March 7, 2025 • 44 mins
Bloomberg's Caroline Hyde and Jackie Davalos speak with White House AI and Crypto Czar David Sacks as President Trump signs an executive order for a Bitcoin reserve. And, Broadcom shares rise as the company shows AI spending strength. Plus, a conversation with HPE CEO Antonio Neri as the company sees weaker profits for the year.
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Speaker 1 (00:00):
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 (00:27):
Live from New York and Caroline Hyde and I'm Jackie
Devalas in Washington.
Speaker 3 (00:31):
This is Bloomberg Technology coming up.
Speaker 4 (00:33):
Crypto leaders flock to DC for the White House's Crypto Summit.
Missus Trump signs his Bitcoin Reserve Executive Order White House
AI and cryptozar David Sachs joins us to discuss plus
AI spending still going strong. Broadcom shares rise after the
company gave an upbeat forecast, with AI demanding key driver
in its first quarter, and Hpe also out with earnings,
(00:56):
but they send ches tumbling as profits a road in
part due to tariffs with the CEO Antonio Nary but
first breaking news but moments ago. Russia is willing to
discuss a potential truth with Ukraine, but it is with conditions,
willing to discuss a temporary truce if those progress towards
a final peace settlement. Let's get straight out to Kaylee lines,
what's the nuance here?
Speaker 5 (01:17):
Well, Caroline Bloomberg did just break the story, citing sources
familiar with the matter, but I would point out that
this is something that Russia apparently presented to the US
at talks in Saudi Arabia that happened last month, a
suggestion that yes, they are willing to agree to a
temporary truce, provided that there is an effort toward a
peace deal that Russia like. Specifically, what Russia has asked
to the United States is clear guidance on what the
(01:39):
parameters of peace would look like, specifically what a peacekeeping
mission in Ukraine would constitute.
Speaker 6 (01:44):
US.
Speaker 5 (01:44):
Russia has rejected the presence of NATO troops on Ukrainian soil.
That would be complicating for the idea that France and
uk for example, would be providing troops for that peacekeeping mission,
the so called Coalition of the Willing we have heard
European leaders talking about in recent weeks.
Speaker 3 (02:00):
Russia does not like that idea.
Speaker 5 (02:01):
They would they'll be open to a country like China
providing a peace keeping force. So it's unclear whether or
not that is something Ukraine would agree to. We should
keep in mind that this news is breaking as we
are expecting next week senior US officials, including the Secretary
of State Marco Rubio, the National Security Advisor Mike Waltz,
as well as Special Envoy Steve Whitcoff to be meeting
with There are Ukrainian counterparts in Saudi Arabia four additional
(02:24):
talks toward pieces. The US is still continuing to push
for a deal.
Speaker 4 (02:28):
Kae lines with a wrap, We thank you. Let's just
take a quick look at the markets and reaction to this.
They do bounce off of their lows. Nevertheless, we are
having a torrid time and then as that one hundred
to one point heading correction territory, we're down more than
ten percent from previous highs.
Speaker 3 (02:43):
This is we see three straight weeks of.
Speaker 4 (02:45):
Declines for the tech benchmark, the longest losing streak since August.
We're off by more than four percent over the last
five training days. And this is anxiety grows regarding Chinese
AI models. Well, that means for compute demand, what it
means overall for me selling your winners into an economy
that could potentially be.
Speaker 3 (03:03):
Slowing on the back of taris.
Speaker 4 (03:04):
Move on to what's happening in the world of crypto, though,
because so much to delve into.
Speaker 3 (03:08):
When it comes to the.
Speaker 4 (03:09):
Latest executive order, we're off by one point eight percent
on the day. We're at eighty eight thousand, but remember
we're still well higher than the sixty seven thousand dollars
level we were at when the presidential election occurred.
Speaker 3 (03:21):
All of this as many anticipate that.
Speaker 4 (03:23):
Such regulations will become more pro crypto, and we see
that executive order signed last night with a reserve for bitcoin.
We're now pleased to be welcoming to our TV and
radio audiences around the world, someone who can dive into
this exact executive order. We bring in the White House
AI and cryptos are David Sachs.
Speaker 3 (03:43):
It's busy. You're about to.
Speaker 4 (03:44):
Expect yet more people coming to the White House from
the cryptosphere. Remind the American public and investors why you
need a bitcoin reserve at all?
Speaker 7 (03:53):
Well, good to be here, I mean, the reason why
we need a bitcoin reserve is that the federal government
already owns some. In fact, it obtained around four hundred
thousand bitcoin over the past decade through criminal and civil
forfeitures and seizures, and so the government has to have
a strategy for how it deals with this. In the past,
the strategy has been simply to sell it in an
(04:15):
ad hoc way almost willy nilly, and that cost American
taxpayer something like seventeen.
Speaker 8 (04:20):
Billion dollars in lost value.
Speaker 7 (04:22):
So we want to have a long term strategy to
maximize the value these holdings. We've decided that that bitcoin
is scarce, it's valuable, and that is strategic for the
United States to hold on.
Speaker 8 (04:31):
To this as a long term reserve asset.
Speaker 7 (04:33):
So that's the plan with the two hundred thousand bitcoin
that we believe are in the possession of the federal government.
I say we believe because no one really knows for
sure because we never had a proper audit. So that's
one of the first things that this executive order provides
that we're going to do a full government wide audit
to find out what digital assets we actually have so
they can be safeguarded and moved into a strategy that
(04:55):
maximizes their long term value.
Speaker 2 (04:56):
Right.
Speaker 3 (04:57):
And then there's a stockpile.
Speaker 4 (04:58):
Told us about the nuance there and why you need
to stockpile for old coins and how you're treating them differently.
Speaker 8 (05:04):
Right.
Speaker 7 (05:04):
Well, the idea there is, again, we're going to figure
out what we actually have on the federal ballot sheet,
and we're going to move those Like you said, all
coins are digital assets other than bitcoin, into a stockpile
for safekeeping. The difference there is that the Secretary of
the Treasury will exercise responsible stewardship over those assets, and
(05:25):
he has the discretion to rebalance the portfolio or to
sell items in that portfolio. But that's not true for bitcoin.
The bitcoin we want to keep long term, So there's
a difference there in objective. With the reserve, the goal
is long term preservation. With the stockpile, the goal is
responsible stewardship portfolio management.
Speaker 2 (05:45):
In essence, David, the executive order also tasks Secretary Lutnik
Investment with finding budget neutral ways that won't cost the
taxpayer to add to that reserve. What call fies as
budget neutral. Can you give us some examples of how
that would actually work well?
Speaker 7 (06:06):
Budget neutral this means it won't cost the taxpayer or anything,
It won't increase the deficit, it won't increase the debt.
So that's basically the constraints on what they can do.
If they can figure out creative ways to add to
the stock to the reserve of bitcoin, they're allowed to
accumulate more bitcoin, but again it cannot impose any burden
on the federal deficit, debt or the taxpayer.
Speaker 8 (06:27):
So that's the rule.
Speaker 7 (06:28):
Now you can ask the question, well, how are they
going to do that? And I think that's sort of
up to them if they can figure out creative strategies
that they believe are in the long term insto of
the country. They now have the authorization to develop those strategies.
Speaker 2 (06:42):
Do you think using savings that come from DOZE, for example,
qualify is something that would be budget neutral?
Speaker 8 (06:49):
That's a good question. I don't know the answer to
that question.
Speaker 7 (06:52):
I think that that's something that I have to be
assessed by probably the Office of Management and Budget. I
think that since DOZE is cutting the deficit that and
we'd want to seek a way to rescind those appropriations,
it probably would not count.
Speaker 8 (07:06):
But you probably have to ask the O and B that.
Speaker 4 (07:09):
When you talk about the stewardship, particularly the stockpile, could
you be seeing things like staking lending. Is there going
to be other ways to maximize the volume there?
Speaker 8 (07:18):
I mean, it's a good question.
Speaker 7 (07:19):
I mean, you know, I think that the idea of
this executive order is to create the mandate. Right, So
first of all, we're going to move these digital assets
from wherever they are all over the government. We're going
to find out what they are. First of all, we're
going to do the account and we're going to do
the audit. Then we're going to move them into a
separate account for safekeeping. And then the Sectary of the
Treasury and his team will be able to exercise portfolio
management and long term and responsible stewardship. And yes, that
(07:42):
could include staking, it could include rebalancing, it could include sales.
These are all options that they can pursue if the
Secuary of the Treasury believes that these are in the
long term interests of the American people.
Speaker 4 (07:55):
Just going into what's in the holding of the US government.
Going back to President Trump mentioned over the weekend talking
of Ripple, Solana, other alternative coins that people are wondering
whether they're going to be included in this stock pile.
Will they does the US own them? Why mention them
by the president?
Speaker 7 (08:13):
Well, the President has mentioned the top five cryptocurrencies by
market cap, So I think people are just reading into
this a little bit too much. He just mentioned the
top five. In terms of what we'll actually have. Again,
we have to do the accounting we're not sure at
sitting here today whether the federal government owns any of
these alternative cryptocurrencies. We know it owns bitcoin. I believe
it owns some ethereum. I'm not sure about the other ones.
(08:34):
This is why we have to do the accounting. Is that,
to be honest, no one's been able to give us
a straight answer yet in terms of what the federal
government owns. And this is part of the problem, is
that we've never really had a digital asset strategy before,
and this is why we've missed out on accumulating a
lot of value for the American people.
Speaker 2 (08:52):
David, you mentioned earlier that you know, you don't have
any additional cryptocurrency anywhere you've divested from your interests there. However,
Secretary Lutnik in July mentioned that he had quote a
shedload of bitcoin. Do you think it's important for these
(09:12):
stewards of the Reserve and the stockpile to divest from
their cryptocurrency interests?
Speaker 3 (09:19):
Do you know if they've done so already.
Speaker 8 (09:21):
I can't speak to a situation.
Speaker 7 (09:23):
You know, every member of the administration has to go
through the same ethics process and the same conflict of
interest process that I've gone through, so I'll let him
speak to his own situation. I can to say that
in my case, I divested or sold all the cryptocurrency
that I own prior to the start of the administration,
so there's no conflict in my case, I just want
to have the right innovation policies for the United States.
Speaker 2 (09:42):
Do you think it's important, though, to just not have
that appearance of a conflict of interest?
Speaker 8 (09:50):
Sure?
Speaker 7 (09:50):
I mean, look, we're all subject to eighteen USC.
Speaker 8 (09:53):
Two eight.
Speaker 7 (09:54):
These are the conflict of interest provisions every remember, the
administration is subject to that can to speak to anyone's situation,
so we all are governed by the same conflict of
interest rules. In my case, I chose to divest everything.
To make it really simple, you should ask every other
member of the administration what their situation is.
Speaker 4 (10:13):
How about the president, because I think here in lies
some of the issues for those who are on the
outside of crypto looking in and suddenly feel that the
US president has an exposure to mean.
