Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
Speaker 1: from coast to coast with Caroline Hide in New York
Speaker 1: and Eva Low in San Francisco.
Speaker 2: This is Bloomberg Tech coming up. Big swings in Korean
Speaker 2: stocks after a South Korean policy maker suggests paying citizens
Speaker 2: at dividend using taxes on AI profits.
Speaker 3: Past The largest US derivatives exchange CME is planning to
Speaker 3: create a futures market for computing power, one of the
Speaker 3: key drivers of the AI.
Speaker 2: Boom, and SAP pushes further into AI agents across business
Speaker 2: operations with its new Autonomous Enterprise platform.
Speaker 4: We'll discussed with the CEO.
Speaker 3: First we check in on these markets, which well, maybe
Speaker 3: for once we get a shakeout of what has been
Speaker 3: a relentless grind hire in the tech industry and most
Speaker 3: notably some of the chip stocks which today are the
Speaker 3: biggest foolers having been of course the crescendo effect in
Speaker 3: the NASDAK we're not by one point four percent. It's
Speaker 3: the biggest drop we've seen since late March ed and
Speaker 3: all of this is as we still have anxiety about
Speaker 3: to your politics and that is feeding through to inflationary trashures.
Speaker 4: More broadly, take a look at this chart.
Speaker 2: Korean stocks took a dive on Tuesday following a Facebook
Speaker 2: post by a South Korean policy maker saying the nation
Speaker 2: should pay citizens a quote dividend using taxes on AI profits.
Speaker 2: The benchmark hosspy sank as much as five percent, then
Speaker 2: paired losses when the Korean government later said that was
Speaker 2: his personal opinion.
Speaker 4: South Korean shares of.
Speaker 2: Samsung's and s k heinez recoup some of their losses,
Speaker 2: but still closed down around five percent. Let's get more
Speaker 2: with Bloomberg's executive editor for Global Tech, Peter Elstrove. It's
Speaker 2: the kind of story you wake up, you see at
Speaker 2: number one on the Bloomberg terminal, and you're not really surprised,
Speaker 2: but you do a double take and you go a
Speaker 2: Facebook post that sank an entire market.
Speaker 4: Who is this policy maker and what do we need
Speaker 4: to know? Yeah, it is a.
Speaker 5: Bit of a surprise, and there are surprising dynamics behind
Speaker 5: this post. So, as you mentioned, this advisor Kim Engbung
Speaker 5: posted on Facebook about this idea of an AI dividend
Speaker 5: really a citizen's dividend because of the AI profits. Again,
Speaker 5: it was posted on Facebook. It's not official policy. The
Speaker 5: President's office was quick to come out and say that
Speaker 5: it's his personal opinion. But it's a twenty five hundred
Speaker 5: word post. It's very in depth. It's actually quite philosophical.
Speaker 5: He talks about the evolution of the Korean economy, what
Speaker 5: it means for the people, what it means for citizens,
Speaker 5: how they're going to be challenges, but they're going to
Speaker 5: be opportunities too, and then he homes in out in
Speaker 5: this idea that perhaps there should be a dividend to
Speaker 5: rebuild the social foundation of the country as they go
Speaker 5: into this new era. So he's not talking about new
Speaker 5: taxes on these companies, just to be clear, on the
Speaker 5: key companies like Samsung and sk Heinix, he's just talking
Speaker 5: about how the country is going to benefit from their
Speaker 5: profits and what the country should do with those profits.
Speaker 5: And the profits are pretty staff just to be clear,
Speaker 5: Samsung is on track to make something like two hundred
Speaker 5: and twenty billion dollars this year. Sk Heinix won't be
Speaker 5: far behind. So you're talking about four hundred billion dollars
Speaker 5: in profits from just two companies. Of course, it's not
Speaker 5: as much as you would get in the US, but
Speaker 5: it's much more concentrated in Korea, so the contribution to
Speaker 5: the Korean budget is going to be much more substantial.
Speaker 5: They're going to have this windfall, and so he's talking
Speaker 5: about what they should do with it.
Speaker 3: He's clicking in on a hot button topic, whether it
Speaker 3: be here in the United States, where Open Ai has
Speaker 3: been essentially suggesting ways in which there could be some
Speaker 3: sort of wealth fund created to distribute the wealth created
Speaker 3: by AI more broadly. But also there's potential labor issues,
Speaker 3: particularly for Samsung.
Speaker 6: Sk heinis has.
Speaker 3: Been promising profits towards its engineers and workers, but Samsung
Speaker 3: is facing a potential strike.
Speaker 5: Yeah, it's a really important point. This is not just
Speaker 5: a Korea issue. This is really a global issue. Governments
Speaker 5: around the world. They're trying to figure out, what are
Speaker 5: we going to do if there is this big, big
Speaker 5: AI boom as we've seen so far, what are you
Speaker 5: going to do with all those profits? What are you
Speaker 5: going to do with that new wealthy You've had the
Speaker 5: billionaire's tax proposed of course in California too. Now Samsung
Speaker 5: and eske Heinix have been wrestling with this issue. As
Speaker 5: you mentioned, Samsung right now is in negotiations with its
Speaker 5: labor union, which is threatened to strike because they want
Speaker 5: to bigger share those profits too. Again, this is not
Speaker 5: a new tax on these companies though, if they proceed
Speaker 5: with this dividend. As we've talked about, it's more a
Speaker 5: sense of what the Korean government can do to prepare.
Speaker 5: And the big message from Kim in this whole discussion
Speaker 5: is that his government in Korea and then governments around
Speaker 5: the world, need to be more proactive and thinking about
Speaker 5: how they're going to navigate this much more complex world
Speaker 5: with AI as it begins to change the economy, begins
Speaker 5: to change the workplace and employment too.
Speaker 3: Philosophical indeed, blom bags Peter Alstrom, thanks for running us
Speaker 3: through it. Look Staying in Asia, President Trump is poised
Speaker 3: to travel to China to meet with President Shijinping later
Speaker 3: this week now, a number of top tech executives are
Speaker 3: expected to join the trip.
Speaker 6: As we told you yesterday, the.
