Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
Speaker 1: from coast to coast with Caroline Hyde in New York
Speaker 1: and Eva low in sentrancs.
Speaker 2: Go this is Bloomberg Tech coming up. Open Ai links
Speaker 2: stock slump after the Wall Street Journal reported that the
Speaker 2: company failed to meet its own sales and user targets.
Speaker 3: Plus, a jury has been selected for the trial between
Speaker 3: some altman and musk, who claims open ai abandoned its
Speaker 3: founding mission.
Speaker 4: Arguments begin today.
Speaker 2: And Late night host Jimmy Kimmel has defended comments he
Speaker 2: made that prompted President Trump to call for him to
Speaker 2: be fired.
Speaker 5: We head to Hollywood for the latest.
Speaker 3: First, we head to these markets and they are under pressure. Yes,
Speaker 3: geopolitical tension is still loom large, and we think a
Speaker 3: lot about Iran and the straight orfor moves, But we
Speaker 3: also think about what's currently happening in the cell of
Speaker 3: related to techniques. Quarter percent on the Nasdaq, one hundred
Speaker 3: worse day in a month. Why you're going to get
Speaker 3: to those details. It's all open ai related.
Speaker 5: Yep. Look at this board.
Speaker 2: These are the soft bank US listed shares that have
Speaker 2: tens of billions of dollars of exposure to open ai
Speaker 2: Core Weave clear Neocloud exposure to open ai Oracle, the
Speaker 2: primary infrastructure partner for open Ai. The journal reporting that
Speaker 2: open Ai missed its own metrics financial ones for twenty
Speaker 2: twenty five, and contemporaneously Caro the user number is not
Speaker 2: where they want it to be.
Speaker 3: It's not and this is all reporting for the Wall
Speaker 3: Street Journal. We want to dig into that. Bloomberg Tech
Speaker 3: editor Seth Figgerman, what is the biggest anxiety for investors?
Speaker 3: Is it that they're not yet at a billion users
Speaker 3: and have been hoped by investors thus far? Is it
Speaker 3: more the revenues that aren't hitting internal targets?
Speaker 4: What is it about this reporting?
Speaker 6: I'd say probably more of the revenue sag of things. Ultimately,
Speaker 6: this company is still growing pretty fast, but if they
Speaker 6: fall short of their own expectations, even by a margas
Speaker 6: de mal in my affair to the wider AI ecosystem.
Speaker 6: As a reminder, as we've reported, Opening has increasingly set
Speaker 6: itself up at the center of this complex web of
Speaker 6: investments from ship suppliers and cloud providers, and if it
Speaker 6: has to reduce in any form it's commitment to the
Speaker 6: infrastructure spending. It could have ripple effects for the wider
Speaker 6: AI landscape.
Speaker 2: I'm just going to go through what the journal reported.
Speaker 2: Chat GPT missed its annual revenue target in twenty five,
Speaker 2: it missed its internal full year revenue goal, and then
Speaker 2: for twenty six, monthly revenue targets are behind. And the
Speaker 2: big one probably is the billion figure for Chat GPT uses.
Speaker 2: Again all Wall Street Journal reporting, and I note that
Speaker 2: in that story there is a pretty strong statement from
Speaker 2: both Sarah Fryer, the CFO, and COO Sam Oltman. What's
Speaker 2: the logic here of why we see all these stocks react.
Speaker 2: It's just their partners or what?
Speaker 6: Yeah, I think that their partners and ultimately if Opening
Speaker 6: I has to rethink hundreds of billions of dollars plans
Speaker 6: to spend in the next five to ten years on
Speaker 6: DIGA centers and ships that could have ripple effects for
Speaker 6: a lot of these partners. Now, I will say you
Speaker 6: alluded to some pushback here. We're also hearing directly from
Speaker 6: Opening eyeing a statement that they're saying their business is
Speaker 6: firing on all cylinders quote end quote right now with
Speaker 6: strong growth in their nascent advertising efforts on the consumer side,
Speaker 6: as well as with their enterprise product. Now they're not
Speaker 6: spelling out their financial details, neither is the Wall Street Journal.
Speaker 3: All of this so puts the question of the IPO
Speaker 3: in the balance as well, and just the rush to
Speaker 3: be able to raise more funds publicly, does that matter
Speaker 3: in this context, particularly if we are seeing that it
Speaker 3: questions whether they're going to be able to finance that
Speaker 3: going forward for more compute.
Speaker 6: I think it certainly matters in probably a couple different ways. One,
Speaker 6: if their business is not where they want it to be,
Speaker 6: that's going to add pressure for them to maybe delay
Speaker 6: a little bit longer before going public. But Two, if
Speaker 6: the question here is why are they not where they
Speaker 6: want to be, it seems likely that's because of the
Speaker 6: pressure they're facing from Google, an anthropic the lagger of
Speaker 6: which also wants to go public as soon as this year.
Speaker 6: So if it's facing off against possibly as sendan rival,
Speaker 6: that's going to make it even that much harder to
Speaker 6: pitch Wall Street.
Speaker 2: So for part of the Open AI story, and in
Speaker 2: the Wall Street Journal's reporting and others reporting, is this
Speaker 2: concern that Sarah Fryer has revenues aren't growing at the
Speaker 2: same pace that justifies all the spending, and when you're
Speaker 2: going to IPO, that's a bit worrying if you're going
Speaker 2: to put down in front of investors, what do we
Speaker 2: know in that standpoint?
Speaker 6: Yeah, I mean, look what this company is publicly said
Speaker 6: as I think last year, they were around thirteen billion
Speaker 6: dollars in revenue. As of February, after they announced the
Speaker 6: mammoth funding round, they said that they were generating two
Speaker 6: billion dollars in revenue a month, So you can do
Speaker 6: the math there. It's still a fast growing company. But
Speaker 6: in order to justify six hundred billion dollars and infra spending,
Speaker 6: which is what they've said, you need to be growing
Speaker 6: up bit faster than that. And Sam Alman has previously
Speaker 6: sounded quite bullish on the prospects to grow this business
Speaker 6: quite fast up to one hundred billion dollars in revenue
Speaker 6: in the coming years. If that's going to happen at
Speaker 6: a slower pace, they might need to rethink some of
Speaker 6: their data center build out plans.
Speaker 2: Bloomberg Seth Fighman, thank you, Bloomberg Intelligence out with the
Speaker 2: React Senior tech handlist, and rag Rana writing that if
Speaker 2: open ai s sales were to miss as reported by
Speaker 2: the Wall Street Journal, it could have an impact across
Speaker 2: the entire AI infrastructure ecosystem, and a rag joins us, Now,
Speaker 2: what's so interesting about this, Like the market's response is, oh,
Speaker 2: we actually now do need evidence of demand. Right, we
Speaker 2: know about the infrastructure spend that data we've got. What
Speaker 2: we don't have is what's coming out the other side.
Speaker 2: How are you computing that?
Speaker 7: So when we look at the entire cloud infrastructure demand,
Speaker 7: I mean that still remains very solid. Whether that's transferred
Speaker 7: from open ai to Entropic. That is the big story
Speaker 7: that we are discussing here is whether this promise that
Speaker 7: openei has made to Oracle, to Amazon, to Microsoft to
Speaker 7: goal bed, you know, how good is that promise over
Speaker 7: the long term. And I think that's the contention point.
