April 24, 2025 • 45 mins
Bloomberg’s Caroline Hyde and Ed Ludlow discuss tech earnings as Alphabet prepares to report after the bell, setting the tone for Magnificent Seven results. Plus, ServiceNow CEO Bill McDermott discusses the company’s outlook amid the threat of tariffs and the government's cost-cutting efforts. And Neo CEO Ali Partovi explains why he still focuses on backing founders with computer science backgrounds, even as AI takes over coding tasks.
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news from the heart of
where innovation, money and power collide in Silicon Valley and beyond.
This is Bloomberg Technology with Caroline Hyde.
Speaker 2 (00:20):
And Ed Ludlow live from New York and San Francisco.
This is Bloomberg Technology coming up. Service now jumps as
earnings results show resilience. Our conversation with the company's.
Speaker 3 (00:42):
CEO, plus Alphabet earnings looking to set the tone for
megacat Tech later today, and Tesla's sales.
Speaker 2 (00:50):
They slump in Europe again as it's overtaken by VW
as Europe's top ev seller. More on that this hour,
But first we check in on the market and it
is hope that we might get some sort of reprieve
from the Federal Reserve. Maybe rates could move as soon
as June. So being hinted at by some key people,
the Cleveland president, for example, we're at one point eight percent.
Big Tech manages to rally again. This is a third
(01:12):
straight day of games on the Nastaq one hundred. We've
added a trillion dollars in market capitalization to that benchmark
in those three days. But I'm looking at bitcoin once again.
The disconnect happening. In terms of stocks, we move in
a different direction. Bitcoin maybe able a profit taking as
we hit ninety three thousand en what have you got?
Speaker 3 (01:28):
Yeah, it's the companies that have reported earnings already. I
think a lot of people were surprised by the strength
of Texas Instruments resilient demand. These are the analog chips
that go into everything, more basic chips, and they seem
to do well. Later in the Albluem magazine, King will
break it down for us. Then there's IBM and Service Now,
two CEOs that you spoke to, and we'll hear from
Service now resilience of demand, winning government contracts. By contrast,
(01:52):
IBM losing government contracts, strong profit numbers, but people are
worried about how they're interpreting the economy going forward. Again,
we'll hear from both those CEOs and your conversations. Then
there's what's to come alphabet parent of Google is after
the bell and at the same time there's the news
flow out of the doj Antitrust Remedies trial pushing higher
(02:13):
at one point six percent. But this evening alphabet sets
the tone, as we just said, for megacaps to come,
and we have a lot of questions about the mag
seven we do.
Speaker 2 (02:21):
We're anticipating what results of twelve percent increase in revenue,
but the tone is going to really dictate big tech earnings.
More broadly, You've got so many risks, said rising taris
anti trustee that you just reference AI uncertainty. Raand Vastellac
has been writing about all of it in the stock
It's already been slammed so far this year. How anxious
are investors?
Speaker 4 (02:41):
Hey, thanks for having me, I say. There is so
much uncertainty surrounding Alphabet, a lot more than even some
of the other MAGS seven names. It's true that Alphabet
has less direct exposure to tear us, but there is
still a lot of concern about the regulatory picture, about
the risk of competition within AI. All this stuff has
been really impacting the stop this year. That has some
(03:03):
people saying that it looks like an attractive bargain here,
But at the same time, the number of sort of
existential concerns. Is there going to be a breakup, Is
it going to lose its really dominant position with its
biggest market with his Internet search. All these questions really
have people wondering, how are they going to fare this quarter.
What are they going to say about the economic backdrop
and outlook? It's really going to be meaningful for I
(03:24):
think the broader big tech.
Speaker 3 (03:25):
Space Boombos, Ryan Fastelica, thank you very much. Let's turn
to IBM. The company beat first quarter expectations with fourteen
point five billion dollars in revenue, boosted by strong software sales,
but shares falling today is the company warned of delayed
contracts due to economic uncertainty. IBM CEO Aarvin Krishna spoke
to Caroline and said, quote, it's a dynamic environment where
(03:47):
things are changing. We want to stay focused on the
business and there's still a lot of business to be had.
People are going to remain invested in tech. Ana rag Rana,
a Bloomberg Intelligence joins us with his analysis, and I
think about big blue right shift to software and consultancy.
There's what they said and then there's weather. What they
said is reflected in the forecast. Does IBM really understand
(04:09):
how the economy is changing right now?
Speaker 5 (04:11):
In a rag.
Speaker 6 (04:13):
See to be very frank, I was surprised that the
stocks down because you know, if you look at it,
their consulting business is extremely susceptible to downgrades or deceleration.
And it was okay, I mean, and they held up guidance,
But it seems to me that maybe going into the quarter,
investors were looking for maybe better commentary around software spending.
(04:35):
Software did decelerate, which is what I mean, at least.
Speaker 7 (04:38):
I was expecting.
Speaker 6 (04:39):
But one of the comments I think that got me
my attention was that the company's guidance does not take
into account any material deterioration in economic climate or spending climate.
And I think that's probably what's causing a little bit
of hiccup because you know, we all know that if
the tariff stocks don't, you know, hold true, and some
(05:01):
of these spendings will will hit really hardbreak that has
an impact on second half growth, not just for IBM,
but the entire services and the software sector.
Speaker 2 (05:10):
Anna Agrana, Bloomberg Intelligence, the deep dive on IBM. We
thank you. Let's go broader with earnings and the tech
market volatility. More broadly, Anna Rathman's with US Seedbiz Investment
Advisory Services, Global Market Structures previously and joining us as
an investment strategist. Anna, I'm really interested as to what
we glean from say Arvin over at IBM, he's saying, look,
(05:31):
he puts a low probability on negative global GDP, and
he's trying to say his business is resilient to any
macro headwinds here more broadly, but he's also telling us, look,
I'm worried about the implication of us the sentiment against
American businesses. How are you hearing that during this earning season.
Speaker 8 (05:51):
Yeah, I mean, I think there is a lot of
uncertainty still. I mean the terriff, the tariff talk is
actually causing a lot more damage in terms of reallylationships.
And I think that's going to be the longer term uncertainty.
Is even if we arrive at some kind of a
tariff situation where everyone agrees, what happens to all of
those negative feelings in terms of being able to trust
(06:12):
each other and to be able to do business together.
I think this is going to be a longer term damage.
Speaker 3 (06:18):
To be honest with you, You're damned if you do
and danned if you don't. If you think about what
Anaag was just saying about IBM, his thesis is that
they are not taking into account a deteriorating economic environment.
But say they had cut guidance. I mean, then what
would you do. I mean, what is it that you
think the investor wants to hear from the company right now?
(06:39):
A cut or adjustment to guidance, or just hold until
you've got more information.
Speaker 8 (06:43):
Yeah, I'm not sure if you can give good guidance
at this point, because you know, the tariffs.
Speaker 9 (06:50):
I mean, that's one thing. It's unilateral.
Speaker 8 (06:52):
We're talking about it at like a thirty thousand foot level.
How it actually trickles down to actual supply chains and
businesses and what choices management teams make in the face
of this headwind.
Speaker 9 (07:05):
That's the unknown.
Speaker 8 (07:07):
So in terms of negative GDP, maybe perhaps there might
be other alliances that are being made.
Speaker 9 (07:14):
We just don't know. But in terms of guidance, it's
almost difficult to know.
Speaker 8 (07:19):
And even if they were to give guidance, I think
we have to take with a huge grain of salt.
So right now, I think investors, I think the best
bet is to just hold and watch.
Speaker 3 (07:31):
One interesting angle out of Texas Instruments earnings was the
idea that they had a good first three months of
the year, but they said that was not necessarily reflective
of people front running tariffs. How do you interpret that
we had a lot of soft data from PC shipments,
for example, smartphone shipments that very much told us in
the world of technology, companies were front running tariffs in
(07:55):
the first three months of the year.
Speaker 8 (07:57):
Yeah, I mean, I think companies that that consumers did that,
and so really we don't have that much information because
Liberation Day wasn't even a month ago, right, So you know,
time this to the FED speek this morning about how
we may have some economic numbers by June to be
able to do something.
Speaker 9 (08:16):
I think that's too early.
Speaker 8 (08:18):
I think there's a lot of distortion in the data
in terms of front running as well as just holding
and waiting and watching with baited breath. I don't think
there's going to be enough data for either investors or
policy makers to be able to do anything definitively.
Speaker 2 (08:34):
So, Anna, if you're an investor and you haven't sold
out during prior to any of this turbulence, do you
just stay the course? Do you remain long the names
that you've been committed to prior to this, and just
hold steady until we come out the other side of
what is a very much self induced period of instability.
Speaker 8 (08:54):
Yeah, I think that the self induced is right. I
think US management can't make any real decisions at the
moment or give guidance. I think it's difficult for investors
to say either sell or buy.
Speaker 9 (09:10):
I think there it is very much a wait and see.
Speaker 8 (09:12):
Now if you're a long term investor, if your short term,
I mean, the choices are to just sit and wait.
You're long term investor, I don't think any of the
propositions that.
Speaker 9 (09:22):
We have around AI, around tech and.
Speaker 8 (09:25):
Tech dominance is changing for you. So tech is still quality.
Speaker 9 (09:30):
They've got very good balance sheets.
Speaker 8 (09:32):
Tech is still utility in terms of the fact that
modern life just doesn't work without tech. So if you're
a long term investor, taking the course is not a
bad idea either.
Speaker 3 (09:41):
Which corner of the technology market is going to come
hurtling out of whatever happens next? Anna give me one
specific area you're most excited about.
Speaker 8 (09:50):
You know, hardware has taken a lot of hit because
of not only terrorists, but because of the strained relationship
with China. But I think hardware is is actually maybe
over sold and maybe are still a good bed. You're
going to need hardware to develop software that's not going away,
So I don't think there's anything bad to say necessarily
(10:13):
for the long term for hardware, I would say maybe
the bad news wouldn't hit hardware as much as it
may software, given that it has sold off so much.
Speaker 3 (10:23):
You're going to need hardware to develop software. As the
line that CEOs all over this planet are telling themselves
every day at the moment, and are AFTEN consulting local
market strategists.
Speaker 7 (10:32):
Thank you very much.
Speaker 2 (10:40):
Service now shares surging best state since twenty thirteen after
earnings showed that the software demand looks pretty resilient despite
the economic threat of tarists and the government's cost cutting efforts.
I spoke with the CEO a little McDermott about it's
pretty rosy outlook.
Speaker 10 (10:54):
Why we're so well positioned for this moment is companies today.