Speaker 3: Likes of Tim Kok, the likes of tests Evil Musk
Speaker 3: notably absent in Vidio CEO Jensen Wang, who was reportedly
Speaker 3: not even invited here with Moris Bloomberg's Chip and AI
Speaker 3: reporter Maggi Easton say is that the case that the
Speaker 3: invite wasn't extended to Jensen who seems so close to
Speaker 3: the president.
Speaker 7: Yes, exactly, that's what we're reporting here. In Vidia's chief
Speaker 7: executive officer, the leader of America's most valuable company, did
Speaker 7: not get the invite to come to China, even though
Speaker 7: he has a lot at stake in China, and Jiwang
Speaker 7: is continuing to push for some sort of AI chip
Speaker 7: sale there, though. This seems to be a signal that
Speaker 7: he's not going to get Blackwell sales in China anytime soon,
Speaker 7: at least from the US permission side.
Speaker 2: It's interesting you're writing about this in your Tech in
Speaker 2: Depth today right that the President's priorities and Jensen Wang's
Speaker 2: priorities right now they might not be as aligned as
Speaker 2: they have been in recent months. Just take us into
Speaker 2: your Tech in Debt.
Speaker 7: Absolutely, so, there's really a stark contrast here. If you
Speaker 7: look at the last time President Trump met with President
Speaker 7: she in Korea last October, Blackwells were top of mind.
Speaker 7: You know, President Trump was telling reporters that he was
Speaker 7: going to talk.
Speaker 6: To She about those chips.
Speaker 7: At the same time, in video was lobbying for potentially
Speaker 7: selling those high powered processors to China. So now we're
Speaker 7: seeing sort of a reversal in Trump's priorities.
Speaker 6: The issue of AI chips has.
Speaker 7: Been deliberated, and it was decided that, you know, the
Speaker 7: US would allow in Video to sell its H two
Speaker 7: hundred processor, which is less powerful than the Blackwell. And
Speaker 7: it seems to be that that's sort of where the
Speaker 7: line stands, and the latest signal of that is, of
Speaker 7: course Jensen not joining for this China trip.
Speaker 3: It's interesting that maybe more on the focus from the
Speaker 3: Chinese leadership perspective is Taiwan, and there in line is
Speaker 3: the whole issue of supply chain and a desire to
Speaker 3: make America stand alone a little bit more in its
Speaker 3: own ability to fabricate these chips. Margie, who do you
Speaker 3: think is going to be centered around conversation?
Speaker 6: And when it comes to.
Speaker 3: Jensen, is it a big loss because the market is
Speaker 3: down what eight ten percent on his name today?
Speaker 7: Well, look, it's certainly not the boost that the idea
Speaker 7: that AI chips could be on the table and Blackwells
Speaker 7: could be on the table was last October. I mean
Speaker 7: that's sent in Video's you know market cap above five
Speaker 7: trillion dollars. So we're not seeing that same enthusiasm, and
Speaker 7: even for something like the H two hundreds, it's unclear
Speaker 7: if in video will ever be able to you know,
Speaker 7: tally up sales from selling those to China. China could
Speaker 7: still reject those. You know, it's possible that comes up
Speaker 7: in this meeting, though the focus is probably going to
Speaker 7: be bigger geopolitical issues, especially the warn Iran, and so
Speaker 7: it seems since AI chips are just not a focus
Speaker 7: in videos, definitely not going to get a boost from
Speaker 7: this meeting, and you know, they might even see some declines.
Speaker 6: As you're pointing.
Speaker 2: Out Lin Beg's Maggie Eastland, thank you very much. The
Speaker 2: melt up in chip SUNDAYI infrastructure stocks is hitting a
Speaker 2: pause today. I'm looking at the Philadelphia Semiconductor Index. It's
Speaker 2: up behind forty percent over the last twelve months through
Speaker 2: yesterday's close, up seventy percent year to date, but today,
Speaker 2: in the moment, we're on track for our biggest drop
Speaker 2: since that last week of March. Is probably worth pointing
Speaker 2: out as well that CPI inflation accelerating in April, coming
Speaker 2: in three point eight percent year on year. That has
Speaker 2: had big impact on the markets of the moment. Let's
Speaker 2: get more with Kim Forrest, CEO Boca Capital Partners. I
Speaker 2: was talking with the equities desk this morning at Bloomberg
Speaker 2: News about a lot of these names that are really
Speaker 2: lower today, taking a pause, Intel, Micron, Intel particular, they
Speaker 2: were kind of primed for a bit of a pullback, right.
Speaker 4: Is that it is that.
Speaker 2: Just timing in the moment, or is it this CPI
Speaker 2: print we got this morning.
Speaker 8: I think the CPI print is completely disregarded by the
Speaker 8: Chip Nation and AI because they don't care. They just
Speaker 8: simply don't care what cast things are, or I guess
Speaker 8: overall they don't care. God knows that. You know, AMD
Speaker 8: is probably making some gains because they have a somewhat
Speaker 8: lower price GPU than in Nvidia, and it's capable, so
Speaker 8: you know, cost is relative. But yes, I don't think
Speaker 8: CPI has anything to do with today's tech selloff. I
Speaker 8: think it has more to do with just look at
Speaker 8: the gains for the year, and sometimes you just run
Speaker 8: out of buyers, even momentum buyers can't continue. So it's
Speaker 8: probably that as well as what happened in South Korea. Again,
Speaker 8: buyers want to buy companies that are going up and
Speaker 8: perhaps yesterday's sell off of those memory names was enough
Speaker 8: to cool the temperature of buying chip stocks today.
Speaker 3: It's interesting to talk about momentum, and we've been hearing
Speaker 3: from some of the biggest leaders on Wall Street just
Speaker 3: today about whether AI is real, what the investment opportunities are,
Speaker 3: who wins, who lose?
Speaker 6: Just take a listen to Jamie Diamond a little bit earlier.
Speaker 9: Kim, The way I look at it is that AI
Speaker 9: is re all. A lot of money's going to go
Speaker 9: into it. It doesn't mean everyone does it is going
Speaker 9: to be a winner. Like go back to the Internet.
Speaker 9: A lot of people lost, a lot of people won.
Speaker 9: And so you know in the hyper skills those data centers.
Speaker 4: Not find use.
Speaker 9: They probably will, But is it possible some do it badly,
Speaker 9: design it badly, didn't get the right Yes, of course
Speaker 9: it's possible, Kim.
