the chips because of all
the tarif uncertainty. But you know, something more like like
an equal weight sort of tech play. You know, you
get you know, catch on the themes with AI. You know,
like if you remember, you know, the starting place before
all the tarif stuff, we're all talking about AI.
Speaker 6 (04:23):
Still because it was still a really big deal. It
will continue to be a big deal.
Speaker 7 (04:27):
It's just being overshadowed currently, and so you know, this
is probably a pretty good time to start putting money
to work towards that sector and towards that theme.
Speaker 2 (04:34):
Okay, but if it's not chips, how are you thinking
about the AI opportunity.
Speaker 6 (04:39):
Yeah, look, I think it's a little bit more nuanced
right now.
Speaker 7 (04:41):
You know that this is you know, you can think
about the AI trade as being or you know, the
AI investments broadly, as as following a couple of different phases.
Speaker 6 (04:48):
You know, we've been in mostly sort of.
Speaker 7 (04:50):
The infrastructure phase and that's and that's dominated obviously by chips,
by the hard work kind of kinds of things, just
like routers dominated the first part.
Speaker 6 (04:57):
Of the Internet cycle.
Speaker 7 (04:58):
We're getting now into more of the prove it stage
of AI, which is where you know, we're comps.
Speaker 6 (05:02):
You're gonna have to figure out and prove to the
market that hey, I'm using this stuff. I know how
to make it.
Speaker 7 (05:06):
I know how to use it in my company to
dry productivity, dry processes, and to get higher margins ultimately,
which is really the name of the game for this.
And so you know, finding those companies that can help
deliver that type of margin expansion through through productivity growth
using AI is really is what we think is kind
of the next trade. And so that's why that that
more equal weight treatment we think is probably a better play.
Speaker 2 (05:26):
When we think about this week, though, Scott and the
amount of guidance we might get from earnings from CEOs,
whether it's the telecom sector that comes thick and fast,
whether you've got some of those chip names, whether it's
Intel or Texas Instruments, Are you expecting the guidance to
be lower?
Speaker 7 (05:42):
We expect the guidance to be completely fuzzy, Like, look,
I'm not sure who's who's gonna leave guidance.
Speaker 6 (05:48):
You know.
Speaker 7 (05:48):
Yeah, United Airlines come out, you know, last week and say, look,
here's our guidance for a recession. Here's our guidance for
non recession. Like that's not guidance, I mean, that's actually
it's just fairly useless. And so you know, what we're
really going to be focusing on is like how are
companies thinking operating? So, you know, in terms of the guidance,
like the numbers aren't really going to mean anything, nobody's
gonna believe them, But in terms of like philosophically, like
how are you operating in this environment through this uncertainty?
(06:09):
How are you thinking about cappex What sort of contingency
plans do you have in place? It's really gonna be
those types of things that the people are going to
be looking for. It's it's going to be a you know,
a kind of a tip of the cap towards good management.
You know, good management and thoughtful management will probably you know,
get a premium through this kind of cycle. Yeah, but
it's you know, it's gonna be really those types of
more squishy qualitative things that folks can be looking for
(06:30):
rather than focusing on the hard numbers this quarter.
Speaker 3 (06:32):
Let's go to the squishy CAPEX then, Scott, because what.
Speaker 2 (06:35):
Are you expecting in terms of companies commitment to continue
to spend? We're all questioning it from well, the hyperscale
is when it comes to in video investment, for example, you.
Speaker 7 (06:45):
Know, I think I think it's going to be a
time scale type of type of argument. So, you know,
I don't think like nobody's very confident in the next
few months, Like nobody has any visibility into what these policies.
Speaker 6 (06:55):
Are actually going to look like, what these serves are
actually going to look like.
Speaker 7 (06:57):
What we're really focusing on is like, what are folks
thinking about for the next two to three years and
are they actually being are they going to start executing
on some of those plans? So, you know, again, it's
it's just a tip towards the towards of management, towards
the guide you know, towards uh, you know, teams that
are proven that they can think through some of the
short term issues, manage through some of the short term issues,
and really focus more on the medium term stuff that
will like you know, that can have the benefits accrue
(07:19):
to them through time. It's you know, again, it's not
going to be a easy charge. I mean, this is
not going to be an easy earning season to figure
out and sort of bottom line for folks. It's really
going to be kind of a company by company, hand
to hand battle.
Speaker 2 (07:29):
What about global exposure versus domestic exposure? I think of
the telecoms names, and they've weathered relatively resiliently because they're
focused on a.
Speaker 3 (07:37):
Consumer here in the US.
Speaker 2 (07:39):
How do you think about opportunities to invest abroad or
companies that have exposure abroad right now?
Speaker 6 (07:44):
Scott, Yeah.
Speaker 7 (07:45):
I mean, look, if you're thinking about investing in broad
you know, it's really about two things right now for US.
One is, you know, we do think the dollar down
trend is going to be fairly strong and and fairly
persistent for the next couple of years.
