Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is a
Speaker 1: live from Coast to coast with Caroline Hide in New
Speaker 1: York and Eva low in sentrancs.
Speaker 2: Go, This is Bloomberg Tech coming up. Soft Bank sells
Speaker 2: its entire stake in Nvidia for close to six billion dollars.
Speaker 2: This to help bankroll it's other AI investments.
Speaker 3: As we sit down with core Wee've CEO Michael and
Speaker 3: Trader to talk about the company's earnings and that data
Speaker 3: center delay and.
Speaker 2: More earnings with paramount skide answer as the company reports
Speaker 2: its first results since David Ellison's takeover.
Speaker 3: Much to digest when it comes to the fundamentals of
Speaker 3: businesses today, and but overall we've got a bit of
Speaker 3: risk aversion here. We've got some of the biggest players
Speaker 3: in technology. On the downside, you're going to drill into
Speaker 3: the individual movers. But there is a question of AI infrastructure.
Speaker 3: There's a question of pressure or some of these market
Speaker 3: capitalizations of eight ten percent after yesterday's bounce back on
Speaker 3: hopes that the government shutdown might.
Speaker 4: Be reaching some sort of end.
Speaker 3: But then take us to the individual movers.
Speaker 2: Yeah, cor Weave is where we start stock down about
Speaker 2: thirteen percent, on track for its biggest drop since mid August.
Speaker 2: The stock trading in its lowest level since early September.
Speaker 2: In a few minutes time, we're going to speak to
Speaker 2: the CEO, Michael and traitor.
Speaker 5: The company cut its revenue.
Speaker 2: Outlook for fiscal twenty five or trimmed it really because
Speaker 2: of a delay to a specific project. The other thing
Speaker 2: that's weighing on the markets right now is in Vidio
Speaker 2: in video down around two percentage points when last I checked.
Speaker 2: The issue is right now three percent now that soft
Speaker 2: Bank sold its remaining stake in Vidio in its entirety,
Speaker 2: it's not unprecedented. Soft Bank has sold out of Nvidia before.
Speaker 2: I'd also remind our audience yesterday Vidia jumped almost six percent,
Speaker 2: on track for its biggest jump, or was its biggest
Speaker 2: jump since April.
Speaker 5: But the market's a little nervous. Hire. There's a lot
Speaker 5: to unpack.
Speaker 3: Car there is, and let's unpack it with our executive
Speaker 3: Global Tech editor, Peter Elstrom. Peter talk us through what
Speaker 3: is happening, because, as Ed says, this is not unheard of,
Speaker 3: and in many ways what they use the money for
Speaker 3: could end up being a benefit to Invidia longer term.
Speaker 6: Yeah, that's exactly right, Caroline. So SoftBank reported earnings for
Speaker 6: the quarter, they were really blow out earnings. They reported
Speaker 6: about sixteen billion dollars in that income. That's roughly six
Speaker 6: times what had been expected. A lot of that came
Speaker 6: from some of their investments in AI, including their stake
Speaker 6: in open Ai in particular. But as as you mentioned,
Speaker 6: they decided that they were going to sell their entire
Speaker 6: stake in Nvidia and take take the six billion dollars
Speaker 6: so that they can make other investments with it. Now,
Speaker 6: a big part of where they're going to put that
Speaker 6: money is into their Stargate venture, where they're building these
Speaker 6: AI data centers in the US, and they're going to
Speaker 6: buy in Vidia chips to put into those data centers.
Speaker 6: So partly Masioshi son is getting this cash so it
Speaker 6: can make investments in AI. Some people may be reading
Speaker 6: it as a negative sign for AI and for Nvidia
Speaker 6: in particular, but in fact he's going to use that
Speaker 6: need to make investments.
Speaker 2: Again, not unprecedented in Nvidia was a stock that Softbanks
Speaker 2: sold out of in twenty nineteen, and then in twenty
Speaker 2: twenty they started building up his stake again in some
Speaker 2: of those paper games have been to SoftBank's benefit. The
Speaker 2: issue is that management faced a lot of questions both
Speaker 2: about what.
Speaker 5: They're doing here.
Speaker 2: They're rationale what they're going to use the cash forward,
Speaker 2: but also are we in an AI bubble?
Speaker 5: Peter? What did they say?
Speaker 6: Yeah, there was one of the questions that came up.
Speaker 6: So Marcoshi Son doesn't do their earnings calls anymore. He
Speaker 6: stopped doing those a few years ago when he was
Speaker 6: taken arm public. But he has said a number of
Speaker 6: times that he regrets selling in video shares in twenty nineteen,
Speaker 6: as you referred to, those shares would have been worth
Speaker 6: more than two hundred billion dollars now, which is more
Speaker 6: than the market cap for a SoftBank at this point.
Speaker 6: But so the person who stubs in for him as
Speaker 6: the CFO, Yoshimisi Goto, and he talked through these issues.
Speaker 6: He did get some questions about the Invidia shares. He said,
Speaker 6: it's not that they don't believe in Nvidia anymore. He
Speaker 6: also got the question you're referring to are we in
Speaker 6: an AI bubble? And he said it's hard to tell
Speaker 6: at this point. Not quite the same kind of conviction
Speaker 6: you would hear from Sam Altman or from Jensen Wong,
Speaker 6: but he's realistic about we're not really sure where we
Speaker 6: are in this cycle. But to be clear, Masieo Sheson
Speaker 6: is going to keep making investments.
Speaker 3: Peter Elstrom breaking it down, We thank you so much.
Speaker 3: Let's talk about where we are in this cycle. Because
Speaker 3: Core Weave shares, as Ed pointed out earlier, under pressure.