You know, let's take auto industry as an example. You know,
tariffs are on the table and that industry is affected.
So these companies have to think about the marketplace very,
very differently. They have to reorient their supply chains in
real time, and only AI can do that. And you say, well,
(11:16):
why do I have to do that? There's thirty thousand
parts that go into manufacturing a single vehicle. They may
not be able to pass on the ten thousand dollars
increase to the consumer. So companies like Service Now can
get them to tier two and three suppliers, sign up
new suppliers in real time, and position these companies to win.
And this is true in every industry. It could be insurance,
(11:39):
it could be pharma, it could be retail manufacturing. It's
all in the focus of Service Now to help these
companies innovate.
Speaker 2 (11:47):
Let's go from private companies to the public sector. And
I know that you've won a federal contract, but many
had a lot of anxiety about what DOSEE meant for you.
You said, those loves you, but why would those love
you at this moment.
Speaker 10 (12:01):
Well, we're laser focused on modernizing government and elevating how
it serves the American people in the US. And what's
really interesting about DOZE it has formed a standard that
other governments around the world are following. So our public
sector business was up thirty percent year on year. We
(12:21):
had six new public sector logos, including one large US
federal agency. We have eleven federal deals greater than a million,
and two of them were greater than five million. And
this is net new software sales. So This is kind
of a big moment because we are the only software
platform I'm personally aware of that can take out billions
(12:45):
in cost in government around the world, and certainly the
United States is looking at that very closely, and we're excited.
Speaker 2 (12:52):
I mean, have you spoken to Elon about the work
that he's doing. How did you make sure that you
were protected in this moment to be able to bring
the transformation, bring the efficiency.
Speaker 10 (13:02):
Well, you have to remember the agencies are run by
amazing public servants and great leaders, and DOEGE is doing
the right thing. They obviously want to make good for
the American people, so the tax payers get their benefits.
Our platform is front and center and helping them do that.
(13:22):
You know, there's systems like COBOL systems in there and
government entities since nineteen fifty nine, and then the twentieth
century architectures where all of these legacy systems were departmentally organized,
and then there was Maverick buying over decades of different administrations.
We can come in there and consolidate all of these
(13:45):
spends onto the Service Now platform and replace hundreds of systems.
Speaker 7 (13:50):
And who wouldn't want to do that?
Speaker 2 (13:52):
Service Now CEO Bill McDermott. Let's dig in more. Brody
Ford is with us, who's been busy covering all of
these earnings. Brody, we were all surprised by the resilience
versus the public sector. But more broadly, they're just showing
current remaining performance obligations are really strong.
Speaker 11 (14:08):
Exactly so yet meet right, it's been a kind of
funky moment for the economy. Everyone's wondered if you're a
software vendor, you're not impacted by tariffs, what does this
mean for you? And what Service Now has shown us
is maybe not a whole lot. The results were very solid.
I mean, the stock was down like twenty some percent
headed in through the results, and so expectations were quite low,
(14:31):
but they did surpass that and they were able to
show that, at least for the time being, not a
whole lot of impacts from all the economic kind of
chaos and fear we've been seeing out there.
Speaker 5 (14:42):
Right, what he.
Speaker 3 (14:44):
Had to say, Bill McDermott showed confidence. But actually we
probably should focus on the full year guidance because the
full year guidance definitely reflects the political uncertainty and perhaps
in caution Brady.
Speaker 11 (14:59):
Correct, Yeah, factor in the currency it was just the
slightest cut from their previous guidance in that environment. That's
pretty good. They say in their commentary that the guidance
reflected some caution that you know, they even though the
trends were good, that they gave a conservative guidance because
(15:19):
it allowed them to essentially, if things go a little
wrong later in the year, they won't have to cut again,
because yeah, it's still an open question. I mean, if
we head into a true recession or if there's more
aggressive federal cost cuts, Service now will not be immune.
Speaker 2 (15:33):
It was interesting Morgan Stanley's saying that they're de risking
their forward guidance, but Brody, they also highlight how strong
they've been in terms of generative AI. Are we back
to talking about some of the efficiency that we've all
been promised some of the productivity.
Speaker 11 (15:47):
Yes, every company right now is singing the song of
our generative AI product is driving revenue. Not a ton
of them are breaking out super specifically what that means.
Service now has given some numbers, some guides, but I
think still the generative AI uplift most analysts expect that
to come next year, even the year after in a
(16:09):
significant way, but still that's where the big growth bet
is for all these companies. In service Now's case, it
is a higher tier product that you would buy. You
would uplift your license to be able to access the
generative AI tools, and so certainly if you're a salesperson
there that is priority number one right now.
Speaker 3 (16:26):
The most Brady Ford terrific reporting, Thank you very much.
Coming up, Alphabet's cloud unit is expected to show growth
off the back of the company's AI push. We'll discuss
what's expected from the Google parents' earnings. This is what
financial markets look like right now in the context of technology.
So at the index level and as that one hundred,
the vast majority of names are in the green.
Speaker 5 (16:46):
It is the.
Speaker 7 (16:47):
Megacaps that are pushing us higher.
Speaker 3 (16:48):
Though it's interesting that this is kind of broad based
all corners of the tech market. You have software names,
hardware names, social media names as well continuing to push higher.
There is some reverberation of fear fe good. I would
say from those names that we just covered. The earnings
of Bitcoin is put off the gas a little bit
in the moment, ninety hundred US dollars per token back.
(17:10):
You know, we're four days into a week where we
talked about bitcoin every day having some momentum, behaving like gold.
There's a lot more to come in this hour. This
is Bloombog technology.
Speaker 2 (17:33):
Google parent Alphabet. Well, it reports its earnings after the
market close today. Let's get more and what to expect
blooemeg Intelligence. As Man Deep singers here, there is a
whole host of headaches for Alphabet right now, but revenue
is still set to grow by twelve percent.
Speaker 12 (17:45):
Yeah, and search grew double digits last quarter, so I feel.
Speaker 5 (17:49):
The bar is high.
Speaker 12 (17:50):
And then I look at all the things that have
transferred since the last time they're reported earnings. I feel
on the margin it's gonna go down, and especially if
they miss on search. I mean, you know, overall print,
no matter how strong cloud is or YouTube is, it's
not going to matter. So from a profitability perspective, it's
all about search. And I can't imagine, you know, how
(18:12):
they beat on the search revenue given all the stuff
you have heard about t machine and advertisers pulling back
even though they're ad pricing will be better than peers.
But on the margin, I think I don't see them
beating consensus numbers.
Speaker 7 (18:26):
You know what's interesting, Man, deep.
Speaker 3 (18:27):
I've spoken to several CEOs in the supply chain for
Data Center right and they're so confident that cat TO
expenditures will continue to rise on a multi year horizon.
Speaker 7 (18:38):
Google told us a number.
Speaker 3 (18:41):
How important is it or not that Google specifically sticks
with that spending plan for the rest of the magnetic
seven names that are to come.
Speaker 12 (18:51):
Absolutely, I think it's table stakes for someone like Google.
And you know, they don't have a choice but to
invest in their Gemini model because of the thread from
CHATGPT and all the LM search vendors. So right now,
what's insulating them is none of these guys have an
AD platform. They're monetizing the engagement through subscriptions, but there
(19:11):
is no doubt that they are taking volume of the searches,
and so from that perspective, Google will see the impact
in their volume. It's just if you're an online business,
you have no way out but to spend your money
on Google. And even in a recessionary environment, what we
have seen is Google is the most insulated. That will
remain the case when it comes to the ads spend,
at least for now.
Speaker 2 (19:32):
At least for now at the moment, there's a whole
host of anti trust issues, and I'm interested in just
whether you think we'll hear a lot of analyst calls
and requests to know more about that. How they preserve
the business model in the face of it.
Speaker 12 (19:44):
Oh, absolutely, the Chrome one is huge. I mean, I
think what they're going to do is with the Viz
acquisition really deploy AI inside Chrome. So losing Chrome will
be just catastrophic for Google. So from that perspective, that
case is huge. I mean, they may have to do
some remedies. They've already talked about keeping the cookies and
all that, but at the end of the day, Chrome
(20:07):
is how they have the distribution when it comes to
their Gemini two point five model, which is just getting
great review. So in the end, it comes down to
having distribution, and Google has that with Chrome as well
as the Android ecosystem, but Chrome is very important to
cut it across the iOS and all the other devices.
Speaker 3 (20:25):
The Duck Duck Go CEO testified in that case and
he put a fifty billion dollar or more value on Chrome,
which I found fascinating. Same question I've asked you every
year since I've lived in America. Does the stop reflect
the antitrust risk that you continue to talk about and.
Speaker 12 (20:43):
Does I think right now Google is at the lowest
valuation when it comes to all the max seven names
in terms of multiples. So from that perspective, the chatchipt thread,
the regulatory risks are reflected in the valuation. But like
I said, you know, if something happens to that search revenue,
then suddenly all the earning estimates are going to get
(21:04):
revised lower. So from Google's perspective, you know, cloud is
not how they make their money. It's search, and that's
why it's all the more important to keep that intact.
You know, when it comes to the regulatory risks that
are out there.
Speaker 3 (21:16):
I bring it up because the DOJ is seeking divestment
of Chrome, which would be a big thing. Bloomberg Intelligence
is man deep saying terrific analysis.
Speaker 7 (21:24):
Thank you very much.
Speaker 2 (21:32):
Welcome back to Bloomberg Technology and Karine Hide in New.
Speaker 7 (21:34):
York and Amed love Loo in San Francisco.
Speaker 2 (21:37):
Let's got to check on these markets, said, because we
are once again in rebound mode. We're up for a
third straight day on the last like one hundred one
point nine percent. Let's call it a macro picture. We're
getting a few more dubvish tones coming from those fed
presidents today. Could we see a move as the macro
faces headwind of the headwind amid the tariff anxiety. We're
currently at one point eight percent. Is big tech really
(21:57):
leaves the charge? Drillian and I want to shine a
light on chips. You've talked about Texas Instruments so well,
but the socks is having a wonderful day, having its
best day. The overall semiconductor index, well, we're seeing every
single company in the green. Notably we're looking ahead to
earnings of Intel. Is there going to be a pull
forward on Intel numbers in terms of the amount of
(22:17):
PCs that we've wanted to see in terms of inventory
trying to get the head of tariffs, but we're likely
to see overcall revenue on the downside. Texas Instruments really
smashed it though, ed, Yeah.
Speaker 3 (22:26):
Let's stick with Texas Instruments and bring in Bloomberg, see
and King. This is a maker of the more simple chips,
goes in everything from cars to electronics.
