Speaker 1: From the heart of where innovation, money and power collide
Speaker 1: in Silicon Valley and beyond. This is Bloomberg Technology with
Speaker 1: Caroline Hyde and Ed.
Speaker 2: Lovelow live from New York Home Caroline Hyde.
Speaker 3: And I'm Jackiet Devowls from San Francisco. This is Bloomberg
Speaker 3: Technology coming up.
Speaker 2: China retaliates with its own tariffs on the United States,
Speaker 2: including a probean to Google plus Pallanteer sauce to a
Speaker 2: new recorder's earning show. Untamed growth for its AI software
Speaker 2: and Spotify shares also surged to a record offer its
Speaker 2: first annual profit. And we start there with a markets
Speaker 2: check amid all the record highs in earnings. Let's get
Speaker 2: to it with the NAZAC currently making up for yesterday's
Speaker 2: sell off. Jackie, we're currently up more than a percentage
Speaker 2: point at the moment, and in terms of points contributed,
Speaker 2: it's all about Palenteer. Move on and have a look
Speaker 2: at what the fundamentals and certain businesses are doing to
Speaker 2: this index. Valenteer up twenty six percent, a new record high.
Speaker 2: This as we see untamed organic growth. When it comes
Speaker 2: to AI. They win on commercial, they win on government.
Speaker 2: We'll get to it later in the show. Spotify also
Speaker 2: add a new record up almost ten percent as they
Speaker 2: add to their growing monthly active users, and also the
Speaker 2: first profit ever in terms of an annual profit. They're
Speaker 2: going to continue that out for that up to two
Speaker 2: and a half percent. Look, they're coming with their earnings
Speaker 2: after the bell all lies on thirteen percent increase in revenue.
Speaker 4: Will get to the earnings in a bit.
Speaker 2: But this is also an anti trust investigation story from China.
Speaker 4: This is we see China.
Speaker 2: Retaliate to the tariff potential coming from the United States.
Speaker 2: We anticipate a call between Shujimping and Trunk coming soon.
Speaker 2: But let's delve into the tech implications. Bloembags Mike Shepherd
Speaker 2: is with us in Washington, and look from a search perspective,
Speaker 2: Google's not there in China, but Android.
Speaker 5: Is, Android is, and Caro. You have to think of
Speaker 5: this also in terms of symbolism as well. Shuchimping is
Speaker 5: trying to send a signal to Washington that hey, I
Speaker 5: can retaliate too and try to make it hurt by
Speaker 5: targeting individual companies. So by going after Google with this
Speaker 5: anti trust probe, Look, the search is not really a
Speaker 5: factor in China, where it really hasn't been operating since
Speaker 5: twenty ten, but the company does have some advertising, sales
Speaker 5: and engineering work done there. It does have three offices
Speaker 5: in three different Chinese cities, so it's not a zero factor,
Speaker 5: but it is a signal that other US entities, perhaps
Speaker 5: Apple and perhaps Intel. We saw the Financial Times reporting
Speaker 5: that officials in Beijing were weighing whether to conduct a
Speaker 5: fuller probe of Intel as well. And also, as you
Speaker 5: and I have talked about before, there is the Nvidia
Speaker 5: anti trust probe being conducted by officials in Beijing, and
Speaker 5: this is over that long ago acquisition by Nvidia of Melanoch.
Speaker 5: So they are trying to send a signal with this
Speaker 5: Google anti trust probe as much as anything else.
Speaker 3: Mike, as you mentioned, there's also an Nvidio probe, So
Speaker 3: this isn't the first time that Chi Jimpang is using
Speaker 3: a probe like this to retaliate in the past, have
Speaker 3: you seen it be an effective negotiating tool.
Speaker 4: Well, we're going to.
Speaker 5: Find out now whether it works in real time with
Speaker 5: Donald Trump, because under the Biden administration it was one equation,
Speaker 5: but under Donald Trump it's a very different one and
Speaker 5: he may not be looking at this as such a
Speaker 5: dangerous signal. Even after having met with Jensen Wang last week,
Speaker 5: it may not be as big a concern. Really, what
Speaker 5: we're looking for is the broader negotiation that is going
Speaker 5: to happen in April. This is really just sort of
Speaker 5: the opening round in the conversation between China and the
Speaker 5: US on trade. The President has ordered US President has
Speaker 5: ordered a review of the Phase one trade agreement that
Speaker 5: he forged at the end of his first term, and
Speaker 5: we're going to hear more about that in April. So
Speaker 5: this is just sort of the warm up act to
Speaker 5: a bigger conversation. And remember Donald Trump has talked about
Speaker 5: imposing tariffs of up to sixty percent additional tariffs of
Speaker 5: up to sixty percent on Chinese goods, and that would
Speaker 5: really hurt Beijing, which is focusing on its exports to
Speaker 5: the rest of the world as a way of reviving
Speaker 5: in domestic economy.
Speaker 3: Bloomberg's Mike Shephard, thank you, and as Alpha that faces
Speaker 3: a Chinese probe, the company is set to report results
Speaker 3: today after the closing bell. For what we can expect,
Speaker 3: Bloomberg's Ryan les Stelica joins us Now. Ryan when it
Speaker 3: comes to Google, there's cloud, search and artificial intelligence as
Speaker 3: of late, what's tep of mind for investors going into
Speaker 3: this report?
Speaker 4: Good afternoon.
Speaker 6: I would say that probably the cloud business is probably
Speaker 6: what people are most curious about right now. We did
Speaker 6: get Microsoft results last week. There were sort of a
Speaker 6: mixed bag. They were growing a little bit slower than expected,
Speaker 6: but that's partially due to some supply constraints. So, you know,
Speaker 6: cloud has become increasingly important to alphabet and I think
Speaker 6: people are curious to see what growth looks like there.
Speaker 6: We also got Meta results last week which painted a
Speaker 6: pretty good picture of the market for online advertising, So
Speaker 6: it seems kind of safe to assume that a Google
Speaker 6: search will be at least pretty strong as well.