Speaker 3: That's after it lowered its annual revenue forecast due to
Speaker 3: delay it a third party developing a data center really
Speaker 3: overshadowed impressive growth in revenue in order backlog. Let's get
Speaker 3: straight to it with Core Weave CEO Michael and Trader.
Speaker 3: How frustrating is it that you don't own your entire
Speaker 3: supply chain? How much of an issue is some power
Speaker 3: you have to give to third parties?
Speaker 7: Oh so, look, look, I think it's important to understand
Speaker 7: that every single part of this ecosystem is dependent upon
Speaker 7: other parts of the ecosystem. Nobody controls the entire supply chain,
Speaker 7: and that's just the nature of doing business at this
Speaker 7: scale on projects that are as complicated as whether it's
Speaker 7: you know, you know, the the design and architecture of
Speaker 7: the chips, through the fabrication of the chips, through the
Speaker 7: building of the data center, through the concrete that has
Speaker 7: to go into the data center. Like it's just, you know,
Speaker 7: like it's really hard to even contemplate a world in
Speaker 7: which you have true control over every aspect of it.
Speaker 7: And so you're going to work with partners, and you're
Speaker 7: going to work with good partners that are able to
Speaker 7: help you.
Speaker 8: Drive your business forward.
Speaker 3: Is this a good partner who's had issues at this
Speaker 3: PowerShell level?
Speaker 7: Yeah, Look, they are a good partner, right, Like, we've
Speaker 7: been working with these guys since twenty and eighteen.
Speaker 8: There there has been a stumble.
Speaker 7: There's an issue. The issue is going to be cleaned
Speaker 7: up rapidly. But I wouldn't say that they're not a
Speaker 7: good partner. I think that, you know, we are. You know,
Speaker 7: we've gone back and contracted with them again and again,
Speaker 7: and you know they've contracted with us again and again
Speaker 7: because you know, we do work well together. It's just
Speaker 7: you know, occasionally you hit a bump in the road.
Speaker 7: You know, what we're talking about here is a contract
Speaker 7: that gets pushed back by you know, uh one quarter,
Speaker 7: let's say, and that the impact of that on our
Speaker 7: revenue is a delay of revenue, not a loss of revenue.
Speaker 7: And uh, you know, I think that is the definition
Speaker 7: of working with.
Speaker 8: An ecosystem of good partners.
Speaker 5: Michael, good morning.
Speaker 2: Which customer was it pleased that was impacted by this delay?
Speaker 7: We don't speak to specific customers within the data centers.
Speaker 8: That's that's not how we look at it.
Speaker 7: But you know, we we we really are working with
Speaker 7: the whole you know, or a material part of the broader.
Speaker 8: Kind of.
Speaker 7: Ecosystem that consumes compute at this scale. So you know
Speaker 7: that that that's you know, there's a large project, it's
Speaker 7: from a large counterpart, and you know, like I said,
Speaker 7: you know they they understand, uh, the the impact of
Speaker 7: this delay and that they are.
Speaker 8: Shifting with us.
Speaker 7: The contract back to ensure that the total contract value
Speaker 7: that was being contemplated is going to be captured at
Speaker 7: this reilm.
Speaker 2: I thought you might say that, but I wanted to
Speaker 2: offer you the opportunity to explain who the customer was.
Speaker 5: Anyway.
Speaker 2: I appreciate this is going to sound a little bit
Speaker 2: like I work in your internal audit team or in
Speaker 2: your risk team, but there is a bigger issue here
Speaker 2: of managing third party risk as much as you can.
Speaker 2: So if your supply is tight today, what procedures are
Speaker 2: you putting in place for the event that your backlog
Speaker 2: doubles and supply is even tighter down the road.
Speaker 7: Listen, that's a that's a that's that is the question
Speaker 7: that we work on across our company continuously, right And
Speaker 7: if you, if you, if you think about the messages
Speaker 7: that I was trying to communicate.
Speaker 8: During the earning.
Speaker 7: Scroll yesterday, I talked about the incredible impact of the
Speaker 7: effort that we've had to diversify our clients. We started
Speaker 7: the year with you know, eighty five percent of our
Speaker 7: revenue to a single client, and we are coming out
Speaker 7: of the year with our back log with you know,
Speaker 7: which has reached you know, all time highs where no
Speaker 7: specific client is more than thirty five percent of it.
Speaker 7: And that is down from fifty percent even last quarter.
Speaker 7: So you're seeing tremendous progress on the contracting side, on
Speaker 7: the supply side, when you're looking at the powershells the
Speaker 7: data center providers, you know, there is no single provider
Speaker 7: of data centers that represents in excess of twenty percent
Speaker 7: of our two point nine gigawatts of power that we
Speaker 7: will be delivering to the market over the next twenty
Speaker 7: four months.
Speaker 9: You know.
Speaker 7: So you're seeing a real focus by our company to
Speaker 7: diversify on both sides of the you know, the ledger,
Speaker 7: the clients that we are delivering infrastructure to as well
Speaker 7: as the suppliers that are delivering us the components that
Speaker 7: we need to be successful.
Speaker 3: What can be done Because we hear about power issues,
Speaker 3: we hear about how much.
Speaker 4: People maybe need government to help speed.
Speaker 3: Up contracts, supply chain headaches. What is it in this
Speaker 3: particular data center issue that won't be replicated down the road.
Speaker 3: How are you making sure or is it just something
Speaker 3: we are going to see time and time again do
Speaker 3: you think so?
Speaker 7: Look the way that we are handling this is we
Speaker 7: are doing several discrete things to ensure that we are
Speaker 7: future proofing ourselves against these type of delays.
Speaker 8: Right.