Speaker 3: You've that on invested in the right names, some that
Speaker 3: have done incredibly well through momentum otherwise recently, But are
Speaker 3: too many ramping higher at this moment?
Speaker 6: Will we start to see more discernment?
Speaker 8: I hope so it Actually we've seen some discernment with
Speaker 8: Intel coming back from you know, it was not only
Speaker 8: dead and buried, but it had the.
Speaker 4: Grass grew over.
Speaker 8: It's great, right, I mean, it was gone, and yet
Speaker 8: here we are, and why are we here? I think
Speaker 8: it's the forward movement of AI development. And whenever AI
Speaker 8: came on the scene and chat GPT captured everyone's imagination
Speaker 8: both in Nvidia and open AI seemed to be like
Speaker 8: the winners, and everybody else was just going to languish. Well,
Speaker 8: technology rollouts don't really work that way. And I think
Speaker 8: we're probably in I've been watching a lot of baseball
Speaker 8: because the Pittsburgh Pirates are actually tolerable to watch this
Speaker 8: year so far, and we're probably in the bottom of
Speaker 8: the second inning in AIM, so we have a lot
Speaker 8: of road to go ahead of us.
Speaker 2: The big calendar item this week probably is President Trump's
Speaker 2: visit to China meeting with President President g and also
Speaker 2: the delegation of top CEOs, all relevant to to the
Speaker 2: fields that you've outlined. What's at stake here for the
Speaker 2: technology investor and for markets this week.
Speaker 8: Well, the US and China are walking a really really
Speaker 8: narrow line between each other. Where AI is considered is
Speaker 8: you know, the topic for a long time America has
Speaker 8: been winning. But I think it feels like decades ago
Speaker 8: whenever Deep Seek came out. Maybe it was the beginning
Speaker 8: of twenty twenty five. You know, the shiver went through
Speaker 8: the AI community going, oh my gosh, China might have
Speaker 8: something here. And while we want competition, it's the military
Speaker 8: uses of AI and the military uses of the chips
Speaker 8: that were very cognizant of. And I think that's why,
Speaker 8: you know, Jensen Wong didn't get the invite. They don't
Speaker 8: really want to discuss that at this point, so don't
Speaker 8: invite them, don't have the conversation about it. But yes,
Speaker 8: AI is very much a contention between the US and China,
Speaker 8: and I know that the US is you know, US
Speaker 8: first would like to develop it and sell it to
Speaker 8: the rest of the world, but so would China. So
Speaker 8: there's going to be tension over the world of AI.
Speaker 3: Kim Forest Cio of Boca Capital Partners, it's always great
Speaker 3: to check in with you. Thanks the expertise. Now coming
Speaker 3: up the largest US de riveters exchange. That's the CME.
Speaker 3: It's planning to create a futures market for computing power details.
Speaker 6: Next, this is Bloomberg Tech.
Speaker 10: The United States is short power for short compute we're
Speaker 10: short chipped. Is there going to be shortages at all?
Speaker 10: Three and memory for things. I actually believe a new
Speaker 10: acid class will be buying futures of compute. We just
Speaker 10: don't have enough compute power right now.
Speaker 3: That was black Rock CEO Larry Fink a week ago
Speaker 3: at Milken.
Speaker 6: For telling what is big news out today.
Speaker 3: CME and Silicon Data are teaming up to create a
Speaker 3: futures market for computing power, one of the pillars of
Speaker 3: the AI boom.
Speaker 6: Bloomberg's finance for portech. Adam Doherty has actually.
Speaker 3: Been following what's the condage has been doing around this
Speaker 3: for a while, and now the CME brings it because,
Speaker 3: according to Terry Duffy at the CME computes the new oil.
Speaker 11: That's right, it's just another commodity that is going to
Speaker 11: be able to not just be traded, tracked versus That's
Speaker 11: really what was the first pillar was the index that
Speaker 11: was created Silicon Data bringing that too investors so they
Speaker 11: could at least start to have more transparency around putting
Speaker 11: a number to what people were valuing as the price
Speaker 11: of compute technology. And now we have the ability to hedge,
Speaker 11: to hedge against price moves and some of the risks
Speaker 11: that are out there, as it would you tracking oil
Speaker 11: or other commodity prices. This is really bringing this into
Speaker 11: the institutional space, and you're going to have both the
Speaker 11: tech firms and investors that are going to jump into
Speaker 11: this and build the market and grow it so that
Speaker 11: it has the actual liquidity to back it.
Speaker 2: Kata and I go even more basic than that. You know,
Speaker 2: futures contracts an agreement to buy or sell something at
Speaker 2: a later date at a fixed price, So you're either
Speaker 2: locking in that cost or you're betting in a price
Speaker 2: change in either direction. But like with compute, like I
Speaker 2: think we're talking about GPUs or GPU hours something like that.
Speaker 2: You know, have they worked out how this would work
Speaker 2: in the real world, that's.
Speaker 11: Right, So the index is where you're getting into that
Speaker 11: detail about GPUs and the processing power. That was kind
Speaker 11: of the first step. Now with the futures contracts, as
Speaker 11: you are pointing out, this is the ability to hedge
Speaker 11: for future moves, putting a price to or really the
Speaker 11: bet of where these contracts are going to be traded
Speaker 11: in the future.
Speaker 6: So it's both looking at.
Speaker 11: Where is the price of these GPU processing power trading
Speaker 11: today and where do we see it in a few weeks,
Speaker 11: months and as it builds out it's really going to be.
Speaker 11: It has to develop, and I think that it's something
Speaker 11: that also needs the blessing of regulators. But the intent
Speaker 11: is to be able to put a price on not
Speaker 11: just where this power is trading at the very moment,
Speaker 11: but in the future.
Speaker 3: Silicon Data commonly who's the founder of all this previously
Speaker 3: a trader, was her idea to bring transparency to those
Speaker 3: who were going and trying to buy compute and just
Speaker 3: understand what one offering was like to another. Or she
Speaker 3: really thinking that this could become a fully fledged asset
Speaker 3: class that the retail investors want to get in it,
Speaker 3: and more broadly, we want to sort of build up
Speaker 3: an ecosystem.