Speaker 2: Any response to deep seat mentioned, do you think.
Speaker 6: Ron, I'm sure they'll address it. It's a sort of
Speaker 6: an interesting position with respected deep seek. If you know,
Speaker 6: they do find a way to make their own AI
Speaker 6: model more efficient, more cost effective, that's probably going to
Speaker 6: be great for the stock. It's probably going to be,
Speaker 6: you know, something that's cheered on Wall Street. But it
Speaker 6: seems like so far, while it did see a little
Speaker 6: bit of volatility last week when the you know, the
Speaker 6: big sell off happened and impacted everyone in tech. It's
Speaker 6: really come back strongly since then.
Speaker 4: It's trading at a record right now.
Speaker 6: It's been able to brush off a lot of issues
Speaker 6: that you think would take down a stock like this,
Speaker 6: not only the regulatory and antirut trust stuff out of China,
Speaker 6: but also here in the United States.
Speaker 2: I like that you note that shares are at a
Speaker 2: record high round less selica. We thank you. You got MD
Speaker 2: after the bell as well. There's a lot to get
Speaker 2: to from more market perspective. Let's bring in Fiona Scottish,
Speaker 2: a senior analysta City Index Financial Markets.
Speaker 4: Let's just stick with earnings.
Speaker 2: For a moment, because've got record high as a bound
Speaker 2: on the back of certain earnings today, and we look
Speaker 2: towards Alphabet and AMD. What are you looking to in
Speaker 2: terms of generative AI sort being a winning formula for
Speaker 2: these companies or not.
Speaker 7: I'm continue to way I think we have.
Speaker 2: A technical issue there. We're just going to bring her
Speaker 2: volumes up a little bit more for you. So we
Speaker 2: spend just a moment just anticipating what Fiona is going
Speaker 2: to be delving into in terms of generative AI. The
Speaker 2: focus on Alphabet whether or not AMD can steal any
Speaker 2: of the market share from in video in terms of
Speaker 2: its offering to data centers and servers, and Jackie, I
Speaker 2: think we can also be anticipating what all of the
Speaker 2: trade tariffs and geopolitical anxiety is currently having on the markets.
Speaker 2: Let's go back to Fiona, now, I think we fix
Speaker 2: your technical issues, just talk about earnings and fundamentals first.
Speaker 8: Yes, that's right.
Speaker 7: You know, I think AI is still going to be
Speaker 7: very much and it is still very much are focus
Speaker 7: as far as earnings are concerned. You know, we know
Speaker 7: that the investors are still looking to see whether these
Speaker 7: huge investments that we've seen are going to be bringing returns,
Speaker 7: are going to be bringing in new revenue streams and
Speaker 7: stronger revenue streams, and that I think is what's sort
Speaker 7: of helping to keep these stocks at these record levels.
Speaker 7: There is still a lot of optimism surrounding what the AI,
Speaker 7: what AI can do for these stocks, and you know
Speaker 7: the prospect of potentially those costs coming down in the future. Again,
Speaker 7: I think that's a positive as far as users of
Speaker 7: AI can be concerned.
Speaker 3: Fiona, I'm curious if there's a divergence between some of
Speaker 3: the software names and hardware names, especially as we're seeing
Speaker 3: geopolitical tensions play out in the forum of tariffs, that
Speaker 3: could take a bigger hit to chip makers for example.
Speaker 7: Yes, you know, it's a really good point, and we
Speaker 7: have been noticing that, and I think that's something that's
Speaker 7: going to be very much forefront as we get through
Speaker 7: these earnings as well. Is you know, what is the
Speaker 7: outlook as far as some of those chip stocks are concerned.
Speaker 7: What is the prospect of exports and tariffs being placed
Speaker 7: on them, export limitations which could make the outlook for
Speaker 7: those chip socks a little bit more complicated them. Whereas
Speaker 7: the sort of more software firms, I think they have
Speaker 7: the potential to have a little bit more freedom as
Speaker 7: far as their outlook is concerned, and potentially could benefit
Speaker 7: from the outlook even as we see trade tariff's discussions
Speaker 7: in the market.
Speaker 3: One of the things I'm curious about is in this
Speaker 3: new administration, many think that it's going to be pretty
Speaker 3: friendly when it comes to the Federal Trade Commission. What
Speaker 3: do you think that bodes for technology?
Speaker 7: Yeah, you know, if we do have a sense that
Speaker 7: they're sort of reduced regulation, we know that that could
Speaker 7: be really beneficial for technology, and I think it's a
Speaker 7: really interesting idea, especially when we're considering, you know, what
Speaker 7: regulation there might have been with regards to big tech,
Speaker 7: what regulation they could be with regards to this idea
Speaker 7: of AI as well. I think still very much an
Speaker 7: open subject of where regulation may have been, but the
Speaker 7: fact that we could be looking at a future at
Speaker 7: least for the next few years of decreased regulation is
Speaker 7: definitely a positive for many stocks in the tech area,
Speaker 7: but also could be outside of the tech area as well.
Speaker 4: What are the.
Speaker 2: Names fear and that you've been fielding the most cause on.
Speaker 7: Oh, that's a good one, you know. I think obviously
Speaker 7: Navidia and Vidia has been hugely in focus because of
Speaker 7: those levels of volatility that we've had. We've also seen
Speaker 7: Tesla has always been very popular among our clients as well,
Speaker 7: But heading towards this week, Amazon and Alphabet are the
Speaker 7: names that have been up there with our clients. You know,
Speaker 7: we do see this big focus on the Magnificent seven
Speaker 7: and their ability to be able to sort of continue
Speaker 7: impressing the market with their numbers.
Speaker 2: And how do you think the investor base has come
Speaker 2: out in terms of yes, please spend all costs.
Speaker 4: This is a rush, this is a war.