Speaker 7: So, we have our team that has been built out
Speaker 7: over the past year that builds and delivers data center
Speaker 7: and so we have self build organization to be able
Speaker 7: to deliver our own data centers for instance, Kenilworth in
Speaker 7: New Jersey or Lancaster in Pennsylvania, where we are building
Speaker 7: from the ground up.
Speaker 8: Those skill sets.
Speaker 7: Being able to deploy those individuals with those talents down
Speaker 7: to the data centers as they're being constructed by third parties.
Speaker 7: If they encounter problems where we can be useful, helpful
Speaker 7: thinking through ways of solving and driving the process forward
Speaker 7: is really important to being able to mitigate these type
Speaker 7: of delays.
Speaker 8: We have massively.
Speaker 7: Diversified our data center providers so we're not exposed to
Speaker 7: any specific they say to data center provider.
Speaker 8: In too large of a component.
Speaker 7: And then the third piece of it is it's important
Speaker 7: to understand that as we get larger, as our delivered
Speaker 7: power gets larger, the relative impact of a delay at
Speaker 7: any one given site becomes less and less meaningful and
Speaker 7: less and less impactful on our.
Speaker 8: Run rate. And that's really important.
Speaker 7: Like you're encountering scaling issues within a company, that's encountering
Speaker 7: scaling issues.
Speaker 8: Within a supply chain, both of those will get better.
Speaker 8: Time solves that scale solves that we.
Speaker 3: Are currently seeing that time isn't particularly helping the share price.
Speaker 3: As we speak, it's now down fourteen point three percent,
Speaker 3: worst day since August.
Speaker 4: We are here with Michael and Trader across radio and TV, and.
Speaker 3: I want to sort of ask whether you think more broadly,
Speaker 3: the US is stunted by the supply chain headache, or
Speaker 3: do you think there is something that can be done
Speaker 3: from a federal perspective here to ensure that you can
Speaker 3: build at the rate you want to build you're not
Speaker 3: having these sorts of headaches.
Speaker 7: So we've been we and many others have been, you know,
Speaker 7: quite forceful in making the case that there is a
Speaker 7: role for government in helping us with some of the
Speaker 7: permitting issues, speed to which you can get our infrastructure
Speaker 7: and others can get their infrastructure attached to the grid.
Speaker 7: You know, all of those type of things where there's
Speaker 7: there's there's a great role for for for the government
Speaker 7: to help in that. They are the they are the
Speaker 7: organization or government entity that is correctly positioned to help
Speaker 7: facilitate that. And I think that's a great role where
Speaker 7: where government can lean in and make an impact across
Speaker 7: the space.
Speaker 2: Broble Michael, you have an agreement within NVIDIA that lots
Speaker 2: of people find very interesting that down the road, if
Speaker 2: there is spare capacity, there's some flexibility for you to
Speaker 2: deploy it elsewhere. That's a simple summation of it. But
Speaker 2: I'm wondering how you're thinking about serving some of the
Speaker 2: smaller AI labs and casting that net even wider in
Speaker 2: your customer base if indeed that capacity gets freed up
Speaker 2: down the line.
Speaker 7: Yeah, it's a it's a contract. I'm actually incredibly excited about, right.
Speaker 7: It's a contract that we did within VideA where we
Speaker 7: will deliver them compute for the next six years. But
Speaker 7: in the contract is the capacity to interrupt the flow
Speaker 7: of compute to them, and that will allow us to
Speaker 7: repurpose that compute to new companies, startups, companies that have
Speaker 7: struggled to get access to the compute that they require
Speaker 7: to bring new companies, organizations, ideas into existence. And I
Speaker 7: think it's just an incredibly important component of how the
Speaker 7: infrastructure is so important to allowing the ecosystem itself, of
Speaker 7: these startups, of these new companies, of these new ideas
Speaker 7: to become more resilient, to become more scaled, And it's
Speaker 7: just a great contract for us to be.
Speaker 8: Able to position ourselves.
Speaker 7: It also provides this wonderful on ramp for us to
Speaker 7: be able to work with the new amazing companies that
Speaker 7: are coming into existence so that they integrate into our
Speaker 7: solution and get to make use of the best alternative
Speaker 7: that exists in the market as they're scaling their companies.
Speaker 2: Michael, it's finished to what extent is in Vidious still
Speaker 2: the gold standard in videous GPUs for your customer base
Speaker 2: and what data are you tracking on demand for those
Speaker 2: kind of more inferenced specific chips that are offered by others.
Speaker 7: So look, we have always been client led, right. Our
Speaker 7: clients come to market and tell us, hey, we would
Speaker 7: like you guys to help us build a cluster. We
Speaker 7: needed to be this size and this location and this
Speaker 7: type of network, and we work with them in a
Speaker 7: very kind of interactive way to ensure that the infrastructure
Speaker 7: that we're building is the best infrastructure for them, is
Speaker 7: fungible for us, like all of these type of requirements
Speaker 7: to make for successful delivery of infrastructure. Right now, the
Speaker 7: reality of the situation is the buy signals from our
Speaker 7: clients overwhelm our capacity to deliver infrastructure to the market.
Speaker 7: As a matter of fact, they overwhelmed the entire market's
Speaker 7: capacity to deliver infrastructure to the market. You have a
Speaker 7: systemic shortage of ability to deliver the GPU's the computing
Speaker 7: infrastructure for the buildout of artificial intelligence and we have
Speaker 7: never wavered from that position. We have been very very
Speaker 7: clear that you know, when we look at the demand
Speaker 7: signals coming into core Weave, the totality of that overwhelms
Speaker 7: the capacity of the market to deliver that, and will
Speaker 7: continue to do that for quite a while.