Speaker 7 (22:33):
What do we learn from their numbers?
Speaker 13 (22:35):
Yeah, I mean they said everything essentially, everything is awesome.
That's been the message so far for all TIP companies.
Demand is good. It's coming back, just like we said
it was, crosshold markets, cross old geographies.
Speaker 7 (22:45):
Everything is really good.
Speaker 13 (22:47):
But with the giant butt.
Speaker 3 (22:48):
Yeah, the giant but being tariffs and uncertain trade policy.
The other one that caught the eye of night was
sk heinez at a career key memory provider to Nvidia
in the context data center.
Speaker 7 (23:01):
What's the read through to the big picture?
Speaker 13 (23:03):
Yeah, the same thing there. Everything is awesome, right, everything,
the orders are coming in, selling a lot of chips.
Demand fundamentally still strong.
Speaker 7 (23:11):
But tariffs.
Speaker 2 (23:13):
We want to thank you in King on all things chips.
But meanwhile, going back to broader stories, right now, there
are some breaking news that the US is set to
demand that Putin of Russia accepts that Ukraine has a
right to continue its military force. Now we go out
to our Balance of Power co hosts Katie Lines, who
can bring us some of the details here. There is
(23:33):
an important meeting about to occur in Moscow, and this
is the line when it comes to what Russia must
accept in any sort of ceasefar Yeah, Bloomberg.
Speaker 14 (23:42):
According to sources familiar with the matter, Caroline is really
providing some light as to what exactly in terms of
concessions the US wants to ask of Russia after much
reporting over all of the concessions that have been asked
of Ukraine, and that does include a demand that Russia
essentially accepts that Ukraine will have its own military force
and defense industry as part of any deal. And our
(24:03):
understanding is this is going to be presented as an
issue when Steve Whitcoff, the US Special Envoy, meets with
Vladimir Putin next in Moscow, which is expected to happen tomorrow.
Speaker 2 (24:12):
And in additional demand.
Speaker 14 (24:13):
Here as well, according to our reporting, is that Russia
returns control of the Zaparijia Power nuclear power plant in
Ukraine and that the US and theory would take over
the operations of that. Now, it's not clear whether or
not these are concessions that Vladimir Putin will be willing
to accept. Is at least when it comes to the
Ukrainian defense industry, that would mean Putin does not achieve
one of his stated war aims. When he invaded Ukraine,
(24:34):
he said part of the objective was to achieve the
demilitarization of Ukraine. Now, of course, there are other objectives
that based on our reporting on the deal, that had
been presented to Ukraine from the US. That would mean
Vladimir Putin would achieve including a commitment that Ukraine would
never be able to join NATO, as well as recognition
of Crimea, which Russia illegally annexed in twenty fourteen as Russian.
(24:59):
That is something that ukrain and President Vladimir Zelinski has
said he could not accept in any deal because it
would violate the Ukrainian constitution, and of course President Trump
was upset with that statement. He said that it is
a deterrent or an impediment, if you will, to achieving peace,
though he also has expressed ir with Vladimir Putin. Today,
in the aftermath of deadly strikes in Kiev over a
night which killed at least a dozen people and wounded
(25:20):
dozens more, he says that Vladimir.
Speaker 2 (25:23):
Putin must stop.
Speaker 14 (25:24):
He says that the timing is very bad. It was
not necessary. He says he is not happy with the
Russian strikes on Kiev and it'll remain to be seen
if Russia is happy with this architecture of a deal that, again,
based on our reporting, the US is preparing.
Speaker 3 (25:36):
To present Balance and Power. Co host Katie Lynes thank
you very much. Let's get back to technology earnings driving
stocks today IBM underwhelming investors despite posting a sales beat.
CEO of Vin Krishna expecting AI to continue to deve
a telling Caro AI business is six billion dollars. It's
pretty big compared to most others, and we are very
(25:58):
happy people are using it to improve price, customer service,
customer experience for more. David Bunts and the Buns And
Group chief investment officer joins us now is company seven
point one billion dollars of assets under management. You might
have heard Bloombergsy and King a moment ago, also speaking
in the context of the chip names, and in summary,
everything is awesome IBM. The market is sort of not
(26:22):
necessarily sharing the sentiment, but that start there. David, is
everything awesome for technology in corporate America?
Speaker 15 (26:29):
Well, no, not everything is awesome in the sense of
technology is not immune at all from the uncertainty generated
by the tariffs and the questions as to what that
will mean both to the economy but then also to
actual policy and therefore expectations for corporate profits. So that
uncertainty lingers. But I think everything is certainly wonderful. So
(26:52):
far in terms of operating results that have been reported.
We are holders of both Texas Instruments, which is upp
today and IBM, which is down. But IBM has been
an absolutely unbelievable performer, and really the AI side was
good news. The stock would be down more today if
it were not.
Speaker 7 (27:11):
For the AI boost.
Speaker 15 (27:13):
It's the software growth was only nine percent quarter over
quarter when they had done eleven percent to the quarter before,
so some deceleration and what's been a very successful growth
in that hybrid cloud, the former red Hat business that
they acquired. IBM has executed very well and we're big
(27:33):
believers long term and what they're doing.
Speaker 5 (27:35):
That whole story.
Speaker 8 (27:36):
There's a lot of good news.
Speaker 15 (27:37):
In the technology sector, but you just simply can't overpay
for the good news.
Speaker 2 (27:42):
David. What's so interesting is, yes, maybe there's some profit
taking given the run up in IBM and its resiliency
amid the tariff uncertainty. But Avin Christa said, look, demand
signals are still unchanged. Is that what need to remain
the case? How much are we already basically paying for
inventory pulled forward by Texas Instruments and a resiliency consultancy
(28:03):
that might not withstand what could be a real slow
down in the economy.
Speaker 15 (28:07):
Well, there is a very big difference in the answer
to that, from Texas Instruments to IBM, to other companies
that are part of this AI capex story.
Speaker 5 (28:16):
Like let's say in Nvidia.
Speaker 15 (28:18):
Nobody's going to be immune if there's a system wide
demand slowdown and a recession that lasts more than a
few minutes. But there's uncertainty as to what exactly will happen.
I expect that there will be a slowdown, and again
we're not We don't own any company for the sake
of one quarter of results, so I think you could
very well see a slowdown that impacts fundamentals short term.
(28:41):
The question is who has the resilience, who has the
balance sheet? Who is the business model to most execute
through that? I have no doubt Texas Instruments and IBM
belong at the top of those lists. They're not dependent
on a somewhat unsustainable AI capex cycle let alone. Are
they relying on a pe ratio that has been totally
(29:03):
unsustainable to hold the stock price up?
Speaker 7 (29:07):
Okay, who is at the top of that list for
you in the weeks to.
Speaker 15 (29:10):
Come, Well, and video, I should go easy on them
because they've obviously had a tough time through this. But
I think when in Video is one hundred and fifty
dollars trading eighty times forward earnings now down here to
the lower hundreds, it's certainly cheaper, but it's very much
tether do a big story around AI capex and suffers
from law of large numbers. Just when you get to
(29:31):
that three trillion market cap, it's very difficult for people
to realize that a twenty percent gain, which is not
really what their shareholders want. They want something more than that,
but the math of that requires it to add like
almost a trillion dollars of market capitalization. So it's just
very difficult to make money out of those valuations. So
(29:54):
in Video is a good example there. Look, we're givinging
growth investors, and so in Video is not a name
that we'd be looking at anyways. So I think IBM,
if you look at the dividend on cost for people
that were buying IBM a number of years ago, we
entered the position about seven years ago. It's been unbelievable.
And everyone focuses on how well the stock price is done,
(30:15):
and that's great, it makes us look good, but for me,
it's a cash on cash story. Their dividend growth has
been remarkable.
Speaker 2 (30:21):
David, what about buybacks as well? Sorry to jump in there,
but many expecting companies are going to make the most
of that capital hall right now.
Speaker 15 (30:28):
Well, I think that stock buybacks to us are at
best supplemental. Most technology companies don't use it as real
capital return. They use it as executive compensation to the
degree or at least buying back the shares that you
issued because of stock options and executive comp I think
that that's a very good thing as a capital return strategy.
(30:49):
We prefer it the second tier, not first, and IBM
is a good example.
Speaker 7 (30:54):
David bunts into the buns and group. Thank you very much.
Speaker 3 (30:56):
I want to get to a story I broke yesterday
with bloomboas jillion ten Lommus Neuralink is planning to raise
around five hundred million dollars at a pre money valuation
of eight point five billion dollars.
Speaker 7 (31:07):
That's, according to sources.
Speaker 3 (31:08):
The brain implant company in clinical trials for its chip
that allows patients to control computers with their brains, and
a big jump in valuation. It was too now coming up,
Ali Patovi an early investor in names like Facebook and Cusa,
joins us to talk about finding and cultivating tech leaders.
Speaker 7 (31:27):
That's next. This is newbog technology.
Speaker 3 (31:43):
Ali Partovi, an early investor in Facebook, Airbnb, and drop Box,
has announced a new three hundred and twenty million dollar
fund from his company Neo to back early tech talent
through a scholars program for college students, an accelerator which
would compete with the likes of y Combinator. AI joins us. Now,
welcome to the show. Welcome to the studio. That's the debate, right,
(32:05):
is what you do venture capital with an accelerator offering?
Speaker 7 (32:09):
Or are you an accelerator?
Speaker 16 (32:11):
I define us as a mentorship community. I'm so excited
to be here, Ed and Caroline. We've just raised three
hundred and twenty million dollars. But what I'm most excited
about is that we discover superstars earlier.
Speaker 5 (32:24):
Than anybody else.
Speaker 16 (32:25):
I started this company eight years ago with the vision
that you can identify future billionaires when they're still in college,
right and mentor them and help them accomplish their potential.
And it's just amazing to see what Neo Scholars have
gone on to do. Last year, all of open Aiy's
new grad hires were neo scholars, and some of them
(32:48):
go on to found you know, companies like Cognition and
Cursor that are worth billions and that we back.
Speaker 2 (32:54):
Yeah. I mean, let's look at the case study of
any sphere which makes Cursor such a hot product. You
found Michael before anyone else. You were the first check
in the fact that you've got such prior experience and wins.
Is there a method? Is there something that you see
in each founder?
Speaker 5 (33:13):
There is?
Speaker 16 (33:14):
And honestly, when I started, I had a little bit
of insecurity of like, is it possible to build a machine,
build an institution that systematically identifies future you know, future
tech leaders when they're still sophomores in college and is
it or you know, do I just have anc or
can you do it systematically? And I feel pretty confident
(33:35):
we've not proven that you can do it institutionally. Michael
is a great example.