Speaker 2: Or on the other side, hold on do we need
Speaker 2: this sort of level of data center investment right now?
Speaker 4: Where are they falling?
Speaker 2: Is to that sort of ultimate dichotomy we see faced
Speaker 2: in the market.
Speaker 7: Yeah, I think you know that when we did see
Speaker 7: that sort of release last week from deep Seek, that
Speaker 7: did just sort of raise questions of disruption and raise
Speaker 7: those questions over the amount of spending which had been
Speaker 7: lingering anyway. But I think at the moment so far,
Speaker 7: and what we've seen from earning seasons so far, from
Speaker 7: the calls that we've listened to, it does seem to
Speaker 7: be that sense that AKA for now, this still seems
Speaker 7: like an idea that spending in AI, investing in AI
Speaker 7: is still the way to go. There's still plenty of
Speaker 7: opportunity out there. I still think we're very much at
Speaker 7: the cusp of understanding what this AI revolution could mean
Speaker 7: for these stock So I think at the moment we're
Speaker 7: just still on that side. I think what the concern
Speaker 7: would be is actually, when we get a little bit
Speaker 7: further down the line and we're not seeing a return
Speaker 7: on those investments, that's when we're going to start potentially
Speaker 7: to see this unraveling, but up to now that hasn't
Speaker 7: been the case.
Speaker 3: Fear Now I'm curious, but now that you mentioned kind
Speaker 3: of perhaps companies getting a bit more leeway, especially as
Speaker 3: you have President tramp really amping up this idea of
Speaker 3: the EI race national competitiveness. How long do you think
Speaker 3: investors will give companies to see whether those investments are
Speaker 3: actually panning out.
Speaker 7: Yeah, that's a really good question. Yeah, because I think
Speaker 7: this the whole sort of what we've seen over the
Speaker 7: last couple of weeks, the last week particular with this
Speaker 7: deep Seek unveiling is sort of that question of innovation,
Speaker 7: is that question of you know what's next? How far
Speaker 7: can this go? And so you know, investors are curious,
Speaker 7: they are optimistic, but they're not going to have an
Speaker 7: everlasting patients. Obviously we've seen from Matter, I mean, they
Speaker 7: were a good example to use from last week's earnings,
Speaker 7: where we've seen sort of really encouraging outlook and numbers,
Speaker 7: and then obviously we've seen Microsoft wasn't so well received.
Speaker 7: So there is sort of this sense that the investors
Speaker 7: do want to see some optimism into the future. But
Speaker 7: I do think that as we head towards the middle
Speaker 7: and the end of twenty twenty five, and I think
Speaker 7: that's when we're going to really need to start to
Speaker 7: see these numbers coming through into stronger revenue streams still
Speaker 7: and profit margins.
Speaker 3: The honest and kard a senior analyst of City Index
Speaker 3: Financial Markets, thank you.
Speaker 4: Coming up.
Speaker 3: Shares of Spotify and Puenteer surge to new records on
Speaker 3: strong earnings.
Speaker 4: More on that. Next, this is Bloomberg.
Speaker 2: Shares of Spotify jumping to a new record as the
Speaker 2: music streaming company posted another quolta better than expect to
Speaker 2: subswabic growth. And so first I have an annual profit
Speaker 2: from all openubg's actually common joins us now and more
Speaker 2: than a billion delivered in terms of euros that managed
Speaker 2: to control called stag grow.
Speaker 9: Yes, last year was really a story of unfortunately lots
Speaker 9: of layoffs at Spotify. They really cut back on their
Speaker 9: podcast spending. And then this year, so I guess actually
Speaker 9: twenty twenty four, that was twenty twenty three, twenty twenty
Speaker 9: four was the year of new products, really doubling down
Speaker 9: on these video creators. They say now they're going to
Speaker 9: be focusing more on the music business. So they've they've
Speaker 9: definitely turned a corner.
Speaker 4: Ashley. I'm a huge fan of audio books.
Speaker 3: And historically this has kind of been a drag on
Speaker 3: margins for Spotify. What did the companies say about its
Speaker 3: growth prospects in this particular segment.
Speaker 9: So really, podcasts were what investors were really worried about
Speaker 9: when it came to their margins. So they introduced audiobooks
Speaker 9: back in twenty twenty three, and so far, I mean,
Speaker 9: the company is basically positioning it as they have this profit.
Speaker 9: Now they had their full year of profit, they're able
Speaker 9: to reinvest in new verticals like audiobooks, like these video creators.
Speaker 9: They did say on their earnings call today that there's
Speaker 9: going to be a little bit of variability when it
Speaker 9: comes to their gross margin moving forward. But again I
Speaker 9: think they're sort of couching it as well. We showed
Speaker 9: you guys we could do really well. We do need
Speaker 9: to start innovating again and really putting out new products.
Speaker 3: Bloomberg's Ashley Carmen, thank you. Another earning story, Palenteer stock
Speaker 3: surging to a record after it posted a full year
Speaker 3: revenue forecast that exceeded analyst estimates, driven by a quote
Speaker 3: untamed AI Demand CEO Alex Karp said this on yesterday's
Speaker 3: earnings call.
Speaker 10: We are at the way beginning of our trajectory. We
Speaker 10: are at the way beginning of revolution, and we plan
Speaker 10: to be a cornerstone if not the cornerstone company and
Speaker 10: driving this revolution in the US over the next three
Speaker 10: to five years.
Speaker 3: For more impalentail Gil I'm managing partner at DA Davidson
Speaker 3: joins us now. He has a neutral rating on the
Speaker 3: stock with a price target of one hundred and five
Speaker 3: dollars gil. Alex Karp called this a revolution. He made
Speaker 3: clear that the company is poised to benefit as global
Speaker 3: conflict rises, especially with China. But they also touted its
Speaker 3: commercial business on its call and in its letter. What
Speaker 3: do you make of that segment and are you confident
Speaker 3: in its growth prospects?