Speaker 7: But frankly, if you were to put that aside, the
Speaker 7: demand for cloud infrastructure remains extremely strong right now, and
Speaker 7: partially driven by Anthropic and all the coding tools that
Speaker 7: we have seen over the last six months.
Speaker 3: What's so interesting is cool we've come out with a
Speaker 3: statement from a spokesperson's saying all we see is more
Speaker 3: demand than there is supply when it comes to compute,
Speaker 3: right Now that exactly leans into where you see anaag
Speaker 3: So if there was one player pulling back, there's immediately
Speaker 3: enough demand to fill that supply.
Speaker 7: See for somebody like poor Vid, absolutely they can backfil
Speaker 7: it with because they have agreements with Meta, they have
Speaker 7: agreements with Microsoft. So I mean, given their scale, it's
Speaker 7: not a big deal. And I would say the same
Speaker 7: thing for both Amazon and Microsoft because they have enough
Speaker 7: backlock coming from other places. The thing is over here.
Speaker 7: Oracle is the one where open Ai has the largest commitment,
Speaker 7: which was three hundred billion dollars plus. Now this is
Speaker 7: where you would see that how will that number shape
Speaker 7: up in the coming years? You know, I would argue
Speaker 7: that even if things were really fine with open Ai
Speaker 7: and there were no changes, there could be some transfer
Speaker 7: of that demand from Oracle to potentially Amazon's web services
Speaker 7: because when open Ai and Oracle signed that deal, Amazon
Speaker 7: was not in the picture. Amazon recently got included in
Speaker 7: the pie and the opening I made one hundred billion
Speaker 7: plus commitment with them, So you know, if they're going
Speaker 7: to cut back somewhere, I think the my gut instinct
Speaker 7: is it's going to come more from Oracle than anybody else.
Speaker 3: And we see the share price reaction in Oracle today,
Speaker 3: of course along with everyone else. Ana rag Can I
Speaker 3: just go back to one area that has been reported
Speaker 3: is that open Ai had turned to its own investors saying,
Speaker 3: the reason we can stay ahead and perhaps fend off
Speaker 3: competition like an anthropic is we've got more compute. Is
Speaker 3: that a winning formula for these llms right now?
Speaker 7: So that is the traditional mindset that the more compute
Speaker 7: that you have, the better your model is going to be.
Speaker 7: So far that trick has been working in a sense,
Speaker 7: that model, that concept of uh, you know, you could
Speaker 7: say scaling laws have been working. I just don't know
Speaker 7: how that shapes up in the next iteration of model
Speaker 7: and how big of a clusters do you need to
Speaker 7: train them?
Speaker 3: And rag Rana out with the react, out with the
Speaker 3: boommeg intelligence. We so appreciate it. Let's get broader market perspective.
Speaker 3: Tiffany Wadees say with US Columbia thread Needle Investments senior
Speaker 3: portfolio manager, It's interesting how much the market reacts to
Speaker 3: this particular reporting. Is there reason to have anxiety that
Speaker 3: companies are good for the compute demand right now?
Speaker 4: I think we're going to.
Speaker 8: See that the compute demand continues to persist. There's so
Speaker 8: much demand, and it's not just from Anthropic and open Ai.
Speaker 8: It's really across the economy that we're seeing demand for
Speaker 8: more processing power. So I expect the spending is going
Speaker 8: to continue. But I get why we're seeing some of
Speaker 8: the stock reactions on a news report like this, especially
Speaker 8: across the tech in the semi space, where these stocks
Speaker 8: have been up almost forty percent over the last month,
Speaker 8: So it kind of makes sense that we're seeing them
Speaker 8: take a breather on a big bit of a negative
Speaker 8: news report. But I don't think that we're going to
Speaker 8: see that the story for infrastructure, you know, spaying demand
Speaker 8: has cracked.
Speaker 2: Tiffany, I'm right in saying that Alphabet parent of Google
Speaker 2: is one of your top holdings, one of your.
Speaker 5: Top names, right.
Speaker 2: Yes, what we've looked at is obviously the chaos in
Speaker 2: the moment, there's a big move in the session, But
Speaker 2: this is a longer term chart, and it shows that
Speaker 2: Alphabet exposed stocks have massively outperformed open Ai exposed stocks.
Speaker 2: We can get into the definition of but each but
Speaker 2: what does that chart tell you about your own thesis
Speaker 2: and conviction on Google?
Speaker 8: Yeah, I think we're seeing the divergence here, and the
Speaker 8: charts really happen according to the competitiveness of the models
Speaker 8: that have been released by both companies. Right, So, Google
Speaker 8: for a while was being perceived as a bit of
Speaker 8: a loser because their models were maybe not as good
Speaker 8: as what we were seeing come out of open Ai
Speaker 8: an anthropic and that changed last year when they released
Speaker 8: some of their newer Gemini models and then they were
Speaker 8: seen as more of a winner. And I think that
Speaker 8: caused some of that divergence and the performance between those
Speaker 8: baskets of stocks that are linked to Google and that
Speaker 8: are linked to open Ai. And certainly this continues to
Speaker 8: sort of push that narrative around how competitive are open
Speaker 8: ai models versus the competitors.
Speaker 2: Let's bring it back to today's top story. Stocks that
Speaker 2: have an association with open Ai are selling off pretty
Speaker 2: hard on the basis that the journal reported it missed
Speaker 2: prior year financial targets internal and it's still not where
Speaker 2: it wants to be on CHATGBT users. It seems like
Speaker 2: now we do need some more evidence of demand on
Speaker 2: a longer term basis. We're not just focused on the
Speaker 2: capex input. Is that where your head's at Tiffany.
Speaker 4: I think that's right.
Speaker 8: I don't think the demand overall is slowing. We're seeing
Speaker 8: amazing numbers coming out of Anthropic. They've taken up their
Speaker 8: revenue targets significantly over.
Speaker 4: The course of the year. There could be a couple.
Speaker 8: Things that are causing open ai to grow a little
Speaker 8: bit slower, and part of it could be that they're
Speaker 8: losing a bit of market share to Nthropic. Anthropic with
Speaker 8: their cloud code product, has been a massive hit so
Speaker 8: far this year. Open Ai was a couple months behind
Speaker 8: and releasing their Codex product. Their exclusivity agreement with Microsoft
Speaker 8: may also have been a bit of a headwind to
Speaker 8: enterprise adoption, but yesterday that agreement was renegotiated, so we
Speaker 8: might see some more opportunity for open Ai on some
Speaker 8: of the other cloud providers as more models become available elsewhere.
Speaker 8: So I think we might see some of those proof
Speaker 8: points around the growth given just you know, having the
Speaker 8: ability to sell this Codex product across more platforms, and
Speaker 8: also the ability to sell their models across a wider
Speaker 8: array of models across aws and then also across the
Speaker 8: Google Cloud platform.
Speaker 3: And that proof point comes in earnings. I mean we're
Speaker 3: all just holding our breath for this week to really
Speaker 3: see how much capital expenditure continues to come from these megaplays.