Speaker 2: Michael Intradeser, Core Weave CEO, thank you for coming back
Speaker 2: on Bloomberg tet. Okay, I'm also taking a look at
Speaker 2: shares of Nebus. This is the Neo Clouds spun out
Speaker 2: of Russia's Yandex A year ago. The USS shares down
Speaker 2: more than three percent, but in the quarter soul growth
Speaker 2: of three hundred percent year on year and has added
Speaker 2: a major contract with Meta. That's positive upside. Maybe this
Speaker 2: was a high bar kind of quarter where the market
Speaker 2: saw it coming in, But you know, Cara, I think
Speaker 2: you'd agree. Nebus name that's coming up more often in
Speaker 2: the context of hyperscalers and this case Meta using them
Speaker 2: for off ramped compute.
Speaker 4: All about the supply of AI infrastructure.
Speaker 3: But coming up, we steered towards earnings again, paramount s
Speaker 3: guidance raising its target though for job cuts and for
Speaker 3: cost saving measures we'll dig in next.
Speaker 4: This is a Blueberg Tech.
Speaker 2: Back to earnings with paramount Skuidance, which reported it's financial
Speaker 2: results for the first time since a new investor group
Speaker 2: took over in August. The company raised its target for
Speaker 2: job cuts and cost saving measures, and it's forecasting thirty
Speaker 2: billion dollars in revenue next year. Let's break it all
Speaker 2: down with Laura Martin's senior entertainment analyst at Needham. I
Speaker 2: don't know, like, hello, what's being cheered here? You know,
Speaker 2: sometimes cutting your way to profit and cutting your way
Speaker 2: into a good financial positions not the most exciting story.
Speaker 2: What is the Laura Martin main takeaway?
Speaker 10: Well, the Laura Martin main takeaway was I thought they
Speaker 10: left more questions unanswered than they answered. So I think
Speaker 10: one of the big questions is they just did an
Speaker 10: affiliated transaction with Oracle, which for Enterprise Software, which is
Speaker 10: the dad's company. So now you can, through pricing, move
Speaker 10: money between these two public companies. That sort of was weird.
Speaker 10: And then also they said they're going to spend a
Speaker 10: billion five on content and double their film slate from
Speaker 10: seven films a year to fifteen films a year starting
Speaker 10: in twenty twenty six. And the problem with that is
Speaker 10: the sky Dance track record is one theatrical release a year,
Speaker 10: so so going to five fifteen means not only are
Speaker 10: you spending the money on the negative cost, but now
Speaker 10: you're going to spend about one hundred million each marketing,
Speaker 10: which all just sounds like an awful lot of money
Speaker 10: that you're spending in the near term, which is a
Speaker 10: tax on public shareholders before you get the return. It
Speaker 10: takes about three years to release a movie between green
Speaker 10: lining and release, which means you have a couple of
Speaker 10: investment years ahead of you, which doesn't sound like you know,
Speaker 10: so we're going to stay on the sidelines here. In
Speaker 10: terms of the shares.
Speaker 3: I want to go back to that relationship between Oracle
Speaker 3: and the affiliated transaction that you mention, implying that the
Speaker 3: value can be transferred between the two public companies. How
Speaker 3: much is that help if we're thinking about the shar
Speaker 3: scale of money David Ellison needs perhaps from Larry Edison
Speaker 3: to keep on buying in WBD assets, or how much
Speaker 3: is it a concern just in what are you actually
Speaker 3: buying an entertainment company here or a tech an AI
Speaker 3: infrastructure bet so.
Speaker 10: I think that is one of the differentiated things they're
Speaker 10: saying is they're saying that our content storytelling is complementary
Speaker 10: to our tech stack, and our tech stack needs investment
Speaker 10: because Paramount, the old Paramount sort of starved it. So
Speaker 10: we p Sky are going to invest in the tech stack.
Speaker 10: So from a fundamental point of view, they're going to
Speaker 10: try to marry storytelling with Jenai tech, which is sort
Speaker 10: of a cool messaging although expensive in the near term.
Speaker 10: I would say the oracle point was just a new
Speaker 10: piece of information we got, having nothing to do with
Speaker 10: the Warner Brothers. Like if the dad writes a seventy
Speaker 10: billion dollar check to Warner Brothers, like you know, that's
Speaker 10: a bigger deal than a contract might be several million
Speaker 10: a year. So it was just an affiliated transaction that
Speaker 10: I just would really like to see the pricing on
Speaker 10: when they have to disclose it in a ten K.
Speaker 10: But this's just a new piece of information. I think
Speaker 10: the big issue is you don't know what you're buying here.
Speaker 10: Are you buying a sixteen billion dollar subscale Paramount sky
Speaker 10: Dance or are you buying a Are they going to
Speaker 10: use money to make a seventy billion dollar acquisition of
Speaker 10: all of Warner Brothers and then that's a hundred that's
Speaker 10: round numbers, one hundred billion dollars scaled player with bigger
Speaker 10: everything including studios. So then you wouldn't have to double
Speaker 10: the films because Warner Brothers got fifteen by itself already.
Speaker 10: So I think they might be justifying of warn Brother's
Speaker 10: bid in some ways with some of their cost estimates.
Speaker 5: Here, Laura, very quick pivot here.
Speaker 2: You just heard the cool weave interview, you published your
Speaker 2: research on hyperscale capex.
Speaker 5: Just a quick reaction to what you heard.
Speaker 10: Yeah, So, I mean, I think one of the big
Speaker 10: biggest question we get is are the hyperscaler spending too
Speaker 10: much money on infrastructure? And we published a note this
Speaker 10: morning showing that the JENAI implementations at Amazon, Meta, and
Speaker 10: Alphabet are accelerating their revenue growth and cutting their operating costs.