Speaker 5 (33:41):
You know.
Speaker 16 (33:42):
I met him when he was a rising sophomore at
MIT and we helped mentor him not just towards becoming
a founder, but helped him get his first startup internship.
His co founder Oman, who was also an MIT student,
We helped him get his first startup internship, and when
they were starting a startup, we mentor with them regularly
(34:02):
for almost a year before they raised funding.
Speaker 5 (34:05):
And they're not the only case.
Speaker 16 (34:08):
You know, I just mentioned Cognition co founder Walden Yan
was a NEO scholar. That's a billion dollar company.
Speaker 3 (34:14):
So here's the thing, right, all of these people and
their story is just at the core of Silicon Valley law.
Speaker 7 (34:20):
Right, they are talented.
Speaker 3 (34:22):
Where we are today is a discussion around how you
do not need to be a computer scientist. You don't
even need to learn to code anymore. What is the
talent that you actually need to identify? Is it like
a business acumen more than anything.
Speaker 5 (34:36):
It's a really interesting question ed.
Speaker 16 (34:37):
And it's funny because I remember when I was starting Neo,
one of the top vcs in Silicon Valley said to me, Hm,
you're focusing on computer science. Is that really necessary?
Speaker 5 (34:47):
Is that right? Maybe that doesn't make sense?
Speaker 16 (34:50):
And I was like, you know what, I'm focusing on
computer science and the names I just mentioned are all
computer science students. I think computer science teaches you how
to You're probably correct that you may not need to.
Speaker 5 (35:03):
Know how to code.
Speaker 16 (35:04):
But your question, I would say, would you want people
to know how to write because writing can also be
done by AI, you know, but writing teaches you how
to think, you know. Yeah, And computer science. I still
we focus on computer science students because I think it
does give them business acumen and just gives them strategic
(35:26):
thinking abilities.
Speaker 2 (35:26):
It's why you founded code dot org with your brother
all those years ago. Well, yeah, I'm going to get
personal for a minute, Ali, because you're an immigrant yourself
and your family fled the Uranian regime years ago. We're
at a period where immigrants perhaps don't feel quite as
accepted in the United States right now. Does that impact
some of the founders that you're going to find?
Speaker 16 (35:47):
Honestly, I think there's an emerging question, and I'm still
trying to figure out, you know, both how I feel
and where we're going to end up. I still believe
today the United States is the best haven for smart
people who want to build something out of their careers
and the and even immigrants. And you know, by the way,
(36:07):
I was not only an immigrant. I was deported when
I was very young and managed to come back.
Speaker 5 (36:12):
So I definitely understand the fear.
Speaker 16 (36:15):
And there's some really terrible things about the US immigration system.
Speaker 5 (36:18):
But I still think that in terms of the.
Speaker 16 (36:20):
Opportunity the US offers, it's better than any any other
place on Earth, and I'd like to think that our
immigration system will eventually get to where it makes more
sense as well.
Speaker 3 (36:32):
Ali was short in time, but I want to just
end by asking you what is the distinction or advantage
you have against the Y Combinator or against what Jason
Calacanis is doing for example.
Speaker 16 (36:43):
You know, I'd say there's a lot of incredible legacy
programs from the past decades that inspired us and on
whose shoulders we've built whose focus has been backing first
time founders or identifying college students and you know, convincing them,
you know, to start companies. And we today are the
(37:05):
best of these programs. We discover superstars earlier than anybody else.
And you know, if you look at the top AI,
Company's cursor right now is basically the top of that list.
And it was started by somebody who was a NEO
scholar when he was a college student, and we were
their first investor.
Speaker 3 (37:23):
Ali Potsov, CEO of Neo, thank you for joining us,
really appreciate your time.
Speaker 7 (37:27):
Now.
Speaker 3 (37:28):
Some news out of China, Chinese ev maker, Neo is
preparing to launch lower price models in Europe as it
expands beyond Asia.
Speaker 7 (37:34):
Yesterday, CEO William.
Speaker 3 (37:36):
Lee spoke with Bloomberg about recent changes Neo's expansion strategy.
Speaker 17 (37:41):
Well in the next three years, our focus will undoubtedly
remain on the Chinese market, as China is the world's
largest and fastest growing markets for smart electric vehicles, which
is also the most competitive. As a company founded in China,
we must secure a sufficient market share in our home
markets and achieve sustainable operations. This year, we have launched
(38:06):
nine new products. Our chips, for example, can increase our
gross margin by four to five percent. Additionally, we are
making significant efforts in managing sales expenses and enhancing the
efficiency of R and D costs. Therefore, we are very
confident in achieving profitability in the fourth quarter of this year.
Speaker 18 (38:27):
You're seeing that, so I know your new brand, Firefly,
You're going to be concentrated on Singapore and other markets
including Europe UK.
Speaker 17 (38:35):
How are you.
Speaker 18 (38:35):
Going to change the model there? Because you did go
into five fairly expensive, largely Nordic countries in Europe and
you said you underestimated the cost structures there.
Speaker 7 (38:46):
So how are you going to.
Speaker 18 (38:47):
Change that cost structure at a time when there are
tariffs as well.
Speaker 5 (38:52):
So.
Speaker 17 (38:54):
The tariffs will indeed impact our overall business plan. However,
on the other hand, our new model Firefly is designed
specifically for small car users. From a product perspective, it's
very suitable for markets including Europe. The global market for
small cars is approximately twenty million units. We will change
(39:15):
our ways of cooperation. In the past few years, we
have operated directly in five European countries. However, we will
now collaborate more with local partners. We will have one
partner in each country for long term cooperation, leveraging their
capabilities to expand our presence.
Speaker 18 (39:34):
How are you going to stand out in the domestic market?
You're doing the battery swapping technology with the Firefly. Are
you in active discussions with partners?
Speaker 2 (39:42):
I know you have talks with coatl.
Speaker 18 (39:45):
But others who are going to be those who helped
solder the immense cost of spreading across all the provinces
in China.
Speaker 17 (39:53):
We have invested in three thy two hundred and seventy
five battery swap stations in China for the past few years.
This year we have an even more ambitious plan. We
aim to build battery swap stations in every county across
the twenty seven provincial level administrative regions in China. That
means adding at least one thousand more battery swap stations
(40:15):
this year. This will certainly be a significant capital expenditure FUS.
We changed our approach this year by working with local
partners in China which will handle the construction of those stations.
We have built partnership with more than a dozen companies.
We will then rent the battery swap stations from them,
which can help reduce our capital expenditure.
Speaker 3 (40:38):
That was NEO CEO William Lee. European car sales rebounded
in March, with electric vehicle deliveries in particular surging twenty
four percent in the region, but that did not extend
to Tesla, which saw new registrations full twenty eight percent
in Europe last month. I want to bring in Kristen Whole,
head of Near Impact Capital that holds some Tesla's share.
(41:00):
You sold out of client funds two years ago, but
you retain Tesla shares for the purposes of voting and
vocalizing your thoughts your.
Speaker 7 (41:10):
Thesis on the stock. You are not bullish here.
Speaker 19 (41:12):
No, we're not. No, And it's interesting because we have
seen shares drop thirty three percent so far this year,
and yet there's a rally now even though we're seeing
I believe that they are short on earnings thirty four percent.
Speaker 2 (41:28):
Let's just disentangle some of the pushes and pulls Hill Kristen,
because many would say, oh, it's been production holts, or
it's been a stale lineup, But how much are you
measuring what seems to be a brand damage story that's
particularly happened in Europe.
Speaker 19 (41:43):
Well, thank you, Caroline, and we have to look at
everything here with this company because it's quite exceptional. There's
a dream of automobiles, and yet we're seeing twenty percent
drop in sales on the automobiles at Tesla. And what
isn't coming up in the earnings reports that is important
into investors is what is happening both to the brand
(42:04):
the damage there. We've seen sales dropping in their major
markets in both California and Europe, and with the alignment
of the CEO with the current administration, that doesn't vode
well for brand moving forward.
Speaker 7 (42:16):
We're also oh, no, I just want to jump into
this point.
Speaker 5 (42:19):
You know.
Speaker 7 (42:19):
I'll also be honest with the audience.
Speaker 3 (42:21):
I don't hold any Tesla shares nor any shares of
any company, but I do drive a Tesla. I have
a powerwell home. The technology is fantastic. But many would
say we welcome Elon Musk being a participant in the
government and Doge. What's your reaction to him pledging to
now come back to Tesla and dial back on the
time at Doge. Does that give you some more confidence?
Speaker 5 (42:44):
No?
Speaker 19 (42:45):
No, not in this case where he's there talking about Doge,
which is specifically about efficiencies, we're not seeing him practice
that in his own company. And so what we're talking
about here with efficiencies are human capital management. And we've
seen so many, particularly top executives in charge of both
engineering and safety leave the company, and they're also doing
(43:06):
some pretty significant layoffs. We want to see really strong
human capital management to be able to move this company forward.
Speaker 2 (43:14):
Exactly what because thus far you have been since twenty
nineteen talking about human capital management needs to change, but
many of us is just ultimately haven't cad Kristen, and
the stock has continued to outperform give a take the
last six months.
Speaker 19 (43:30):
That's right, Caroline, So We have been talking to Tesla
and engaging since twenty nineteen about some of the significant
issues for racial discrimination, and we're talking about really top
innovation being able to attract and retain top talent, and
that's an issue moving forward at Teslaine. I think we're
seeing that in both the ability to innovate. They don't
(43:50):
have their next lower price automobile out yet despite promises
for years at this point, so we are quite concerned.
Speaker 2 (43:58):
We're pleased to say.
Speaker 19 (43:59):
That NIA has had a significant win and the board
has committed to substantially what we asked for as far
as oversight for human capital management and DEI programs at Tesla.
Speaker 2 (44:10):
To be fair, they do remain committed to that rollout
of a more affordable vehicle by the first half of
this year and Indy. We haven't reported any more recent
headcount losses for the business. But Kristin Hull, it's always
a joy to have you on the show. Thank you,
Chief investment officer for Near Impact Capital. Now that does
it for this edition of Bloomberg Technology Ed Boy, It's
been a busy one and there's more to go.
Speaker 3 (44:31):
Yeah, I think let's go back to some of the
top names we've been thinking about throughout the show. Then
as that one hundred is pushing higher and it's all
corners of tech, right other than IBM. So IBM had
like strong profit in sales and investors are going like, yeah,
it just wasn't enough for us. There's some concern about
the economy. But the big one after the Bell Carro
is Alphabet, the parent of Google.