Speaker 3 (10:23):
Coins or solana. How do you give the confidence.
Speaker 4 (10:27):
To the US investor base and indeed US population that
this is totally.
Speaker 7 (10:31):
Legit Well, honestly, I think you're kind of making something
up there. I mean, how do you know that he
has exposure to Salona? Is that's something you just came
up with.
Speaker 4 (10:39):
Well, ultimately, when we think about the mean coin exposure
in particular, and people trying to understand for what reason
we have a Trump coin or Milania coin, is there
a clearer way that the US president can disassociate himself
from any event upside when it comes to cryptocurrencies.
Speaker 7 (10:56):
Well, I think he's already spoke to the to the
Trump coin, and I think that that is a collectible.
The SEC said it's a collectible. Collectibles have no intrinsic value,
they're not security. Is there in a different category, And
I think as long as you issue a mean coin
and disclaim that there's no intrinsic value, it can just
be a collectible. So that is a different category, I
think than what we're talking about here with cryptocurrencies.
Speaker 3 (11:18):
What do you make of some of the market reaction.
Speaker 2 (11:21):
I mean, clearly Bitcoin down later earlier today on the
back of just not really getting what they were hoping for.
You know, if the government is not going to buy
additional crypto, then what's really the benefit. But can you
say for sure that the administration is not open to
using taxpayer dollars in the future.
Speaker 3 (11:41):
Is that completely off.
Speaker 8 (11:42):
The table according to this EO?
Speaker 6 (11:45):
It is.
Speaker 7 (11:45):
We've said that this will not cost taxpayers a dime.
So we've been very clear in this executive Order that
we will not use taxpayer funds to basically accumulate more
crypto unless it can be done in a completely budget
neutral way. No increase the deaf sit, no increase in
the debt, no use of taxpayer funds, no burden on
the taxpayer. We've been very clear in this executive Order
(12:07):
about that.
Speaker 2 (12:08):
David, Let's move on to artificial intelligence, where you're also
weighing in on policy there. The Biden executive Order was
repealed in January. What is in the works currently that
you can share about how that's looking and who's involved.
Speaker 7 (12:23):
So the president is week one executive order on AI
that rescinded the Biden EO. By the way, that was
a very burdensome executive order that Biden had passed, those
over one hundred pages of burn some regulations on AI companies.
Speaker 8 (12:35):
The whole industry hated it.
Speaker 7 (12:36):
He rescinded that, and he tasked three people to basically
evaluate a new and create a new AI action plan,
and those people are the head of the Office of
Science Technology Policy, the now Security Advisor, myself, and so
we're currently working on that plan and we'll have more
information for you about that once we're ready to present.
Speaker 4 (12:55):
How confident are you at this moment around AI leadership
here in the United State? Dates that thick and fast,
the news coming out of China, for example, of the
latest models that are incredibly powerful with less data and
ultimately more efficient. How are you exercising the view that
AI can be still a leader for the United States
and not losing its leadership versus China.
Speaker 7 (13:17):
Well, I'm confident in American leadership, but we can't be
complacent about it. I mean, it's very clear that China
is going to be very very competitive. Something like roughly
half of the AI researchers in the world are from China.
They are very good at math and science, and you've
seen with the launch of deep Seek that they're very good.
They're very good AI software companies. So this is going
to be a very competitive race, and we have to
(13:39):
win that race, but we can't be complacent about that
in any way.
Speaker 8 (13:43):
It's going to be a very tough competition here.
Speaker 4 (13:45):
There's actually reporting from other news sources that maybe deep
seat would be bad from apps here in the United States.
Speaker 3 (13:51):
Do you think that's appropriate.
Speaker 7 (13:53):
It's pretty maature for me to comment on something like that.
If the administration announces a policy on that, then I'll
comment on it.
Speaker 2 (13:59):
Then let's talk about some of the other voices inside
the White House as of late that could potentially chime
in on AI policy. Elon Musk is he involved in
any capacity.
Speaker 8 (14:13):
Not in what we're doing.
Speaker 7 (14:15):
So you know, again, we have an office within the
White House and we deal with crypto and AI policy.
Elon's doing DOGE and these are two totally separate initiatives.
Speaker 2 (14:25):
But let's talk a little bit more about what the
contours of the AI policy could look like. I realize
you can't share too much at the moment, but what
will be your priority areas? A lot of the talk
has been around AI competitiveness and what we've seen coming
out of Trump's President Trump's comments around the Chips Act
and then National Science Foundation layoffs.
Speaker 3 (14:46):
There is some concern that this.
Speaker 2 (14:48):
Could undermine competitiveness if there's not enough federal funding going
to research.
Speaker 3 (14:54):
What are your thoughts on that?
Speaker 7 (14:56):
Well, I think there are some items that are policy
items that are coming up very quickly. So, for example,
there was this eleventh hour policy that was announced by
or rule that was now called the Diffusion Rule, that
was announced by the Biden administration, and that governs the
sale of advanced AI chips or GPUs to countries all
across the world. They're basically an international version of the
(15:18):
export controls. There's one hundred and twenty day clock on
that in order for the Trump administration to weigh in
and make whatever modifications we want to make. So, for example,
I think that's probably going to be one of the
first policy items on our plate that we have to
address because there's a clock on it. So I think that,
you know, export controls are a big area, Diffusion is
a big area. Just the you know, how we govern
(15:41):
the licensing of the most sophisticated chips and semiconductor manufacturing
equipment is sort of at the heart of the policy
discussion right now.
Speaker 4 (15:54):
Would you ultimately be supporting an end to the chipsacked.
Speaker 7 (16:00):
I don't think that anyone in the administration has said
we want to end it, but the President has been
very critical of it, and I think with good reason.
I mean, I think the intent of the Chips Act
was good. We were trying to get semicon manufacturing to
occur in the United.
Speaker 8 (16:12):
States because's so strategic.
Speaker 7 (16:14):
The problem is that the money went to, frankly, a
lot of companies who are losing in that very competitive market.
And some of those companies haven't even used the money
they were granted because they're not doing very well. So
the Chips Act had I think, mixed results at a
high cost, and the question is just whether we can
do something much better. And I think what the President
has said is that he would like to use terrorists
(16:34):
as an incentive to get companies to onshore their semiconductor
manufacturing here. And the advantage of that approach is that
the best companies have to do it too. They can't
kind of drag their feet or they're going to be
hit with terrorists. So I think the President has figured
out a very powerful weapon, a very powerful incentive to
get the best companies to want to onshore their manufacturing,
(16:56):
including for semi conductors, and that is very strategic for
the United States.
Speaker 4 (17:00):
TSMC putting money where its mouth is and potentially in
response to tariff concerns for you right when.
Speaker 7 (17:07):
You saw that yet, sorry you mentioned t SMC. I
think it's a very good point. We did a press
conference with them just earlier in the week and they
announced over one hundred billion dollar investment in the US
and a big part of the reason why is because
of the President's Tariff's policies give them a strong incentive
to want to move some manufacturing here because they know
that if they don't do that, they're going to be
here with the tariff.
Speaker 3 (17:28):
With forty five seconds.
Speaker 4 (17:29):
They've got to ask you, therefore, should Intel not be
getting the money? Is that the company you're hinting at.
Speaker 7 (17:35):
I'm not saying they shouldn't get it, but I think
that everyone knows that Intel's a very challenged company right now,
and I think that it's unfortunately.
Speaker 8 (17:42):
We want Intel to do well.
Speaker 7 (17:43):
We want domestic chip manufacturing, and Intel is a legendary
company and it is one of the few companies in
the United States that's capable of doing advanced chip manufacturing.
So we want them to do well, and I think
we will try to do whatever we can to help
them do well well.
Speaker 4 (17:58):
You're going to be speaking with lots of leaders from
other companies today of course over at the White House,
leaders of crypto exchanges across the ball, we thank you
so much. The White House AI and cryptos are David Sachs.
Ahead of that one important White House crypto meeting coming
up first though, Braallcom shares they jump following its earnings
and not beat forecasts full by AI demand details.
Speaker 3 (18:17):
Next, this is blue Meg Technology.
Speaker 2 (18:29):
Let's take a look at Broadcom shares. This after the
company gave an upbeat forecast driven by strong spending on
AI computing, shares are down by about three percent. Joanne Feene,
partner at Advisor's Capital Management, joins us.
Speaker 3 (18:46):
Now for more.
Speaker 2 (18:47):
What a roller coaster it's been so far for the
chip makers this week other infrastructure players as well. Is
the market telling us something more about the fundamentals? Is
it a short term blip or a fundamentals okay at
this point?
Speaker 9 (19:01):
Yeah, Hey, Jackie, you know the surgeon in Broadcom shares
after they reported in December, right, obviously I really boosted
the stock. It's come down a year to date about
twenty five or so percent. But last night's report was
very impressive. Not only did the beat the numbers that
came in with better guidance than expected, and more importantly
(19:22):
not in their guidance are two new partners for the
development of custom AI solutions, including chips and networking solutions.
And so their sixty to ninety billion dollars outlook for
fiscal twenty seven for the AI business, and by the way,
it's only at a pace of about twenty million this
year billions, So it's a really startling opportunity that the
(19:44):
company has ahead of it. And remember that they see
the road mass of their partners and their customers, so
they have an awful lot of visibility. I think it
did reassure investors somewhat and that's why the stock is
up today.
Speaker 4 (19:57):
Is it there, fool still enough to shake off the
overall anxiety surrounding Generator AI, the opportunity that these companies have,
and ultimately how profitable it will be for them.
Speaker 9 (20:08):
Yeah, it's unclear what's causing the pullback here. I think
there are a lot of moving parts in investors' minds
right now. You know, one of them is just the
general level of policy uncertainty, whether it's terrorists or government
shutdown or geopolitical that is causing a little bit of
a risk off trade across the board the Deep Seek
Information you know announcement back at the beginning of the year.
(20:28):
It certainly caused some to question how much we needed
the most advanced chips. But what Hocktan CEO said last
night was really informative. He said that customers are demanding
more and more powerful solutions. They're clearly not running away
from having the best hardware to run their AI models,
both training, pre training, post training and inference. And again
(20:52):
he sees the roadmaps for years out. So I think
that investors are, you know, unfortunately taking the raw long
idea out of the Deep Seek situation and inferring that
for some reason, hyperscalers and others that want to use
AM models are somehow going to say, oh, we don't
need all that computing power. They clearly want that. According
(21:12):
to what a broadcom is saying.
Speaker 4 (21:15):
The twenty percent sell off that we've seen in broadcom
shares since the start of the year, though ultimately what
shakes that off is this the right time to be
buying a broadcom if it's ultimately going to be a winner?
Speaker 9 (21:27):
Yeah, Caroline, you know, a lot of times market sentiment
again a risk off trade. People pull back from their winners.