Speaker 11: Yeah, the commercial segment is doing phenomenally well because Palenteer
Speaker 11: is addressing the need in the market. There's a deep
Speaker 11: need in the market for implementing AI solutions that can
Speaker 11: add insight and decision making support. And Palenteer has a
Speaker 11: combination of an existing set of products that they've developed
Speaker 11: over the years, as well as a very strong professional
Speaker 11: services group. That can help companies implement AI solutions quickly.
Speaker 11: They're uniquely positioned to do that, and they're really riding
Speaker 11: the AI wave right now.
Speaker 2: So does that vindicate a price to earnings ratio of
Speaker 2: four a price versus future earnings that is currently training
Speaker 2: at almost two hundred times. This is a phenomenal valuation.
Speaker 11: Yes, it is. It's orders of magnitude higher than comparable companies.
Speaker 11: But the reality is that right now, there is no
Speaker 11: comparable company. Polunteer is the only company at this size
Speaker 11: that is not only going to grow more than thirty percent,
Speaker 11: it's doing so as it accelerates growth. I mean, the
Speaker 11: rest of the software complex it has seen decelerating growth,
Speaker 11: and very few companies at this size can even approach
Speaker 11: thirty percent.
Speaker 2: Let's just talk about that growth though, because if you
Speaker 2: go back to twenty twenty two and we heard from
Speaker 2: William Blair, analyst talking about this, he made a commitment
Speaker 2: to bringing in about four and a half billion in
Speaker 2: terms of revenue, So actually he's undershot that. Are you
Speaker 2: worried about the undershooting of a three year target.
Speaker 11: Here right now? Because again, on the commercial side, they
Speaker 11: have a tremendous amount of momentum with enterprise customers that
Speaker 11: want AI solutions quickly going to Poundteer to do that.
Speaker 11: And then on the government side, they're having great success
Speaker 11: with Department of Defense, which is likely to continue under
Speaker 11: this administration given the focus on digital, given the focus
Speaker 11: the proximity of people Impounteer to this administration. And then
Speaker 11: they also have really big wins in the UK National
Speaker 11: Health Services that drove a lot of the growth this
Speaker 11: quarter as well. So they're hitting on all cylinders right now.
Speaker 11: They have a ramp to continue to grow at these
Speaker 11: rates even if they didn't reach some of those ambitious
Speaker 11: goals they've set in the past.
Speaker 3: Potentially one of those ramps could be Elon Musk's Department
Speaker 3: of Government Efficiency, which came up on last night's call.
Speaker 3: I'm curious if that is factoring into how you're thinking
Speaker 3: about the stock.
Speaker 11: It does, because the government is running a lot of
Speaker 11: outdated software that was developed sometimes in the eighties or nineties,
Speaker 11: with code that can only be maintained by people that
Speaker 11: are retiring. There's a huge need to update all the
Speaker 11: software code in the government and again especially in units
Speaker 11: of the Department of Defense. And this is what Palndteer
Speaker 11: has been focused on for more than twenty years. So
Speaker 11: with a little bit more of a sense of urgency
Speaker 11: from the government, pound Tier is very well positioned to
Speaker 11: get a lot more of that business, again extending the
Speaker 11: ramp in the government sector, where where previously maybe they
Speaker 11: were still fighting for turf. Now they have a much
Speaker 11: straight line, much more straight line towards getting that progress.
Speaker 2: But international growth, gil that's going to be hit if
Speaker 2: we do see geopolitical tensions and they are seeming to
Speaker 2: lose that sort of growth trajectory in an international sales perspective.
Speaker 11: That's right outside of the US and the UK, they're
Speaker 11: having challenges in Europe, and part of it is the
Speaker 11: political identity. This company is a mission driven company. They
Speaker 11: state very clearly that they're there to defend Western civilization
Speaker 11: and especially the United States and putting America first, which
Speaker 11: again fits very well with this administration in the US,
Speaker 11: but in Europe that rubs some people the wrong way.
Speaker 11: They don't necessarily see that mission as a reason to
Speaker 11: buy software, and that's where polunteers not doing as well. Now.
Speaker 11: There are some political landscape shifts in Europe and we'll
Speaker 11: see how those play out.
Speaker 2: And getting real time messages from hedge Fund Telemetry, for example,
Speaker 2: really questioning the market capitalization here, Gil, you talked about
Speaker 2: why it's vindicated, it's unique offering, but just tell us
Speaker 2: about your price point, because it's actually where the price
Speaker 2: is currently for the stock. Would you upgrade it?
Speaker 11: We prefer other companies that have similar growth trajectories and
Speaker 11: similar ramps. Specifically, in this case, Snowflake and Data Dog
Speaker 11: will also ride the AI wave in their own way,
Speaker 11: and they're trading at a fraction of the multiple. So
Speaker 11: if palteers trading at seventy times revenue and one hundred
Speaker 11: and seventy times cash flow, Snowflake and Data Dog are
Speaker 11: trading more like fifteen times revenue and fifty times cash flow,
Speaker 11: which are much more palatable valuations, and that's why those
Speaker 11: are our by ratings in this sector.
Speaker 2: Iilllaria, It's great to catch up with you. Thank you,
Speaker 2: Da Davison. It's time now for talking tech. First up
Speaker 2: salesforce cutting jobs at its latest fiscal year gets underway,
Speaker 2: according to a source who says in fat more than
Speaker 2: a thousand roles will be affected. This comes even as
Speaker 2: the company is simultaneously hiring workers to sell new AI products.
Speaker 2: Plus Grab check out the shares jumping on the back
Speaker 2: of the news that it is weighing a takeover of
Speaker 2: rival Goat at evaluation more than seven billion dollars. The
Speaker 2: firms are the two biggest white hailing providers in Southeast
Speaker 2: Asia and have held on and off talks for years,
Speaker 2: and shares of German Chipmaker and Finian also surging, this
Speaker 2: time the most in nine months, after the company's forecast
Speaker 2: revenue beat analyst expectations. A bright spot in an industry
Speaker 2: that's been grappling with long standing slump, a situation which
Speaker 2: would not be held though by tariffs, says the company CFO.