Speaker 8: Yeah, well, I don't think we'll know the answer Frobe
Speaker 8: and I specifically this week, but we'll certainly see if
Speaker 8: the demand continues to hold up. I think we'll be
Speaker 8: watching very closely to see the revenue growth and potentially
Speaker 8: continued sort of acceleration in revenue growth for the cloud
Speaker 8: services providers, and then also what they have to say
Speaker 8: about capex plans. It's likely that we'll continue to hear
Speaker 8: the companies say that their capacity constrained, which may lead
Speaker 8: to increased CAPEX expenditures.
Speaker 4: For the year.
Speaker 2: Tiffany, let's put the academic side of this to one side.
Speaker 2: AI is developing. AI is potentially good for the world.
Speaker 2: This is Bloomberg. We do business. So what's the metric
Speaker 2: by which we set the world order of who is
Speaker 2: leading in the field? Open AI andthropic alphabet meta XAI.
Speaker 5: How do you establish a rank?
Speaker 8: I think some of the things we're looking for, certainly
Speaker 8: user growth when we're thinking about the model providers, So
Speaker 8: at the moment, it seems like anthropic is leading. Also
Speaker 8: their focus on enterprise demand has clearly been a benefit
Speaker 8: for them versus open AI shifting demand towards enterprise or
Speaker 8: their focus towards enterprise later on. And then for the
Speaker 8: cloud providers, we're really looking for that acceleration in the
Speaker 8: revenue for the cloud businesses as an indicator that demand
Speaker 8: continues to grow and that they're starting to generate some
Speaker 8: good returns off of the spending that they are committed to.
Speaker 3: From your perspective, the hard way, you opened this up
Speaker 3: by saying, no, wonder we perhaps get a pullback because
Speaker 3: the market is run so high, But is it for
Speaker 3: the twenty twenty six hardware wins, infrastructure wins. Software is
Speaker 3: still at play and still an anxiety ridden space right now.
Speaker 8: I think we're going to see that continue to be
Speaker 8: the playbook for the year. I wouldn't be surprised if
Speaker 8: we took a little bit of a breather on some
Speaker 8: of the semiconductor stocks I mentioned. They're up almost forty
Speaker 8: percent over the last month, so potentially quite crowded here
Speaker 8: going into the rest of earnings. But I think that
Speaker 8: that narrative probably continues for the rest of the year,
Speaker 8: where we're seeing very good demand, very good backlog for
Speaker 8: all of the hardware companies, and these questions continue to
Speaker 8: linger about sort of the business model for software and
Speaker 8: SaaS companies.
Speaker 2: Tiffany Wade of Columbia, Fred deed Or, It's been a robust, timely,
Speaker 2: and very useful conversation, Thank you very much. Now coming up,
Speaker 2: President Trump is once again criticizing late night host Jimmy
Speaker 2: Kimmel and calling for him to be fired.
Speaker 5: We had the details of that next.
Speaker 2: In the meantime, President Trump is speaking in Washington where
Speaker 2: he's welcoming King Charles IID at the White House.
Speaker 5: That's listen it.
Speaker 9: We're the two great leaders met was called the Prince
Speaker 9: of Wales the very time that his Majesty the King
Speaker 9: held longer than any other individual in British history, and
Speaker 9: he held it with great pride and respect. It said
Speaker 9: that when Prime Minister Churchill first met this future King
Speaker 9: many decades ago, he was so impressed. He made the statement,
Speaker 9: he is so young to think so much and so well.
Speaker 9: And the bust of your great Prime Minister rests proudly
Speaker 9: again in the Oval Office. I'm very proud to bring
Speaker 9: it back. We brought it back throughout His Majesty's life.
Speaker 9: The world has witnessed that same thoughtfulness which first struck
Speaker 9: Britain's greatest Prime Minister. His Majesty's intellect, passion, and devotion
Speaker 9: have been a long, really a long, a blessing, blessing
Speaker 9: to the British people, but not only to his own country,
Speaker 9: but to the cherished bond between the United States and
Speaker 9: the United Kingdom. And I am very certain that it
Speaker 9: will continue that way long into the future. In a
Speaker 9: few hours, his Majesty will stand in the heart of
Speaker 9: the United States Capital as the very first British King
Speaker 9: ever to address a joint session of the United States Congress.
Speaker 9: So he's going to be addressing.
Speaker 5: Congress.
Speaker 10: Said, I'm going to be watching.
Speaker 9: I was thinking of going, but they said, I don't know.
Speaker 9: That might be a step two foot.
Speaker 10: I would love to go.
Speaker 9: It's not supposed to be protocol, but I would love
Speaker 9: to be with you. But there, the direct descendant of
Speaker 9: King George the Third will speak to the direct successor
Speaker 9: of the very body that gathered in Independence Hall and
Speaker 9: July fourth, seventeen seventy six. If John Adams and George Washington,
Speaker 9: or the King's fifth great grandfather could see that site,
Speaker 9: they might be absolutely shocked, but probably only for a moment.
Speaker 9: Surely they would be delighted that the wounds of war
Speaker 9: healed into the most cherished friendship. Think of that very,
Speaker 9: very long ago, difficult war, and yet those wounds did
Speaker 9: indeed heal into the most cherished of friendships, most cherished.
Speaker 9: They would be moved beyond words to know that the
Speaker 9: soldiers who once called each other redcoats and Yankees became
Speaker 9: the Tommys and the Gis who together saved the free
Speaker 9: world as brothers in arms and brothers in eternity. And no, no,
Speaker 9: but he fought better together than us. If they could
Speaker 9: see us today.
Speaker 11: I agree that hateful and violent rhetoric is something we
Speaker 11: should reject. I do, and I think a great place
Speaker 11: to start to dial that back would be to have
Speaker 11: a conversation with your husband about it. Because, by the way,
Speaker 11: I also should point out Donald Trump is allowed to
Speaker 11: say whatever he wants to say, as are you and
Speaker 11: as am I, as are all of us, because under
Speaker 11: the First Amendment, we have as Americans a right to
Speaker 11: free speech.
Speaker 2: Jimmy Kimmel there defending a joke he made last week
Speaker 2: that prompted President Donald Trump to call for ABC to
Speaker 2: fire the late night host. Let's get the details on
Speaker 2: this latest fight between Kimmel and the President with Lucas Shaw,
Speaker 2: who leads our screen time team out of LA and Hollywood.
Speaker 5: Where do we start, Lucas.
Speaker 2: I mean, there is a chronology to what happened over
Speaker 2: the last seven days, but the net result is that
Speaker 2: the President has called for Jimmy Kimmel to be fired.
Speaker 12: Yeah, I mean, we we've It feels a little bit
Speaker 12: like deja vu, which which Kimmel talked about on television
Speaker 12: last night. It was it was you know, six months ago,
Speaker 12: give or take. I think it was maybe seven where
Speaker 12: you know, the the chairman of the FCC, Brendan Carr,
Speaker 12: President Trump, we're calling for Kimmel to be fired by
Speaker 12: by Disney and ABC or calling on stations to come
Speaker 12: after Kimmel. But that's one of the big differences this
Speaker 12: time versus last time, is you know, Disney reacted very swiftly,
Speaker 12: in part because some of the biggest local station owners
Speaker 12: which carried the kind of ABC on their on their
Speaker 12: local networks, were asking for Kimmel to be fired or
Speaker 12: asking for him to be off the air because of
Speaker 12: comments he'd made at the time regarding Charlie Kirk.