They diversify, and that's a good thing people. You know,
investors should be diversified.
Speaker 8 (21:36):
What will probably.
Speaker 9 (21:37):
Turn this around is more and more of these kinds
of reports, and not just from Broadcom, from other companies.
You know, we've owned Broadcom for clients since it was
called Avago ten years ago, and we've ridden through some
of these pullbacks before. But ultimately, you know, a company
like this, you want to have a long term view.
You want to be able to ride it out during
(21:58):
the times when it does pull back, because you just
don't know when sentiment is going to change. To your question,
we don't know when investors might decide, you know what,
we want to own companies that are going to provide
really long term, solid year after year growth, and those
are hard to find, particularly in an environment where policy
uncertainty that they affect other sectors of the economy could
(22:18):
be so confounding. Here's one area where we think the
growth is solid and will be relatively impervious to a
lot of the politics that we're seeing out there.
Speaker 2 (22:27):
That's incredible, you say that, Johan, because so much of
the market jitters that we've seen this week have directly
been correlated to some of the trade tensions that are
really escalating as of late, tariffs being mentioned in HPES
earnings as a potential a detractor for their outlook going forward.
Why is Broadcom more insulated perhaps from that volatility and
(22:49):
what other players in this space could perhaps kind of
see themselves a little bit more protected from that volatility.
Speaker 9 (22:57):
Yeah, Jackie, so they're not, you know, Broadcom certainly is
vulnerable to tearffs on imports of chips. They don't, you know,
manufacture many of the chips themselves, and most advanced ships
are manufactured abroad, but in Taiwan. And obviously there's some
question about the Taiwan situation, and so you know, any
political news there, you know, could disturb the shares. It's
(23:18):
good to see that Taiwan Semi is bringing more manufacturing
here to the US. That will help buffer that kind
of risk. I mean, other companies that are more reliant
in their sales on just chips are going to be
more impacted by the tariff talk. Notice though, that Broadcom
is more diversified. They have a software business which is
substantial and is improving in its reach into customers and
(23:38):
its margins, et cetera. And they have other areas of
the business. You know, Kila Packard Enterprise is being hurt
particularly because they you know, they have built you know,
their systems in China, so they're going to be particularly vulnerable.
And also there seem to have been some execution problems
over there. So you know, that's a very different, much
more narrow company relative to a so an investor that
(24:01):
owns Broadcom owns something that's diversified and that helps them
write out you know, some of these other political ristic
companies will be more hurt by.
Speaker 2 (24:10):
It's Joey and Feenie from Advisor's Capital Management. Thanks so
much for joining us.
Speaker 3 (24:22):
Welcome back to Blue Med Technology. I'm Caroline Hide in
New York and I'm Jack Devalas in Washington.
Speaker 4 (24:27):
Quick check on these markets, because at one point we
hit a technical correction.
Speaker 3 (24:31):
On the Nasdaq one hundred.
Speaker 4 (24:32):
We're by more than five percent as you see over
the course of the five trading days, and in fact,
we've had our longest weekly losing street in this particular
benchmark going back to August of last year. What drags
us lower anxieties around China and it performance with generator
of AI anxieties around tarifs anxieties around just selling your
winners because maybe we have an economic slowdown at this point.
We're seeing on the higher side on a daily perspective
(24:53):
from the points perspective is Apple and of course Broadcom
with its numbers doing better than Anticipator.
Speaker 3 (24:57):
But on the.
Speaker 4 (24:57):
Downside, basically all the key magnificence names at the moment, Jockie,
so keep an eye on what's happening, were broadly with
an US DOT one hundred.
Speaker 2 (25:05):
Let's talk about how those markets are reacting to this
week's news. We're joined by Martin Norton, chief investment strategist
for Empower. As Caroline just teed up, there there's a
lot here that markets are grappling with. What would you
say is truly driving this negativity we're seeing in tech stocks.
Speaker 10 (25:24):
I mean, the key word that jumps out to me
and Caroline's comments is just anxiety. We're seeing so much anxiety,
of course around the tech narrative that began with deep
Seek and has continued as we continue to see competition
coming out of China. But it's also related to the
tariff question, and I think when we're thinking about tariffs,
we have to acknowledge the fact that This is an area,
(25:48):
you know, AI generally where there's a lot of emphasis
on US becoming a superpower, and so that should have
some insulation when we think about how the Trump administration
is going to approach coach the semiconductor space and the
technology space broadly. At the same time, there's a lot
of rumblings around the types of tariffs that we could
(26:09):
see on semiconductor's real pressure to build here in the US.
And I think when we think about all of these
different anxieties, from questions on global competition to questions around tariffs,
we have to remember the contexts that we're in and
the valuations that we saw at the start of the year.
There was just no room for disappointment or uncertainty, and
I think it's that setup that creates the sell off
(26:31):
that we're seeing today.
Speaker 2 (26:33):
In many ways, investors have gotten what they wanted. Hyperscalers
still plan to invest in more infrastructure. President Trump has
been supportive bringing in more commitments, and you also have
demand holding up. But when we respect to China as
a competitor, we're not going to stop seeing new models
(26:53):
coming out of there. What is it going to take
for tech stocks to really get the boost that they
were getting four or are those days pretty much over?
Speaker 10 (27:02):
Well my inclination right now, you know, as we think
about the CAPEC story and we think about the spending
from hyperscalers, that expectation of the hyperscaler demand is in
the prices right now. You know, the kind of the
infrastructure build is in the prices. And I think what
we'll have to see when it comes to technology and
a renewed strength and performance is really that pivot from
(27:23):
building the infrastructure to seeing the demand. And we see
that dichotomy so far in market movement thus far in
twenty twenty five. So for example, Meta has had a
very different run than some of these other players, and
one of the explanations could be the way that they've
been able to integrate AI and you know, take advantage
of AI on the revenue side. And so I think
(27:43):
it's that revenue narrative that's really the act too of
this AI play, and we really need to move to
that act too, and my estimation for us to see
prices move higher from here the act too.
Speaker 4 (27:55):
We had other investors or indeed market participants come on
and say act too really gets reignited as when in
videos GPUs. The latest Blackwell chipsets are flying off the shelves.
Speaker 3 (28:08):
We really see the proof in them being.
Speaker 4 (28:10):
Sold and used and ultimately that will kickstart once again
the growth in this industry. Are you anticipating it being
a second half kind of a pivot point?
Speaker 10 (28:19):
It seems like there's room for the narrative to shift
in the second half. I think the timing, though, is
particularly tricky. We have some sense of that from kind
of expectations around Blackwell, but in terms of broad use
case of AI, corporate spending on AI, I think that
timing is especially tricky in this environment, in particular, as
we think about in an environment where there may be
(28:42):
a hesitancy on corporations to really extend into long term
investment opportunities that could potentially pull back demand for some
of the AI applications that we'd really like to see
be part of that act to and that makes the
timing maybe a little bit more in question than we
would otherwise like. And perhaps it's that uncertainty that is
also helping drive prices lower and is.
Speaker 3 (29:05):
So unstee then should people sit on the hands.
Speaker 10 (29:08):
Well, I'm looking at this, you know, as I'm looking
at valuations and expecting this sell off to really show
up in valuations. But if I'm looking at technology broadly,
the sector still looks on a historical basis to be
in one of the more expensive death styles from a
price to expected earning standpoint. So though we've had this
sell off, we haven't seen valuations move that much. I
(29:28):
wouldn't consider it now to be a time to be
selling technology. But to me, it's more of a hold
environment if it sized appropriately in a portfolio to hang
on to it, But it's not necessarily a buying opportunity now.
I think we'll really have to see a little bit
more froth come out of those valuations to make a
really justifiable argument to move in.
Speaker 3 (29:48):
Martin.
Speaker 2 (29:48):
One of the other things that we're seeing now is
perhaps more discernment among investors for companies that aren't as diversified.
Do you see that's going to be a longer lasting trend.
Speaker 3 (30:00):
That's a possibility.
Speaker 10 (30:00):
I mean a related topic that is, of course, tap
of mind for people is moving from the pigs and
shovels to those who are putting AI to use in
their businesses and softwares in the like. I think in
this environment that uncertainty is going to cast kind of
a shadow over that play as well. But to the
extent that valuations are more approachable, I don't know if
that's a bad decision to have some of that exposure
(30:22):
in the portfolios as well.
Speaker 4 (30:24):
We want to thank you as always for joining the
show and Powers chief investment strategist Smart and Naughton.
Speaker 3 (30:29):
Great to catch up. Happy weekend.
Speaker 4 (30:31):
Let's return to the world of crypto and prices ahead
of the White House Summit on digital assets.
Speaker 3 (30:36):
We're currently off by.
Speaker 4 (30:37):
Two point six percent on the day for bitcoin. There's
a little bit of sort of buy the room of
sell the news when it comes to a bitcoin reserve.
Perhaps many wondering whether potentially, instead of just holding on
to US assets and not selling them, it could have
been more buying and that doesn't seem to be the
case for now at least.
Speaker 3 (30:53):
Let's stick into.
Speaker 4 (30:54):
All of this what we can anticipate more broadly across
the industry, and we're please we welcome Lizziang, head of
Growth at a ZY and Many A Crypto Leader Thought
Leader CEO is going to the White House today to
talk about what regulations could look like in the future,
but also a Pine on the latest executive order, what
did you make of it?
Speaker 11 (31:13):
So I think it's important to consider the political zeitgeist
of the moment.
Speaker 3 (31:17):
Crypto has come a.
Speaker 11 (31:19):
Really long way, and over the last fifteen years there's
been growing demand both for crypto as a digital asset
and also as a technology. So it's no longer a
question of is crypto something legitimate or is it something real.
Crypto is definitively here to stay, and with today's White
House summit, it shows that we have a voice and
(31:39):
a seat at the table, so we're expecting big things
to come from the summit.
Speaker 4 (31:44):
Was the Bitcoin Reserve and the stoppoial of other alternative
assets in the digital space a.
Speaker 3 (31:50):
Big enough deal for you today?
Speaker 11 (31:52):
So there was a lot of commentary around the Strategic
Bitcoin Reserve, and I think what the White House has
been able to do is come up with an equitable solution.
So the way I see it personally, we already have
this bitcoin, but there were no policies in place to
steward it and there was no accountability within government. David
Sach's earlier mentioned that there was a loss of seventeen
(32:13):
billion dollars by not having policies on when to sell bitcoin.
So if we already have this bitcoin from criminal and
civil asset forfeitures, I think it's important that we have
a framework in place to manage this bitcoin for the
American people.
Speaker 2 (32:27):
Liz, what do you want to see coming out of
this crypto summit that will give the market some of
that clarity that we're looking for.
Speaker 11 (32:35):
I think what the United States lacks today is a
clear framework around digital assets. So in this sense, we
lag a lot of different regions, mainly the European Union.