Speaker 12: A major escalation of the tariffs is not included in
Speaker 12: our guidance because we still are not giving up in
Speaker 12: advocating for free trade. We do not see that as
Speaker 12: positive for the industry, so an escalation of tariffs and
Speaker 12: counter tariffs would be negative.
Speaker 2: Welcome back to Bloomberg Technology. I'm Caroline Hyde in New
Speaker 2: York and.
Speaker 3: I'm Jackie Devalas in San Francisco.
Speaker 2: Quick check on these markets, Jackie, because for making up
Speaker 2: for yesterday's sell off, we're up more than one point
Speaker 2: three percent on the NASDAK Big points contribution coming from
Speaker 2: the likes of Nvidia, from Alphabet that has numbers after
Speaker 2: the bell, but also from Pallenteer that had its numbers
Speaker 2: off the bell yesterday.
Speaker 4: Boy, we are riding high. We are new record high.
Speaker 2: Let's moving on to Palenteer that currently jumps twenty six percent.
Speaker 2: The valuation is absolutely extraordinarily on this software stop as
Speaker 2: we're hearing from key Da Davison analysts saying, look, look, ultimately,
Speaker 2: this is a unique story in software, and they continue
Speaker 2: to outperform. We've got government contracts, we've got commercial contracts.
Speaker 2: It's all about the US in this age of geopolitical risk.
Speaker 2: But Jackie, we're looking at plenty more.
Speaker 3: Elon Musk's government takeover has been swift and chaotic. Bloomberg's
Speaker 3: Kirt Wagner rates in today's Tech news letter that just
Speaker 3: in two short weeks, Musk has become a bit of
Speaker 3: a human wrecking ball in Washington.
Speaker 4: He joins us now for more, Kurt, you rate that
Speaker 4: this isn't a movie that we haven't seen before. Could
Speaker 4: you walk us through?
Speaker 3: Perhaps the difference is between how Elon Musk is running
Speaker 3: Doze right now versus his previous takeover of Twitter.
Speaker 13: Yeah, Well, the number of similarities is going to be
Speaker 13: a lot longer, I think than the number of differences.
Speaker 13: I think anybody familiar with that Twitter takeover is seeing
Speaker 13: a very familiar playbook play out right here. Right, it's
Speaker 13: you know, showing up cutting off access for people offering
Speaker 13: buyouts with literally the same language in the email that
Speaker 13: he's given people kind of bullying his way into these systems, right,
Speaker 13: and anybody who tries to get in his way is
Speaker 13: you know, suddenly showing up on leave.
Speaker 8: And in Twitter's case, it was it was being fired.
Speaker 13: And so I think the biggest difference here, and what
Speaker 13: I wanted to really hammer home in the in this
Speaker 13: morning's Tech newsletter, is that, you know, with Twitter, he
Speaker 13: was doing this with a privately held company that he
Speaker 13: bought with private money.
Speaker 8: Right, this is the US government.
Speaker 13: This is the ramifications of what he's doing to cut
Speaker 13: the government is going to affect all of us as
Speaker 13: citizens here.
Speaker 8: And it doesn't necessarily strike me.
Speaker 13: As well that the the tactics are the same.
Speaker 8: The you know, stakes are much higher here, I think.
Speaker 4: They are, but some people like it.
Speaker 2: Kurt look Palenteer, the CTO, was on the call saying
Speaker 2: that Palenti's real competition is a lack of accountability, and
Speaker 2: in fact, they think Dog is going to bring meritocracy,
Speaker 2: It's going to bring transparency to government. So even though
Speaker 2: it is this sort of wrecking ball, could it have
Speaker 2: positive impacts for companies here?
Speaker 8: Yeah?
Speaker 13: So, I think in much the same way you know
Speaker 13: he succeeded in cutting costs at Twitter, I have no
Speaker 13: doubt that he will cut costs at the US government
Speaker 13: and find things that quite frankly, all of us would
Speaker 13: be scratching our head saying, wait, we were paying for
Speaker 13: what we were spending X number of millions on?
Speaker 5: What?
Speaker 4: Right?
Speaker 13: I have no doubt that those things exist and that
Speaker 13: they will hopefully be uncovered. But I also think that
Speaker 13: there are probably a lot more thoughtful ways to go
Speaker 13: about doing this. I think the thing we know from Elon,
Speaker 13: over covering him for years and watching him with all
Speaker 13: his companies as he tends to you know, not worry
Speaker 13: about the collateral damage, right, he just simply says, the
Speaker 13: goal is to cut costs, we will do whatever it
Speaker 13: takes to get there, and you know everything else that
Speaker 13: happens as a side effect, well, those side effects, I
Speaker 13: think at a at a national scale could just be
Speaker 13: really significant, and so for me, I would prefer to
Speaker 13: see someone who's you know, maybe moving a little slower,
Speaker 13: you know, to try and make sure that we don't
Speaker 13: have any of these downstream effects that we've seen at
Speaker 13: some of his companies when he moves this quickly.
Speaker 2: Cole Wagner, thanks so much, and do check out, of course,
Speaker 2: the Tech in Depth newsletter from Bloomberg's journalists around the world.
Speaker 2: You can subscribe on bloombg dot com slash newsletters. But
Speaker 2: let's keep this conversation going when it comes to do
Speaker 2: Jennifer Perlker's with our senior fellow at the Nishkin and
Speaker 2: Center and former President Mark Balmer's deputy chief technology officer.
Speaker 2: And interestingly, you just recently co authored a report providing
Speaker 2: perhaps a roadmap for improving government performance structural cultural challenges.
Speaker 2: But do in any way see the positives of this
Speaker 2: doze drive, Jennifer.
Speaker 8: I think I hoped to see positives.