Speaker 10: You know this time, they they aren't doing that. They've
Speaker 10: been pretty silent.
Speaker 2: Lucas in October, after that first dispute, you had an
Speaker 2: extended conversation with Kimmel on stage in Los Angeles at
Speaker 2: our screen time event. So the Bloomberg Tech audience around
Speaker 2: the world that may not understand this, right, they don't
Speaker 2: necessarily know Jimmy Kimmel. They may they don't understand why
Speaker 2: the president is so engaged over what Jimmy Kimmell has
Speaker 2: to say. Just give us the basics of his show,
Speaker 2: its reach, why this is happening.
Speaker 12: Look, Jimmy Kimmel hosts one of the three main late
Speaker 12: night talk shows on American broadcast TV. You've got the
Speaker 12: show on CBS by Stephen Colbert, which is about to
Speaker 12: go away. You've got the show on NBC hosted by
Speaker 12: Jimmy Fallon, and then Kimmel on ABC. You know, he
Speaker 12: is not known, or, at least for most of his career,
Speaker 12: was not known as a political comedian, but over the
Speaker 12: last several years has gotten far more out spoken on
Speaker 12: politics and has been a really frequent thorn in the
Speaker 12: side of President Trump. Trump does not like to get
Speaker 12: made fun of and is someone who still cares about
Speaker 12: late night television. And so they've had sort of public
Speaker 12: jousting again and again, and I think this time, you know,
Speaker 12: Disney didn't.
Speaker 10: Kimmel off the air. Kimmel was not.
Speaker 12: You know, he is finding a way to consistently tweak
Speaker 12: the president while also trying to not cross the line
Speaker 12: as he has done in the past.
Speaker 3: Kimmel did say he was sorry for what Trump the
Speaker 3: first Lady and everyone at the dinner this is a
Speaker 3: White House correspondence dinner went through. But question whether really
Speaker 3: the joke was in any way relationship to them what
Speaker 3: occurred over the weekend. That is the context here, Lucas,
Speaker 3: how do we see therefore, maybe any friend and car
Speaker 3: comments coming further? Do you anticipate or you're bracing yourself
Speaker 3: for any further reaction?
Speaker 12: Mark, you made a crucial point, which is that Jimmy
Speaker 12: Kimmel made a joke that we can debate whether or
Speaker 12: not it was in good taste or not, but it
Speaker 12: was made prior to the incident and the White House
Speaker 12: correspondent to dinner over the weekend, so it's not like
Speaker 12: he was making light of that situation.
Speaker 10: Because the comments were edgy.
Speaker 12: They have been weaponized by the Trump administration once again
Speaker 12: to show that Kimmel is.
Speaker 10: A bad guy.
Speaker 12: Is it possible that s see in that the FCC
Speaker 12: and Brendan Carr come after Kimmel, or more specifically, come
Speaker 12: after Disney and those ABC station licenses, kind of anything
Speaker 12: as possible. Brendan Carr has behaved in a manner that
Speaker 12: is unlike any FCC chair.
Speaker 10: Before, but we don't know yet what they're planning to do.
Speaker 3: Away, As Luka shaw As always across it, we appreciate you.
Speaker 3: China is moving from regulation to intervention in an unprecedented
Speaker 3: geo political power play. Hijiping is attempting to block a
Speaker 3: Meta deal that has already closed new works. Peter Elstrom
Speaker 3: has more on Beijing's move to exert extra territorial influence
Speaker 3: over Silicon Valley. Is that how it's being seen, Peter,
Speaker 3: I'm really interested in we understand how Meta and mannas.
Speaker 3: Yesterday we covered why that deal might be being getting
Speaker 3: pushed back from China, But how does it affect other companies.
Speaker 4: That have been born in China and moved elsewhere.
Speaker 13: Well, China for a long time has been able to
Speaker 13: exercise these regulatory powers that are far beyond what you
Speaker 13: see in other countries. We know a course about their
Speaker 13: crackdown on Jack Man, Ali Baba and the Ant Group,
Speaker 13: for example. Probably the closest thing to what we're seeing
Speaker 13: right now with Manus is when d D the ride
Speaker 13: hailing company, they're listed on the New York Stock Exchange
Speaker 13: and then actually I had to reverse course and pull
Speaker 13: its listing, and so what they're trying to do here
Speaker 13: is quite similar in a lot of ways. They're trying
Speaker 13: to go to Meta, even though it's already closed this
Speaker 13: deal and get them to undo the acquisition of Manus.
Speaker 13: It's not clear how that would happen. As we talked
Speaker 13: about yesterday, the money has already been distributed to the
Speaker 13: shareholders of Manus. It's not clear whether they can get
Speaker 13: those checks back and actually return them. And it's also
Speaker 13: not clear how they're going to undo some of the
Speaker 13: technology sharing that we've already seen. Manus has already shared
Speaker 13: a bunch of their technology with Meta at this point,
Speaker 13: so it's not clear that you can actually undo this
Speaker 13: and what it would mean to actually undo it at
Speaker 13: this stage of the process.
Speaker 2: There is a case study mirror mind, Peter, correct me
Speaker 2: if I haven't said that right. But this is a
Speaker 2: business that has a US component and a Chinese component,
Speaker 2: and we've reported that the founder is looked at the
Speaker 2: manner situation and said, Okay, I'm taking action in light
Speaker 2: of the latest policy position from China.
Speaker 13: That's right, yeah, And this is a sign of how
Speaker 13: Chinese entrepreneurs or entrepreneurs with their roots in China are
Speaker 13: now being very careful about this geopolitical divide between China
Speaker 13: and the United States in particular. So in this case,
Speaker 13: you said it exactly right.
Speaker 10: It's Mirolen.
Speaker 4: Mind.
Speaker 13: This is a founder Chen who was famous for starting
Speaker 13: a games company called Shanda. He's decided that he needs
Speaker 13: to quarantine the Chinese business and the US business from
Speaker 13: each other. They've set up strict restrictions between those operations
Speaker 13: to make sure that they don't share data, they don't
Speaker 13: share code between the two operations. They can run them
Speaker 13: separately at this point, and I think that's a sign
Speaker 13: more broadly for these Chinese entrepreneurs who are starting up
Speaker 13: a bunch of very very interesting companies within the country
Speaker 13: at this point. Some of them in the past have
Speaker 13: looked to move to Singapore, or to perhaps distance themselves.
Speaker 13: That's actually what Man has tried to do, but it's
Speaker 13: not clear that that's going to work unless you go
Speaker 13: to Singapore separately, start up your company separately there, and
Speaker 13: then don't leave anything behind in China. So it's a
Speaker 13: tricky situational overall for these entrepreneurs.
Speaker 2: Bloomberg's Peter Alstrom, who's the executive editor leading our coverage
Speaker 2: of Asia tech, thank you very much.