So what I'm hoping for personally is I hope to
see us take steps to lay ground work to have
regulatory clarity in the United States. And the reason why
(32:57):
this is important is because it really that's the stage
for American crypto companies to flourish, and this brings jobs
that attracks entrepreneurship, attracts investment, and it ensures America's dominance
on the global stage in technology.
Speaker 2 (33:14):
One of the things that David Sax really emphasize is
that taxpayer dollars will not be used to bolster this
reserve and stockpile. How can the crypto community really gain
if the government is not buying crypto?
Speaker 11 (33:28):
So I think that even taking steps to establish a
strategic Bitcoin reserve has already been a huge step for
the industry. As for the specific details around its implementation,
I think we'll have to see what comes of the
working group and what comes from the Cryptosummit, But I
am very optimistic on what this means for the crypto industry.
Speaker 4 (33:51):
So what next? We've got the reserve that was a
promise made and promise kept, as David Saxon say, an
indeed just a stop pole, but now will clarity is
needed ultimately still about what is a digital asset, the
way in which it's viewed as regulators and indeed stable
coin future, what do you want to hear out of
today for future regulation?
Speaker 11 (34:10):
So I think something that's interesting to consider with crypto
is that a lot of the mainstream discussion centers around
crypto as a digital asset with the financial use case,
but it's important to remember that crypto is also an
underlying technology upon which applications can be built, which span
a variety of different sectors, ranging from identity solutions to
(34:31):
life sciences, to media, entertainment and everything in between. So
what I hope is for this to really lay the
groundwork for crypto to flourish in the United States.
Speaker 4 (34:42):
Do you think that founders are changing their mind about
building in the United States.
Speaker 6 (34:48):
Oh?
Speaker 11 (34:49):
Absolutely, I personally know of entrepreneurs that have left the
United States due to regulatory uncertainty, and I know.
Speaker 3 (34:56):
That those of us who have chosen to.
Speaker 11 (34:58):
Stay in the United States are feeling quite validated in
that decision.
Speaker 4 (35:05):
He said, Thanks Liz Young, thank you for growth at Azuki.
Speaker 3 (35:09):
We appreciate it for joining us.
Speaker 4 (35:10):
Quick check on some breaking news, this one regarding in
video that we just told you that the NaSTA one
hundred was in correction. Territory now in video has been
shed one trillion dollars in market value from its record high.
Speaker 3 (35:20):
Remember it was as high as more.
Speaker 4 (35:21):
Than three trillion dollars and it has come down significantly
from that market capitalization. We're off one point five percent
on the day on Invidia.
Speaker 2 (35:38):
Shares of HPE are plunging today after the company said
profits in the coming year would be hurt by tariffs,
week margins on server sales and execution issues. HPE also
saying it will look to eliminate three thousand jobs. Antonio Nairy,
HPE CEO joins us now for more Antonio. I know
it's a tough day, but give us a little bit
(36:00):
of clarity in terms of what you're seeing as the
turnaround plan here.
Speaker 12 (36:05):
Yes, good morning, Thanks for having me. Today obviously is
a disappointed day for me and for us as a company.
We had a solid quarter. We delivered in our commitments.
We grow our revenue double digits, up seventeen percent. We
had double digit growth in our bookings. We disappointed on
one specific metric, which was the server operative margins, and
(36:29):
that server operative margin was impacted by three specific issues.
Two in the traditional server business call of the X
eighty six. One was a very aggressive market, meaning a
high discounting, and second was a specific issue with the
evaluation of our inventory which caused us not to have
the exact right cost in that pricing in the end
(36:52):
of the quarter.
Speaker 6 (36:53):
And those issues have been already fixed and we have
taken very aggressive action.
Speaker 12 (36:58):
On the E side, we have a higher than normal
inventory related to the GPU transition from the copper of
h one hundreds and two hundreds Intro Blackwell, and in
the quarter we booked one point six billion dollars of
new AI system orders, which was doubled the.
Speaker 6 (37:17):
Orders that we had in Q four, but seventy percent.
Speaker 12 (37:21):
Of that is on the blackwell side, so the working
capital aspect that I had a negative impact on our
operating margins.
Speaker 8 (37:29):
For the servers.
Speaker 6 (37:29):
The rest of the business is very, very strong.
Speaker 12 (37:33):
And inclusive of the networking business, which had again another
recovery on sequential revenue double digit year over the year
revenue growth our hybrid cloud was up eleven percent year
every year, and we had a very strong performance in
our storage bookings. So it was all in the server margin.
But I have to tell you because of the demand
(37:53):
we selved, it reinforced our strategies, right, we just need
to execute better than a couple of things and return
to the normal operating profit, which we are committed to
do in the second half. And then what we guided
was inclusive of that and the net impact of tariffs,
because now it's.
Speaker 3 (38:11):
Available on tariff.
Speaker 4 (38:14):
Antonio, how much of a pain to the bottom line
and tarif's going to be do you have a clear
guidance of number, Yes.
Speaker 6 (38:22):
We did, Caroline.
Speaker 12 (38:23):
We guided that it would be seven pennies net of
the mitigation impacts that we have now put in place
and will continue to execute throughout FIS career twenty twenty five.
Speaker 3 (38:35):
The worst case.
Speaker 4 (38:36):
Scenario do you build in there, though, Antonio, because at
the moment, every day we get a different tariff headline.
Speaker 12 (38:42):
Well, we decided to go all in based on the
twenty five percent tariff in Mexico, the twenty five percent
tartfs in Canada, which we don't produce in Canada today,
and that incremental ten percent meaning the twenty percent on China.
So we factor all that in and obviously we have
mitigation strategy from a global supply chain and also the pricing.
Speaker 6 (39:05):
So we decided to put it all in in.
Speaker 12 (39:06):
A this part of time and if some of that
doesn't get done then you know, obviously we'll get the
benefit of it. But right now, because kind of what
happened here is that because we did not guide the
full year waiting for the Juniper deal to close at
the end of Q one, we decided to put a
flag pole out there for an investor.
Speaker 6 (39:24):
So they have it all out there.
Speaker 2 (39:27):
Can you give us an update there, Antonia is where
the Department of Justices case stands.
Speaker 12 (39:34):
Yes, of course, First of all, we are incredibly disappointed
that the DOJ decided to file a lawsuit to try
to block the transaction. Their market analysis completely flawed. Then
nar the market to one slaver or the market called
the wireless lund and they felt there would be only
three vendors to play in the market.
Speaker 6 (39:52):
The reality are at least the eight.
Speaker 12 (39:54):
Vendors and many of them had this exact same share
as Juniper today.
Speaker 6 (40:00):
Addition, you know they don't.
Speaker 12 (40:01):
Consider this is a great rossure for the United States
to strengthen our US national security outside the country. So
now the judge has been selected. The judge has established
July ninth as the trial date and we will defend
this in court. So we expect to prevail because we
have a very compelling case and therefore we expect to
(40:23):
close the transaction in twenty twenty five, obviously delayed from
the regional time.
Speaker 2 (40:29):
We have about thirty seconds left. But are you prepared
for the worst case scenario.
Speaker 12 (40:36):
Meaning the deal doesn't close. We always have multiple options
on the table. Our feederstrem duty, together with my board,
is to drive the best return for our shareholders. We
felt that the Juriper transaction is the best long term
return that will shift the portfolio and create more earnings
(40:57):
and free cash flow. Because we committed at least four
hundred and fifty million dollars of synergies, and so that's
what we're focused. However, they are different ways to create
your holder value and all those options out of the table,
But right now we want to see this.
Speaker 4 (41:11):
Through Antonio Nary HPCO, thanks so much for joining us today.
Speaker 3 (41:16):
Jackie.
Speaker 2 (41:17):
Coming up, we take a look at tech entrepreneur Peter
Teel's many lengths inside the Trump's new administration.
Speaker 4 (41:34):
Tech billionaire Peter tail used his Silicon pelling wealth and
influence to help Donald Trump win his second presidency that
could give him authority within the administration itself. For more,
Bloomberg's Jamie Tarabay joins us now. Actually, the nuance to
this is that he certainly leaned into Trump in the
first before the first administration.
Speaker 3 (41:51):
In the second administration, he.
Speaker 4 (41:52):
Took a step back in terms of committing financially, we'd see,
although he did say he was going to vote for Trump.
And Jade Vance is a close ally. How what does
this network.
Speaker 3 (42:00):
Sprawl within this new administration?
Speaker 13 (42:04):
Well, I mean, as you said, like pretty early on
Peter thal had donated to conservative candidates. He very sort
of famously surprised Silicon Valley. When he voted for and
supported Donald Trump in the twenty sixteen presidential election, he
spoke at the Republican National Convention and gave over a
million dollars to Trump's campaigns, and when Trump won the
first time around, Tiel was a member of the Executive
(42:26):
Transition Committee, and two people who worked for him at
thel Capital went on to have senior positions both at
the National Security Council and also at the White House.
This time around, people who are connected to Peter Theal,
including Vice President J. D.
Speaker 3 (42:40):
Vance, who had.
Speaker 13 (42:40):
Worked at Mithril, a venture capital fund that theel co founded,
have senior positions across the administration. Along with Vance, a
former THEOD associate is number two at the Department of
Health and Human Services. Another is Assistant to the President
for Science and Technology. One is the ambassador to Denmark.
And there are at least two who now hold senior
(43:02):
positions at the Defense Department, which is a place where
he and Elon Musk have several critical contracts with the government.
Speaker 4 (43:13):
Let's just talk a little bit more about the going
forward and whether there's going to be proof in the
pudding as to whether or not he is benefiting personally
because we already know a lot of the companies he
helped co founder and Leeds fund have started to win
some pretty big contracts.
Speaker 3 (43:27):
That's right.
Speaker 13 (43:27):
I mean theal is an investor in several of Musk's companies,
including SpaceX, Neurlink, and Boring. And I'm going to read
off my paper for a moment because once Trump was elected,
Palenteer stock. Palenteer is Theel's company. The stock soared more
than ninety percent in February. And Real Industries, a defense
(43:48):
tech startup which is backed by Field's founder's fund, landed
an expanded role so with the US Army that was
valued at more than twenty billion. And then scale AI,
another founder's funds company, just signed a major deal with
the Defense Department.
Speaker 3 (44:04):
Jamie Tarabey, it's an amazing read.
Speaker 4 (44:06):
It's succinct to the point I urge people to go
and find it on the terminal or online.
Speaker 3 (44:09):
Thanks so much.
Speaker 4 (44:10):
Meanwhile, we want to check it on the markets once again. Look,
we've seen a sell off that's seen the NASAK one
hundred in a correction, territory in videos wiped off one
trillion dollars of its market cap, and now Tesla has
raised all of its election rally. We're down forty eight
percent from its record high, with down another four percent
on the day.
Speaker 3 (44:27):
Plenty to be digesting as we go into this weekend.