Speaker 14: I've been a big advocate for real significant renovation of
Speaker 14: government for a long time, and as Kurt said, I've
Speaker 14: been hoping that would move faster. I think unfortunately what
Speaker 14: we're seeing is moving far too fast. And not with
Speaker 14: the right intent. So if you want to renovate government,
Speaker 14: that's sort of like pulling it back down to the studs.
Speaker 14: What we're seeing now is really pulling up the core
Speaker 14: foundations of our government, the principles on which it was established,
Speaker 14: and that is not going to increase state capacity.
Speaker 8: Which is what our report is about.
Speaker 14: State capacity is just the ability of government to achieve
Speaker 14: its policy goals. We have incredibly important challenges that we
Speaker 14: need to face as a government. We need a stronger state,
Speaker 14: not a destroyed state.
Speaker 3: Jennifer, you've talked about how government and perhaps some political
Speaker 3: parties more than others, have focused too much on process,
Speaker 3: not outcomes. How in a perfect world could you see
Speaker 3: perhaps those playing a role in advancing technology really helping
Speaker 3: government perform better.
Speaker 14: We certainly do need more focus on outcomes over process.
Speaker 8: We don't need no process.
Speaker 14: And what's happening right now is not just looking deeply
Speaker 14: at what processes could be simplified, but actually not respecting
Speaker 14: the law. And what I had hoped Doge would do
Speaker 14: is go in and say, Okay, these things can be
Speaker 14: cleaned up. Oh and by the way, some of these
Speaker 14: laws are holding us back. Let's go to Congress and
Speaker 14: have them fixed so that we can operate in a
Speaker 14: more streamlined and outcomes oriented way. Instead, they're just sort
Speaker 14: of rolling roughshot over the law, which is again through
Speaker 14: the principle of our government, and very dangerous.
Speaker 3: I mean, if you were to give lawmakers perhaps some
Speaker 3: advice on how to clean some of this up, how
Speaker 3: to regain some of the trusting credibility that perhaps DOGE
Speaker 3: can bring, what advice would you bring them?
Speaker 14: Well, we have four major pillars that we think need
Speaker 14: to happen, and they should have been regardless of DOGE.
Speaker 14: I think we're in a very chaotic moment, but there
Speaker 14: will be moments when we can look back at this agenda.
Speaker 14: We essentially say four things. If you want a government
Speaker 14: that can do what it says it's going to do,
Speaker 14: you need to be able to hire the right people
Speaker 14: and fire the wrong one. You need to reduce the
Speaker 14: procedural bloat. You need to invest in digital and data
Speaker 14: infrastructure in smart ways, not just cutting people off but
Speaker 14: actually building what does work. And lastly, we need to
Speaker 14: close the loop, the feedback loop between policymakers and the
Speaker 14: outcomes that actually come from our laws and policies. Right now,
Speaker 14: we're just sort of putting things out there and hoping
Speaker 14: that we get what we want without doing what the
Speaker 14: private sector does, which is really say, is this working
Speaker 14: as we're going? Can we check in? Can lawmakers and
Speaker 14: others sort of work with the executive branch in new
Speaker 14: ways to say, let's tweak this as it goes along
Speaker 14: so that we get the outcomes that are laws and
Speaker 14: policies intend. I still think all of these things can
Speaker 14: be done, but it's very hard to do it in
Speaker 14: the current environment chaos and fear.
Speaker 2: Chaos fere but also speed, and that's all from what
Speaker 2: the private sector brings. And as you say, a lot
Speaker 2: of your offerings and prioritization here feel like very private
Speaker 2: sector orientation of of prioritizing talent, of streamlining processes. Realistically,
Speaker 2: if they didn't, as you quote Ron Roshod, if they
Speaker 2: went along with.
Speaker 4: Congress, how much longer would that take.
Speaker 2: Are the incentives of politicians aligned with ultimately remaking with efficiency?
Speaker 14: I think the incentives of politicians come from the people,
Speaker 14: and that the people need to ask their politicians to
Speaker 14: be more focused on the how of government and not
Speaker 14: just the what whatever you want government to do, it
Speaker 14: has to actually be able to do it. And I
Speaker 14: think if the people say, look, this matters how we
Speaker 14: are structured to achieve our policy goals, they will ultimately
Speaker 14: be responsive to that. Right now, again, it's very hard
Speaker 14: because there's so much chaos going on, but I do
Speaker 14: think we'll get to a place where that conversation can happen. Yes,
Speaker 14: it would be a little bit slower, and yes I
Speaker 14: have called for things to move faster, but the core
Speaker 14: foundations of our government are good and we should be
Speaker 14: protecting them right now as well.
Speaker 4: Is Elon is cool.
Speaker 2: Department of Government efficiency the right albitter of this if
Speaker 2: they do it in the right way.
Speaker 14: Elon, I think, has shown that he's not going to
Speaker 14: do it in a way that's consistent with the core
Speaker 14: values of our government. Unfortunately, we still need it done,
Speaker 14: but we need it done probably first at the state
Speaker 14: and local level, so that we can show how to
Speaker 14: do it right and then bring it back to the
Speaker 14: federal government and do it the way that it needs
Speaker 14: to be done for the American people.
Speaker 3: Jennifer polkas senior Fellow at the Nis Canon Center.
Speaker 4: We thank you now.
Speaker 3: Coming up, Edith Young from Race Capital joins us next
Speaker 3: on the state of crypto under the Trump administration.
Speaker 4: This is Bloomberg. Senator Bill.
Speaker 3: Senator Bill Haggerty will introduce legislation today to create a
Speaker 3: framework for stable coins. This is the latest push of
Speaker 3: my Republicans to create a crypto friendly guideline for the industry.