Speaker 11: Around I do think it was all about the ecosystem.
Speaker 11: What Silicon Data and what Carmen was building from the
Speaker 11: very start was again one pillar to something that was
Speaker 11: much larger. And when we talk about transparency, before today,
Speaker 11: there really wasn't a big player like CME that was
Speaker 11: able to bring compute as an asset class to the
Speaker 11: market in this way. As a derivatives exchange, they already
Speaker 11: have the traders and so You might not have just
Speaker 11: the tech firms and the AI providers, the superscalers that
Speaker 11: are going to be using this to hedge their own costs,
Speaker 11: but you're bringing an entire new institutional base that is
Speaker 11: going to look at this asset class in the same
Speaker 11: way that they would oil, metals and other things that
Speaker 11: they trade. So it's going to be kind of a
Speaker 11: mix of many different worlds that is going to build
Speaker 11: this ecosystem, this new market.
Speaker 2: That was my next question really is like put CME
Speaker 2: in the context of the broader derivatives markets. A next
Speaker 2: step would be, I guess other players would make similar
Speaker 2: proposals for futures contracts on computes in other jurisdictions.
Speaker 11: Yes, you already have seen some exchanges, some upstarts, but
Speaker 11: no one to the size of CME, which is the
Speaker 11: largest US derivatives exchange, come into this space. It's very
Speaker 11: likely that we'll see other large exchange operators will jump
Speaker 11: into this and build their own marketplace, because it's all
Speaker 11: about the more liquidity, the more trading, and the more
Speaker 11: interest that you can build, the better it is for
Speaker 11: the market as a whole. It doesn't need to be
Speaker 11: just one exchange.
Speaker 2: Bloombo's Karen Doherty on a big breaking news story this morning,
Speaker 2: Thank you very much. Sam Altman is expected to take
Speaker 2: the stand today in the closely watched trial over the
Speaker 2: charitable status of open Ai. Elon Musk has accused the
Speaker 2: startup and his fellow co founders and Microsoft of betraying
Speaker 2: open AI's founding mission for their own benefit. Yesterday, we
Speaker 2: learn more about the financial gains during testimony from Microsoft
Speaker 2: CEO Sati and Nadella and open AI's former chief scientist
Speaker 2: Ilia Sutzkiva. Bloomberg's Madeline Meckelberg is covering the case and
Speaker 2: has been there every single day. Let's start with the
Speaker 2: what's to come, Sam Altman. You know this is the
Speaker 2: testimony probably that the world's waiting for.
Speaker 4: What do we know at this stage?
Speaker 10: That's right.
Speaker 12: This is definitely the high profile witness that we've been
Speaker 12: waiting to hear from. We've heard from at this point
Speaker 12: all of the other major players in this open Ai
Speaker 12: battle with Elon Musk, that includes Elon Musk, Greg Brockman,
Speaker 12: Ilias Setskov, Sati, Nadella. As you said, and so we
Speaker 12: don't know much about Altman. We don't even know what
Speaker 12: time we're expecting him to take the stand today, but
Speaker 12: there's just a few days left at trial, and he
Speaker 12: really has a lot of questions that he's going to
Speaker 12: have to answer for before the jury. I think we're
Speaker 12: going to hear him grilled on a lot of the
Speaker 12: subjects that we've covered already at trial, mainly about his
Speaker 12: relationship with Elon Musk, but also chiefly about his ouster.
Speaker 12: That's something that Musk's legal team has been making a
Speaker 12: really big issue of. This is back in the twenty
Speaker 12: twenty two twenty twenty three time period, and they're going
Speaker 12: through a lot of concerns that employees voiced at that time,
Speaker 12: or members of the board rather voiced at that time
Speaker 12: about his leadership style. So I think this is going
Speaker 12: to be an opportunity for him to kind of respond
Speaker 12: to a lot of the allegations and the description that we've
Speaker 12: heard so far and tell his side of the story,
Speaker 12: which is an essential one in this case.
Speaker 3: And the essential element of the story is well to
Speaker 3: convince that it wasn't just out of greed that they were.
Speaker 6: Turning into a for profit business.
Speaker 3: What is it that through Sam's leadership style that they're
Speaker 3: looking to prove one way or other.
Speaker 4: That's right.
Speaker 12: So that's the central argument from Musk here, is that
Speaker 12: they've betrayed the founding mission in an effort to try
Speaker 12: to enrich themselves. That's why we've heard so much about
Speaker 12: how much stake some of these leaders have in open AI,
Speaker 12: how much money was being thrown around and made here
Speaker 12: since they've made this conversion to a for profit. I
Speaker 12: know your viewers know that the value of open ai
Speaker 12: has skyrocketed, especially in recent years, and so all these
Speaker 12: folks who had equity in the very early days of
Speaker 12: making it a for profit have made significant return since then.
Speaker 12: Their steak has grown so much. And so I think
Speaker 12: what we've seen from Musk lawyers is an attempt to
Speaker 12: show that all men has maybe not been truthful to
Speaker 12: the board and the past asked, his motives have not
Speaker 12: always been clear. So while he may be saying one
Speaker 12: thing about his commitment to the mission, I think they're
Speaker 12: trying to have the jury ask some questions about whether
Speaker 12: he's telling the truth there and whether that's really where
Speaker 12: his motivation is.
Speaker 3: Megs, Madlin and Macabeg will let you get back to
Speaker 3: that courtroom.
Speaker 6: We appreciate you.
Speaker 3: Checking in on eBay and GameStop shares well. Apparently the
Speaker 3: fifty six billion dollar takeover offer from GameStop is.
Speaker 6: Deeply non credible nor attractive.
Speaker 3: According to eBay itself, ed, we have clearly something that
Speaker 3: now could become some sort of proxy battle. It could
Speaker 3: become hostile takeover where Ryan Cohen goes directly to shareholders
Speaker 3: of eBay. But thus far a company that is worth
Speaker 3: a quarter of the company it's trying to book bid
Speaker 3: four hasn't managed to convince the board.
Speaker 2: Yeah, the offer was one hundred and twenty five dollars
Speaker 2: a share, fifty percent cash, fifty percent game Stop stock.
Speaker 2: eBay's at one oh seven, and there were concerns about
Speaker 2: actually how game Stop would come up with the financing
Speaker 2: of that offer.