Speaker 4 (44:30):
People again not wanting to be long tech or indeed
the market more generally. But that does it for this
edition of Bluebig Technology. You don't want to forget to
check out our podcast. You can find it on the
terminal as well as online on Apple, Spotify, and iHeart
This is Blue Meg Technology.
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 (00:27):
Live from New York and Caroline Hyde and I'm Jackie
Devalas in Washington.
Speaker 3 (00:31):
This is Bloomberg Technology coming up.
Speaker 4 (00:33):
Crypto leaders flock to DC for the White House's Crypto Summit.
Missus Trump signs his Bitcoin Reserve Executive Order White House
AI and cryptozar David Sachs joins us to discuss plus
AI spending still going strong. Broadcom shares rise after the
company gave an upbeat forecast, with AI demanding key driver
in its first quarter, and Hpe also out with earnings,
(00:56):
but they send ches tumbling as profits a road in
part due to tariffs with the CEO Antonio Nary but
first breaking news but moments ago. Russia is willing to
discuss a potential truth with Ukraine, but it is with conditions,
willing to discuss a temporary truce if those progress towards
a final peace settlement. Let's get straight out to Kaylee lines,
what's the nuance here?
Speaker 5 (01:17):
Well, Caroline Bloomberg did just break the story, citing sources
familiar with the matter, but I would point out that
this is something that Russia apparently presented to the US
at talks in Saudi Arabia that happened last month, a
suggestion that yes, they are willing to agree to a
temporary truce, provided that there is an effort toward a
peace deal that Russia like. Specifically, what Russia has asked
to the United States is clear guidance on what the
(01:39):
parameters of peace would look like, specifically what a peacekeeping
mission in Ukraine would constitute.
Speaker 6 (01:44):
US.
Speaker 5 (01:44):
Russia has rejected the presence of NATO troops on Ukrainian soil.
That would be complicating for the idea that France and
uk for example, would be providing troops for that peacekeeping mission,
the so called Coalition of the Willing we have heard
European leaders talking about in recent weeks.
Speaker 3 (02:00):
Russia does not like that idea.
Speaker 5 (02:01):
They would they'll be open to a country like China
providing a peace keeping force. So it's unclear whether or
not that is something Ukraine would agree to. We should
keep in mind that this news is breaking as we
are expecting next week senior US officials, including the Secretary
of State Marco Rubio, the National Security Advisor Mike Waltz,
as well as Special Envoy Steve Whitcoff to be meeting
with There are Ukrainian counterparts in Saudi Arabia four additional
(02:24):
talks toward pieces. The US is still continuing to push
for a deal.
Speaker 4 (02:28):
Kae lines with a wrap, We thank you. Let's just
take a quick look at the markets and reaction to this.
They do bounce off of their lows. Nevertheless, we are
having a torrid time and then as that one hundred
to one point heading correction territory, we're down more than
ten percent from previous highs.
Speaker 3 (02:43):
This is we see three straight weeks of.
Speaker 4 (02:45):
Declines for the tech benchmark, the longest losing streak since August.
We're off by more than four percent over the last
five training days. And this is anxiety grows regarding Chinese
AI models. Well, that means for compute demand, what it
means overall for me selling your winners into an economy
that could potentially be.
Speaker 3 (03:03):
Slowing on the back of taris.
Speaker 4 (03:04):
Move on to what's happening in the world of crypto, though,
because so much to delve into.
Speaker 3 (03:08):
When it comes to the.
Speaker 4 (03:09):
Latest executive order, we're off by one point eight percent
on the day. We're at eighty eight thousand, but remember
we're still well higher than the sixty seven thousand dollars
level we were at when the presidential election occurred.
Speaker 3 (03:21):
All of this as many anticipate that.
Speaker 4 (03:23):
Such regulations will become more pro crypto, and we see
that executive order signed last night with a reserve for bitcoin.
We're now pleased to be welcoming to our TV and
radio audiences around the world, someone who can dive into
this exact executive order. We bring in the White House
AI and cryptos are David Sachs.
Speaker 3 (03:43):
It's busy. You're about to.
Speaker 4 (03:44):
Expect yet more people coming to the White House from
the cryptosphere. Remind the American public and investors why you
need a bitcoin reserve at all?
Speaker 7 (03:53):
Well, good to be here, I mean, the reason why
we need a bitcoin reserve is that the federal government
already owns some. In fact, it obtained around four hundred
thousand bitcoin over the past decade through criminal and civil
forfeitures and seizures, and so the government has to have
a strategy for how it deals with this. In the past,
the strategy has been simply to sell it in an
(04:15):
ad hoc way almost willy nilly, and that cost American
taxpayer something like seventeen.
Speaker 8 (04:20):
Billion dollars in lost value.
Speaker 7 (04:22):
So we want to have a long term strategy to
maximize the value these holdings. We've decided that that bitcoin
is scarce, it's valuable, and that is strategic for the
United States to hold on.
Speaker 8 (04:31):
To this as a long term reserve asset.
Speaker 7 (04:33):
So that's the plan with the two hundred thousand bitcoin
that we believe are in the possession of the federal government.
I say we believe because no one really knows for
sure because we never had a proper audit. So that's
one of the first things that this executive order provides
that we're going to do a full government wide audit
to find out what digital assets we actually have so
they can be safeguarded and moved into a strategy that
(04:55):
maximizes their long term value.
Speaker 2 (04:56):
Right.
Speaker 3 (04:57):
And then there's a stockpile.
Speaker 4 (04:58):
Told us about the nuance there and why you need
to stockpile for old coins and how you're treating them differently.
Speaker 8 (05:04):
Right.
Speaker 7 (05:04):
Well, the idea there is, again, we're going to figure
out what we actually have on the federal ballot sheet,
and we're going to move those Like you said, all
coins are digital assets other than bitcoin, into a stockpile
for safekeeping. The difference there is that the Secretary of
the Treasury will exercise responsible stewardship over those assets, and
(05:25):
he has the discretion to rebalance the portfolio or to
sell items in that portfolio. But that's not true for bitcoin.
The bitcoin we want to keep long term, So there's
a difference there in objective. With the reserve, the goal
is long term preservation. With the stockpile, the goal is
responsible stewardship portfolio management.
Speaker 2 (05:45):
In essence, David, the executive order also tasks Secretary Lutnik
Investment with finding budget neutral ways that won't cost the
taxpayer to add to that reserve. What call fies as
budget neutral. Can you give us some examples of how
that would actually work well?
Speaker 7 (06:06):
Budget neutral this means it won't cost the taxpayer or anything,
It won't increase the deficit, it won't increase the debt.
So that's basically the constraints on what they can do.
If they can figure out creative ways to add to
the stock to the reserve of bitcoin, they're allowed to
accumulate more bitcoin, but again it cannot impose any burden
on the federal deficit, debt or the taxpayer.
Speaker 8 (06:27):
So that's the rule.
Speaker 7 (06:28):
Now you can ask the question, well, how are they
going to do that? And I think that's sort of
up to them if they can figure out creative strategies
that they believe are in the long term insto of
the country. They now have the authorization to develop those strategies.
Speaker 2 (06:42):
Do you think using savings that come from DOZE, for example,
qualify is something that would be budget neutral?
Speaker 8 (06:49):
That's a good question. I don't know the answer to
that question.
Speaker 7 (06:52):
I think that that's something that I have to be
assessed by probably the Office of Management and Budget. I
think that since DOZE is cutting the deficit that and
we'd want to seek a way to rescind those appropriations,
it probably would not count.
Speaker 8 (07:06):
But you probably have to ask the O and B that.
Speaker 4 (07:09):
When you talk about the stewardship, particularly the stockpile, could
you be seeing things like staking lending. Is there going
to be other ways to maximize the volume there?
Speaker 8 (07:18):
I mean, it's a good question.
Speaker 7 (07:19):
I mean, you know, I think that the idea of
this executive order is to create the mandate. Right, So
first of all, we're going to move these digital assets
from wherever they are all over the government. We're going
to find out what they are. First of all, we're
going to do the account and we're going to do
the audit. Then we're going to move them into a
separate account for safekeeping. And then the Sectary of the
Treasury and his team will be able to exercise portfolio
management and long term and responsible stewardship. And yes, that
(07:42):
could include staking, it could include rebalancing, it could include sales.
These are all options that they can pursue if the
Secuary of the Treasury believes that these are in the
long term interests of the American people.
Speaker 4 (07:55):
Just going into what's in the holding of the US government.
Going back to President Trump mentioned over the weekend talking
of Ripple, Solana, other alternative coins that people are wondering
whether they're going to be included in this stock pile.
Will they does the US own them? Why mention them
by the president?
Speaker 7 (08:13):
Well, the President has mentioned the top five cryptocurrencies by
market cap, So I think people are just reading into
this a little bit too much. He just mentioned the
top five. In terms of what we'll actually have. Again,
we have to do the accounting we're not sure at
sitting here today whether the federal government owns any of
these alternative cryptocurrencies. We know it owns bitcoin. I believe
it owns some ethereum. I'm not sure about the other ones.
(08:34):
This is why we have to do the accounting. Is that,
to be honest, no one's been able to give us
a straight answer yet in terms of what the federal
government owns. And this is part of the problem, is
that we've never really had a digital asset strategy before,
and this is why we've missed out on accumulating a
lot of value for the American people.
Speaker 2 (08:52):
David, you mentioned earlier that you know, you don't have
any additional cryptocurrency anywhere you've divested from your interests there. However,
Secretary Lutnik in July mentioned that he had quote a
shedload of bitcoin. Do you think it's important for these
(09:12):
stewards of the Reserve and the stockpile to divest from
their cryptocurrency interests?
Speaker 3 (09:19):
Do you know if they've done so already.
Speaker 8 (09:21):
I can't speak to a situation.
Speaker 7 (09:23):
You know, every member of the administration has to go
through the same ethics process and the same conflict of
interest process that I've gone through, so I'll let him
speak to his own situation. I can to say that
in my case, I divested or sold all the cryptocurrency
that I own prior to the start of the administration,
so there's no conflict in my case, I just want
to have the right innovation policies for the United States.
Speaker 2 (09:42):
Do you think it's important, though, to just not have
that appearance of a conflict of interest?
Speaker 8 (09:50):
Sure?
Speaker 7 (09:50):
I mean, look, we're all subject to eighteen USC.
Speaker 8 (09:53):
Two eight.
Speaker 7 (09:54):
These are the conflict of interest provisions every remember, the
administration is subject to that can to speak to anyone's situation,
so we all are governed by the same conflict of
interest rules. In my case, I chose to divest everything.
To make it really simple, you should ask every other
member of the administration what their situation is.
Speaker 4 (10:13):
How about the president, because I think here in lies
some of the issues for those who are on the
outside of crypto looking in and suddenly feel that the
US president has an exposure to mean.
Speaker 3 (10:23):
Coins or solana. How do you give the confidence.
Speaker 4 (10:27):
To the US investor base and indeed US population that
this is totally.