Speaker 3: That's a priority for President Trump. Let's bring in Edith
Speaker 3: Young for today's VC Spotlight, General partner at Race Capital
Speaker 3: in early stage Silicon Valley VC fund investing in all
Speaker 3: things infrastructure. Edith, why don't you walk us through what
Speaker 3: this new administration means for the crypto landscape and how
Speaker 3: you're thinking about potential opportunities going forward.
Speaker 4: Yeah.
Speaker 15: So, one of my predictions for twenty twenty five is
Speaker 15: for President Trump to create the Bitcoin Reserve.
Speaker 4: And this is only his third.
Speaker 15: Week in office, and I don't have all the tea
Speaker 15: leaves yet, but I just spent some time digging into
Speaker 15: how the US government holds our other reserved assept today.
Speaker 15: Let's take Goal as an example, is actually managed by
Speaker 15: the Treasure Department, and US actually hold over eighty eighty
Speaker 15: one hundred tons of Goal reserve today and is managed
Speaker 15: by the Treasury Department.
Speaker 4: And what's really interesting is that.
Speaker 15: Particular is being oversight by the Inspector General of Treasure Department,
Speaker 15: and this role is currently vacant.
Speaker 4: No one is in this world today.
Speaker 15: And what's also really interesting is that that role is
Speaker 15: supposed to the custody security audit and set all the
Speaker 15: policy around goal. So for us, as you us to
Speaker 15: think about should we have.
Speaker 4: A bitcoin reserve?
Speaker 15: The key thing I think for the administration and of
Speaker 15: course the exacts are cryptosard to think about is why
Speaker 15: do we want a reserve? And historically it's really for
Speaker 15: to hetch against the inflation at the same time, and
Speaker 15: of course we already US already have over two hundred
Speaker 15: thousand of bitcoin in custody today. But the key thing
Speaker 15: is really is the government do need to diversify but
Speaker 15: bitcoin is fluctually quite a bit. Is this something that
Speaker 15: we really want to do? Ns this afternoon we'll find
Speaker 15: out more.
Speaker 2: You, of course a well known for your backing of Solana,
Speaker 2: and so perhaps I dare say slight talking of books,
Speaker 2: to say there should be digital asset reserve rather than
Speaker 2: perhaps just a bitcoin reserve, plain and simple. But I'm
Speaker 2: interested as to what the stable coin adoption or indeed
Speaker 2: clarity can bring to actual US using crypto more easily
Speaker 2: with real tangible benefits that isn't just about asset purchases.
Speaker 4: Yeah.
Speaker 15: Absolutely, I'm actually very bullish on stable coin in general.
Speaker 15: I think in twenty twenty four over two hundred billion
Speaker 15: of stable market cap, which is over fifty percent increas
Speaker 15: year over year. And particularly what I'm really interested in
Speaker 15: is the whole concept of open PAYFI infrastructure, and I
Speaker 15: think is really really aligned with President Trump the administration
Speaker 15: with the executive Order, which is all about strengthening American
Speaker 15: leadership in digital finance. So think about it. The more
Speaker 15: the US dominated a stable coin being adopted means we
Speaker 15: need to kind of think about really is the traditional
Speaker 15: PAYFI means credit card remittances across border payment and all
Speaker 15: these old infrastructure is slow, is expensive, and Visa was
Speaker 15: actually dablished in nineteen fifty fifty.
Speaker 4: Eight, sixty six years ago. It's a long time and
Speaker 4: these rail is very old.
Speaker 15: So having like stable coin, particularly US dominated, I think
Speaker 15: it will drive more use case for US dollar and
Speaker 15: it will really really align with and think through the
Speaker 15: whole infrastructure is only not only about transaction layer, which
Speaker 15: is Solana, the finance layer, which is humor, finance, and
Speaker 15: more so it's also compliance KYC security. So there are
Speaker 15: a lot of opportunities for venture to invest and pay
Speaker 15: attention to.
Speaker 3: You mentioned President Trump's executive order. His rhetoric has also
Speaker 3: brought some volatility to the sector.
Speaker 4: I mean, just this.
Speaker 3: Weekend we saw a huge liquidation this risk off trade
Speaker 3: in crypto.
Speaker 4: Curious if you find.
Speaker 3: That US dependency on how the headlines here at home
Speaker 3: are really driving those movements. Is crypto a little too
Speaker 3: s US dependent at the moment.
Speaker 15: Well, I think crypto in some set is the other
Speaker 15: way around. The United States need crypto innovation. Before President Trump,
Speaker 15: the Biden administration really have been using lawsuits to manage
Speaker 15: the whole policy. This is really not the way to go.
Speaker 15: I think the Trump presidencies, in particular with the new cryptosar,
Speaker 15: really set the stage just now. The America wants to
Speaker 15: be the leaders the forefront of this, and I think
Speaker 15: in general is set a really positive tone. Although everything's
Speaker 15: been again, as I said mentioned earlier, it's only been
Speaker 15: third week, and I really don't know what's going to happen,
Speaker 15: but I think the whole world is watching and really
Speaker 15: looking out for the US leadership. In crypto, stable coin
Speaker 15: and bitcoin.
Speaker 2: Should have it involved a meme coin from the president,
Speaker 2: and indeed the first lady.
Speaker 15: I think you know, President Trump is have a lot
Speaker 15: of fun with the Trump and the Millennium Mean coin
Speaker 15: before his inaugurations. And I watched many many of the
Speaker 15: crypto exchange leadership, including Brian's Armstrong, and what they say
Speaker 15: about the meme coin, and all of them basically say
Speaker 15: a lot of things that happened early in their Internet
Speaker 15: all looked like fund and don't really know what it is.
Speaker 15: And I think the key thing for as an investor,
Speaker 15: particularly as a consumer investor, for to pay attention to
Speaker 15: it's really about we need to be careful about speculations.
Speaker 15: The key thing is really about protecting the normal retail investor.
Speaker 15: So it's really the key thing is the power for
Speaker 15: all the different exchanges to determine which token should be
Speaker 15: listed to make sure that the US consumer re'll investor
Speaker 15: is being protected in.