Speaker 2 (44:51):
Can they deliver that twelve percent increase in revenue? Don't
forget to check out our podcast too. You can find
it on the terminal as well as online on Apples, Spotify,
and I Hunt. This is technology.
Bloomberg Audio Studios, podcasts, radio news from the heart of
where innovation, money and power collide in Silicon Valley and beyond.
This is Bloomberg Technology with Caroline Hyde.
Speaker 2 (00:20):
And Ed Ludlow live from New York and San Francisco.
This is Bloomberg Technology coming up. Service now jumps as
earnings results show resilience. Our conversation with the company's.
Speaker 3 (00:42):
CEO, plus Alphabet earnings looking to set the tone for
megacat Tech later today, and Tesla's sales.
Speaker 2 (00:50):
They slump in Europe again as it's overtaken by VW
as Europe's top ev seller. More on that this hour,
But first we check in on the market and it
is hope that we might get some sort of reprieve
from the Federal Reserve. Maybe rates could move as soon
as June. So being hinted at by some key people,
the Cleveland president, for example, we're at one point eight percent.
Big Tech manages to rally again. This is a third
(01:12):
straight day of games on the Nastaq one hundred. We've
added a trillion dollars in market capitalization to that benchmark
in those three days. But I'm looking at bitcoin once again.
The disconnect happening. In terms of stocks, we move in
a different direction. Bitcoin maybe able a profit taking as
we hit ninety three thousand en what have you got?
Speaker 3 (01:28):
Yeah, it's the companies that have reported earnings already. I
think a lot of people were surprised by the strength
of Texas Instruments resilient demand. These are the analog chips
that go into everything, more basic chips, and they seem
to do well. Later in the Albluem magazine, King will
break it down for us. Then there's IBM and Service Now,
two CEOs that you spoke to, and we'll hear from
Service now resilience of demand, winning government contracts. By contrast,
(01:52):
IBM losing government contracts, strong profit numbers, but people are
worried about how they're interpreting the economy going forward. Again,
we'll hear from both those CEOs and your conversations. Then
there's what's to come alphabet parent of Google is after
the bell and at the same time there's the news
flow out of the doj Antitrust Remedies trial pushing higher
(02:13):
at one point six percent. But this evening alphabet sets
the tone, as we just said, for megacaps to come,
and we have a lot of questions about the mag
seven we do.
Speaker 2 (02:21):
We're anticipating what results of twelve percent increase in revenue,
but the tone is going to really dictate big tech earnings.
More broadly, You've got so many risks, said rising taris
anti trustee that you just reference AI uncertainty. Raand Vastellac
has been writing about all of it in the stock
It's already been slammed so far this year. How anxious
are investors?
Speaker 4 (02:41):
Hey, thanks for having me, I say. There is so
much uncertainty surrounding Alphabet, a lot more than even some
of the other MAGS seven names. It's true that Alphabet
has less direct exposure to tear us, but there is
still a lot of concern about the regulatory picture, about
the risk of competition within AI. All this stuff has
been really impacting the stop this year. That has some
(03:03):
people saying that it looks like an attractive bargain here,
But at the same time, the number of sort of
existential concerns. Is there going to be a breakup, Is
it going to lose its really dominant position with its
biggest market with his Internet search. All these questions really
have people wondering, how are they going to fare this quarter.
What are they going to say about the economic backdrop
and outlook? It's really going to be meaningful for I
(03:24):
think the broader big tech.
Speaker 3 (03:25):
Space Boombos, Ryan Fastelica, thank you very much. Let's turn
to IBM. The company beat first quarter expectations with fourteen
point five billion dollars in revenue, boosted by strong software sales,
but shares falling today is the company warned of delayed
contracts due to economic uncertainty. IBM CEO Aarvin Krishna spoke
to Caroline and said, quote, it's a dynamic environment where
(03:47):
things are changing. We want to stay focused on the
business and there's still a lot of business to be had.
People are going to remain invested in tech. Ana rag Rana,
a Bloomberg Intelligence joins us with his analysis, and I
think about big blue right shift to software and consultancy.
There's what they said and then there's weather. What they
said is reflected in the forecast. Does IBM really understand
(04:09):
how the economy is changing right now?
Speaker 5 (04:11):
In a rag.
Speaker 6 (04:13):
See to be very frank, I was surprised that the
stocks down because you know, if you look at it,
their consulting business is extremely susceptible to downgrades or deceleration.
And it was okay, I mean, and they held up guidance,
But it seems to me that maybe going into the quarter,
investors were looking for maybe better commentary around software spending.
(04:35):
Software did decelerate, which is what I mean, at least.
Speaker 7 (04:38):
I was expecting.
Speaker 6 (04:39):
But one of the comments I think that got me
my attention was that the company's guidance does not take
into account any material deterioration in economic climate or spending climate.
And I think that's probably what's causing a little bit
of hiccup because you know, we all know that if
the tariff stocks don't, you know, hold true, and some
(05:01):
of these spendings will will hit really hardbreak that has
an impact on second half growth, not just for IBM,
but the entire services and the software sector.
Speaker 2 (05:10):
Anna Agrana, Bloomberg Intelligence, the deep dive on IBM. We
thank you. Let's go broader with earnings and the tech
market volatility. More broadly, Anna Rathman's with US Seedbiz Investment
Advisory Services, Global Market Structures previously and joining us as
an investment strategist. Anna, I'm really interested as to what
we glean from say Arvin over at IBM, he's saying, look,
(05:31):
he puts a low probability on negative global GDP, and
he's trying to say his business is resilient to any
macro headwinds here more broadly, but he's also telling us, look,
I'm worried about the implication of us the sentiment against
American businesses. How are you hearing that during this earning season.
Speaker 8 (05:51):
Yeah, I mean, I think there is a lot of
uncertainty still. I mean the terriff, the tariff talk is
actually causing a lot more damage in terms of reallylationships.
And I think that's going to be the longer term uncertainty.
Is even if we arrive at some kind of a
tariff situation where everyone agrees, what happens to all of
those negative feelings in terms of being able to trust
(06:12):
each other and to be able to do business together.
I think this is going to be a longer term damage.
Speaker 3 (06:18):
To be honest with you, You're damned if you do
and danned if you don't. If you think about what
Anaag was just saying about IBM, his thesis is that
they are not taking into account a deteriorating economic environment.
But say they had cut guidance. I mean, then what
would you do. I mean, what is it that you
think the investor wants to hear from the company right now?
(06:39):
A cut or adjustment to guidance, or just hold until
you've got more information.
Speaker 8 (06:43):
Yeah, I'm not sure if you can give good guidance
at this point, because you know, the tariffs.
Speaker 9 (06:50):
I mean, that's one thing. It's unilateral.
Speaker 8 (06:52):
We're talking about it at like a thirty thousand foot level.
How it actually trickles down to actual supply chains and
businesses and what choices management teams make in the face
of this headwind.
Speaker 9 (07:05):
That's the unknown.
Speaker 8 (07:07):
So in terms of negative GDP, maybe perhaps there might
be other alliances that are being made.
Speaker 9 (07:14):
We just don't know. But in terms of guidance, it's
almost difficult to know.
Speaker 8 (07:19):
And even if they were to give guidance, I think
we have to take with a huge grain of salt.
So right now, I think investors, I think the best
bet is to just hold and watch.
Speaker 3 (07:31):
One interesting angle out of Texas Instruments earnings was the
idea that they had a good first three months of
the year, but they said that was not necessarily reflective
of people front running tariffs. How do you interpret that
we had a lot of soft data from PC shipments,
for example, smartphone shipments that very much told us in
the world of technology, companies were front running tariffs in
(07:55):
the first three months of the year.
Speaker 8 (07:57):
Yeah, I mean, I think companies that that consumers did that,
and so really we don't have that much information because
Liberation Day wasn't even a month ago, right, So you know,
time this to the FED speek this morning about how
we may have some economic numbers by June to be
able to do something.
Speaker 9 (08:16):
I think that's too early.
Speaker 8 (08:18):
I think there's a lot of distortion in the data
in terms of front running as well as just holding
and waiting and watching with baited breath. I don't think
there's going to be enough data for either investors or
policy makers to be able to do anything definitively.
Speaker 2 (08:34):
So, Anna, if you're an investor and you haven't sold
out during prior to any of this turbulence, do you
just stay the course? Do you remain long the names
that you've been committed to prior to this, and just
hold steady until we come out the other side of
what is a very much self induced period of instability.
Speaker 8 (08:54):
Yeah, I think that the self induced is right. I
think US management can't make any real decisions at the
moment or give guidance. I think it's difficult for investors
to say either sell or buy.
Speaker 9 (09:10):
I think there it is very much a wait and see.
Speaker 8 (09:12):
Now if you're a long term investor, if your short term,
I mean, the choices are to just sit and wait.
You're long term investor, I don't think any of the
propositions that.
Speaker 9 (09:22):
We have around AI, around tech and.
Speaker 8 (09:25):
Tech dominance is changing for you. So tech is still quality.
Speaker 9 (09:30):
They've got very good balance sheets.
Speaker 8 (09:32):
Tech is still utility in terms of the fact that
modern life just doesn't work without tech. So if you're
a long term investor, taking the course is not a
bad idea either.
Speaker 3 (09:41):
Which corner of the technology market is going to come
hurtling out of whatever happens next? Anna give me one
specific area you're most excited about.
Speaker 8 (09:50):
You know, hardware has taken a lot of hit because
of not only terrorists, but because of the strained relationship
with China. But I think hardware is is actually maybe
over sold and maybe are still a good bed. You're
going to need hardware to develop software that's not going away,
So I don't think there's anything bad to say necessarily
(10:13):
for the long term for hardware, I would say maybe
the bad news wouldn't hit hardware as much as it
may software, given that it has sold off so much.
Speaker 3 (10:23):
You're going to need hardware to develop software. As the
line that CEOs all over this planet are telling themselves
every day at the moment, and are AFTEN consulting local
market strategists.
Speaker 7 (10:32):
Thank you very much.
Speaker 2 (10:40):
Service now shares surging best state since twenty thirteen after
earnings showed that the software demand looks pretty resilient despite
the economic threat of tarists and the government's cost cutting efforts.
I spoke with the CEO a little McDermott about it's
pretty rosy outlook.
Speaker 10 (10:54):
Why we're so well positioned for this moment is companies today.
You know, let's take auto industry as an example. You know,
tariffs are on the table and that industry is affected.