Speaker 4: Welcome back to Bloomberg Tech.
Speaker 3: We check in on these markets which are under pressure,
Speaker 3: and that's like one hundred having the worst day in
Speaker 3: a month at the moment as big tech pulls.
Speaker 4: Back, and we'll get into the reasoning around that.
Speaker 3: But one key stock that's on the downside, of course,
Speaker 3: European born but US traded Spotify off by twelve percent.
Speaker 4: I think it's worst day since twenty twenty three.
Speaker 3: This after earnings come in lackluster or according to Bloomberg Intelligence,
Speaker 3: second quarter gross margin forecast implies a very modest expansion
Speaker 3: from the fiscal first quarter, and they say it's going
Speaker 3: to fuel concerns that AI music is taking market share.
Speaker 3: Let's talk more about AI because that is what's seeing
Speaker 3: tech under pressure today.
Speaker 4: Not the geopolitical.
Speaker 3: Overhang, but what's happening with open ai. Reporting from the
Speaker 3: Wall Street Journal that it's missing internal targets for growth
Speaker 3: on user base, for growth on revenues, and it tugs
Speaker 3: down the ecosystem that surrounds open ai. Oracle, It's infrastructure
Speaker 3: player down by four percent, arm holdings with its relationship
Speaker 3: with soft Bank, or by more than eight percent, geeven no,
Speaker 3: but even the electricity infrastructure that's meant to be going
Speaker 3: into future compute it's down by five percent.
Speaker 13: Ed.
Speaker 4: This is a broad reaction, Okay.
Speaker 2: Bloomberg Equities reported Carmen Rhyanikey is with us.
Speaker 5: I mean, how broad right?
Speaker 2: You know, we looked very closely at Oracle and its
Speaker 2: exposure to open ai, the neoclouds core. We even obvious
Speaker 2: example carriage touched on power. Does it go beyond that?
Speaker 2: In the market this.
Speaker 14: Morning, yeah, I mean, I think we're seeing kind of
Speaker 14: any stock that's really linked to open ai under pressure
Speaker 14: this morning. And really the reason behind that is that
Speaker 14: there's concerns if they're not meeting these targets, are they
Speaker 14: going to be able to meet the sort of myriad
Speaker 14: of commitments that they've made with other companies through all
Speaker 14: the deals that they have. It's really bringing back those
Speaker 14: fears around circular financing that we saw kind of at
Speaker 14: the beginning of the year, and investors have maybe started
Speaker 14: to overlook a little bit as maybe they've shifted to,
Speaker 14: you know, looking at capax and return on investment for
Speaker 14: some of this AI spending. So we're seeing really broad
Speaker 14: based pressure here. It's also important to note I think
Speaker 14: that open ai linked stocks have underperformed those linked to Alphabet,
Speaker 14: so that's the other thing here. There's just more competition
Speaker 14: in this space overall that it's putting pressure on open
Speaker 14: ai and investors are really taking note of that.
Speaker 3: Common It is interesting that Opening I have come back
Speaker 3: falsely and known statements to Bloomberg saying they're firing on
Speaker 3: all the cylinders. What's interesting is all cylinders going to
Speaker 3: be firing, and earnings coming up day to this week.
Speaker 3: That just show where the capital expenditure is there, whether
Speaker 3: they're more broadly, the compute story is there, even if
Speaker 3: it's being reshuffled around some of the llms.
Speaker 5: Yeah, definitely.
Speaker 14: I think investors were already looking at these reports coming up,
Speaker 14: especially all the hyperscalers on Wednesday with a high level
Speaker 14: of scrutiny, and I think this raises the bar. Right
Speaker 14: we're looking at CAPEX we want to see. I think
Speaker 14: that spending is still happening, but any pullback would be
Speaker 14: an issue. And then on the flip side, the return
Speaker 14: on investment, like what these companies are seeing from all
Speaker 14: this spending is just going to be paramount.
Speaker 5: What next, corbon.
Speaker 2: I mean, it's weird, but for the first thirty two
Speaker 2: minutes and thirty seconds of the show, we haven't mentioned
Speaker 2: that there are trillions and trillions of dollars of market
Speaker 2: cap reporting earnings imminently and that could turn the entire
Speaker 2: tech market on its head exactly.
Speaker 14: I mean, we have a huge slate of reports that
Speaker 14: are coming up later this week. I mean Wednesday again
Speaker 14: we get the four biggest hyper scalers, We get Apple
Speaker 14: on Thursday.
Speaker 4: Qualcoms in the mix as well.
Speaker 14: So there's so much money you know, in the market
Speaker 14: coming from AI that's tied to AI, and we're going
Speaker 14: to get results from these companies this week, and investors
Speaker 14: have been reacting very strongly, sort of pricing in either
Speaker 14: the very best case scenario or the very worst case scenario.
Speaker 14: I think we conceded day with how the market, these
Speaker 14: tech stocks are moving. So these are these reports coming
Speaker 14: up are going to be so important and they're going
Speaker 14: to swing, you know, the entire market. So we're really
Speaker 14: just waiting to see what happens. I think it's an
Speaker 14: eighty second spread on Wednesday that we get four of
Speaker 14: the biggest companies you know in the AI story reporting.
Speaker 14: So it's going to be it's going to be a
Speaker 14: really fun day.
Speaker 3: Brace Brace most common Rhyanicky, Thank you very much. Indeed,
Speaker 3: now let's turn to other open ai news right now
Speaker 3: making headlines today. A jury has been selected for the
Speaker 3: trial between the AI firm and Elon Musk, who claims
Speaker 3: that the company open Ai abandoned its fouling mission as
Speaker 3: a nonprofit. Arguments begin today, But regardless of the outcome,
Speaker 3: bloom My Opinion rebord to Dave Lee says it's a
Speaker 3: win for mask. They've you're with us now, and in
Speaker 3: many ways is it the distraction that ends up winning
Speaker 3: for XAI and Elon.
Speaker 15: Musk here right, I think if you're Elon Musk, you're
Speaker 15: looking at open ai and thinking there's a competitor that
Speaker 15: reduces musks chances of capturing more of the AI market.
Speaker 15: We know SpaceX is looking to go public very very soon,
Speaker 15: and Xai the AI company, is part of that. And
Speaker 15: what this case is doing at the very very least
Speaker 15: is putting a cloud over open AI's own efforts to
Speaker 15: go public themselves. You know, as this is overhanging them,
Speaker 15: there's a chance if it really goes against open ai
Speaker 15: that they'd have to unwind their for profit business and
Speaker 15: go back to the non profit structure that they're originally
Speaker 15: set up in which Elon Musk says he's seeking to
Speaker 15: create open Ai. Of course, say, you know Elon Musk
Speaker 15: is being disingenuous. He wants to be rich from ai
Speaker 15: as well. He was behind a for profit restructuring for
Speaker 15: open ai, and that this is just a ploy to
Speaker 15: slow them down. Well, it's a ploy that is already
Speaker 15: working and could get more effective depending on how the
Speaker 15: court ends up ends up seeing it.