Speaker 4: What happens next?
Speaker 3: Yeah, and question of course all about whether or not
Speaker 3: this can remain an investment grade company if combined, and
Speaker 3: that seems to be a key issue that our reporting
Speaker 3: shows that resources showing that that TV offering not enough
Speaker 3: if it's not investment graded.
Speaker 2: Not the end of that story. Welcome back to Bloomberg Tech.
Speaker 2: Generally speaking, we're seeing technology stocks down and quite significantly then,
Speaker 2: as that one hundred off by almost two percent now,
Speaker 2: and actually semiconductors and chips are the mainstay of that decline.
Speaker 2: There's two parts to it. We saw an astonishing rally,
Speaker 2: in particular in chip stocks that as of yesterday's close
Speaker 2: we're up seventy percent year to date, so we're taking
Speaker 2: a time out a breather, but the Philadelphia Semiconductor Index
Speaker 2: down almost six percent and on track for its biggest
Speaker 2: drop since the last week of March.
Speaker 4: We did get a pretty hot.
Speaker 2: Inflation print this morning, and our equities desk is saying
Speaker 2: in the Global markets wrap that that's part of it,
Speaker 2: the whole in rally. In the rally we see in
Speaker 2: stocks carry now. Intel is an interesting case study one
Speaker 2: of those taking a breather. It's been driven by reports
Speaker 2: for a potential deal with Apple and a strategic pivot
Speaker 2: into AI. Intel was staging a comeback and in a
Speaker 2: blazing rally, added over four hundred billion dollars in market
Speaker 2: value in just six weeks, but short interest is near
Speaker 2: a fifty two week high, suggesting that for some today
Speaker 2: might be the day to bet against some momentum rhyme.
Speaker 2: Vastellica joins us with for once some good timing on
Speaker 2: the piece you put out this morning. I joke, I joke,
Speaker 2: explain the short interest piece to me. How does that work?
Speaker 2: Why would it drive the stock like this?
Speaker 13: Sure, so, as you mentioned, Intel has seen some really
Speaker 13: tremendous momentum in the Star price over the past few weeks.
Speaker 13: I think it's up more than two hundred percent since
Speaker 13: late March. So that's a very attractive opportunity for a
Speaker 13: lot of short sellers who are expecting that this momentum
Speaker 13: will not only reverse, but reverse in a pretty dramatic fashion.
Speaker 13: Because in addition to how much the stock is moved up,
Speaker 13: the multiple is at an all time high over one
Speaker 13: hundred times estimated earnings. So you have a high valuation
Speaker 13: stock that's already seen some pretty significant games. It's not
Speaker 13: really a surprise that people are betting on a reversal,
Speaker 13: even though a lot of short sellers are saying, when
Speaker 13: you have a company like this with so much positive momentum,
Speaker 13: so much fundamental momentum, it's very difficult to pick a
Speaker 13: top and really write the move down. So a lot
Speaker 13: of confusion here, but certainly some people are betting on
Speaker 13: a reversal.
Speaker 3: And they're looking pretty clever today at least as we're
Speaker 3: currently trading off by more than ten percent. What's interesting, though,
Speaker 3: is that the analyst community still think one should be
Speaker 3: buying the stock. What is it seventeen buys only three cells,
Speaker 3: even though the price.
Speaker 6: Target is a little out of whack who it currently
Speaker 6: is run.
Speaker 13: I would say that consensus is a little bit more
Speaker 13: muted on Intel relative to some other big tech names.
Speaker 13: I think there's far more hold ratings than there are buys.
Speaker 13: But I do think people are warming up to this story.
Speaker 13: A lot of skepticism for years about will they be
Speaker 13: able to get their foundry business back at the top
Speaker 13: of the line the industry standard, and there's been a
Speaker 13: lot of optimism that they are showing some progress on
Speaker 13: This turnaround was a very ambitious move. It's cost them
Speaker 13: a lot of money. There's been a lot of skepticism,
Speaker 13: but lately we are seeing very strong results. We had
Speaker 13: this report about potentially working with Apple on chip making,
Speaker 13: which would be a huge validation for the chip making business.
Speaker 13: So there are some very positive signs here. Like I said,
Speaker 13: the multiple is very high, there's a lot of questions
Speaker 13: out there, and the stock has already seen a pretty
Speaker 13: significant move.
Speaker 3: And that's benefit of the US government for one play
Speaker 3: bags Ron Plastelica, thanks so much.
Speaker 6: Always great reporting.
Speaker 3: Now let's talk about a growing number of bench firms
Speaker 3: who are pumping ever larger sums into leading startups, open
Speaker 3: AI and topic.
Speaker 6: But our next guest is taking a different approach.
Speaker 3: Bennett Segeil is a co founder of a style which
Speaker 3: targets seed stage startups. Checks three five million dollars, it's
Speaker 3: just closed. It's third fund four hundred and fifty million
Speaker 3: dollars in total. That's a large seed round and fund,
Speaker 3: but perhaps small versus multi stage VC fundraises that we've
Speaker 3: seen of late. So Bennett and I'm pleased to welcome
Speaker 3: you here into the New York studio. Seeds rounds have
Speaker 3: become astronomically large in many ways.
Speaker 6: So are you doing what you've always done? Are you
Speaker 6: having to change with the times? How is your VC
Speaker 6: model looking?
Speaker 1: Well?
Speaker 14: First off, thank you for having me. I think we
Speaker 14: right now live in a world of giants, both on
Speaker 14: the venture capital side and the company side, and we've
Speaker 14: really stuck to our craft, which is early stage investing,
Speaker 14: backing founders with an idea of raising a few million
Speaker 14: dollars and looking to build a giant of tomorrow, and
Speaker 14: we wanted a fund size that allowed us to execute
Speaker 14: on this strategy where we could be a close partner
Speaker 14: to these founders. As funds get larger, incentive shift and
Speaker 14: they increasingly put larger amounts of capital on the later
Speaker 14: stage rounds, and you see that with Anthropic and Open
Speaker 14: AI raising many billions of dollars. We tend to start
Speaker 14: more at the ground floor and have crafted our fund
Speaker 14: in our team to be a partner to founders when
Speaker 14: it's not obvious and before the technology is clear, before
Speaker 14: the market opportunity is present.