Speaker 7 (10:31):
Legit Well, honestly, I think you're kind of making something
up there. I mean, how do you know that he
has exposure to Salona? Is that's something you just came
up with.
Speaker 4 (10:39):
Well, ultimately, when we think about the mean coin exposure
in particular, and people trying to understand for what reason
we have a Trump coin or Milania coin, is there
a clearer way that the US president can disassociate himself
from any event upside when it comes to cryptocurrencies.
Speaker 7 (10:56):
Well, I think he's already spoke to the to the
Trump coin, and I think that that is a collectible.
The SEC said it's a collectible. Collectibles have no intrinsic value,
they're not security. Is there in a different category, And
I think as long as you issue a mean coin
and disclaim that there's no intrinsic value, it can just
be a collectible. So that is a different category, I
think than what we're talking about here with cryptocurrencies.
Speaker 3 (11:18):
What do you make of some of the market reaction.
Speaker 2 (11:21):
I mean, clearly Bitcoin down later earlier today on the
back of just not really getting what they were hoping for.
You know, if the government is not going to buy
additional crypto, then what's really the benefit. But can you
say for sure that the administration is not open to
using taxpayer dollars in the future.
Speaker 3 (11:41):
Is that completely off.
Speaker 8 (11:42):
The table according to this EO?
Speaker 6 (11:45):
It is.
Speaker 7 (11:45):
We've said that this will not cost taxpayers a dime.
So we've been very clear in this executive Order that
we will not use taxpayer funds to basically accumulate more
crypto unless it can be done in a completely budget
neutral way. No increase the deaf sit, no increase in
the debt, no use of taxpayer funds, no burden on
the taxpayer. We've been very clear in this executive Order
(12:07):
about that.
Speaker 2 (12:08):
David, Let's move on to artificial intelligence, where you're also
weighing in on policy there. The Biden executive Order was
repealed in January. What is in the works currently that
you can share about how that's looking and who's involved.
Speaker 7 (12:23):
So the president is week one executive order on AI
that rescinded the Biden EO. By the way, that was
a very burdensome executive order that Biden had passed, those
over one hundred pages of burn some regulations on AI companies.
Speaker 8 (12:35):
The whole industry hated it.
Speaker 7 (12:36):
He rescinded that, and he tasked three people to basically
evaluate a new and create a new AI action plan,
and those people are the head of the Office of
Science Technology Policy, the now Security Advisor, myself, and so
we're currently working on that plan and we'll have more
information for you about that once we're ready to present.
Speaker 4 (12:55):
How confident are you at this moment around AI leadership
here in the United State? Dates that thick and fast,
the news coming out of China, for example, of the
latest models that are incredibly powerful with less data and
ultimately more efficient. How are you exercising the view that
AI can be still a leader for the United States
and not losing its leadership versus China.
Speaker 7 (13:17):
Well, I'm confident in American leadership, but we can't be
complacent about it. I mean, it's very clear that China
is going to be very very competitive. Something like roughly
half of the AI researchers in the world are from China.
They are very good at math and science, and you've
seen with the launch of deep Seek that they're very good.
They're very good AI software companies. So this is going
to be a very competitive race, and we have to
(13:39):
win that race, but we can't be complacent about that
in any way.
Speaker 8 (13:43):
It's going to be a very tough competition here.
Speaker 4 (13:45):
There's actually reporting from other news sources that maybe deep
seat would be bad from apps here in the United States.
Speaker 3 (13:51):
Do you think that's appropriate.
Speaker 7 (13:53):
It's pretty maature for me to comment on something like that.
If the administration announces a policy on that, then I'll
comment on it.
Speaker 2 (13:59):
Then let's talk about some of the other voices inside
the White House as of late that could potentially chime
in on AI policy. Elon Musk is he involved in
any capacity.
Speaker 8 (14:13):
Not in what we're doing.
Speaker 7 (14:15):
So you know, again, we have an office within the
White House and we deal with crypto and AI policy.
Elon's doing DOGE and these are two totally separate initiatives.
Speaker 2 (14:25):
But let's talk a little bit more about what the
contours of the AI policy could look like. I realize
you can't share too much at the moment, but what
will be your priority areas? A lot of the talk
has been around AI competitiveness and what we've seen coming
out of Trump's President Trump's comments around the Chips Act
and then National Science Foundation layoffs.
Speaker 3 (14:46):
There is some concern that this.
Speaker 2 (14:48):
Could undermine competitiveness if there's not enough federal funding going
to research.
Speaker 3 (14:54):
What are your thoughts on that?
Speaker 7 (14:56):
Well, I think there are some items that are policy
items that are coming up very quickly. So, for example,
there was this eleventh hour policy that was announced by
or rule that was now called the Diffusion Rule, that
was announced by the Biden administration, and that governs the
sale of advanced AI chips or GPUs to countries all
across the world. They're basically an international version of the
(15:18):
export controls. There's one hundred and twenty day clock on
that in order for the Trump administration to weigh in
and make whatever modifications we want to make. So, for example,
I think that's probably going to be one of the
first policy items on our plate that we have to
address because there's a clock on it. So I think that,
you know, export controls are a big area, Diffusion is
a big area. Just the you know, how we govern
(15:41):
the licensing of the most sophisticated chips and semiconductor manufacturing
equipment is sort of at the heart of the policy
discussion right now.
Speaker 4 (15:54):
Would you ultimately be supporting an end to the chipsacked.
Speaker 7 (16:00):
I don't think that anyone in the administration has said
we want to end it, but the President has been
very critical of it, and I think with good reason.
I mean, I think the intent of the Chips Act
was good. We were trying to get semicon manufacturing to
occur in the United.
Speaker 8 (16:12):
States because's so strategic.
Speaker 7 (16:14):
The problem is that the money went to, frankly, a
lot of companies who are losing in that very competitive market.
And some of those companies haven't even used the money
they were granted because they're not doing very well. So
the Chips Act had I think, mixed results at a
high cost, and the question is just whether we can
do something much better. And I think what the President
has said is that he would like to use terrorists
(16:34):
as an incentive to get companies to onshore their semiconductor
manufacturing here. And the advantage of that approach is that
the best companies have to do it too. They can't
kind of drag their feet or they're going to be
hit with terrorists. So I think the President has figured
out a very powerful weapon, a very powerful incentive to
get the best companies to want to onshore their manufacturing,
(16:56):
including for semi conductors, and that is very strategic for
the United States.
Speaker 4 (17:00):
TSMC putting money where its mouth is and potentially in
response to tariff concerns for you right when.
Speaker 7 (17:07):
You saw that yet, sorry you mentioned t SMC. I
think it's a very good point. We did a press
conference with them just earlier in the week and they
announced over one hundred billion dollar investment in the US
and a big part of the reason why is because
of the President's Tariff's policies give them a strong incentive
to want to move some manufacturing here because they know
that if they don't do that, they're going to be
here with the tariff.
Speaker 3 (17:28):
With forty five seconds.
Speaker 4 (17:29):
They've got to ask you, therefore, should Intel not be
getting the money? Is that the company you're hinting at.
Speaker 7 (17:35):
I'm not saying they shouldn't get it, but I think
that everyone knows that Intel's a very challenged company right now,
and I think that it's unfortunately.
Speaker 8 (17:42):
We want Intel to do well.
Speaker 7 (17:43):
We want domestic chip manufacturing, and Intel is a legendary
company and it is one of the few companies in
the United States that's capable of doing advanced chip manufacturing.
So we want them to do well, and I think
we will try to do whatever we can to help
them do well well.
Speaker 4 (17:58):
You're going to be speaking with lots of leaders from
other companies today of course over at the White House,
leaders of crypto exchanges across the ball, we thank you
so much. The White House AI and cryptos are David Sachs.
Ahead of that one important White House crypto meeting coming
up first though, Braallcom shares they jump following its earnings
and not beat forecasts full by AI demand details.
Speaker 3 (18:17):
Next, this is blue Meg Technology.
Speaker 2 (18:29):
Let's take a look at Broadcom shares. This after the
company gave an upbeat forecast driven by strong spending on
AI computing, shares are down by about three percent. Joanne Feene,
partner at Advisor's Capital Management, joins us.
Speaker 3 (18:46):
Now for more.
Speaker 2 (18:47):
What a roller coaster it's been so far for the
chip makers this week other infrastructure players as well. Is
the market telling us something more about the fundamentals? Is
it a short term blip or a fundamentals okay at
this point?
Speaker 9 (19:01):
Yeah, Hey, Jackie, you know the surgeon in Broadcom shares
after they reported in December, right, obviously I really boosted
the stock. It's come down a year to date about
twenty five or so percent. But last night's report was
very impressive. Not only did the beat the numbers that
came in with better guidance than expected, and more importantly
(19:22):
not in their guidance are two new partners for the
development of custom AI solutions, including chips and networking solutions.
And so their sixty to ninety billion dollars outlook for
fiscal twenty seven for the AI business, and by the way,
it's only at a pace of about twenty million this
year billions, So it's a really startling opportunity that the
(19:44):
company has ahead of it. And remember that they see
the road mass of their partners and their customers, so
they have an awful lot of visibility. I think it
did reassure investors somewhat and that's why the stock is
up today.
Speaker 4 (19:57):
Is it there, fool still enough to shake off the
overall anxiety surrounding Generator AI, the opportunity that these companies have,
and ultimately how profitable it will be for them.
Speaker 9 (20:08):
Yeah, it's unclear what's causing the pullback here. I think
there are a lot of moving parts in investors' minds
right now. You know, one of them is just the
general level of policy uncertainty, whether it's terrorists or government
shutdown or geopolitical that is causing a little bit of
a risk off trade across the board the Deep Seek
Information you know announcement back at the beginning of the year.
(20:28):
It certainly caused some to question how much we needed
the most advanced chips. But what Hocktan CEO said last
night was really informative. He said that customers are demanding
more and more powerful solutions. They're clearly not running away
from having the best hardware to run their AI models,
both training, pre training, post training and inference. And again
(20:52):
he sees the roadmaps for years out. So I think
that investors are, you know, unfortunately taking the raw long
idea out of the Deep Seek situation and inferring that
for some reason, hyperscalers and others that want to use
AM models are somehow going to say, oh, we don't
need all that computing power. They clearly want that. According
(21:12):
to what a broadcom is saying.
Speaker 4 (21:15):
The twenty percent sell off that we've seen in broadcom
shares since the start of the year, though ultimately what
shakes that off is this the right time to be
buying a broadcom if it's ultimately going to be a winner?
Speaker 9 (21:27):
Yeah, Caroline, you know, a lot of times market sentiment
again a risk off trade. People pull back from their winners.
They diversify, and that's a good thing people. You know,
investors should be diversified.
Speaker 8 (21:36):
What will probably.
Speaker 9 (21:37):
Turn this around is more and more of these kinds
of reports, and not just from Broadcom, from other companies.