Speaker 2: Okay, the title of your column is open ai is
Speaker 2: shedding baggage. Now it needs a jury's help, Dave Lee,
Speaker 2: what baggage? Just be a bit more specific?
Speaker 10: Where do you begin?
Speaker 15: I mean, look, we've seen today this issue of having
Speaker 15: user and revenue growth issues, but one of the things
Speaker 15: that's been affecting open ai recently is this idea that
Speaker 15: it's doing too many things and that, and it's some
Speaker 15: of this deal making has tied it in knots. So
Speaker 15: for example, on Monday, we saw that open ai had
Speaker 15: renegotiated and already renegotiated deal with Microsoft over computed over
Speaker 15: access to frontier models. That's a good bit of baggage
Speaker 15: to get out of the way because it brings some
Speaker 15: clarity to their deal with Microsoft, which has kind of
Speaker 15: gone sour over the last couple of years. Other baggage
Speaker 15: includes what the company was calling side quests, so we
Speaker 15: saw it close down sour. The video app that was
Speaker 15: kind of popular but was really expensive to run, didn't
Speaker 15: really seem to have much in the way of generating
Speaker 15: enough revenue to make it worth it for open Ai.
Speaker 10: These are all little things.
Speaker 15: That sam Utman I think, in his sheer enthusiasm to
Speaker 15: try and do everything, are now as the company prepares
Speaker 15: for an IPO, seen as a distraction, seen of strains
Speaker 15: on the balance sheet. You know, this is a company
Speaker 15: that's going to show that even though it's going to
Speaker 15: be losing money for quite some time up until at
Speaker 15: least twenty thirty is the projection. So they've got to
Speaker 15: be shown to be raining in some of those costs
Speaker 15: to at least be heading in the right direction. The
Speaker 15: biggest bit of baggage, or one of the largest bits
Speaker 15: of baggage, I used to say, is this trial, though,
Speaker 15: which is why, as I said, they need they need
Speaker 15: a jury's help.
Speaker 10: With some of this.
Speaker 4: Well, they've got the jury. They have opening statements. In fact,
Speaker 4: Samulmon and.
Speaker 3: Greg Brotman were at the court yesterday, which was a
Speaker 3: surprise to some. We are expecting a lot of other
Speaker 3: previous and current Open Air executives to take the stand,
Speaker 3: right Yeah.
Speaker 15: I mean what Open a Eye has been a soap
Speaker 15: opera in Silicon Value. You had Sam Hartman forced out
Speaker 15: briefly back after a weekend. You've had staff leaving starting
Speaker 15: their own companies, and Thropic of course, is one of those.
Speaker 15: Mira Morati has started her own company. She was formerly
Speaker 15: Open AI. Having some of this laid out on the
Speaker 15: stand is going to be wonderful for people like I
Speaker 15: feel it's gonna be very uncomfortable for some of those
Speaker 15: really sort of at the center of this. There's a
Speaker 15: lot of egos here. There's a lot of you know,
Speaker 15: bad blood, I think between some of these former colleagues.
Speaker 15: But that's what happens, you know, when you're at the
Speaker 15: center of what. For the last couple of years, I
Speaker 15: think we can say it's one of the most exciting
Speaker 15: and talked about companies in the world. So plenty to enjoy,
Speaker 15: and we've got a couple of weeks, a few weeks
Speaker 15: of it to enjoy starting today.
Speaker 2: That was That is Bloomberg opinion columnist Daily. We haven't
Speaker 2: worn him out just yet. Now, coming up on the show,
Speaker 2: space startup True Anominally raises a new funding round, a
Speaker 2: big one, as it aims to speed up production of
Speaker 2: its orbital defense tech. We're going to talk to the
Speaker 2: CEO next. This is Bloomberg Tech.
Speaker 4: True Anomaly.
Speaker 3: It's close to six hundred and fifty million dollar series
Speaker 3: defunding around, valuing the company at two point two billion.
Speaker 8: Now.
Speaker 3: The space startup is among a dozen companies recently named
Speaker 3: to work on inter for the Golden Dome missile defense
Speaker 3: shield as well to Anominally. CEO Evan Rodgers joins us,
Speaker 3: it's been a.
Speaker 4: Busy few days.
Speaker 10: That's good, very busy.
Speaker 3: Let's focus on the funding round. First, where do you
Speaker 3: deploy that capital? What really injects the growth of the business.
Speaker 16: We're really stepping up alongside guardians in the Space Force.
Speaker 16: The Space Force budget and FY twenty seven is expected
Speaker 16: to be seventy two billion. That tells you a lot
Speaker 16: about the kinds of capabilities the United States Space Force
Speaker 16: needs to build to counter China and Russia. We are
Speaker 16: investing in the staff and the products and the infrastructure
Speaker 16: that's necessary to come alongside guardians to build combat capability
Speaker 16: for space warfare.
Speaker 4: Let's talk about your products.
Speaker 3: What makes you unique, distinct and additive to the others?
Speaker 3: Forerosius out there in the world of defense tech, it's
Speaker 3: a really hot space.
Speaker 16: So I served ten years in the Air Force and
Speaker 16: then transition into the United States Space Force, and what
Speaker 16: I saw from the defense industrial base is a focus
Speaker 16: on dual use technologies and there's good reason for that.
Speaker 16: But because space is now a warfighting domain, it's very
Speaker 16: clear that the operational concepts for space warfare necessitate dedicated
Speaker 16: space warfighting system. They have a completely different performance envelope
Speaker 16: than commercial capabilities. They're quite literally going to get shot at,
Speaker 16: and so our focus is on clean sheet design to
Speaker 16: deploy operational concepts into the domain. So Jackal, for example,
Speaker 16: our first product is a clean sheet space to space
Speaker 16: engagement platform. It's not designed to do anything else other
Speaker 16: than protection and surveillance.
Speaker 10: Of the domain.
Speaker 2: Evan, We're very excited about this domain. Right, space is
Speaker 2: a warfighting domain the technology you're doing. But I'm going
Speaker 2: to try and bring it back down to Earth a
Speaker 2: little bit for the Bloomberg Tech audience. So, Jackal, you
Speaker 2: mentioned it's a highly maneuverable vehicle. It moves around other
Speaker 2: satellites in orbit. Explain the basics of that, right, Our
Speaker 2: audience is chuineing in and going okay, So space is
Speaker 2: a warfighting domain. You make vehicles that are in space
Speaker 2: and it moves around other satellites.
Speaker 5: Take it from there, that's right.
Speaker 16: Our adversaries deploy into orbits that we don't necessarily have
Speaker 16: capabilities in. For example, geosynchronous orbit, which is twenty two
Speaker 16: thousand miles from the surface of the Earth, is a
Speaker 16: long way for a great based telescope to be able
Speaker 16: to really characterize what our adversaries are doing. So we
Speaker 16: need systems that have the maneuverability, the fuel, the acceleration
Speaker 16: to be able to chase those targets down and take
Speaker 16: pictures of them. The first the foundation of combat capability
Speaker 16: is intelligence, and so the first order of business is
Speaker 16: to really understand what our adversaries are up to in space,
Speaker 16: and Jackal is purpose built to go after highly maneuverable targets.