Speaker 6 (07:57):
And you know that that in and of itself, it gives.
Speaker 7 (07:59):
You a pretty to a tailwind if you're an international
investor investing international equities. So you know that's that's a
starting place and so you've got to get the dollar
part right for that, and we do think that dollar
trend is lower.
Speaker 6 (08:09):
The other thing, though, is importantly the fiscal expansion.
Speaker 7 (08:13):
You know, like on fiscal thrust is now the realm
of internationals and not the realm of the United States,
you know, companies and or the United States governments. Sorry,
and you know that the market definitely rewards fiscal expansion.
Speaker 6 (08:25):
We saw that through COVID, We've seen that over the
last ten years.
Speaker 7 (08:27):
Really and so you know, the sort of the dual
thing of fiscal expansion internationally versus the US, and you know,
and and the dollar trending lower against most major trading partners.
You know, we think those two tailwinds are going to
you know, really really be to be to the benefit
of international equity investing for the next probably year or so.
Speaker 3 (08:43):
Most major trading partners.
Speaker 2 (08:45):
I don't know if you count China as one of
them any more, Scott, but what about China's investment the
fiscal stimulus and whether or not you want to me
in some of these Chinese internet names for.
Speaker 6 (08:53):
Example, yeah, Karion Lens.
Speaker 7 (08:55):
Really, it's obviously a pretty tricky one, you know. You know,
China we think is going to get it's kind of
getting bullied, just like Europe is kind of getting bullied
in into doing the fiscal expansion thing. We think China's
gonna get bullied a little bit by Trump into doing
uh sort of countercyclical fiscal expansion, countercyclical policies, which.
Speaker 6 (09:09):
They've really been resistant to for the last couple of years.
Speaker 7 (09:12):
You know, one thing that we think is pretty important,
especially for Chinese tech though, is you know, you premiere
she he's dropped the common prosperity language. We've not heard
common prosperity come out of his mouth or or in
written for him for many months now, and that you
know that when that common prosperity the language just started
to take hold, it's really the death note towards Chinese,
so towards Chinese equities and Chinese tech in particular. And
(09:32):
so you know that that language being dropped, we think
is important. And so you know, the combination of that
language being dropped, so he's signaling a changed uh, you know,
changing his mindset towards capitalism, changes his mindset towards those
Chinese tech companies. Plus what we think is going to
have to be some sort of fiscal countercyclical uh you
know response by the Chinese governments, you know, you know,
makes those you know, probably probably okay to invest in.
But man, that is a tricky one.
Speaker 2 (09:54):
Scott Ladner, Horizon Investments, thanks so much for joining us today.
Speaker 3 (09:58):
Coming up, Alphabet heads to.
Speaker 2 (09:59):
Call as the government continues its push to split up Google.
Speaker 3 (10:04):
This is Blue Meg Technology today. Alphabet's Google.
Speaker 2 (10:16):
Well, it's in court of a US government prosal to
split up the company. It follows a ruling last year
that Google has an illegal monopoly in web search. Lumeg's
Michael Shepherd has the details in Washington, and last week
it was all about that landmark ad.
Speaker 3 (10:30):
Tech monopoly ruling.
Speaker 2 (10:31):
This week, when we're reminded of the search ruling, what
are the remedies that likely to be discussed?
Speaker 8 (10:36):
Chat Well, Carol, you're right that this is another front
in a broader antitrust push against Alphabet and a number
of other tech companies. But here we're talking about search,
and what the government is saying is that, look, Google
has this illegal monopoly per judges ruling back in August,
and these are the remedies that we would like to see.
(10:57):
This is the so called penalty a remedy phase, and
before the same judge who made that rolling back in August,
they are calling for a couple of big changes. One
is that Google should sell off its Chrome browser. Another
is that it should be licensing more data to its competitors,
and then finally, it should stop making all those billions
of dollars in payments to companies like Apple and others
(11:18):
to guarantee a good position on those platforms for its
search engine. Something that the judge found signaled anti competitive behavior.
Now Google has countered with saying that, look, making changes
like this will hinder innovation, it will put us at risk,
put the US at is at risk of losing a
(11:39):
competitive edge on the global stage. In essence, they are
saying that, look, the Justice Department's proposed fixes would seek
to break something that doesn't need fixing.
Speaker 2 (11:49):
What's really interesting is just the time that it's been
more than forty years since we got the breakup of
marbll AT and t is in twenty five years since
Microsoft was under the microscope chev What do we think
will actually be an outcome in any sort of time
horizon here.