Speaker 10: So they're getting margin expansion by using generative AI tools,
Speaker 10: which gives them the confidence to invest in these infrastructure
Speaker 10: plays to then sell to third parties those same capabilities
Speaker 10: to lower costs and drive faster product innovation for the
Speaker 10: rest of the US economy. So I actually think that
Speaker 10: the biggest funders of generative AI infrastructure are seeing the
Speaker 10: biggest benefits already in their own businesses.
Speaker 4: Laur Martin on optimistic mode for the end.
Speaker 3: We really appreciate it always from Needham, keep coming back,
Speaker 3: thank you.
Speaker 11: The valuations don't look crazy, but they do if there's nervousness.
Speaker 11: Are on the growth story in and that's why I
Speaker 11: think the AI story, of which we do remain bullish,
Speaker 11: and we do think that there is a lot further
Speaker 11: to go, it is likely to be a volatile ride.
Speaker 2: That was Black Rocks Helen Jewels discussing the nervousness we're
Speaker 2: seeing in AI stocks right now.
Speaker 5: You can see that in nvideo and you can see
Speaker 5: it in core Wave.
Speaker 2: As we've been discussing all morning, the risks aren't only
Speaker 2: about lack of growth. Bloomberg opinion columnist Chris Bryant, writing
Speaker 2: about that there's a quote a danger of depreciation tsunami,
Speaker 2: links to the short lifespan of AI chips. His piece
Speaker 2: focuses on AI investors ignoring warnings from short seller Michael Berry.
Speaker 2: You can check that out on the Bloomberg terminal or
Speaker 2: dot com carac.
Speaker 4: Yeah.
Speaker 3: Now, though, ed, it's time for talking tech, and first up,
Speaker 3: Microsoft is planning to build a ten billion dollar AI
Speaker 3: data center the Portuguese coast.
Speaker 4: He's working with start.
Speaker 3: Campus, the Portuguese developer, and British startup Ndscale, one of
Speaker 3: Microsoft's biggest European investments this year. Plus, Intel's chief technology
Speaker 3: and AI officer Sajin Kati has left to join Open Ai,
Speaker 3: where he'll be working on the.
Speaker 4: Startups infrastructure efforts.
Speaker 3: Back in Intel, well CEO Lit Tan will take over
Speaker 3: Catty's role and reports on another major departure, Meta is
Speaker 3: set to lose its chief AI scientist, Jan Kuhn.
Speaker 4: According to Financial Times.
Speaker 3: Lacun is reportedly leaving to launch his own style up,
Speaker 3: focusing on what he calls world models, as in early
Speaker 3: talks with investors to raise funds.
Speaker 2: Welcome back to Bloomberg Tech if you're just joining us.
Speaker 2: Our top stories are coll Weave and Nvidio. In video
Speaker 2: down three percent, SoftBank is selling out of the entirety
Speaker 2: of it's almost six billion dollar steak in the company
Speaker 2: because it needs cash to finance his other AI ventures.
Speaker 2: The street not really seeing this as a concern about
Speaker 2: in video itself, but in aggregate taken with cor Weave's
Speaker 2: almost fourteen percent drop, there are some jitters in the market.
Speaker 2: Corweave is down after just slightly trimming it's outlook for
Speaker 2: sales in twenty twenty five because of a delay on
Speaker 2: a specific data center project that delayed trimbutable to a
Speaker 2: third party. And in an interview of the CEO earlier
Speaker 2: in the program, we didn't really get any answers on
Speaker 2: who the customer impact it is. But with time and
Speaker 2: with scale, such supply issues will go away. The market
Speaker 2: right now not buying it.
Speaker 3: Kra they're not, and let's stick in with the fact
Speaker 3: that the market's not buying it. Bloomberg Gecrity's reporter comm
Speaker 3: and Rhyinikey is here with us and it's interesting the
Speaker 3: jitters around AI of late have been around an AI
Speaker 3: bubble and demand concern but ultimately these are supply side issues.
Speaker 3: Constraints for cor Weave, maybe the cash constraints for Softbag
Speaker 3: and needings sell off in video.
Speaker 12: Yeah, it's really interesting how this has shifted really from
Speaker 12: the dip buying that we saw yesterday the drove and
Speaker 12: video up Corey we think was also up before the
Speaker 12: Bell before it reported its results, and now we're seeing
Speaker 12: really any concern on I their side, AI bubble or
Speaker 12: supply here is really weighing on these shares. I think
Speaker 12: as the AI theme just continues to get stretched, investors
Speaker 12: are nervous and they're really really ready to sell at
Speaker 12: kind of any moment, this especially coming before in video
Speaker 12: results next week. Obviously the whole market really looks ahead
Speaker 12: to that, but shares going down into in video results
Speaker 12: is a little bit different than what we usually.
Speaker 2: See, right Covin, you made a really good point, and
Speaker 2: I'm going to bring up a chart to illustrate it.
Speaker 2: Yesterday and Vidia jumped almost six percent, which was its
Speaker 2: biggest jump since early April.
Speaker 5: So a drop off of.
Speaker 2: Three percent or more in the session taken into account
Speaker 2: with the newsflow, give that context. Generally speaking, though, what
Speaker 2: is the sentiment of the investors that we're speaking to
Speaker 2: right now? Are they still like mega bullish on this
Speaker 2: long term trend that they think will just carry on
Speaker 2: and keep going.
Speaker 12: Yeah, that's a really great question. I think people are
Speaker 12: very split. But I hear a lot of people that
Speaker 12: are still very bullish on the long term trend and
Speaker 12: even say that some selling now or a little shakeout
Speaker 12: in the market would be pretty healthy. I mean, valuations
Speaker 12: are very stretched. We've we're three years into a bull run.
Speaker 12: These are some of the biggest stocks in the overall markets.