Speaker 3: But the size of the seed rounds, even when a
Speaker 3: product hasn't developed. I mean, you're thinking, what was it
Speaker 3: reporting around two billion being raised by Thinking Machines Lab.
Speaker 3: You're thinking about safer superintelligence again, a two billion seed round.
Speaker 6: I know Ed's going to come in with the avocados
Speaker 6: and the mangoes, But how do you stick to your knitting? Oh,
Speaker 6: you just you ignore those sorts of coming.
Speaker 14: No, it's a great question. I think there's a bifurcation
Speaker 14: in the market. I think there's traditional seed rounds, which
Speaker 14: increasingly companies started by younger founders, graduates from Harvard MIT Stanford.
Speaker 14: They're raising what we call more traditional seed round of
Speaker 14: between three to five million dollars. In many cases, they're
Speaker 14: building on top of foundational model companies, so they're leveraging
Speaker 14: the technology and the capital invested in open Ianthropic and
Speaker 14: we've backed a number of those companies and they build them.
Speaker 14: What we call the application layer on the flip side
Speaker 14: is exactly the types of rounds you're talking about. It's
Speaker 14: typically researchers that are spinning out of established model companies.
Speaker 14: They're raising in many cases could be hundreds of millions,
Speaker 14: could be billions of dollars out of the gate to
Speaker 14: go and do research and perhaps commercialize the future technology.
Speaker 14: We've largely avoided those rounds. In those rounds have been
Speaker 14: led by companies like Indries and Horrowitz and others. We
Speaker 14: will pick our spots, but many cases founders don't really
Speaker 14: need five hundred million dollars out of the gate, though
Speaker 14: in this capital markets environment, they're able to get it,
Speaker 14: and there are funds that will back them to do so.
Speaker 2: Before co founding a Star, you did four years at
Speaker 2: CO two and I imagine focused on slightly different scale
Speaker 2: and domains, but would you just reflect a little bit
Speaker 2: on the difference in your experience what that was like
Speaker 2: out investing out of CO two versus the seed stage
Speaker 2: at these check sizes and round sizes.
Speaker 14: Yeah, it's a great question. I think incentives do matter,
Speaker 14: and there's a reason that funds increasingly raise larger amounts
Speaker 14: of money over time, and when they raise larger quantuments
Speaker 14: of capital, they tend to invest in the later stages
Speaker 14: and they tend to focus on large dollar deployment. You know,
Speaker 14: CO two is a multi stage fund. They invest venturing
Speaker 14: through public markets. Most of the focus tends to be
Speaker 14: on the growth stages when there's already clear winners and
Speaker 14: you could invest hundreds and millions of dollars in a company.
Speaker 4: And look to earn a multiple on that.
Speaker 14: You know where we play at the seed stage, we're
Speaker 14: investing typically it starts out at a couple of million dollars.
Speaker 14: We're backing on a founder before there's an idea, before
Speaker 14: there's consensus around a market, and we're working with them
Speaker 14: to build their business.
Speaker 4: The beauty of our model is.
Speaker 14: We can actually make venture type returns, and we can
Speaker 14: make one hundred, two hundred and three hundred times our
Speaker 14: money but we have to go and find these, you know,
Speaker 14: incredible opportunities early, and it takes many years for the
Speaker 14: companies to sort of grow and mature. The other aspect
Speaker 14: of our model, which is different from coaches, will continue
Speaker 14: to invest, which we've done in our best companies over time,
Speaker 14: and be one of the largest shareholders in the cap table,
Speaker 14: so be much more concentrated with a handful of companies
Speaker 14: that we hope will go from inception stage to the
Speaker 14: public markets over a decade or longer.
Speaker 2: Well, Caroline was referring to about coconut rounds, avocado rounds,
Speaker 2: mango seed rounds. Is I wrote a column a few
Speaker 2: months ago that it's pointless saying seed because inside cases
Speaker 2: the entry level is so high. But you're committed to
Speaker 2: this two to five million dollar level, you know, that
Speaker 2: would counter that that the seed market is alive and
Speaker 2: well and true to its definition.
Speaker 14: Look, we're going to play the game in the field.
Speaker 14: We've modestly grown fun size. We started out with a
Speaker 14: three hundred million dollar fund. We're now in fun three
Speaker 14: or four hundred and fifty million, So we see inflation
Speaker 14: in round size, and you know, our goals to partner
Speaker 14: with the best founders in Silicon Valley, so we will
Speaker 14: do what we need to do to accomplish that. That said,
Speaker 14: it's still rare for founders to raise one hundred million
Speaker 14: dollars out of the gate with no product or prior
Speaker 14: track record. That is a rare, I would say circumstance
Speaker 14: of particularly researchers coming out of labs what we see
Speaker 14: in other cases. For instance, with a company called Decagon,
Speaker 14: which is one of the leaders in AI customer support.
Speaker 14: It's one of the killer use cases that AI where
Speaker 14: you could replace a lot of folks in the call
Speaker 14: center functions. You know, we co let a seed round
Speaker 14: at a twenty two point five million dollar valuation. In
Speaker 14: less than three years, the company has valued at nearly
Speaker 14: five billion dollars, and we've invested in every single round
Speaker 14: and worked with them to build the business. I think
Speaker 14: there are a number of examples like that where you
Speaker 14: can do a lot with less capital and in fact
Speaker 14: enforces discipline on the teams and the companies.
Speaker 2: Decagoon founded by Jesse Jang and Ashri and Stream of Us.
Speaker 2: I think I've been on this program Bennett's eeg or
Speaker 2: Astar co founder, not enough time, but really interesting look
Speaker 2: at that earlier stage of investing. Thank you very much.
Speaker 2: Now coming up, we're going to speak with SAPCO Christian Klein.
Speaker 2: There's the company debuts, it's autonomous enterprise platform, it's conversations.
Speaker 4: Next, this is Doonberg Tech.
Speaker 2: SAP has unveiled a new autonomous enterprise platform at this
Speaker 2: year's SAP Sapphire Conference, expanding its push into AI agents
Speaker 2: across business operations. Joining us now is SAP CEO Christian Client.