Speaker 8 (12:07):
Well, they're talking about perhaps August to actually learn what
the judge's decision as far as the remedy goes. But
this will go on for years to come. This case
is not over now or in August. No matter what happens,
either a ruling in favor of the government again or
against the government, it will head to the Supreme Court
(12:27):
Foreign Appeal. Both sides have a lot at stake here,
and the US government is not showing any signs of
letting up in its anti trust push against the major
tech companies. We saw the Meta trial being pushed in
the case being pushed by the Federal Trade Commission proceeding
last week with testimony from Mark Zuckerberg and Cheryl Sandberg
about the company's alleged anti competitive behavior there and then
(12:50):
here in Google. As we were talking at the top
about the two front push there from the government against Alphabet,
and then there are other companies as well, Apple for
instance and Amazon are also under pressure over competitive practices
that the government has singled out is potentially harmful to
the market.
Speaker 2 (13:09):
Care not to mention on the EU's been looking at too.
Greenberg's Michael Shepherd with all things from Washington, let's discuss
this further the former Nebraska Attorney General Doug Peterson with
US currently at Keating O'Gara and Doug, it's really interesting
as to how much you with AG and Nebraska pushed
forward on this particular case or many others that surround
(13:31):
Alphabet at the moment, and it was under the previous
Trump administration that first kicked off in twenty twenty.
Speaker 3 (13:36):
What impact remind.
Speaker 2 (13:37):
Us does this have on the consumer, on the tech
industry at large, this sort of form of.
Speaker 9 (13:43):
Control, I think the biggest issue that as attorney generals.
Speaker 4 (13:48):
That we had concerned.
Speaker 9 (13:49):
About was that big tech was accumulating so much personal data,
and that data really presented the consumer almost as the product,
because the data was what fed search, it's what feeds AI.
And really we felt as AGS that we needed to
step forward because their privacy and the use of their
(14:11):
data for profit was a big concern.
Speaker 2 (14:13):
Let's talk about that for the consumer in this scenario,
because Google would counter that this is going to hurt
the consumer if you separate, for example, Chrome off suddenly
that seamless approach if you're an Android user, if you're
a Chrome user disintegrates. Does that ultimately hold firm in
your mind?
Speaker 6 (14:30):
You know, I don't think so.
Speaker 9 (14:31):
I think one of the biggest concerns we had was
that what Google did in maintaining and this is in
the judge's August opinion, in maintaining this monopoly, it basically
created this ecosystem where they entered into exclusionary contracts with
all the important players, had some revenue sharing with us,
which were very important, and then as a result they
create this basically this feedback loop that keeps everything contained
(14:57):
within Google, and the result of that is a disincentivize
anyone from the outside actually being able to get any
capital to challenge with a certain type of search engine
that may be a better product, may better protect privacy.
All of that is pretty much locked out because investors
weren't going to invest in someone who's going to go.
Speaker 4 (15:15):
Up against Google.
Speaker 9 (15:16):
And second of all, all the players within that loop
that they had through these exclusionary contracts, you know, we're
disincentivized to look at working with any other technologies. So frankly,
I think it's put a ten year hold on really
developing better search technology.
Speaker 3 (15:33):
Interesting.
Speaker 2 (15:33):
I mean, eddie q is going to be giving evidence
from Apple they get about twenty six billion dollars a
year in terms of payments to be offering that exclusive
nature of Google as a search option. But there are
other companies out there are the search options that actually
get money from Google too. What do you think we'll
hear in terms of some of the evidence given this week, Well.
Speaker 4 (15:54):
I think there's several things.
Speaker 6 (15:56):
One.
Speaker 9 (15:56):
I think the Court in its August opinion made some
really important five feeds about the effects of these revenue
sharing contracts. I think the Court also really realized the
importance of scale because having that data and Google being
able to acquire so much of that just builds a
scale that actually makes it very difficult for any competition
(16:16):
to occur. So I think we're going to once again
see evidence about how companies who wanted to develop products
in general search and also in the area of search
advertising text advertising will see evidence of how they've been
kept out of the market and how it's necessary, including
the divestiture of Chrome is an important element to balance
(16:36):
out competition in the market.
Speaker 2 (16:38):
Alphabet shares currently act session laws by two and a
half percent. They've got their earnings later this week, So
Sono Pitch is a busy guy.
Speaker 3 (16:45):
Doug.
Speaker 2 (16:45):
I'm interested though, in the countering nature from Google also,
is this is backward looking. We suddenly got a lot
more competition in the search space because open AI is
there and all perplexity these other generative AI forms of search.
Speaker 3 (17:00):
Is that an interesting argument. Is the timing wrong here?
Speaker 10 (17:04):
Well?
Speaker 9 (17:04):
No, Actually, I think the timing's really important because I
think we both the Department of Justice and the state
Attorneys General recognize that technology is moving so quickly. AI
is moving very quickly. But what's the fuel of all
of that, once again is data, And so we think
actually part of what we're asking for in the remedy
(17:25):
is to ask the court to keep a monitoring process
going so that we can follow this as we go
into the AI world development because really from a vent diagram,
there's a lot of overlap, and so having an ongoing
monitoring ability by the court will allow us to address
some of the new technology challenges that might come forward.
Speaker 3 (17:45):
Back in private practice.
Speaker 2 (17:46):
But of course, the former Nebraska Attorney General Doug Peterson,
wonderful to have some time with you.