Speaker 12: That makes sense that they've drag down the entire index,
Speaker 12: so a little bit of a shakeout here wouldn't be
Speaker 12: a huge concern. Obviously, this is really overlaid though, with
Speaker 12: the fact that people are really talking about an AI bubble,
Speaker 12: and so I think any selling in any of these stocks,
Speaker 12: even you know, at the end of the year when
Speaker 12: people are sort of looking to lock in performance lock
Speaker 12: in gains it, you know, sparks more conversation around this
Speaker 12: entire debate about an AI bubble.
Speaker 2: Bloombos come and rhyanikay, thank you very much. Meanwhile, shares
Speaker 2: of Nokia and Ericsson close higher in European trading. Sources
Speaker 2: say the European Commission is weighing steps to push EU
Speaker 2: members to phase out Huawei and Zte gear from telecom
Speaker 2: networks amid security concerns. More let's get out to Bloomberg's
Speaker 2: Illn Deutsch who joins us with the reporting. This is
Speaker 2: timely and this is very interesting. What do we learn
Speaker 2: in the course of reporting about how serious this move
Speaker 2: is to push Huawei out of the market, That it
Speaker 2: is very strong in in Europe.
Speaker 13: Yeah, I think it's actually really important to note. People
Speaker 13: do not realize that there's still so much Huawei Kit
Speaker 13: in various EU countries infrastructures, and the European Commission for
Speaker 13: years has wanted to push U countries to stop using
Speaker 13: this technology across their networks.
Speaker 4: They have really failed to do so.
Speaker 13: And the new Commission that came in two years ago,
Speaker 13: they're doing a new push. They're going to try to
Speaker 13: get different EU countries to push out force out Huawei
Speaker 13: and ZTE. Now I cannot orderstate how difficult this is
Speaker 13: going to be. Like I said, the previous Commission tried
Speaker 13: to do this and they did not have the political backing.
Speaker 13: Things like critical infrastructure, are things like national security. These
Speaker 13: are left up to the member states of the EU.
Speaker 13: So essentially what has to happen is these countries will
Speaker 13: have to come together and say yes, actually we're going
Speaker 13: to hand over that power to Brussels, to the European
Speaker 13: Commission to make that reality. That is a tough pill
Speaker 13: for a lot of countries to swallow.
Speaker 3: Countries such as in your piecing make clear Spain, Greece,
Speaker 3: which have remained relatively dependent interestingly UK. We know that
Speaker 3: they've been pulling away for long time, banned any Huawei infrastructure,
Speaker 3: similar with Sweden, so it can be done. It's interesting
Speaker 3: that Chinas sort of tried to point out that it
Speaker 3: slowed those nations down there.
Speaker 13: Yeah, it's a great point, Kawlin, because you know a
Speaker 13: lot of the operators and independent analysis has been done
Speaker 13: to show that actually by forcing a strip out of
Speaker 13: Huawei from the UK networks, that delayed.
Speaker 4: Five year roll by up to two years.
Speaker 13: This is a very costly ambition from certain countries if
Speaker 13: they want to go ahead with this kind of push.
Speaker 13: Not only does it delay possible you know, technology development,
Speaker 13: it also comes at a great cost to the operators.
Speaker 13: So if you look at Germany, for example, some people
Speaker 13: in the government are examining ways that. Okay, if they
Speaker 13: were to try to force Huawei and ct out of
Speaker 13: their networks, could they compensate operators not Obviously would soften
Speaker 13: the blow for a lot of these operators, but this
Speaker 13: would commit a great cost then to governments.
Speaker 4: If not readers.
Speaker 3: Jinaen Deutsch's great read, we urge people to go take
Speaker 3: a read of it, thank you very much. Indeed, let's
Speaker 3: take a look at crypto more broadly right now, because
Speaker 3: we want to put it into the world a bitcoin.
Speaker 3: It's too seeing some risk a version selling. Today we're
Speaker 3: off by two percent one hundred and three thousand. Remember
Speaker 3: it remains below its moving average targets, so one hundred
Speaker 3: day moving average for example, at one hundred and ten thousand.
Speaker 3: It remains trading below that. People fearful they won't be
Speaker 3: seeing any sort of breakout. We're seeing Gemini space station
Speaker 3: though Gemini, of course crypto Exchange went public recently off
Speaker 3: by fifteen percent. That's after its earnings just showed that
Speaker 3: perhaps they're not managing to ramp into any sort of
Speaker 3: profitability as soon as people have maybe hoped. Let's bring
Speaker 3: in Blomberg senior crypto rewarter Olga Karaf, who can dig
Speaker 3: into the Gemini story because they were a beneficiary of
Speaker 3: the changes in regulation in the United States.
Speaker 4: But why did it underwhelm on the quart of just reporting.
Speaker 14: So, like you said, the Winkle West twins that founded Gemini,
Speaker 14: they have been very strong supporters of President Trump and
Speaker 14: a lot of crypto companies with public this year as
Speaker 14: we've seen sort of deregulation and more favorable regulatory environment
Speaker 14: towards the industry. But the fact of the matter is
Speaker 14: that the company, Gemini, is unprofitable and some analysts basically
Speaker 14: don't expect it to become profitable until two or three
Speaker 14: years from now. And what we've seen in this quarter
Speaker 14: is that the losses widened partially because of this ideolic
Speaker 14: related expenses and marketing expenses. But people are wondering, sort of,
Speaker 14: what about profitability, when is that going to come?
Speaker 2: Alger It's good to see Dan Chen, the CFO, talked
Speaker 2: about this the expenses issue and it being strategic for
Speaker 2: those that have never come across Gemini. What's the business
Speaker 2: model on paper? Just explain the basics of how it
Speaker 2: supposed to function, because then that will make the loss
Speaker 2: probably more digestible.