Speaker 2: Evan who's the counterpart to true anomally? Does China have
Speaker 2: a company or a competence in the same domain that
Speaker 2: you think about.
Speaker 16: China doesn't have necessarily a company that's focused on space warfighting,
Speaker 16: but their entire military industrial complex is blended with their
Speaker 16: commercial their commercial manufacturing and infrastructure. So everything that China
Speaker 16: does really for civil or war for commercial has military
Speaker 16: applications and we're starting to see that, particularly in their
Speaker 16: intelligence platforms. So that China over the last several years
Speaker 16: has deployed about thirteen hundred spacecraft into lower forbit about
Speaker 16: five hundred of those are intelligence platfs. Those intelligence platforms
Speaker 16: are designed to track terrestrial forces, so maritime forces, aviation systems,
Speaker 16: and ground capabilities. So there's really it's very difficult for
Speaker 16: the United States to maneuver globally without China seeing where
Speaker 16: we're going.
Speaker 3: Let's talk about the United States but because you build
Speaker 3: exclusively from I understand for the United States government, will
Speaker 3: that expand will there be others that you want.
Speaker 4: To serve here?
Speaker 16: Right now, we focus on the United States because that's
Speaker 16: where the problem is and also where there are substantial
Speaker 16: budgets focused on space superiority. But we're starting to see
Speaker 16: our allies build the rhetoric and build the policy to
Speaker 16: support space war fighting. The UK, France, Japan in particular
Speaker 16: really lean forward into space warfighting. They have their own
Speaker 16: dependencies on space capabilities, but the budgets need to follow.
Speaker 16: We are happy to partner with our allies, but the
Speaker 16: budgets are really not following, and there's a focus on
Speaker 16: nationalized capabilities.
Speaker 3: The budgets have been there, but some would still say
Speaker 3: perhaps this spending on smaller companies by the by the
Speaker 3: Pentagon still somehow needs to be shown a little bit more.
Speaker 3: Are you really confident that the spending will be there
Speaker 3: for you?
Speaker 4: I mean, already you've been announced on Friday to be
Speaker 4: part of Goldendale.
Speaker 16: There is a shift in the way that the Defense Department,
Speaker 16: or rather the Department of War, is acquiring systems, and
Speaker 16: it really biases and creates an opening towards new companies
Speaker 16: like Truronomially. They're focused on firm, fixed price contracts, capital partnerships,
Speaker 16: long term contracts that allow for a rational ROI, and
Speaker 16: that's an opening for truronomally to step into that gap
Speaker 16: and deliver capabilities. And we're truly unique in the marketplace.
Speaker 16: I mean space warfighting is one of the most rapidly
Speaker 16: growing areas of investment for the Department of War forty
Speaker 16: billion this year, in spending seventy two billion this year,
Speaker 16: twenty billion of which is in space control is the
Speaker 16: highest growth market.
Speaker 10: And we're stepping in.
Speaker 2: Evan Rodgers CEO true anomally six hundred and fifty million
Speaker 2: dollars Series D two point two billion dollar valuation.
Speaker 5: Thank you very much, all right, Carroy, So use headlines PAD.
Speaker 3: Talking Tech aired first up. Hong Kong is betting on light.
Speaker 3: Shares of Light Intelligence skyrocketed three hundred and eighty four
Speaker 3: percent in their trading debut today, giving the company a
Speaker 3: market value of over ten million dollars. With heavy backing
Speaker 3: from Ali, Baba and Temasek. The firm is aiming to
Speaker 3: revolutionize AI inference by using light instead of electricity to
Speaker 3: process data. Plus ELI Lily is turning to artificial intelligence
Speaker 3: to design the next generation of medicine. The farmer Giant
Speaker 3: has deal worth up to two and two zero point
Speaker 3: two five billion with AI startup Profluent to find new
Speaker 3: ways to edit DNA so The deal is part of
Speaker 3: Lily's growing investment in AI, and the company ass struck
Speaker 3: at least fifteen AI related deals in the last five years.
Speaker 3: According to Bloomberg Intelligence A manifestos, it's the quote AI
Speaker 3: native law firm just closed a sixty million dollar Series
Speaker 3: A at seven hundred and fifty million dollar valuation. The
Speaker 3: platform aims to help small firm lawyers automate the grunt
Speaker 3: work and shift towards outcome based pricing. Look Their mission
Speaker 3: is to make legal services immigration tech, for example, accessible
Speaker 3: to all through AI. Investors include Mellow Ventures, Klina Perkins,
Speaker 3: and First Round Capital.
Speaker 2: Shell is entering what CEO Yol Sawan calls an inflection point.
Speaker 2: The company agreed by Canadian oil and gas producer ARC
Speaker 2: Resources for thirteen point six billion dollars. It's biggest deal
Speaker 2: in more than a decade. Is it seeks to sustain
Speaker 2: output in the long term. Joining US now from London
Speaker 2: is Shell CEO while Swan. The obvious question is why
Speaker 2: Canada and why now? But the way that a lot
Speaker 2: of people are looking at this WIO is the geopolitical
Speaker 2: bet on safe, safe energy supply.
Speaker 5: How much were you thinking about that?
Speaker 17: I'd start off by saying, actually, this is just an
Speaker 17: important point on the journey that we have been on,
Speaker 17: a journey that started over three years ago where we
Speaker 17: said we want to methodically transform the company, and that's
Speaker 17: what we've been doing. And so the inflection point came
Speaker 17: that as we continue to deliver performance, discipline, simplification and
Speaker 17: show we felt that it was time to look at
Speaker 17: more and more capital reallocation and we felt that we
Speaker 17: had earned the right to be able to grow. And
Speaker 17: so the announcement yesterday for ARC was essentially just a
Speaker 17: step in that journey that we have been on. We
Speaker 17: had been looking at ARC for over two years and
Speaker 17: so that of course predated the Middle East crisis. I've
Speaker 17: particularly been attracted to multiple elements of ARC. I mean,
Speaker 17: first and foremost, this is a liquid rich play, high
Speaker 17: quality resource, low cost, long duration in a terrific basin
Speaker 17: like the Montny basin, with low carbon intensity molecules, and
Speaker 17: so we liked that piece of it. We like the synergies,
Speaker 17: the adjacency to our own assets and the integration into
Speaker 17: LNG Canada, our LERG project in Canada, their and then
Speaker 17: thirty We really liked the people, We liked the culture
Speaker 17: that they had developed over thirty years. And so this
Speaker 17: world predated the crisis, but of course always helpful to
Speaker 17: be able to have diverse sources, source of supply to
Speaker 17: meet the growing energy demands around the world.
Speaker 3: So a growing demand, does that mean you have a
Speaker 3: growing production, a growing supply into the twenty thirties with
Speaker 3: this additive deal, While.
Speaker 17: Absolutely so, we had in the past guided to a
Speaker 17: one percent cager growth between now and twenty thirty for
Speaker 17: our ail and gas production. On the back of this deal,
Speaker 17: we have guided to a four percent per cager, so
Speaker 17: a significant growth uptick between twenty twenty five and twenty thirty.
Speaker 17: But importantly as well, it gives a long duration growth platform.