Speaker 3 (17:51):
Thank you.
Speaker 8 (18:00):
You.
Speaker 3 (18:00):
Look at Tessa shares.
Speaker 2 (18:01):
They're off by or more than seven percent, worst day
since April tenth for the stop the company's biggest falls.
One of them at least sent a start warning to investors.
Wedbush analyst d and I saying that this is code
read this moment for Tesla and the elol Musk needs
to pivot his focus from the Department of Government efficiency
to avoid lasting brand damage. Remberg's David Welch joins us, Now,
(18:21):
we've heard this revives before, but earnings come Tuesday.
Speaker 3 (18:24):
It's an important moment.
Speaker 11 (18:27):
That's right, and I think investors obviously Dan ives among them,
he's an analyst, course, but I want to hear that
Elon is going to come back. They want to hear
that there's a focus again on getting the sales going,
that you're going to coo or praise TV coming out.
And I think the big thing too that's kind of
kept the narrative going before this sort of politically related
(18:49):
route that they've had is what's going on with the
autonomous vehicle, with the whole AI and AV business that
Eon talked about a while back, and with him in
the government and cutting government costs with DOGE, Investors aren't
seeing a lot of that. This is the sort of
thing that goes back years right when investors were worried
(19:09):
Elon was spending too much time at SpaceX or with
the boring company and not enough time at Tesla, And
here he's basically spending most of his time at the government.
And they want to see that the guy who built
the company and who has steered it and made a
lot of people a lot of money is back and
focused on Tesla.
Speaker 3 (19:26):
And on innovation.
Speaker 2 (19:27):
Many looking towards other evs, particularly in China that are
speeding up with charging in c ATL, maybe having charges
that bring us to five minutes or less to full charge.
David just move us away from Also, where areas that
cars being impacted? Right now, I'm looking at Hurts, a
big investment coming into Hurts. Interestingly, they made a poor
decision around Tesla investments in the past, but now it
(19:50):
looks as though Pershing Square like what they're doing now.
Speaker 4 (19:54):
That's right.
Speaker 11 (19:54):
And remember in the fourth quarter Hurtz said that they
were done sewing down this Tesla bed that really caused
like two point nine billion dollars worth of losses last year.
So if that's behind them and the market still isn't
rewarding them for that, it was trading down below four
dollars a share before Acman bought in, it doesn't take
too much in terms of operating improvements for Hurts to
(20:16):
really start to move the needle and get things going
again in the right direction, assuming that there's no more
of a wicked tail here from the Tesla bet and
Acman mentioned that in his letter. And the other thing
too he's looking at is could this be a tariff
bet here? If tariffs drive up the prices of new cars,
it always has an impact brings up the price of
used cars as well. Herts has hundreds of thousands of
(20:39):
them in their fleets, and if they sell them at
a better price than they bottom for, that's just good
for the company and will help them pay down some
of their debts. So there are some potential tail winds
here and some potential operating improvements for Hurts and Actmen's
betting that the Tesla damage is behind the company and
it's all at least some kind of improvement going forward.
Speaker 2 (21:00):
To nineteen percent bet David Welch, thanks so much, and
all the things evs and Auto's welcome back to bloemag
Technology and Caroline Hide in New York. A quick check
on these markets that are once again on a downdraft.
Now we're seeing the NAZNAT one hundred feeling the brunt
(21:20):
of the sell off right now. We're off by two
and three quarters of a percent. In fact, on the
naszat one hundred and only five stocks we're actually in
the green, everything in the red. We move from the
micro anxiety of chip stocks, of worries about earnings, but
also to the macro perspective, what of J. Powell, what
of his future? We're currently on the downside. Move on
to some of the individual movers that we're keeping.
Speaker 3 (21:39):
An eye on.
Speaker 2 (21:40):
Nvidia is one of the key that is on the downside.
From the points perspective, we're currently seeing off by more
than five percent. For three straight days, we've seen losses.
It's wiped out almost four hundred billion dollars worth of
market cap in those three days. I'm also looking though
at TSMC off by three point three percent. They're putting
out a warning in an annual report saying, now, maybe
we're going to find it very hard to ensure that
(22:00):
the end users of our chips aren't Chinese. Let's talk
about that a little bit more with Ian King who
joins us now. And look, this is TSMC saying, look,
we hear you US government. We understand you want to
be limiting some of the exports to certain Chinese entities.
Speaker 3 (22:15):
We don't always know where they're going.
Speaker 12 (22:18):
Yeah, I mean this is obviously an attempt by them
to try to sort of shift the blame or shift
the focus. They're saying, look, hey, we just make these things.
You know, the companies that design them, the companies that
sell them, they're the ones that kind of should know
where they're going. They're the ones that are sort of
more directly involved. And then maybe it's the computer makers
who actually take them and then put them in computers
(22:40):
or cell phones or whatever that So this is, as
you say, there's a heightened environment of like, look, how
are these chips getting to China?