So these companies have to think about the marketplace very,
very differently. They have to reorient their supply chains in
real time, and only AI can do that. And you say, well,
(11:16):
why do I have to do that? There's thirty thousand
parts that go into manufacturing a single vehicle. They may
not be able to pass on the ten thousand dollars
increase to the consumer. So companies like Service Now can
get them to tier two and three suppliers, sign up
new suppliers in real time, and position these companies to win.
And this is true in every industry. It could be insurance,
(11:39):
it could be pharma, it could be retail manufacturing. It's
all in the focus of Service Now to help these
companies innovate.
Speaker 2 (11:47):
Let's go from private companies to the public sector. And
I know that you've won a federal contract, but many
had a lot of anxiety about what DOSEE meant for you.
You said, those loves you, but why would those love
you at this moment.
Speaker 10 (12:01):
Well, we're laser focused on modernizing government and elevating how
it serves the American people in the US. And what's
really interesting about DOZE it has formed a standard that
other governments around the world are following. So our public
sector business was up thirty percent year on year. We
(12:21):
had six new public sector logos, including one large US
federal agency. We have eleven federal deals greater than a million,
and two of them were greater than five million. And
this is net new software sales. So This is kind
of a big moment because we are the only software
platform I'm personally aware of that can take out billions
(12:45):
in cost in government around the world, and certainly the
United States is looking at that very closely, and we're excited.
Speaker 2 (12:52):
I mean, have you spoken to Elon about the work
that he's doing. How did you make sure that you
were protected in this moment to be able to bring
the transformation, bring the efficiency.
Speaker 10 (13:02):
Well, you have to remember the agencies are run by
amazing public servants and great leaders, and DOEGE is doing
the right thing. They obviously want to make good for
the American people, so the tax payers get their benefits.
Our platform is front and center and helping them do that.
(13:22):
You know, there's systems like COBOL systems in there and
government entities since nineteen fifty nine, and then the twentieth
century architectures where all of these legacy systems were departmentally organized,
and then there was Maverick buying over decades of different administrations.
We can come in there and consolidate all of these
(13:45):
spends onto the Service Now platform and replace hundreds of systems.
Speaker 7 (13:50):
And who wouldn't want to do that?
Speaker 2 (13:52):
Service Now CEO Bill McDermott. Let's dig in more. Brody
Ford is with us, who's been busy covering all of
these earnings. Brody, we were all surprised by the resilience
versus the public sector. But more broadly, they're just showing
current remaining performance obligations are really strong.
Speaker 11 (14:08):
Exactly so yet meet right, it's been a kind of
funky moment for the economy. Everyone's wondered if you're a
software vendor, you're not impacted by tariffs, what does this
mean for you? And what Service Now has shown us
is maybe not a whole lot. The results were very solid.
I mean, the stock was down like twenty some percent
headed in through the results, and so expectations were quite low,
(14:31):
but they did surpass that and they were able to
show that, at least for the time being, not a
whole lot of impacts from all the economic kind of
chaos and fear we've been seeing out there.
Speaker 5 (14:42):
Right, what he.
Speaker 3 (14:44):
Had to say, Bill McDermott showed confidence. But actually we
probably should focus on the full year guidance because the
full year guidance definitely reflects the political uncertainty and perhaps
in caution Brady.
Speaker 11 (14:59):
Correct, Yeah, factor in the currency it was just the
slightest cut from their previous guidance in that environment. That's
pretty good. They say in their commentary that the guidance
reflected some caution that you know, they even though the
trends were good, that they gave a conservative guidance because
(15:19):
it allowed them to essentially, if things go a little
wrong later in the year, they won't have to cut again,
because yeah, it's still an open question. I mean, if
we head into a true recession or if there's more
aggressive federal cost cuts, Service now will not be immune.
Speaker 2 (15:33):
It was interesting Morgan Stanley's saying that they're de risking
their forward guidance, but Brody, they also highlight how strong
they've been in terms of generative AI. Are we back
to talking about some of the efficiency that we've all
been promised some of the productivity.
Speaker 11 (15:47):
Yes, every company right now is singing the song of
our generative AI product is driving revenue. Not a ton
of them are breaking out super specifically what that means.
Service now has given some numbers, some guides, but I
think still the generative AI uplift most analysts expect that
to come next year, even the year after in a
(16:09):
significant way, but still that's where the big growth bet
is for all these companies. In service Now's case, it
is a higher tier product that you would buy. You
would uplift your license to be able to access the
generative AI tools, and so certainly if you're a salesperson
there that is priority number one right now.
Speaker 3 (16:26):
The most Brady Ford terrific reporting, Thank you very much.
Coming up, Alphabet's cloud unit is expected to show growth
off the back of the company's AI push. We'll discuss
what's expected from the Google parents' earnings. This is what
financial markets look like right now in the context of technology.
So at the index level and as that one hundred,
the vast majority of names are in the green.
Speaker 5 (16:46):
It is the.
Speaker 7 (16:47):
Megacaps that are pushing us higher.
Speaker 3 (16:48):
Though it's interesting that this is kind of broad based
all corners of the tech market. You have software names,
hardware names, social media names as well continuing to push higher.
There is some reverberation of fear fe good. I would
say from those names that we just covered. The earnings
of Bitcoin is put off the gas a little bit
in the moment, ninety hundred US dollars per token back.
(17:10):
You know, we're four days into a week where we
talked about bitcoin every day having some momentum, behaving like gold.
There's a lot more to come in this hour. This
is Bloombog technology.
Speaker 2 (17:33):
Google parent Alphabet. Well, it reports its earnings after the
market close today. Let's get more and what to expect
blooemeg Intelligence. As Man Deep singers here, there is a
whole host of headaches for Alphabet right now, but revenue
is still set to grow by twelve percent.
Speaker 12 (17:45):
Yeah, and search grew double digits last quarter, so I feel.
Speaker 5 (17:49):
The bar is high.
Speaker 12 (17:50):
And then I look at all the things that have
transferred since the last time they're reported earnings. I feel
on the margin it's gonna go down, and especially if
they miss on search. I mean, you know, overall print,
no matter how strong cloud is or YouTube is, it's
not going to matter. So from a profitability perspective, it's
all about search. And I can't imagine, you know, how
(18:12):
they beat on the search revenue given all the stuff
you have heard about t machine and advertisers pulling back
even though they're ad pricing will be better than peers.
But on the margin, I think I don't see them
beating consensus numbers.
Speaker 7 (18:26):
You know what's interesting, Man, deep.
Speaker 3 (18:27):
I've spoken to several CEOs in the supply chain for
Data Center right and they're so confident that cat TO
expenditures will continue to rise on a multi year horizon.
Speaker 7 (18:38):
Google told us a number.
Speaker 3 (18:41):
How important is it or not that Google specifically sticks
with that spending plan for the rest of the magnetic
seven names that are to come.
Speaker 12 (18:51):
Absolutely, I think it's table stakes for someone like Google.
And you know, they don't have a choice but to
invest in their Gemini model because of the thread from
CHATGPT and all the LM search vendors. So right now,
what's insulating them is none of these guys have an
AD platform. They're monetizing the engagement through subscriptions, but there
(19:11):
is no doubt that they are taking volume of the searches,
and so from that perspective, Google will see the impact
in their volume. It's just if you're an online business,
you have no way out but to spend your money
on Google. And even in a recessionary environment, what we
have seen is Google is the most insulated. That will
remain the case when it comes to the ads spend,
at least for now.
Speaker 2 (19:32):
At least for now at the moment, there's a whole
host of anti trust issues, and I'm interested in just
whether you think we'll hear a lot of analyst calls
and requests to know more about that. How they preserve
the business model in the face of it.
Speaker 12 (19:44):
Oh, absolutely, the Chrome one is huge. I mean, I
think what they're going to do is with the Viz
acquisition really deploy AI inside Chrome. So losing Chrome will
be just catastrophic for Google. So from that perspective, that
case is huge. I mean, they may have to do
some remedies. They've already talked about keeping the cookies and
all that, but at the end of the day, Chrome
(20:07):
is how they have the distribution when it comes to
their Gemini two point five model, which is just getting
great review. So in the end, it comes down to
having distribution, and Google has that with Chrome as well
as the Android ecosystem, but Chrome is very important to
cut it across the iOS and all the other devices.
Speaker 3 (20:25):
The Duck Duck Go CEO testified in that case and
he put a fifty billion dollar or more value on Chrome,
which I found fascinating. Same question I've asked you every
year since I've lived in America. Does the stop reflect
the antitrust risk that you continue to talk about and.
Speaker 12 (20:43):
Does I think right now Google is at the lowest
valuation when it comes to all the max seven names
in terms of multiples. So from that perspective, the chatchipt thread,
the regulatory risks are reflected in the valuation. But like
I said, you know, if something happens to that search revenue,
then suddenly all the earning estimates are going to get
(21:04):
revised lower. So from Google's perspective, you know, cloud is
not how they make their money. It's search, and that's
why it's all the more important to keep that intact.
You know, when it comes to the regulatory risks that
are out there.
Speaker 3 (21:16):
I bring it up because the DOJ is seeking divestment
of Chrome, which would be a big thing. Bloomberg Intelligence
is man deep saying terrific analysis.
Speaker 7 (21:24):
Thank you very much.
Speaker 2 (21:32):
Welcome back to Bloomberg Technology and Karine Hide in New.
Speaker 7 (21:34):
York and Amed love Loo in San Francisco.
Speaker 2 (21:37):
Let's got to check on these markets, said, because we
are once again in rebound mode. We're up for a
third straight day on the last like one hundred one
point nine percent. Let's call it a macro picture. We're
getting a few more dubvish tones coming from those fed
presidents today. Could we see a move as the macro
faces headwind of the headwind amid the tariff anxiety. We're
currently at one point eight percent. Is big tech really
(21:57):
leaves the charge? Drillian and I want to shine a
light on chips. You've talked about Texas Instruments so well,
but the socks is having a wonderful day, having its
best day. The overall semiconductor index, well, we're seeing every
single company in the green. Notably we're looking ahead to
earnings of Intel. Is there going to be a pull
forward on Intel numbers in terms of the amount of
(22:17):
PCs that we've wanted to see in terms of inventory
trying to get the head of tariffs, but we're likely
to see overcall revenue on the downside. Texas Instruments really
smashed it though, ed, Yeah.
Speaker 3 (22:26):
Let's stick with Texas Instruments and bring in Bloomberg, see
and King. This is a maker of the more simple chips,
goes in everything from cars to electronics.
Speaker 7 (22:33):
What do we learn from their numbers?
Speaker 13 (22:35):
Yeah, I mean they said everything essentially, everything is awesome.
That's been the message so far for all TIP companies.