Speaker 4: If you from Race Capital, thanks for joining us today.
Speaker 4: Let's flip gears into another story.
Speaker 2: We're watching Elon Musk stepping up his efforts to block
Speaker 2: open ai from restructuring as a for profit company, claiming
Speaker 2: it would abandon its public spirited mission. Now, Musk's lawyers
Speaker 2: are expected to urge a federal judge to halt open
Speaker 2: AI's conversion plans and a court hearing today.
Speaker 4: All of this is.
Speaker 2: As open a CEOs. Moutman is currently doing another world
Speaker 2: tour with the Global Ai race heating up. Let's get
Speaker 2: to that tour with Rachel Metz and he's been in Japan,
Speaker 2: South Korea. Ultimately, what are we hearing in terms of
Speaker 2: real innovation and partnership that open ai is bringing.
Speaker 16: Yeah, so this is Sam Martman's second world tour over
Speaker 16: the last couple of years. This one he is certainly
Speaker 16: more well known his technology and his company is more established,
Speaker 16: and he is making stopped in a bunch of different countries,
Speaker 16: including South Korea where he had a deal with a
Speaker 16: really large company focused on social media there. And he's
Speaker 16: been meeting with soft Bank in Japan, and there's a
Speaker 16: bunch of other staff stops as well, some are focused
Speaker 16: on meeting with people developers. Also that there's a university
Speaker 16: in Germany that he's going to hit up. So he's
Speaker 16: got like a lot of different kinds of people to
Speaker 16: meet with that are all connected to the company. Or
Speaker 16: that he would like to be connected to the company.
Speaker 3: We Rachel, I'm curious what risks this world tour brings up,
Speaker 3: because obviously the Deep Seek developments of last week really
Speaker 3: amplified this talk about an AI race. Than today we
Speaker 3: see some retaliation from China on alphabet in.
Speaker 4: Response to Trump's tariff.
Speaker 3: So your scene tech companies really get caught in the middle.
Speaker 3: Is by doing this is Sam Altman kind of putting
Speaker 3: himself out there just a little too much.
Speaker 16: That's a really good question. There's a lot of diplomacy
Speaker 16: that needs to come along at this point with heading
Speaker 16: a really powerful AI company, right like, this technology has
Speaker 16: really taken the world by storm over the last couple
Speaker 16: of years, So there's a lot of talking that has
Speaker 16: to happen, meetings that have to happen. You have to
Speaker 16: get a lot of stakeholders invested in what you're doing,
Speaker 16: either literally invested or figuratively at least, you know, interested
Speaker 16: in using the product and buying in So, I mean
Speaker 16: it seems like a reasonably shrewd strategy to meet with
Speaker 16: the people that you need to sort of get at
Speaker 16: least familiarize them with your face and your company, as
Speaker 16: especially as something like deep seek is happening where people
Speaker 16: are saying, wait a minute, do we really need to
Speaker 16: spend this much money to make this AI happen. It's
Speaker 16: a really interesting time for him to be doing this,
Speaker 16: that's for sure.
Speaker 3: Bloomberg's Rachel Mattz thank you. Tesla sales have fallen in
Speaker 3: key markets. The electric vehicle maker registered fewer cars. In
Speaker 3: California throughout twenty twenty four. Sales of Model three fell
Speaker 3: by thirty six percent. Meanwhile, in France, the EU's second
Speaker 3: biggest market for battery vehicle vehicles, Tesla saw registrations plummet
Speaker 3: by sixty three percent.
Speaker 2: CARO Meanwhile, EV competition, well, it's been struggling here in
Speaker 2: the United States as well. Jackie Ford particularly vulnerable with
Speaker 2: no new EV models coming for two years. Keith Norton
Speaker 2: has been writing about this in Bloomberg's Big Take, And
Speaker 2: you call it Ford's EV crisis. Why is it a crisis?
Speaker 2: Why postponing new models is it making it a crisis?
Speaker 4: Keith?
Speaker 17: Yeah, So they are going to face this kind of
Speaker 17: EV desert for the next two years where they won't
Speaker 17: have any new electric vehicle models they made. What CEO
Speaker 17: Jim Frowley called a big pivot. Back in August, they
Speaker 17: canceled plans for a big electric suv. They said it
Speaker 17: would have been too pricey, and now they're going to
Speaker 17: instead focus on lower price dvs below thirty thousand dollars,
Speaker 17: as well as something called an extended range electric vehicle,
Speaker 17: which as a small gas engine that recharges the battery.
Speaker 17: So that's their new two pronged strategy, which is fine,
Speaker 17: but that means they have no new evs to sell
Speaker 17: and their model lineup continues to age for the next
Speaker 17: two years.
Speaker 3: Keith, what does this new administration bode for Ford and
Speaker 3: perhaps other electric vehicle makers, especially with Elon Musk so
Speaker 3: close to President Trump.
Speaker 17: Yeah, and you know Elon Musk's cyber truck is now
Speaker 17: out selling Ford's Flune fifty lightning electric pickup truck, which
Speaker 17: is not a good turn of events for Ford. Ford
Speaker 17: also makes one of its other big electric models, the
Speaker 17: Mustang Mocke, down in Mexico, So if that twenty five
Speaker 17: percent tariff threat comes back, that would add a lot
Speaker 17: of cost to the Mustang Mocke. So there is a
Speaker 17: lot hanging in the balance with the decisions that President
Speaker 17: Trump makes.
Speaker 8: Not you know, the least of which that he wants.
Speaker 17: To get rid of that seventy five hundred dollars tax
Speaker 17: credit given to eed buyers.
Speaker 2: Most Keith Norton is a brilliant big take read it.
Speaker 2: Thanks so much for joining. Now that does it for
Speaker 2: this edition of Bloomberg Technology. Do not forget to check
Speaker 2: out our podcast you can find out on the terminal
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Speaker 4: This is Bloomberg Technology.