Speaker 14: Sure, so it's a crypto exchange, So their biggest rival
Speaker 14: is coinbase here in the US, and essentially they make
Speaker 14: their money about half of the money off of trading
Speaker 14: fees as people trade bitcoin, ether and other cryptocurrencies. And
Speaker 14: then they also have other businesses such as you know,
Speaker 14: their credit cards have actually been on a roll and
Speaker 14: they've been able to grab a lot of new users
Speaker 14: through credit cards that essentially allow you to earn crypto
Speaker 14: rewards as you spend money. They also have a custody
Speaker 14: business and some other.
Speaker 2: Businesses looms, Olga grief, Thank you very much. Now coming
Speaker 2: up on the program, Ali Barber's Singles Day is underway
Speaker 2: and this year AI isn't an option for shopping.
Speaker 5: We got more on that. Next, this is Bloodbag Tech.
Speaker 4: China Singles Day.
Speaker 3: It is underway now in its seventeenth year, but shifting
Speaker 3: consumer habits and he fears price war. They've dourned the
Speaker 3: one day shopping blitz into a weeks long campaign. Bloomberg
Speaker 3: TV's chief North Asia correspondent Stephen Engel really examines China's
Speaker 3: involving consumption trends amid a tougher economy.
Speaker 15: Influencer peddling is all the rage in China online, of course,
Speaker 15: but now more than ever before on the actual trade
Speaker 15: fair floor as well, where rapid fire hawking of product
Speaker 15: over multiple mobile phones direct to China's billion plus consumers
Speaker 15: has never been this well in your face.
Speaker 5: I mean, I don't know how they talk so much.
Speaker 15: Everything you possibly need to know about Vietnamese and other
Speaker 15: products from overseas doesn't matter if it's New Zealand milk
Speaker 15: powder and ice cream, or Italian cleaning supplies complete with
Speaker 15: a Mandarin speaking European oh your bow mouth. They're all
Speaker 15: competing for Chinese cyber shoppers. In a market where around
Speaker 15: forty percent of all retail sales are now done online.
Speaker 8: A single days eleven eleven is huge.
Speaker 14: We have a strong presence on online platform and we
Speaker 14: have a strong focus on gen Z.
Speaker 3: I know think as they had another few more weeks Togo,
Speaker 3: but so far the result has been very, very encouraging.
Speaker 15: Online shopping in China is growing at three times the
Speaker 15: pace of traditional retail, with many brick and mortar outlets
Speaker 15: feeling that pain. CPI did pick up slightly in October,
Speaker 15: but overall retail spending is expected to have slowed again
Speaker 15: as households hold on to savings amid economic uncertainty. Add
Speaker 15: to that are lingering worries importers and exporters here feel
Speaker 15: about the fragile trade trups with the United States.
Speaker 16: High terriffs are hurting everybody, hurting both sides. One of
Speaker 16: the things that as businesses we do hope is that
Speaker 16: there is longer than a fourteen month detent, shall we say,
Speaker 16: but that there is some general baseline of the relationship.
Speaker 16: These are areas we're going to trade in. These are
Speaker 16: areas that are no go. This is kind of a
Speaker 16: gray area where we'll keep negotiating on because that would
Speaker 16: help us all to your point, really understand what we
Speaker 16: can move forward. And if I do want to have
Speaker 16: a five year contract with an American supplier, I know,
Speaker 16: no matter what, I'm going to get that product.
Speaker 9: I think it's been critically important that we have clarity.
Speaker 15: US wine experts to China this year were down seventy
Speaker 15: seven percent in the seven months through July from a
Speaker 15: year ago, with Chinese tariffs and taxes combined amounting to
Speaker 15: about seventy five percent on American wine, and yet Barrows
Speaker 15: is cautiously optimistic for recovery as the truce has kept
Speaker 15: tariffs from escalating further.
Speaker 9: It was a very very positive development that they came
Speaker 9: up with an actual number that's going to be in
Speaker 9: place for the next fourteen months, because before that, I
Speaker 9: think a lot of importers weren't so upset about the tariff.
Speaker 9: It's they didn't know what it was going to be,
Speaker 9: and so now we know what it's going to be,
Speaker 9: at least through the end of December of twenty twenty six,
Speaker 9: and I'm hoping that that brings some normalcyback into the process.
Speaker 15: It's an endurance game shared in some respect by the
Speaker 15: many influencers in nearby booths to keep talking, to keep
Speaker 15: the parties on the other end engaged. Steven Angel, Bloomberg
Speaker 15: News Gender.
Speaker 2: We stay with Single's Day this year if Ali Barber
Speaker 2: artificial intelligence takes center stage as the company pushes out
Speaker 2: AI driven search results. Deborah wind Swig, Coresite Research CEO says,
Speaker 2: quote winners going forward up brands investing in AI driven personalization.
Speaker 2: The retail playbook now blends tech trust and instant gratification commerce.
Speaker 2: Deborah whine six joins us now Deborah, that report from
Speaker 2: Steven Adam Mainland China fascinating learning about sort of the
Speaker 2: scale of the event. But will zero in on Ali
Speaker 2: Barber and where AI is or isn't making the difference.
Speaker 2: What's your assessment about where they stand in that market,
Speaker 2: which he just outlined is pretty chaotic at the moment.
Speaker 17: Well, first, thanks for having me on. Second, as we
Speaker 17: look at Ali Baba specifically, I would say that last
Speaker 17: year they were dipping their tone in the water and
Speaker 17: this year, they're in kind of up to their thigh
Speaker 17: as it relates to AI and the shopping experience. So
Speaker 17: starting at the very beginning all the way through there
Speaker 17: or kind of the PDPs or the information behind all
Speaker 17: of the images on the website to what you've bought previously,
Speaker 17: is that they serve up products you are more likely
Speaker 17: to purchase. But it's all EI driven and it's highly
Speaker 17: personalized in a very short period of time, so that
Speaker 17: return rates are dropping, which is a positive because you're
Speaker 17: buying more of what you want, and it's also much
Speaker 17: easier to do the research you need and that you
Speaker 17: want to do in order to find the perfect gift
Speaker 17: for others or for yourself.