Demand is good. It's coming back, just like we said
it was, crosshold markets, cross old geographies.
Speaker 7 (22:45):
Everything is really good.
Speaker 13 (22:47):
But with the giant butt.
Speaker 3 (22:48):
Yeah, the giant but being tariffs and uncertain trade policy.
The other one that caught the eye of night was
sk heinez at a career key memory provider to Nvidia
in the context data center.
Speaker 7 (23:01):
What's the read through to the big picture?
Speaker 13 (23:03):
Yeah, the same thing there. Everything is awesome, right, everything,
the orders are coming in, selling a lot of chips.
Demand fundamentally still strong.
Speaker 7 (23:11):
But tariffs.
Speaker 2 (23:13):
We want to thank you in King on all things chips.
But meanwhile, going back to broader stories, right now, there
are some breaking news that the US is set to
demand that Putin of Russia accepts that Ukraine has a
right to continue its military force. Now we go out
to our Balance of Power co hosts Katie Lines, who
can bring us some of the details here. There is
(23:33):
an important meeting about to occur in Moscow, and this
is the line when it comes to what Russia must
accept in any sort of ceasefar Yeah, Bloomberg.
Speaker 14 (23:42):
According to sources familiar with the matter, Caroline is really
providing some light as to what exactly in terms of
concessions the US wants to ask of Russia after much
reporting over all of the concessions that have been asked
of Ukraine, and that does include a demand that Russia
essentially accepts that Ukraine will have its own military force
and defense industry as part of any deal. And our
(24:03):
understanding is this is going to be presented as an
issue when Steve Whitcoff, the US Special Envoy, meets with
Vladimir Putin next in Moscow, which is expected to happen tomorrow.
Speaker 2 (24:12):
And in additional demand.
Speaker 14 (24:13):
Here as well, according to our reporting, is that Russia
returns control of the Zaparijia Power nuclear power plant in
Ukraine and that the US and theory would take over
the operations of that. Now, it's not clear whether or
not these are concessions that Vladimir Putin will be willing
to accept. Is at least when it comes to the
Ukrainian defense industry, that would mean Putin does not achieve
one of his stated war aims. When he invaded Ukraine,
(24:34):
he said part of the objective was to achieve the
demilitarization of Ukraine. Now, of course, there are other objectives
that based on our reporting on the deal, that had
been presented to Ukraine from the US. That would mean
Vladimir Putin would achieve including a commitment that Ukraine would
never be able to join NATO, as well as recognition
of Crimea, which Russia illegally annexed in twenty fourteen as Russian.
(24:59):
That is something that ukrain and President Vladimir Zelinski has
said he could not accept in any deal because it
would violate the Ukrainian constitution, and of course President Trump
was upset with that statement. He said that it is
a deterrent or an impediment, if you will, to achieving peace,
though he also has expressed ir with Vladimir Putin. Today,
in the aftermath of deadly strikes in Kiev over a
night which killed at least a dozen people and wounded
(25:20):
dozens more, he says that Vladimir.
Speaker 2 (25:23):
Putin must stop.
Speaker 14 (25:24):
He says that the timing is very bad. It was
not necessary. He says he is not happy with the
Russian strikes on Kiev and it'll remain to be seen
if Russia is happy with this architecture of a deal that, again,
based on our reporting, the US is preparing.
Speaker 3 (25:36):
To present Balance and Power. Co host Katie Lynes thank
you very much. Let's get back to technology earnings driving
stocks today IBM underwhelming investors despite posting a sales beat.
CEO of Vin Krishna expecting AI to continue to deve
a telling Caro AI business is six billion dollars. It's
pretty big compared to most others, and we are very
(25:58):
happy people are using it to improve price, customer service,
customer experience for more. David Bunts and the Buns And
Group chief investment officer joins us now is company seven
point one billion dollars of assets under management. You might
have heard Bloombergsy and King a moment ago, also speaking
in the context of the chip names, and in summary,
everything is awesome IBM. The market is sort of not
(26:22):
necessarily sharing the sentiment, but that start there. David, is
everything awesome for technology in corporate America?
Speaker 15 (26:29):
Well, no, not everything is awesome in the sense of
technology is not immune at all from the uncertainty generated
by the tariffs and the questions as to what that
will mean both to the economy but then also to
actual policy and therefore expectations for corporate profits. So that
uncertainty lingers. But I think everything is certainly wonderful. So
(26:52):
far in terms of operating results that have been reported.
We are holders of both Texas Instruments, which is upp
today and IBM, which is down. But IBM has been
an absolutely unbelievable performer, and really the AI side was
good news. The stock would be down more today if
it were not.
Speaker 7 (27:11):
For the AI boost.
Speaker 15 (27:13):
It's the software growth was only nine percent quarter over
quarter when they had done eleven percent to the quarter before,
so some deceleration and what's been a very successful growth
in that hybrid cloud, the former red Hat business that
they acquired. IBM has executed very well and we're big
(27:33):
believers long term and what they're doing.
Speaker 5 (27:35):
That whole story.
Speaker 8 (27:36):
There's a lot of good news.
Speaker 15 (27:37):
In the technology sector, but you just simply can't overpay
for the good news.
Speaker 2 (27:42):
David. What's so interesting is, yes, maybe there's some profit
taking given the run up in IBM and its resiliency
amid the tariff uncertainty. But Avin Christa said, look, demand
signals are still unchanged. Is that what need to remain
the case? How much are we already basically paying for
inventory pulled forward by Texas Instruments and a resiliency consultancy
(28:03):
that might not withstand what could be a real slow
down in the economy.
Speaker 15 (28:07):
Well, there is a very big difference in the answer
to that, from Texas Instruments to IBM, to other companies
that are part of this AI capex story.
Speaker 5 (28:16):
Like let's say in Nvidia.
Speaker 15 (28:18):
Nobody's going to be immune if there's a system wide
demand slowdown and a recession that lasts more than a
few minutes. But there's uncertainty as to what exactly will happen.
I expect that there will be a slowdown, and again
we're not We don't own any company for the sake
of one quarter of results, so I think you could
very well see a slowdown that impacts fundamentals short term.
(28:41):
The question is who has the resilience, who has the
balance sheet? Who is the business model to most execute
through that? I have no doubt Texas Instruments and IBM
belong at the top of those lists. They're not dependent
on a somewhat unsustainable AI capex cycle let alone. Are
they relying on a pe ratio that has been totally
(29:03):
unsustainable to hold the stock price up?
Speaker 7 (29:07):
Okay, who is at the top of that list for
you in the weeks to.
Speaker 15 (29:10):
Come, Well, and video, I should go easy on them
because they've obviously had a tough time through this. But
I think when in Video is one hundred and fifty
dollars trading eighty times forward earnings now down here to
the lower hundreds, it's certainly cheaper, but it's very much
tether do a big story around AI capex and suffers
from law of large numbers. Just when you get to
(29:31):
that three trillion market cap, it's very difficult for people
to realize that a twenty percent gain, which is not
really what their shareholders want. They want something more than that,
but the math of that requires it to add like
almost a trillion dollars of market capitalization. So it's just
very difficult to make money out of those valuations. So
(29:54):
in Video is a good example there. Look, we're givinging
growth investors, and so in Video is not a name
that we'd be looking at anyways. So I think IBM,
if you look at the dividend on cost for people
that were buying IBM a number of years ago, we
entered the position about seven years ago. It's been unbelievable.
And everyone focuses on how well the stock price is done,
(30:15):
and that's great, it makes us look good, but for me,
it's a cash on cash story. Their dividend growth has
been remarkable.
Speaker 2 (30:21):
David, what about buybacks as well? Sorry to jump in there,
but many expecting companies are going to make the most
of that capital hall right now.
Speaker 15 (30:28):
Well, I think that stock buybacks to us are at
best supplemental. Most technology companies don't use it as real
capital return. They use it as executive compensation to the
degree or at least buying back the shares that you
issued because of stock options and executive comp I think
that that's a very good thing as a capital return strategy.
(30:49):
We prefer it the second tier, not first, and IBM
is a good example.
Speaker 7 (30:54):
David bunts into the buns and group. Thank you very much.
Speaker 3 (30:56):
I want to get to a story I broke yesterday
with bloomboas jillion ten Lommus Neuralink is planning to raise
around five hundred million dollars at a pre money valuation
of eight point five billion dollars.
Speaker 7 (31:07):
That's, according to sources.
Speaker 3 (31:08):
The brain implant company in clinical trials for its chip
that allows patients to control computers with their brains, and
a big jump in valuation. It was too now coming up,
Ali Patovi an early investor in names like Facebook and Cusa,
joins us to talk about finding and cultivating tech leaders.
Speaker 7 (31:27):
That's next. This is newbog technology.
Speaker 3 (31:43):
Ali Partovi, an early investor in Facebook, Airbnb, and drop Box,
has announced a new three hundred and twenty million dollar
fund from his company Neo to back early tech talent
through a scholars program for college students, an accelerator which
would compete with the likes of y Combinator. AI joins us. Now,
welcome to the show. Welcome to the studio. That's the debate, right,
(32:05):
is what you do venture capital with an accelerator offering?
Speaker 7 (32:09):
Or are you an accelerator?
Speaker 16 (32:11):
I define us as a mentorship community. I'm so excited
to be here, Ed and Caroline. We've just raised three
hundred and twenty million dollars. But what I'm most excited
about is that we discover superstars earlier.
Speaker 5 (32:24):
Than anybody else.
Speaker 16 (32:25):
I started this company eight years ago with the vision
that you can identify future billionaires when they're still in college,
right and mentor them and help them accomplish their potential.
And it's just amazing to see what Neo Scholars have
gone on to do. Last year, all of open Aiy's
new grad hires were neo scholars, and some of them
(32:48):
go on to found you know, companies like Cognition and
Cursor that are worth billions and that we back.
Speaker 2 (32:54):
Yeah. I mean, let's look at the case study of
any sphere which makes Cursor such a hot product. You
found Michael before anyone else. You were the first check
in the fact that you've got such prior experience and wins.
Is there a method? Is there something that you see
in each founder?
Speaker 5 (33:13):
There is?
Speaker 16 (33:14):
And honestly, when I started, I had a little bit
of insecurity of like, is it possible to build a machine,
build an institution that systematically identifies future you know, future
tech leaders when they're still sophomores in college and is
it or you know, do I just have anc or
can you do it systematically? And I feel pretty confident
(33:35):
we've not proven that you can do it institutionally. Michael
is a great example.
Speaker 5 (33:41):
You know.
Speaker 16 (33:42):
I met him when he was a rising sophomore at
MIT and we helped mentor him not just towards becoming
a founder, but helped him get his first startup internship.