Speaker 17: It allows us to add one hundred and fifty thousand
Speaker 17: barrels per day of liquids out in twenty thirty five,
Speaker 17: and the inventory we're talking about is well above fifteen
Speaker 17: years of inventory into up to twenty five years in
Speaker 17: certain areas, and so this is just an exciting growth
Speaker 17: platform that is underpinned in my mind with the liquids opportunity,
Speaker 17: but also with significant optionality for the gas through our
Speaker 17: existing plant and possibly through a second phase of that
Speaker 17: development that we have in Llergy, Canada.
Speaker 2: We will talk more about this deal, but it's been
Speaker 2: about ten years since I last attended an OPEC meeting
Speaker 2: and this is a massive story the UA leaving OPEK.
Speaker 2: What's your reaction to that? But I think more importantly,
Speaker 2: what do you think it will do to global oil markets?
Speaker 17: Yeah, difficult to call, I mean, very very early days,
Speaker 17: and of course I'll leave it to the UE leaders
Speaker 17: and to OPEK a pine on it. What I would
Speaker 17: say is, you know, OPEK is roughly a third of
Speaker 17: the overall liquids production of the world, and undoubtedly demand
Speaker 17: for liquids continues to grow, and I mean by that
Speaker 17: oil condensate and so on.
Speaker 4: And so forth.
Speaker 17: The most important influence of OPEC has typically been in
Speaker 17: who has the spare capacity and how do they choose
Speaker 17: to deploy that spare capacity, And so that will be
Speaker 17: I think the calculate that will have to be made
Speaker 17: in the coming weeks, months, and years for a company
Speaker 17: like ours, of course, our focus has been on indeed
Speaker 17: diversifying production. We have production in OPEC countries and non
Speaker 17: OPEC countries, but also importantly continuing to make sure that
Speaker 17: we look at new horizons to be able to grow
Speaker 17: our production, and that, of course we do through both
Speaker 17: expiration and MNA deals like what we've done for example
Speaker 17: here in Canada. And so I think at the end
Speaker 17: of the day, what will be important will be supply
Speaker 17: demand balances. We know that those are going to be
Speaker 17: tight for at least the coming months, if not at
Speaker 17: least the next year plus given the closure on the industrates.
Speaker 17: The question will be longer term, how does all that
Speaker 17: pan out? And I think that's too soon to call
Speaker 17: at the moment.
Speaker 2: What is the environment that you close this deal in?
Speaker 2: How tight are global energy markets right now? We're thinking
Speaker 2: a lot on this program Bloomberg talk about energy security,
Speaker 2: but Asia, in Europe, it's hard to gauge the severity
Speaker 2: how real a supply crunch is.
Speaker 17: The markets are tight. I won't play down at all.
Speaker 17: You know, we're talking about nine hundred million barrels that
Speaker 17: have not been produced in the last couple of months,
Speaker 17: and that's been replaced by essentially draw down. We're now
Speaker 17: sort of starting to reach some relatively low levels. We're
Speaker 17: talking about demand curtailment in certain areas, we're talking about
Speaker 17: fuel switching. So this is profound and not just for oil,
Speaker 17: by the way, it also plays in of course for LNG.
Speaker 17: Twenty percent of the global LNG production comes from the
Speaker 17: Middle East, and all this is happening with the backdrop
Speaker 17: of sustained growth in energy demand, of which to your
Speaker 17: point ed, some of it is being of course contributed
Speaker 17: to by the growth in AI and technology demands exactly.
Speaker 17: And so it is indeed a tight situation, and this
Speaker 17: is why it's incumbent upon us the energy sector to
Speaker 17: continue you to invest in all forms of energy to
Speaker 17: make sure that we are able to provide that energy
Speaker 17: to support multiple countries as they're looking to both grow
Speaker 17: in their own in their own consumption of energy, but
Speaker 17: also those that are looking to underpin their AI and
Speaker 17: technology journeys ahead.
Speaker 4: So while should investors expect more MNA coming from you,
Speaker 4: look this.
Speaker 17: We've always talked about the bar for MNA being a
Speaker 17: high bar, and I absolutely hold on to that this
Speaker 17: deal crossed that high threshold that we had. We didn't
Speaker 17: need to do this deal, by the way, for avoidance
Speaker 17: of that, we were very comfortable being able to meet
Speaker 17: our commitments out to twenty thirty and potentially to continue
Speaker 17: to methodically add resources to our overall funnel. This deal
Speaker 17: worked out perfectly because of the arbitrage in where share
Speaker 17: prices were. We got the bumps because of our at
Speaker 17: performance recently, and of course some of the the tail
Speaker 17: wins from them ad least ARC didn't have the same
Speaker 17: simply because of the nature of their portfolio. So this
Speaker 17: worked because of that. The timing was excellent and I
Speaker 17: think we got a good deal for both sides. But
Speaker 17: that high bar is going to be held high again
Speaker 17: and we will only deploy capital to M and A
Speaker 17: if we really find excellent deals like this.
Speaker 3: And that was in that methodical context. What is in
Speaker 3: methodical is geopolitics and what's happening in.
Speaker 4: The strait of home moves.
Speaker 3: Have you managed to get any of your ships through
Speaker 3: the strait?
Speaker 4: What is your exposure right now?
Speaker 17: While now we continue to have multiple ships there. Actually
Speaker 17: I have a call schedule tomorrow with one of the
Speaker 17: crews on the ships just to check in on them.
Speaker 17: It's a tough time. It's a tough time for our people.
Speaker 17: Our number one priority is the safety of our people,
Speaker 17: and we await the appropriate signals to be able to
Speaker 17: move those ships out. As I said, we're trying to
Speaker 17: focus on keeping morale high, and many here in headquarters
Speaker 17: and well beyond across the Shell family are looking at
Speaker 17: everything they can do to be able to meet our
Speaker 17: customer demands, which which, of course, you know, those demand
Speaker 17: levels continue to be high, but we're running at roughly
Speaker 17: fifteen to twenty percent less molecules than we were just
Speaker 17: two months ago, and so you know, I just continue
Speaker 17: to be incredibly proud of what everyone in the company
Speaker 17: has been doing to be able to contribute well.
Speaker 2: So on Shell CEO, Really grateful for your time here
Speaker 2: on Bloombog Tech.
Speaker 5: Thank you very much.
Speaker 3: Care that does it for this edition of Bloomberg Tech.
Speaker 3: Really folding in there. What is a need for electricity?
Speaker 3: A need for energy because the key story is one
Speaker 3: of compute now to today's story is all about open AI
Speaker 3: and questioning from the Wall Street Journal whether they're living
Speaker 3: up to their own growth aims and targets.
Speaker 2: Yeah, the Journal reported that they missed their own internal metrics,
Speaker 2: and it was interesting you point out earlier some of
Speaker 2: their electricity stocks literally fell as well. That's part of
Speaker 2: the calculus. A lot to recap from this show. You
Speaker 2: know where to do it on the podcast, online, Apple, Spotify,
Speaker 2: iHeart on all the Bloomberg platforms as well. Two days
Speaker 2: into a massive week stay with us. This is Bloomberg
Speaker 2: Tech