Speaker 2: Debra, we actually had some headlines how to China Cross
Speaker 2: since we came on air. Shao Me's single day sales
Speaker 2: exceed twenty nine billion yu want, which if my maths correct,
Speaker 2: is just slightly above four billion US dollars. That show me,
Speaker 2: what do you make of that number and put show
Speaker 2: Me's success in singles day into context or what you
Speaker 2: just told us about Ali Baba.
Speaker 17: Yeah, we've continued to hear from a lot of Western
Speaker 17: brands that their sales are exceeding expectations, and I think
Speaker 17: what they're learning from that is to think about how
Speaker 17: to bring some of those learnings back to the US.
Speaker 17: But this idea that the consumer can find and buy,
Speaker 17: and when you think about like show me right, this
Speaker 17: idea that the consumer and this was actually one of
Speaker 17: the probably key areas of interest is that they call
Speaker 17: them like AI toys, but like AI toys have been
Speaker 17: one of the hottest categories, that and beauty, and so
Speaker 17: the Shami numbers I would say probably are a little
Speaker 17: higher than we would have expected, but that's the trend
Speaker 17: that we're seeing, and you know, we believe that'll continue
Speaker 17: to strengthen.
Speaker 3: Chaomi makes AI toys on wheels, cars, but also ones
Speaker 3: that you have in your hand. How much you seeing
Speaker 3: at the moment the luxury perspective though, because Shami has
Speaker 3: been on the hills of a tesla and everyone's thinking
Speaker 3: about the amount of market share that these local domestic
Speaker 3: players are now taking the world of ev and of
Speaker 3: course phones, but relatively luxurious products to be spending on.
Speaker 3: Where do you see just general consumer appetite right now?
Speaker 17: That's a great question and we've done a lot of
Speaker 17: research on this. So what we're starting to see is
Speaker 17: a I would say, a strengthening at the high end,
Speaker 17: But when it comes to let's say basic essentials. Going
Speaker 17: back to this idea of research and how much easier
Speaker 17: it is to find product. Consumers are i would say,
Speaker 17: being increasingly frugal on everyday necessities and then looking to
Speaker 17: treat themselves. So I would say AI is helping them
Speaker 17: get smarter. But we are i'd say, probably earlier than
Speaker 17: many people expected. We are starting to see a strengthening
Speaker 17: in the high end.
Speaker 3: What are they buying in terms of AI wearables? And
Speaker 3: they're like, I'm seeing oring and ordering. There's lots of
Speaker 3: new cove competises on the market here in the United States,
Speaker 3: but I can only imagine the raft of options you
Speaker 3: got to purchase over in China right now.
Speaker 17: I mean, we're seeing really interesting things on the wearable side,
Speaker 17: like bracelets and pins and whatnot. Other kind of like
Speaker 17: even health sensing, body sensing. Can you find your your
Speaker 17: mate depending on right the you know you're you're kind
Speaker 17: of the electromagnetic field that you're like. It's it's really
Speaker 17: really interesting in terms of how it really is. They're
Speaker 17: toys to make your life more fun. But also better
Speaker 17: and I think going back to this idea around data
Speaker 17: from a healthcare perspective, that's it increasingly important and we're
Speaker 17: seeing it drive improved results for consumers as well.
Speaker 2: The data sets that you're tracking, even from this this
Speaker 2: year's event and prior years, if you've got any assessment
Speaker 2: of like the investment these companies have to make to
Speaker 2: get a payoff, like how committed they are to winning,
Speaker 2: what you've outlined very clearly is a bit of a
Speaker 2: scramble to get consumers who are making very conscious, proactive
Speaker 2: spending choices.
Speaker 17: So therein lies the that is like the question of
Speaker 17: the day, and one of the biggest differences between the
Speaker 17: Western consumer and the Chinese consumer is you know this
Speaker 17: isn't like you know you're clipping coupons, Well, I guess
Speaker 17: you're clipping them, but digital And as we're seeing it
Speaker 17: go into the end of the double even shopping season,
Speaker 17: how the couponing, right, it goes back to it's adjusting
Speaker 17: in real time. So if retailers and brands aren't seeing
Speaker 17: the desired outcomes, they're able to change it in real time. Right.
Speaker 17: These aren't like marketing plans built out six twelve eighteen
Speaker 17: weeks ahead of time, and therein is why I think
Speaker 17: we're going to see a much stronger double eleven season
Speaker 17: than we have in the past. And those retailers like
Speaker 17: Lululemon is in you know, the minds of the Chinese consumers.
Speaker 17: That's the local brand because they've really embraced this and
Speaker 17: they did have to invest of course early on, but
Speaker 17: now they're reaping the rewards of that investment. And so
Speaker 17: that's like Lululna and Loreal. Those are some just great
Speaker 17: examples of brands right, so European brand and US brand
Speaker 17: or Nadian brand technically North American brand of companies who
Speaker 17: have invested and as a result they're seeing outsize rewards.
Speaker 3: Instant gratification. Commerce is the line on your note. We
Speaker 3: really appreciate it. Thank you, Debrah Weinswig for joining us.
Speaker 3: Of course, like research coming up, Oracle co founder Larry
Speaker 3: Ellison gets more employees on his supervision off to the
Speaker 3: company CEO swap.
Speaker 4: We'll discuss what that entails next. This is Broom, the
Speaker 4: tech