Speaker 6 (22:48):
We need to know.
Speaker 12 (22:49):
And this is TSMC saying, hey, it wasn't us.
Speaker 2 (22:52):
What's interesting is TSMC itself has been trying to appease
the administration more investment into the United States. I've just
come back from Arizona. Is all about the investment they're
making in that state, but it's costing.
Speaker 3 (23:03):
Them more in yeah, it is.
Speaker 12 (23:05):
I mean, this is the whole point behind the Chipsack
was to say, look, we need to make the price
of doing business in the US of building these giant,
massively expensive factories equivalent to what it would be to
make them in Taiwan or make them in South Korea
or China for that matter. And the delta has always
been government support. That's the Chipsack. That's what TSMC wants
(23:29):
more of. But frankly, whether that's absolutely the case, whether
it can still get the same level of economics, that's
still a challenge.
Speaker 2 (23:36):
Ian King always brilliant to have you, thank you more
on a semiconductor sector now I'm in this geopolitical uncertainty
and welcome back to the show, Michelle geider Kirk Institute
for Tech Diplomacy at Purdue CEO there.
Speaker 3 (23:48):
Michelle.
Speaker 2 (23:49):
Always great to have your voice, and let's just talk
about what you're hearing from semiconductor companies at the moment.
Are we still seeing the administration getting what it wants.
Speaker 13 (24:00):
I think we are seeing a tightening of export controls,
which has been the trajectory for the past few years,
and I think it speaks to the strategic nature of
semiconductors because they're powering consumer technologies and they're also powering
defense tech at the same time. So if you look
at American chip companies like Nvidia, like AMD, or allied
(24:21):
chip companies like TSMC, they have a very strategic role
to play. They're at the front lines of geopolitical competition,
and so they are not passive but active players and
making sure that the US and the free world maintains
technological leadership. And so these increasing export controls are a
reflection of that.
Speaker 2 (24:40):
When TSMC puts out an annual report saying.
Speaker 3 (24:43):
We're going to struggle with this, when they're trying to.
Speaker 2 (24:45):
Own the fact that they perhaps don't always understand the
exact end user. Of course, there was reports that TSMC
chips ended up in Huawei products.
Speaker 3 (24:55):
How do you rate that acknowledgement from a company.
Speaker 13 (25:00):
Well, I'd say the great opportunity for a company like
TSMC is the fact that TSMC produces ninety percent of
the world's most advanced semiconductors, and so if you look
at the leverage that they have, if they were to
issue guidance requiring more disclosure, more transparency and understanding downstream
who the end users are of the chips that they're making,
(25:20):
I think they would see that their customers would be
highly responsive to that because of the leadership role that
they play, and that's an important thing here. Companies can't
just be passive bystanders, waiting for governments to issue regulations
and then comply. There's actually a leadership opportunity here for
companies who are on the ground, who are operating in
this environment, to play a key role in shaping what
(25:41):
the disclosures need to look like, so we all make
sure that these chips don't end up in the hands
of our adversaries.
Speaker 2 (25:47):
Disclosure is one thing, but designing new types of chips
to abide by changing rules is another, and Nvidia has
been trying to do that. Every time the rules have changed,
they've designed a different type of chip that China is
allowed access.
Speaker 3 (26:00):
And now the crack down on the H twenty.
Speaker 2 (26:02):
How do you think Jensen Wang has navigated this thus far?
Speaker 13 (26:07):
Well, I think it's worth taking a step back and
looking at the bigger picture here, which is, if you
have to modify your product so that a totalitarian customer
isn't using it to undermine your country's national security, something's wrong.
So how do you take a look at what the
overall business strategy is and national security strategy is and
(26:29):
start to think about what is a long game here?
And for American chip companies in China, it's not going
to be a long game because China has declared that
it wants to be self sufficient in critical technology. Semiconductors
is one of them in all critical technologies by twenty
thirty five. And so the clock is ticking on American
chip companies right now. And whether it is the company
leaving the market on its own terms, or it's a
(26:51):
US government issuing new export control regulations, or ultimately China
creating its own national champions like Huawei and then ousting
American companies, the opportunities for a business leader to decide
now whether they want to get out on their own
terms or have it be dictated by China.
Speaker 3 (27:08):
But then Jensenwang, as the crackdown on.
Speaker 2 (27:11):
H twenties happened, goes to Beijing, is in China reconfirming
his commitment to the country. How did you assess that
particular level of diplomacy from the company.
Speaker 13 (27:22):
Well, I think it was equally important that he also
went to Japan thereafter. And look, China's a significant market
for Nvidian, for other chip companies. I think it's their
fourth largest by sales, so I'm not surprising that he
went there. But at the end of the day, we've
got to make sure that American companies, not just chip companies,
but companies and all critical tech sectors are working with
(27:42):
trusted partners and trusted allies in order to advance our
collective national and international security. And the fact that he
was in Japan emphasizing the need for increased energy and resources,
Japan's been a trusted partner in technology. Those types of conversations,
that type of tech diplomacy is really important, and you know,
you see Vice President advances in India today as well.