Speaker 2: Let's start by stripping away the jargon. What is an
Speaker 2: autonomous enterprise platform and what is it that your customers
Speaker 2: can now do, Christian that they couldn't do before.
Speaker 4: Yeah, thanks a lot. First of all, ed for having
Speaker 4: me yesterday.
Speaker 15: We launch the Autonomous Enterprise and we have record attendency
Speaker 15: at Sapphire and I see only thousands of customers very
Speaker 15: excited about the Autonomous Enterprise because we showed our customers
Speaker 15: today that while the large language models are getting better
Speaker 15: and better, they don't know anything about your business data
Speaker 15: and your business processes. And as part of the autonomous
Speaker 15: Enterprise is our new AI platform. And here we are
Speaker 15: infusing the brain of every company, which is the EERP,
Speaker 15: into the platform, so that the agents also not only
Speaker 15: have the large language models, but also that they have
Speaker 15: the context of how a company wants. And then on
Speaker 15: top we had customers like eight and AM, JP Mong
Speaker 15: Chase who have brewn that you know, with these agents
Speaker 15: you can really deliver accurate, compland and reliable results.
Speaker 6: Christian, how are you showing that productivity?
Speaker 3: What sort of data, what sort of statistics you're able
Speaker 3: to show your clients?
Speaker 15: Actually we shottle together with JP Mong Chase that they
Speaker 15: can close the books faster now by thirty percent.
Speaker 4: We have shown with H and M that the turno.
Speaker 15: In their commerce shop is now better because of our
Speaker 15: personalized agent. We have shown that inventory god reduced by
Speaker 15: ten percent because actually our agents work with each other
Speaker 15: and the demand agent actually signaled the inventory agent, hey,
Speaker 15: how to optimize and to how to optimize procurement. So
Speaker 15: we really could also connect the story very well from
Speaker 15: the front office into the fulfillment functions, which is the
Speaker 15: power of SAP.
Speaker 2: Very recently spoke to AWS CEO Matt Garman, an AWS
Speaker 2: partner of SAPs, but they are also moving into this
Speaker 2: exact domain. How much pressure you feel, in Christian to
Speaker 2: offer this sort of encompassing agentic platform because if you don't,
Speaker 2: someone else will.
Speaker 4: Yeah, for sure.
Speaker 15: But look, take AWS actually a great partner. I mean,
Speaker 15: Matta and I talk regularly, and because you know, as
Speaker 15: a matter of fact, not all data of the world
Speaker 15: sits in SEP systems. And with AWS, we are now
Speaker 15: partnering to also build a harmony data layer because of
Speaker 15: course still agents they can't compensate for problem data modules.
Speaker 15: And as part of our new SEP business aiplatform, we
Speaker 15: also now harmonized data SAP non SEP data, and then
Speaker 15: we've infused it into the agents, so we see AWS
Speaker 15: Microsoft we had in Vitair. Here on stage we have
Speaker 15: data break Snowflakes. They are all now joining our platform
Speaker 15: to harmonize business data and these are the partnerships we
Speaker 15: need to deliver highly ecoate AI.
Speaker 3: Is it the accuracy that you think wins people over
Speaker 3: from worrying that you're going to lose out competition? That's
Speaker 3: the heart of where it's going, Like everyone's a frenemi,
Speaker 3: but also the labs serious competition.
Speaker 6: How do you fend off the software anxiety?
Speaker 4: Caroline Exactly.
Speaker 15: I guess the heart of the new platform is clearly
Speaker 15: our contact layer, because the brain of every company is
Speaker 15: the EERP. I mean, we have over seven point five
Speaker 15: million data fields in there, we have thousands of business processes,
Speaker 15: and that knowledge sits in our platform. And this is
Speaker 15: clearly how the platform also can differentiate. You can use
Speaker 15: any commodity LLM you want. People can bring their own
Speaker 15: modules what they would like to use. But then on
Speaker 15: the blootform, these agents immediately get the context what only
Speaker 15: SEP has and that's our why to win, and that's
Speaker 15: how SEP will differentiate.
Speaker 2: Christian in Nvidia CEO Jens Munk's formula or equation is
Speaker 2: very simple. More compute, more tokens, more revenues. Do you
Speaker 2: have any case studies with customers where you can say
Speaker 2: there's actual real revenues through the agentic work they've done
Speaker 2: with SAP.
Speaker 4: Yeah.
Speaker 15: I had Chensen actually with me on the keynote today
Speaker 15: and he clearly said he, of course, which is our
Speaker 15: best luck first of all as a customer to SVP,
Speaker 15: but the second obviously in order to get higher consumption
Speaker 15: of compute and chips. I mean, you need consumption at
Speaker 15: the top where the real value creation happens. And that's
Speaker 15: why when we actually now can build an autonomous supply
Speaker 15: chain for in Vitia. I mean they see this immediately
Speaker 15: also in the hardware consumption. And this is where also
Speaker 15: in Vita and SAP are partnering up to build the
Speaker 15: autonomous enterprise.
Speaker 3: Christian Klein of SAP Sapphire event, we very much appreciate
Speaker 3: you joining from Florida.
Speaker 6: Thank you.
Speaker 3: Ford, and it's set to open a nearly three billion
Speaker 3: dollar battery plant in Marshall, Michigan, bringing new manufacturing jobs.
Speaker 6: An investment to the United States.
Speaker 3: The facility will use technology though license from China's COATL
Speaker 3: supplying LITHIUMAH and phosphate battery chemistry, an arrangement drawing some
Speaker 3: scrutiny amid the US China attentions. This comes across as
Speaker 3: President Trump heads to China this week for talks of
Speaker 3: President using ping so joining us. We've got a roundtable
Speaker 3: Niberg's Auto Report at Keith Norton and Senior Tech editor
Speaker 3: Mike Shephard And Keith, I start with you, because what
Speaker 3: is the relationship like between Ford and CAATL. Has it
Speaker 3: been rosy throughout the ability to build out this manufacturing site.
Speaker 10: Yeah.
Speaker 16: CTL is in Marshall, Michigan right now, training workers, helping
Speaker 16: get this plant off the ground. It's due to open
Speaker 16: this year. Ford takes great pains to say it's fully
Speaker 16: owned by Ford and the workers are employed by Ford.