His co founder Oman, who was also an MIT student,
We helped him get his first startup internship, and when
they were starting a startup, we mentor with them regularly
(34:02):
for almost a year before they raised funding.
Speaker 5 (34:05):
And they're not the only case.
Speaker 16 (34:08):
You know, I just mentioned Cognition co founder Walden Yan
was a NEO scholar. That's a billion dollar company.
Speaker 3 (34:14):
So here's the thing, right, all of these people and
their story is just at the core of Silicon Valley law.
Speaker 7 (34:20):
Right, they are talented.
Speaker 3 (34:22):
Where we are today is a discussion around how you
do not need to be a computer scientist. You don't
even need to learn to code anymore. What is the
talent that you actually need to identify? Is it like
a business acumen more than anything.
Speaker 5 (34:36):
It's a really interesting question ed.
Speaker 16 (34:37):
And it's funny because I remember when I was starting Neo,
one of the top vcs in Silicon Valley said to me, Hm,
you're focusing on computer science. Is that really necessary?
Speaker 5 (34:47):
Is that right? Maybe that doesn't make sense?
Speaker 16 (34:50):
And I was like, you know what, I'm focusing on
computer science and the names I just mentioned are all
computer science students. I think computer science teaches you how
to You're probably correct that you may not need to.
Speaker 5 (35:03):
Know how to code.
Speaker 16 (35:04):
But your question, I would say, would you want people
to know how to write because writing can also be
done by AI, you know, but writing teaches you how
to think, you know. Yeah, And computer science. I still
we focus on computer science students because I think it
does give them business acumen and just gives them strategic
(35:26):
thinking abilities.
Speaker 2 (35:26):
It's why you founded code dot org with your brother
all those years ago. Well, yeah, I'm going to get
personal for a minute, Ali, because you're an immigrant yourself
and your family fled the Uranian regime years ago. We're
at a period where immigrants perhaps don't feel quite as
accepted in the United States right now. Does that impact
some of the founders that you're going to find?
Speaker 16 (35:47):
Honestly, I think there's an emerging question, and I'm still
trying to figure out, you know, both how I feel
and where we're going to end up. I still believe
today the United States is the best haven for smart
people who want to build something out of their careers
and the and even immigrants. And you know, by the way,
(36:07):
I was not only an immigrant. I was deported when
I was very young and managed to come back.
Speaker 5 (36:12):
So I definitely understand the fear.
Speaker 16 (36:15):
And there's some really terrible things about the US immigration system.
Speaker 5 (36:18):
But I still think that in terms of the.
Speaker 16 (36:20):
Opportunity the US offers, it's better than any any other
place on Earth, and I'd like to think that our
immigration system will eventually get to where it makes more
sense as well.
Speaker 3 (36:32):
Ali was short in time, but I want to just
end by asking you what is the distinction or advantage
you have against the Y Combinator or against what Jason
Calacanis is doing for example.
Speaker 16 (36:43):
You know, I'd say there's a lot of incredible legacy
programs from the past decades that inspired us and on
whose shoulders we've built whose focus has been backing first
time founders or identifying college students and you know, convincing them,
you know, to start companies. And we today are the
(37:05):
best of these programs. We discover superstars earlier than anybody else.
And you know, if you look at the top AI,
Company's cursor right now is basically the top of that list.
And it was started by somebody who was a NEO
scholar when he was a college student, and we were
their first investor.
Speaker 3 (37:23):
Ali Potsov, CEO of Neo, thank you for joining us,
really appreciate your time.
Speaker 7 (37:27):
Now.
Speaker 3 (37:28):
Some news out of China, Chinese ev maker, Neo is
preparing to launch lower price models in Europe as it
expands beyond Asia.
Speaker 7 (37:34):
Yesterday, CEO William.
Speaker 3 (37:36):
Lee spoke with Bloomberg about recent changes Neo's expansion strategy.
Speaker 17 (37:41):
Well in the next three years, our focus will undoubtedly
remain on the Chinese market, as China is the world's
largest and fastest growing markets for smart electric vehicles, which
is also the most competitive. As a company founded in China,
we must secure a sufficient market share in our home
markets and achieve sustainable operations. This year, we have launched
(38:06):
nine new products. Our chips, for example, can increase our
gross margin by four to five percent. Additionally, we are
making significant efforts in managing sales expenses and enhancing the
efficiency of R and D costs. Therefore, we are very
confident in achieving profitability in the fourth quarter of this year.
Speaker 18 (38:27):
You're seeing that, so I know your new brand, Firefly,
You're going to be concentrated on Singapore and other markets
including Europe UK.
Speaker 17 (38:35):
How are you.
Speaker 18 (38:35):
Going to change the model there? Because you did go
into five fairly expensive, largely Nordic countries in Europe and
you said you underestimated the cost structures there.
Speaker 7 (38:46):
So how are you going to.
Speaker 18 (38:47):
Change that cost structure at a time when there are
tariffs as well.
Speaker 5 (38:52):
So.
Speaker 17 (38:54):
The tariffs will indeed impact our overall business plan. However,
on the other hand, our new model Firefly is designed
specifically for small car users. From a product perspective, it's
very suitable for markets including Europe. The global market for
small cars is approximately twenty million units. We will change
(39:15):
our ways of cooperation. In the past few years, we
have operated directly in five European countries. However, we will
now collaborate more with local partners. We will have one
partner in each country for long term cooperation, leveraging their
capabilities to expand our presence.
Speaker 18 (39:34):
How are you going to stand out in the domestic market?
You're doing the battery swapping technology with the Firefly. Are
you in active discussions with partners?
Speaker 2 (39:42):
I know you have talks with coatl.
Speaker 18 (39:45):
But others who are going to be those who helped
solder the immense cost of spreading across all the provinces
in China.
Speaker 17 (39:53):
We have invested in three thy two hundred and seventy
five battery swap stations in China for the past few years.
This year we have an even more ambitious plan. We
aim to build battery swap stations in every county across
the twenty seven provincial level administrative regions in China. That
means adding at least one thousand more battery swap stations
(40:15):
this year. This will certainly be a significant capital expenditure FUS.
We changed our approach this year by working with local
partners in China which will handle the construction of those stations.
We have built partnership with more than a dozen companies.
We will then rent the battery swap stations from them,
which can help reduce our capital expenditure.
Speaker 3 (40:38):
That was NEO CEO William Lee. European car sales rebounded
in March, with electric vehicle deliveries in particular surging twenty
four percent in the region, but that did not extend
to Tesla, which saw new registrations full twenty eight percent
in Europe last month. I want to bring in Kristen Whole,
head of Near Impact Capital that holds some Tesla's share.
(41:00):
You sold out of client funds two years ago, but
you retain Tesla shares for the purposes of voting and
vocalizing your thoughts your.
Speaker 7 (41:10):
Thesis on the stock. You are not bullish here.
Speaker 19 (41:12):
No, we're not. No, And it's interesting because we have
seen shares drop thirty three percent so far this year,
and yet there's a rally now even though we're seeing
I believe that they are short on earnings thirty four percent.
Speaker 2 (41:28):
Let's just disentangle some of the pushes and pulls Hill Kristen,
because many would say, oh, it's been production holts, or
it's been a stale lineup, But how much are you
measuring what seems to be a brand damage story that's
particularly happened in Europe.
Speaker 19 (41:43):
Well, thank you, Caroline, and we have to look at
everything here with this company because it's quite exceptional. There's
a dream of automobiles, and yet we're seeing twenty percent
drop in sales on the automobiles at Tesla. And what
isn't coming up in the earnings reports that is important
into investors is what is happening both to the brand
(42:04):
the damage there. We've seen sales dropping in their major
markets in both California and Europe, and with the alignment
of the CEO with the current administration, that doesn't vode
well for brand moving forward.
Speaker 7 (42:16):
We're also oh, no, I just want to jump into
this point.
Speaker 5 (42:19):
You know.
Speaker 7 (42:19):
I'll also be honest with the audience.
Speaker 3 (42:21):
I don't hold any Tesla shares nor any shares of
any company, but I do drive a Tesla. I have
a powerwell home. The technology is fantastic. But many would
say we welcome Elon Musk being a participant in the
government and Doge. What's your reaction to him pledging to
now come back to Tesla and dial back on the
time at Doge. Does that give you some more confidence?
Speaker 5 (42:44):
No?
Speaker 19 (42:45):
No, not in this case where he's there talking about Doge,
which is specifically about efficiencies, we're not seeing him practice
that in his own company. And so what we're talking
about here with efficiencies are human capital management. And we've
seen so many, particularly top executives in charge of both
engineering and safety leave the company, and they're also doing
(43:06):
some pretty significant layoffs. We want to see really strong
human capital management to be able to move this company forward.
Speaker 2 (43:14):
Exactly what because thus far you have been since twenty
nineteen talking about human capital management needs to change, but
many of us is just ultimately haven't cad Kristen, and
the stock has continued to outperform give a take the
last six months.
Speaker 19 (43:30):
That's right, Caroline, So We have been talking to Tesla
and engaging since twenty nineteen about some of the significant
issues for racial discrimination, and we're talking about really top
innovation being able to attract and retain top talent, and
that's an issue moving forward at Teslaine. I think we're
seeing that in both the ability to innovate. They don't
(43:50):
have their next lower price automobile out yet despite promises
for years at this point, so we are quite concerned.
Speaker 2 (43:58):
We're pleased to say.
Speaker 19 (43:59):
That NIA has had a significant win and the board
has committed to substantially what we asked for as far
as oversight for human capital management and DEI programs at Tesla.
Speaker 2 (44:10):
To be fair, they do remain committed to that rollout
of a more affordable vehicle by the first half of
this year and Indy. We haven't reported any more recent
headcount losses for the business. But Kristin Hull, it's always
a joy to have you on the show. Thank you,
Chief investment officer for Near Impact Capital. Now that does
it for this edition of Bloomberg Technology Ed Boy, It's
been a busy one and there's more to go.
Speaker 3 (44:31):
Yeah, I think let's go back to some of the
top names we've been thinking about throughout the show. Then
as that one hundred is pushing higher and it's all
corners of tech, right other than IBM. So IBM had
like strong profit in sales and investors are going like, yeah,
it just wasn't enough for us. There's some concern about
the economy. But the big one after the Bell Carro
is Alphabet, the parent of Google.
Speaker 2 (44:51):
Can they deliver that twelve percent increase in revenue? Don't
forget to check out our podcast too. You can find
it on the terminal as well as online on Apples, Spotify,
and I Hunt. This is technology.
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