(28:03):
Working with democratic partners like that is going to be
even more better news for US national security.
Speaker 2 (28:10):
When we have the idea though, that necessity is the
mother of all invention, our and indeed innovation, Michelle, are
we just pushing China to go and build it themselves
at a faster rate?
Speaker 13 (28:23):
They're going to do it anyway, So you know, the
alternative would be, well, let's hand them our critical technologies
and save them some time. The argument doesn't really stand.
America's got to be focused on innovating faster and smarter
and better and being the leader in all critical areas
of technology and addressing what competitors and adversaries like China
or Russia or Iran or doing in these sectors. But
(28:46):
the imperative for the United States is to focus on
innovation first and make sure we maintain a global leadership position.
China is going to continue doing that on its own.
So the more that we focus on winning what we
do best, which is innovation and enterprise, the better will be.
Speaker 3 (29:00):
Michelle. It's great to have you back. Thank you.
Speaker 2 (29:02):
Michelle Geider at the Crack Institute for Tech Diplomacy now
coming up. Netflix's record profit is giving investors something to
cling to amid of all this economic uncertainty and challenges
for traditional TV and movie businesses.
Speaker 3 (29:15):
More on that.
Speaker 2 (29:15):
Next, this is Bluemot Technology quick check in on Netflix
shares because they had been holding onto gains and in
fact one of the only stocks in the green on
the last that one hundred are up two point eight
percent after the streaming giant reported.
Speaker 3 (29:35):
A record profit to start the year.
Speaker 2 (29:37):
And I see the company business as resilient amid a
tougher macro environment. Blubogs luca sure can break it down. First,
we got the numbers on Thursday evening, and of course
then the markets went on holiday. So today they react,
Lucas and they like it.
Speaker 6 (29:50):
They like it a lot.
Speaker 14 (29:51):
I mean, there had been a belief among investors, analysts,
and I think everyone that Netflix was a company that
was not particularly at because of the current uncertainty, trade
war and the like. And it's also just a company
that continues to operate on all cylinders.
Speaker 4 (30:08):
Right.
Speaker 14 (30:08):
It is excelling, even if there are some people who
think that it's slowed down in terms of subscribers in
the first quarter of the year.
Speaker 4 (30:15):
At least in the US and Canada.
Speaker 14 (30:17):
The numbers that it is now reporting revenue and profit
both look really good. I mean, the thing where Netflix
has continued to over deliver for investors has been its
free cash flow and its profit over the last.
Speaker 4 (30:28):
Couple of years.
Speaker 14 (30:29):
It's kind of crazy to think that there was a
time in which people were worried that they might collapse
under debt.
Speaker 4 (30:34):
Are never make any money.
Speaker 2 (30:36):
The fact that first quarter earnings are up twenty five percent,
the fact that they're talking about resiliency in the face
of potentially.
Speaker 3 (30:42):
Weakened consumer lucas.
Speaker 2 (30:45):
Are they continuing, though, to double down on the commitment
to produce abroad, to continue to roll out when new movies,
new content.
Speaker 6 (30:51):
Yeah, I mean that.
Speaker 14 (30:52):
They actually had a whole section in their letter to
shareholders last week talking about the investment they're making in
international production. I think they said that they're now producing
in something like fifty countries.
Speaker 4 (31:03):
It might be even even north of that.
Speaker 14 (31:05):
You know, they have started to increase their programming budget
after it being flat for a couple of years.
Speaker 4 (31:09):
I think they're up to eighteen billion dollars a year.
Speaker 14 (31:12):
They still produce and release more programming than any streaming
service by a mile, and yeah, they see an opportunity.
I mean, if people do get more cost conscious and
look to cut their streaming services, every service would experience
a higher cancelation rate what's known in the industry as churn.
But Netflix has the industry best and I think would
continue to because of all that you get for it. Right,
(31:33):
Whereas there are other services that if you only watch
one or two shows you might say, I can cut
this for a month, I think it's a lot harder
for the average person to cut Netflix.
Speaker 2 (31:41):
Luka sure on all things Arnings, Thanks so much for that,
And let's just stick a little bit longer with Netflix.
Speaker 3 (31:47):
Bring in Rich Greenfield of light Shed.
Speaker 2 (31:49):
You really pointed to the fact that they're producing content
in so many countries.
Speaker 3 (31:54):
Does that help with the weakening dollar?
Speaker 15 (31:57):
I mean, look, I think first of all, you know,
having pretuction resources all over the world, I mean, more
than anything else, Carolyn, it makes it cheaper to make content.
You know, the cost of making an hour drama in
the US, I mean you can run, you know, you
look at something like you know, take a Yellowstone or
an eighteen eighty three like those can cost twenty five
plus million dollars an episode. When you're producing overseas, you're
(32:19):
taking advantage of generally far lower cost production environments, but
you're also creating content that caters very much to local tastes.