You know, we've owned Broadcom for clients since it was
called Avago ten years ago, and we've ridden through some
of these pullbacks before. But ultimately, you know, a company
like this, you want to have a long term view.
You want to be able to ride it out during
(21:58):
the times when it does pull back, because you just
don't know when sentiment is going to change. To your question,
we don't know when investors might decide, you know what,
we want to own companies that are going to provide
really long term, solid year after year growth, and those
are hard to find, particularly in an environment where policy
uncertainty that they affect other sectors of the economy could
(22:18):
be so confounding. Here's one area where we think the
growth is solid and will be relatively impervious to a
lot of the politics that we're seeing out there.
Speaker 2 (22:27):
That's incredible, you say that, Johan, because so much of
the market jitters that we've seen this week have directly
been correlated to some of the trade tensions that are
really escalating as of late, tariffs being mentioned in HPES
earnings as a potential a detractor for their outlook going forward.
Why is Broadcom more insulated perhaps from that volatility and
(22:49):
what other players in this space could perhaps kind of
see themselves a little bit more protected from that volatility.
Speaker 9 (22:57):
Yeah, Jackie, so they're not, you know, Broadcom certainly is
vulnerable to tearffs on imports of chips. They don't, you know,
manufacture many of the chips themselves, and most advanced ships
are manufactured abroad, but in Taiwan. And obviously there's some
question about the Taiwan situation, and so you know, any
political news there, you know, could disturb the shares. It's
(23:18):
good to see that Taiwan Semi is bringing more manufacturing
here to the US. That will help buffer that kind
of risk. I mean, other companies that are more reliant
in their sales on just chips are going to be
more impacted by the tariff talk. Notice though, that Broadcom
is more diversified. They have a software business which is
substantial and is improving in its reach into customers and
(23:38):
its margins, et cetera. And they have other areas of
the business. You know, Kila Packard Enterprise is being hurt
particularly because they you know, they have built you know,
their systems in China, so they're going to be particularly vulnerable.
And also there seem to have been some execution problems
over there. So you know, that's a very different, much
more narrow company relative to a so an investor that
(24:01):
owns Broadcom owns something that's diversified and that helps them
write out you know, some of these other political ristic
companies will be more hurt by.
Speaker 2 (24:10):
It's Joey and Feenie from Advisor's Capital Management. Thanks so
much for joining us.
Speaker 3 (24:22):
Welcome back to Blue Med Technology. I'm Caroline Hide in
New York and I'm Jack Devalas in Washington.
Speaker 4 (24:27):
Quick check on these markets, because at one point we
hit a technical correction.
Speaker 3 (24:31):
On the Nasdaq one hundred.
Speaker 4 (24:32):
We're by more than five percent as you see over
the course of the five trading days, and in fact,
we've had our longest weekly losing street in this particular
benchmark going back to August of last year. What drags
us lower anxieties around China and it performance with generator
of AI anxieties around tarifs anxieties around just selling your
winners because maybe we have an economic slowdown at this point.
We're seeing on the higher side on a daily perspective
(24:53):
from the points perspective is Apple and of course Broadcom
with its numbers doing better than Anticipator.
Speaker 3 (24:57):
But on the.
Speaker 4 (24:57):
Downside, basically all the key magnificence names at the moment, Jockie,
so keep an eye on what's happening, were broadly with
an US DOT one hundred.
Speaker 2 (25:05):
Let's talk about how those markets are reacting to this
week's news. We're joined by Martin Norton, chief investment strategist
for Empower. As Caroline just teed up, there there's a
lot here that markets are grappling with. What would you
say is truly driving this negativity we're seeing in tech stocks.
Speaker 10 (25:24):
I mean, the key word that jumps out to me
and Caroline's comments is just anxiety. We're seeing so much anxiety,
of course around the tech narrative that began with deep
Seek and has continued as we continue to see competition
coming out of China. But it's also related to the
tariff question, and I think when we're thinking about tariffs,
we have to acknowledge the fact that This is an area,
(25:48):
you know, AI generally where there's a lot of emphasis
on US becoming a superpower, and so that should have
some insulation when we think about how the Trump administration
is going to approach coach the semiconductor space and the
technology space broadly. At the same time, there's a lot
of rumblings around the types of tariffs that we could
(26:09):
see on semiconductor's real pressure to build here in the US.
And I think when we think about all of these
different anxieties, from questions on global competition to questions around tariffs,
we have to remember the contexts that we're in and
the valuations that we saw at the start of the year.
There was just no room for disappointment or uncertainty, and
I think it's that setup that creates the sell off
(26:31):
that we're seeing today.
Speaker 2 (26:33):
In many ways, investors have gotten what they wanted. Hyperscalers
still plan to invest in more infrastructure. President Trump has
been supportive bringing in more commitments, and you also have
demand holding up. But when we respect to China as
a competitor, we're not going to stop seeing new models
(26:53):
coming out of there. What is it going to take
for tech stocks to really get the boost that they
were getting four or are those days pretty much over?
Speaker 10 (27:02):
Well my inclination right now, you know, as we think
about the CAPEC story and we think about the spending
from hyperscalers, that expectation of the hyperscaler demand is in
the prices right now. You know, the kind of the
infrastructure build is in the prices. And I think what
we'll have to see when it comes to technology and
a renewed strength and performance is really that pivot from
(27:23):
building the infrastructure to seeing the demand. And we see
that dichotomy so far in market movement thus far in
twenty twenty five. So for example, Meta has had a
very different run than some of these other players, and
one of the explanations could be the way that they've
been able to integrate AI and you know, take advantage
of AI on the revenue side. And so I think
(27:43):
it's that revenue narrative that's really the act too of
this AI play, and we really need to move to
that act too, and my estimation for us to see
prices move higher from here the act too.
Speaker 4 (27:55):
We had other investors or indeed market participants come on
and say act too really gets reignited as when in
videos GPUs. The latest Blackwell chipsets are flying off the shelves.
Speaker 3 (28:08):
We really see the proof in them being.
Speaker 4 (28:10):
Sold and used and ultimately that will kickstart once again
the growth in this industry. Are you anticipating it being
a second half kind of a pivot point?
Speaker 10 (28:19):
It seems like there's room for the narrative to shift
in the second half. I think the timing, though, is
particularly tricky. We have some sense of that from kind
of expectations around Blackwell, but in terms of broad use
case of AI, corporate spending on AI, I think that
timing is especially tricky in this environment, in particular, as
we think about in an environment where there may be
(28:42):
a hesitancy on corporations to really extend into long term
investment opportunities that could potentially pull back demand for some
of the AI applications that we'd really like to see
be part of that act to and that makes the
timing maybe a little bit more in question than we
would otherwise like. And perhaps it's that uncertainty that is
also helping drive prices lower and is.
Speaker 3 (29:05):
So unstee then should people sit on the hands.
Speaker 10 (29:08):
Well, I'm looking at this, you know, as I'm looking
at valuations and expecting this sell off to really show
up in valuations. But if I'm looking at technology broadly,
the sector still looks on a historical basis to be
in one of the more expensive death styles from a
price to expected earning standpoint. So though we've had this
sell off, we haven't seen valuations move that much. I
(29:28):
wouldn't consider it now to be a time to be
selling technology. But to me, it's more of a hold
environment if it sized appropriately in a portfolio to hang
on to it, But it's not necessarily a buying opportunity now.
I think we'll really have to see a little bit
more froth come out of those valuations to make a
really justifiable argument to move in.
Speaker 3 (29:48):
Martin.
Speaker 2 (29:48):
One of the other things that we're seeing now is
perhaps more discernment among investors for companies that aren't as diversified.
Do you see that's going to be a longer lasting trend.
Speaker 3 (30:00):
That's a possibility.
Speaker 10 (30:00):
I mean a related topic that is, of course, tap
of mind for people is moving from the pigs and
shovels to those who are putting AI to use in
their businesses and softwares in the like. I think in
this environment that uncertainty is going to cast kind of
a shadow over that play as well. But to the
extent that valuations are more approachable, I don't know if
that's a bad decision to have some of that exposure
(30:22):
in the portfolios as well.
Speaker 4 (30:24):
We want to thank you as always for joining the
show and Powers chief investment strategist Smart and Naughton.
Speaker 3 (30:29):
Great to catch up. Happy weekend.
Speaker 4 (30:31):
Let's return to the world of crypto and prices ahead
of the White House Summit on digital assets.
Speaker 3 (30:36):
We're currently off by.
Speaker 4 (30:37):
Two point six percent on the day for bitcoin. There's
a little bit of sort of buy the room of
sell the news when it comes to a bitcoin reserve.
Perhaps many wondering whether potentially, instead of just holding on
to US assets and not selling them, it could have
been more buying and that doesn't seem to be the
case for now at least.
Speaker 3 (30:53):
Let's stick into.
Speaker 4 (30:54):
All of this what we can anticipate more broadly across
the industry, and we're please we welcome Lizziang, head of
Growth at a ZY and Many A Crypto Leader Thought
Leader CEO is going to the White House today to
talk about what regulations could look like in the future,
but also a Pine on the latest executive order, what
did you make of it?
Speaker 11 (31:13):
So I think it's important to consider the political zeitgeist
of the moment.
Speaker 3 (31:17):
Crypto has come a.
Speaker 11 (31:19):
Really long way, and over the last fifteen years there's
been growing demand both for crypto as a digital asset
and also as a technology. So it's no longer a
question of is crypto something legitimate or is it something real.
Crypto is definitively here to stay, and with today's White
House summit, it shows that we have a voice and
(31:39):
a seat at the table, so we're expecting big things
to come from the summit.
Speaker 4 (31:44):
Was the Bitcoin Reserve and the stoppoial of other alternative
assets in the digital space a.
Speaker 3 (31:50):
Big enough deal for you today?
Speaker 11 (31:52):
So there was a lot of commentary around the Strategic
Bitcoin Reserve, and I think what the White House has
been able to do is come up with an equitable solution.
So the way I see it personally, we already have
this bitcoin, but there were no policies in place to
steward it and there was no accountability within government. David
Sach's earlier mentioned that there was a loss of seventeen
(32:13):
billion dollars by not having policies on when to sell bitcoin.
So if we already have this bitcoin from criminal and
civil asset forfeitures, I think it's important that we have
a framework in place to manage this bitcoin for the
American people.
Speaker 2 (32:27):
Liz, what do you want to see coming out of
this crypto summit that will give the market some of
that clarity that we're looking for.
Speaker 11 (32:35):
I think what the United States lacks today is a
clear framework around digital assets. So in this sense, we
lag a lot of different regions, mainly the European Union.
So what I'm hoping for personally is I hope to
see us take steps to lay ground work to have
regulatory clarity in the United States. And the reason why
(32:57):
this is important is because it really that's the stage
for American crypto companies to flourish, and this brings jobs
that attracks entrepreneurship, attracts investment, and it ensures America's dominance
on the global stage in technology.