Speaker 16: It is just a licensing deal. But they've had a
Speaker 16: good relationship to develop these lower cost LFP batteries that
Speaker 16: are central to Ford's efforts to overhaul its EV strategy
Speaker 16: and deploy more affordable evs in twenty twenty seven.
Speaker 3: But Mike this relationship, though Rosie hasn't been particularly well
Speaker 3: loved by some people in Michigan. But even and the
Speaker 3: wholes of Congress, right, how has this been sitting The
Speaker 3: sharing of technology between China and US giants?
Speaker 17: Well, in general, there has been a lot of reluctance
Speaker 17: to allow this kind of a partnership. Anything that remotely
Speaker 17: touches on advanced technology immediately draws concerns from wawmakers here
Speaker 17: in Washington who really fear the leakage of technology to China,
Speaker 17: but also the potential leakage of data and other information
Speaker 17: that could jeopardize US national security. And we have seen that,
Speaker 17: of course in the battle over TikTok, and then more
Speaker 17: recently we have seen this in terms of legislation at
Speaker 17: the State level, and even introduced here at the national
Speaker 17: level this week in Washington aimed at restricting Chinese purchases
Speaker 17: of land and also investments in businesses here for those
Speaker 17: verious security reasons. And it's important to know, Caro, that
Speaker 17: COTL itself is the focus of some of those concerns.
Speaker 17: The company in twenty twenty five was added to this
Speaker 17: Pentagon list of companies that the US government believes support
Speaker 17: China's military.
Speaker 2: Keith, do you not have a great sense of deja vu?
Speaker 2: Didn't you and I write about a COATL licensing deal
Speaker 2: in twenty twenty three that Sections as a Republican Party
Speaker 2: then said was a trojan horse.
Speaker 4: Different.
Speaker 16: Yeah, So there continues to be these concerns, as Mike
Speaker 16: is saying about ties to the Chinese Commingist Party with CTL.
Speaker 16: But here's the reality, Ed, you cannot pursue an EV
Speaker 16: strategy without dealing with the Chinese. The Chinese control eighty
Speaker 16: percent of the world's capacity for batteries, and that is
Speaker 16: the most costly component of an electric vehicle. CATL has
Speaker 16: half of that, So they're the battery giant that you
Speaker 16: must deal with if you want to have an electric
Speaker 16: vehicle strategy.
Speaker 2: What that story at the time showed shep and became
Speaker 2: true in the first few months of this administration was
Speaker 2: there is a scale of China hawkishness right ranging from
Speaker 2: we need complete access and work with China to let's
Speaker 2: not do any business with China. And when the President
Speaker 2: goes with that entourage with CEOs in the next twenty
Speaker 2: four hours, that spectrum of hawkishness will also be a
Speaker 2: part of the political story.
Speaker 17: Well, it certainly will ed. We will see that follow
Speaker 17: the delegation with the President. And these are the concerns
Speaker 17: that's around the ability of China, for example, to purchase
Speaker 17: advanced AI chips from Nvidia, and a notable absence of
Speaker 17: courses noted early on the program is Nvidia's Jensen Wang
Speaker 17: and also the Iran conflict itself will barge into these
Speaker 17: talks and really perhaps restrain the ability of unfettered deal
Speaker 17: making by some of these companies. They'll be looking for
Speaker 17: smaller wins, perhaps in the Chinese market, and then we'll
Speaker 17: come up the question, of course, of what can China
Speaker 17: do for the US, which is what Donald Trump has
Speaker 17: tried with other trading partners like Japan, South Korea, the
Speaker 17: European Union, encouraging them to invest here in the US
Speaker 17: as part of trade negotiations. The challenge is though reaching
Speaker 17: some sort of a grand bargain with the US would
Speaker 17: require much more complex talks on issues ranging from tariffs
Speaker 17: to market access China, and then also the even more
Speaker 17: sensitive question of rare earths and whether China would relax
Speaker 17: its position in terms of handling the choke point that
Speaker 17: it holds, the chokehold that it holds over those elements
Speaker 17: that are critical to manufacturing in so many areas, including autos,
Speaker 17: but across the economy, I mean.
Speaker 3: Where US is where it's that when it comes to
Speaker 3: battery technology. Keith and I go back in many ways
Speaker 3: to market access, because with one breath you'll hear the
Speaker 3: Ford CEO working on this relationship with the atl and
Speaker 3: then the second best saying, but we don't want Chinese
Speaker 3: main cars or auto's coming to the United States.
Speaker 6: So that's something that's got to be balanced.
Speaker 16: Exactly right, because the United States is still well behind
Speaker 16: the Chinese and eb technology maybe a decade behind. And
Speaker 16: of course the Chinese auto industry is supported by its government,
Speaker 16: so they have lower costs. So Jim Farley, the CEO
Speaker 16: of Ford, says, keep the Chinese out, but we also
Speaker 16: value our partnerships with the Chinese.
Speaker 5: We want to do more of them.
Speaker 16: So yeah, it's a very fine line that they're treading here,
Speaker 16: and they do need Chinese tech if they want to
Speaker 16: have evs, but they also would be swamped by Chinese
Speaker 16: competition if Chinese evs were allowed in For America.
Speaker 2: Bloombergs Keith Norton and Bloomberg's Mike Shepherd, thank you very much. Okay,
Speaker 2: before we go, let's take a look at today's big number.
Speaker 2: One hundred and thirty five billion dollars. That's how much
Speaker 2: Netflix says it has spent over the past decade making
Speaker 2: films and TV shows in more than fifty countries. That's
Speaker 2: a part of a new website called the Netflix Effect
Speaker 2: that the company is using to show how it boosts
Speaker 2: local economies. Netflix says the impact goes beyond direct employment.
Speaker 2: For instance, highlighting how South Korea Caro sort of twenty
Speaker 2: five percent spike in airline bookings.
Speaker 3: I just think new film Nana and the Magician's Nephew
Speaker 3: actually going to having a long run in theaters. How
Speaker 3: Netflix is changing the game that does it though, for
Speaker 3: this edition of Bloomberg Tech, a.
Speaker 2: Big show ahead, a big remainder of the week. Don't
Speaker 2: forget to check out the pod. That's where you can
Speaker 2: find it. This is Bloomberg Tech.
Speaker 7: M HM