And so what Netflix has been really unique about is
not just creating great content in the US it's exported
around the world, but.
Speaker 10 (32:34):
Creating great content all around the world.
Speaker 15 (32:36):
I mean, whether it's a squid game or a loop
pen in France, like really figuring out how to produce
at scale all around the world. And I think that's
becoming an increasing advantage versus the peer set. Nobody else
is producing the way Netflix is producing around the world,
and I think it's becoming a bigger and bigger advantage,
especially as you have you know, you just listen to
(32:57):
Lucas talk about, you know, sort of the pressure that
everyone's going to be facing from a weakening economy. You know,
if you think about the way a lot of these
big media companies, legacy media companies are pulling back on
their spending, really retrenching, focusing on just their top projects,
it's giving Netflix a greater advantage versus the peer set.
Speaker 2 (33:14):
And interestingly, they're catering to more than seven hundred million
uses worldwide. They get Korean viewers for squid games, but
also it becomes an international hit too.
Speaker 3 (33:23):
Is that going to be the recipe for the future.
Speaker 15 (33:26):
Look, you know, there's no perfect formula for how you
get a hit, but I will say when you look
at Netflix, whether it's a squid game from Korea, look
at adolescents, it's a you know, four episode, it's a
few hours of content, it's a global sensation out of
the UK. You need to take shots on goal to
(33:47):
have successes. I mean there's no doubt, you know, the
successes overall. I'd say, you know, huge pieces of content
are fewer and further between now for everybody.
Speaker 10 (33:57):
But you need to take shots on goal.
Speaker 15 (33:59):
And Netflix is taking more shots on goal by a
pretty wide margin than everybody else. And I think that
has sort of been the key advantage is nobody is
spending on this much content the way Netflix is, and.
Speaker 10 (34:11):
You can see it.
Speaker 15 (34:12):
I mean every quarter, basically, certainly every six months, it
feels like there's one big show that sort of breaks
out on Netflix. The other services are just struggling to
make really big hits, and part of it is they
don't have enough users, Like they don't have enough daily engagement.
Netflix wants you on Netflix every single day, and so
there's always something new bringing.
Speaker 10 (34:33):
You back to the service.
Speaker 15 (34:35):
And again that point of making it so you have
reason a to pay more and be not to churn
rich shots on goal?
Speaker 3 (34:43):
Now, tell me have the shots been on goal when.
Speaker 2 (34:45):
It comes to live content, Because yes, from a grand perspective,
everyone's loving ww law, but sometimes just the technology hasn't
been there to service the amountious scale of demand to
watch all at the same time.
Speaker 15 (34:58):
Look, there's no doubt that live streaming of content with
mass audiences is not an exact science.
Speaker 10 (35:05):
You saw that with the Tyson fight, the Tyson Paul
fight last year.
Speaker 15 (35:09):
I think if you were to look at, you know,
the NFL on Christmas Day, it worked incredibly well.
Speaker 10 (35:13):
The WWE has not had problems. But I mean, look,
you've seen YouTube TV and Hulu Live.
Speaker 15 (35:18):
Those things have certainly gone out at you know, at
specific moments. You've seen every one of these services have
problems at scale.
Speaker 10 (35:25):
Live streaming is hard.
Speaker 15 (35:27):
I think Netflix has learned a tremendous amount over the
last year and is getting better and better at it.
But I don't think anybody who is in the live
sports streaming where there is massive instantaneous demand. I don't
think you're ever going to see perfection. It's the Internet.
It is fallible, it has problems. But I do think
that Netflix is building up very strong muscle skills in
understanding how to do it.
Speaker 10 (35:48):
But I don't.
Speaker 15 (35:48):
But I also don't think, Carolyn, I don't think sports
is ever going to be the core of Netflix. I
think they really see it as a global entertainment service
where sports has a place and they live has a place,
especially as they build out the advertising side of the equation.
But I'd be surprised if sports became critical the way
sports is critical to a peacock, or critical obviously to
(36:09):
an ESPN.
Speaker 10 (36:10):
I don't think sports is going to be the winner.
Speaker 15 (36:13):
Lose for Netflix anytime over the course of the next
five plus years.
Speaker 3 (36:17):
What becomes the win for the shares right now?
Speaker 2 (36:19):
Rich Because we're up, as we can see on the screen,
more than eleven percent over the course of year to date,
we're up close to record highs for the stock in
this macro environment.
Speaker 3 (36:28):
Are we going to be able to juce any further?
Speaker 15 (36:31):
Look, the big growth from here it really comes from
two things. I mean, obviously, having pricing power in the US.
There's no doubt that whether that's from driving the subscription
price higher or whether it's actually being able to put
the right ad to the right person at the right
time and driving the advertising revenue from the increasingly large
base of advertising supported subscribers on the platform. But the
(36:52):
real gwin, Carolyn, as you look at over the next
five years, is going to be Asia.