Speaker 2 (33:14):
One of the things that David Sax really emphasize is
that taxpayer dollars will not be used to bolster this
reserve and stockpile. How can the crypto community really gain
if the government is not buying crypto?
Speaker 11 (33:28):
So I think that even taking steps to establish a
strategic Bitcoin reserve has already been a huge step for
the industry. As for the specific details around its implementation,
I think we'll have to see what comes of the
working group and what comes from the Cryptosummit, But I
am very optimistic on what this means for the crypto industry.
Speaker 4 (33:51):
So what next? We've got the reserve that was a
promise made and promise kept, as David Saxon say, an
indeed just a stop pole, but now will clarity is
needed ultimately still about what is a digital asset, the
way in which it's viewed as regulators and indeed stable
coin future, what do you want to hear out of
today for future regulation?
Speaker 11 (34:10):
So I think something that's interesting to consider with crypto
is that a lot of the mainstream discussion centers around
crypto as a digital asset with the financial use case,
but it's important to remember that crypto is also an
underlying technology upon which applications can be built, which span
a variety of different sectors, ranging from identity solutions to
(34:31):
life sciences, to media, entertainment and everything in between. So
what I hope is for this to really lay the
groundwork for crypto to flourish in the United States.
Speaker 4 (34:42):
Do you think that founders are changing their mind about
building in the United States.
Speaker 6 (34:48):
Oh?
Speaker 11 (34:49):
Absolutely, I personally know of entrepreneurs that have left the
United States due to regulatory uncertainty, and I know.
Speaker 3 (34:56):
That those of us who have chosen to.
Speaker 11 (34:58):
Stay in the United States are feeling quite validated in
that decision.
Speaker 4 (35:05):
He said, Thanks Liz Young, thank you for growth at Azuki.
Speaker 3 (35:09):
We appreciate it for joining us.
Speaker 4 (35:10):
Quick check on some breaking news, this one regarding in
video that we just told you that the NaSTA one
hundred was in correction. Territory now in video has been
shed one trillion dollars in market value from its record high.
Speaker 3 (35:20):
Remember it was as high as more.
Speaker 4 (35:21):
Than three trillion dollars and it has come down significantly
from that market capitalization. We're off one point five percent
on the day on Invidia.
Speaker 2 (35:38):
Shares of HPE are plunging today after the company said
profits in the coming year would be hurt by tariffs,
week margins on server sales and execution issues. HPE also
saying it will look to eliminate three thousand jobs. Antonio Nairy,
HPE CEO joins us now for more Antonio. I know
it's a tough day, but give us a little bit
(36:00):
of clarity in terms of what you're seeing as the
turnaround plan here.
Speaker 12 (36:05):
Yes, good morning, Thanks for having me. Today obviously is
a disappointed day for me and for us as a company.
We had a solid quarter. We delivered in our commitments.
We grow our revenue double digits, up seventeen percent. We
had double digit growth in our bookings. We disappointed on
one specific metric, which was the server operative margins, and
(36:29):
that server operative margin was impacted by three specific issues.
Two in the traditional server business call of the X
eighty six. One was a very aggressive market, meaning a
high discounting, and second was a specific issue with the
evaluation of our inventory which caused us not to have
the exact right cost in that pricing in the end
(36:52):
of the quarter.
Speaker 6 (36:53):
And those issues have been already fixed and we have
taken very aggressive action.
Speaker 12 (36:58):
On the E side, we have a higher than normal
inventory related to the GPU transition from the copper of
h one hundreds and two hundreds Intro Blackwell, and in
the quarter we booked one point six billion dollars of
new AI system orders, which was doubled the.
Speaker 6 (37:17):
Orders that we had in Q four, but seventy percent.
Speaker 12 (37:21):
Of that is on the blackwell side, so the working
capital aspect that I had a negative impact on our
operating margins.
Speaker 8 (37:29):
For the servers.
Speaker 6 (37:29):
The rest of the business is very, very strong.
Speaker 12 (37:33):
And inclusive of the networking business, which had again another
recovery on sequential revenue double digit year over the year
revenue growth our hybrid cloud was up eleven percent year
every year, and we had a very strong performance in
our storage bookings. So it was all in the server margin.
But I have to tell you because of the demand
(37:53):
we selved, it reinforced our strategies, right, we just need
to execute better than a couple of things and return
to the normal operating profit, which we are committed to
do in the second half. And then what we guided
was inclusive of that and the net impact of tariffs,
because now it's.
Speaker 3 (38:11):
Available on tariff.
Speaker 4 (38:14):
Antonio, how much of a pain to the bottom line
and tarif's going to be do you have a clear
guidance of number, Yes.
Speaker 6 (38:22):
We did, Caroline.
Speaker 12 (38:23):
We guided that it would be seven pennies net of
the mitigation impacts that we have now put in place
and will continue to execute throughout FIS career twenty twenty five.
Speaker 3 (38:35):
The worst case.
Speaker 4 (38:36):
Scenario do you build in there, though, Antonio, because at
the moment, every day we get a different tariff headline.
Speaker 12 (38:42):
Well, we decided to go all in based on the
twenty five percent tariff in Mexico, the twenty five percent
tartfs in Canada, which we don't produce in Canada today,
and that incremental ten percent meaning the twenty percent on China.
So we factor all that in and obviously we have
mitigation strategy from a global supply chain and also the pricing.
Speaker 6 (39:05):
So we decided to put it all in in.
Speaker 12 (39:06):
A this part of time and if some of that
doesn't get done then you know, obviously we'll get the
benefit of it. But right now, because kind of what
happened here is that because we did not guide the
full year waiting for the Juniper deal to close at
the end of Q one, we decided to put a
flag pole out there for an investor.
Speaker 6 (39:24):
So they have it all out there.
Speaker 2 (39:27):
Can you give us an update there, Antonia is where
the Department of Justices case stands.
Speaker 12 (39:34):
Yes, of course, First of all, we are incredibly disappointed
that the DOJ decided to file a lawsuit to try
to block the transaction. Their market analysis completely flawed. Then
nar the market to one slaver or the market called
the wireless lund and they felt there would be only
three vendors to play in the market.
Speaker 6 (39:52):
The reality are at least the eight.
Speaker 12 (39:54):
Vendors and many of them had this exact same share
as Juniper today.
Speaker 6 (40:00):
Addition, you know they don't.
Speaker 12 (40:01):
Consider this is a great rossure for the United States
to strengthen our US national security outside the country. So
now the judge has been selected. The judge has established
July ninth as the trial date and we will defend
this in court. So we expect to prevail because we
have a very compelling case and therefore we expect to
(40:23):
close the transaction in twenty twenty five, obviously delayed from
the regional time.
Speaker 2 (40:29):
We have about thirty seconds left. But are you prepared
for the worst case scenario.
Speaker 12 (40:36):
Meaning the deal doesn't close. We always have multiple options
on the table. Our feederstrem duty, together with my board,
is to drive the best return for our shareholders. We
felt that the Juriper transaction is the best long term
return that will shift the portfolio and create more earnings
(40:57):
and free cash flow. Because we committed at least four
hundred and fifty million dollars of synergies, and so that's
what we're focused. However, they are different ways to create
your holder value and all those options out of the table,
But right now we want to see this.
Speaker 4 (41:11):
Through Antonio Nary HPCO, thanks so much for joining us today.
Speaker 3 (41:16):
Jackie.
Speaker 2 (41:17):
Coming up, we take a look at tech entrepreneur Peter
Teel's many lengths inside the Trump's new administration.
Speaker 4 (41:34):
Tech billionaire Peter tail used his Silicon pelling wealth and
influence to help Donald Trump win his second presidency that
could give him authority within the administration itself. For more,
Bloomberg's Jamie Tarabay joins us now. Actually, the nuance to
this is that he certainly leaned into Trump in the
first before the first administration.
Speaker 3 (41:51):
In the second administration, he.
Speaker 4 (41:52):
Took a step back in terms of committing financially, we'd see,
although he did say he was going to vote for Trump.
And Jade Vance is a close ally. How what does
this network.
Speaker 3 (42:00):
Sprawl within this new administration?
Speaker 13 (42:04):
Well, I mean, as you said, like pretty early on
Peter thal had donated to conservative candidates. He very sort
of famously surprised Silicon Valley. When he voted for and
supported Donald Trump in the twenty sixteen presidential election, he
spoke at the Republican National Convention and gave over a
million dollars to Trump's campaigns, and when Trump won the
first time around, Tiel was a member of the Executive
(42:26):
Transition Committee, and two people who worked for him at
thel Capital went on to have senior positions both at
the National Security Council and also at the White House.
This time around, people who are connected to Peter Theal,
including Vice President J. D.
Speaker 3 (42:40):
Vance, who had.
Speaker 13 (42:40):
Worked at Mithril, a venture capital fund that theel co founded,
have senior positions across the administration. Along with Vance, a
former THEOD associate is number two at the Department of
Health and Human Services. Another is Assistant to the President
for Science and Technology. One is the ambassador to Denmark.
And there are at least two who now hold senior
(43:02):
positions at the Defense Department, which is a place where
he and Elon Musk have several critical contracts with the government.
Speaker 4 (43:13):
Let's just talk a little bit more about the going
forward and whether there's going to be proof in the
pudding as to whether or not he is benefiting personally
because we already know a lot of the companies he
helped co founder and Leeds fund have started to win
some pretty big contracts.
Speaker 3 (43:27):
That's right.
Speaker 13 (43:27):
I mean theal is an investor in several of Musk's companies,
including SpaceX, Neurlink, and Boring. And I'm going to read
off my paper for a moment because once Trump was elected,
Palenteer stock. Palenteer is Theel's company. The stock soared more
than ninety percent in February. And Real Industries, a defense
(43:48):
tech startup which is backed by Field's founder's fund, landed
an expanded role so with the US Army that was
valued at more than twenty billion. And then scale AI,
another founder's funds company, just signed a major deal with
the Defense Department.
Speaker 3 (44:04):
Jamie Tarabey, it's an amazing read.
Speaker 4 (44:06):
It's succinct to the point I urge people to go
and find it on the terminal or online.
Speaker 3 (44:09):
Thanks so much.
Speaker 4 (44:10):
Meanwhile, we want to check it on the markets once again. Look,
we've seen a sell off that's seen the NASAK one
hundred in a correction, territory in videos wiped off one
trillion dollars of its market cap, and now Tesla has
raised all of its election rally. We're down forty eight
percent from its record high, with down another four percent
on the day.
Speaker 3 (44:27):
Plenty to be digesting as we go into this weekend.
Speaker 4 (44:30):
People again not wanting to be long tech or indeed
the market more generally. But that does it for this
edition of Bluebig Technology. You don't want to forget to
check out our podcast. You can find it on the
terminal as well as online on Apple, Spotify, and iHeart
This is Blue Meg Technology.
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