Speaker 10 (36:55):
You know, there's still relatively small.
Speaker 15 (36:57):
They' stopped proporting subscriber numbers, but we know that the
apecific numbers are still small. When you look at the scale,
you know they could ten x the size of their
subscriber base in Asia and still not be fully penetrated.
So there is massive room to run and I think
the next the story over the next five to ten
years is going to be how they execute and build
in Asia the way they've been successful in the US,
(37:19):
Latin America and Europe.
Speaker 2 (37:21):
Rich, so it's great to check in with you. Thanks
so much, Rich. Greenfields of Light shed on all things Netflix, Chat,
what arena, the crowdsourced site, ranking AI models, but a
sufficient becoming a company betting there's big business in benchmarking
(37:42):
for more. Blommerg's Rachel Metz joins us now and before
this has been sort of the passion project of academics,
and now it's becoming formal.
Speaker 6 (37:50):
Yeah.
Speaker 16 (37:50):
I mean, this was the project formed by academics at
EC Berkeley, and they had been working on this. It
had got super popular. Companies use it to test new
and unreleased models. A lot of people use it to
try out the latest and hopefully greatest models, and.
Speaker 17 (38:07):
They wanted to make it more than just an academic project.
Speaker 16 (38:09):
They wanted to scale up. To do that, you need
to get money. To do that, you often need to
be a company. So yeah, it's growing up in a sense.
Speaker 2 (38:17):
Growing up, and more and more people are using it.
You've got on this graphic two p eight million user votes.
How are people approaching it and making the most of
the well the recommendations that it offers.
Speaker 16 (38:29):
So people I think who are individuals are using it
to try things out, get a sense of what they.
Speaker 17 (38:36):
Like what they don't. I mean, really this is sort
of vibe spaced ranking.
Speaker 16 (38:41):
I guess I would say one of the key things
that you can do on this website is try two
different chatbots.
Speaker 17 (38:46):
You are not knowing what they are.
Speaker 16 (38:48):
You type in a prompt and then you rate which
answer you like better, and based on that the chatbots
will go up or they will go down on the
leaderboard there. I think companies increasingly see this as a
really important marker of how well users like their models,
and so that could be really valuable to them a
kind of data. Typically, this data is actually really hard
(39:09):
for companies to get on their own, so having it
be available publicly is quite useful open ai.
Speaker 2 (39:15):
I think GPT four oh it released it on the
arena before it went out more broadly.
Speaker 16 (39:21):
Right, So what some companies are doing is they will
put models on there and they'll have code names, so
you won't know exactly what they are.
Speaker 17 (39:30):
Perhaps, I mean, you might be able to guess pretty well.
Speaker 16 (39:33):
I mean there have been some that I've seen on
there that I'm like, I know where you're coming from.
Speaker 17 (39:38):
But yeah, it's really increasingly valuable and open.
Speaker 16 (39:41):
Ai has done this a number of times, put up
models that are unreleased and people can try them out.
They might not know where they're coming from, but they
might be from open ai.
Speaker 2 (39:50):
And just tell us about the people that you see
Berkeley that are behind this, and whether they become the
executives and now what will be a company.
Speaker 3 (39:56):
A formal one.
Speaker 6 (39:58):
Yeah.
Speaker 16 (39:58):
So this was a the project out of Jan Stouyker's
Sky Computing Lab at UC Berkeley, and a bunch of
graduate students worked on it and undergraduate students helped with
it as well. And a number of the graduate students
along with Yan are going to be the co founders
of it.
Speaker 17 (40:17):
And I think they're still trying to figure.
Speaker 16 (40:19):
Out who's going to have what role in the company,
but yeah, some of them will have sea level titles.
Speaker 2 (40:24):
Rachel Mattz, it's a great story. Thanks for bringing it
to us on all things general to AI. And that
does it for this edition of BlueBag Technology. Let's just
keep our eyes on these markets though, because it is
once again another day down day for the nastat one hundred,
off by more than three percent. Now we're hitting session lows.
Nearly every stock is in the red. TESA in particular,
off by more than seven percent. Earnings coming out Tuesday, remember,
(40:45):
are thick and faster with earnings throughout the week. We
got Alphabet coming Thursday, We've got Texas Instruments, We've got
Intel IBM. Much to be digested from these CEOs and
executives but Tesla. On the downside, we've got bitcoin up
though three point four percent, eighty eight thousand, hitting the
high since March. This as we see a move into
havens such as gold. Maybe digital gold is being seen
(41:06):
as the haven choice when it comes to bitcoin. And
indeed you're seeing money move into short term treasury, so
the two year gets to the bid.
Speaker 3 (41:13):
The ten year is still being sold off.
Speaker 2 (41:15):
But do check out of Bloomberg Technology podcasts as well.
Speaker 3 (41:18):
You can find it on the terminal as well as
online on Apple, Spotify, and iHeart. From New York, this
is Blue Beg Technology
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