Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
Speaker 1: from coast to coast with Caroline Hide in New York
Speaker 1: and ever though in San Francisco.
Speaker 2: This is Bloomberg Tech coming up. Meta shares rise, and
Speaker 2: reports that the social media giant is planning big layoffs
Speaker 2: and an expanded compute deals with Nebuus plus.
Speaker 3: Open Ai is in advanced discussions to form a joint
Speaker 3: venture with private equity firms to boost enterprise adoption of
Speaker 3: its AI software.
Speaker 2: And all eyes on Nvidio GtC kicking off today, we'll
Speaker 2: discuss what investors expect from the Global AI Conference.
Speaker 3: But we return to a global conflict that has markets.
Speaker 4: Once again on edge.
Speaker 3: Oil prices actually come down a little bit as we
Speaker 3: maybe see some alleviation of the straight orf Hole moves
Speaker 3: and the supply blockage there an indeed maybe more oil
Speaker 3: coming into the market is pushing up stocks for up
Speaker 3: one point two percent on the laws that one hundred.
Speaker 3: We've got risk assets basically.
Speaker 4: More in demand in this current environment.
Speaker 3: We find themselves this Monday, Bitcoin two and a half
Speaker 3: percent high, but actually above that seventy three thousand level.
Speaker 3: In fact, we're at the highest level for bitcoin in
Speaker 3: six weeks said, what are you looking at?
Speaker 2: Meta is our top story, and there are two pieces
Speaker 2: of news moving the shares. First Reuter's reporting that Meta
Speaker 2: considers layoffs of up to twenty percent more than twenty
Speaker 2: percent to offset AI spending. And then there is a
Speaker 2: twenty seven billion dollar deal with Neo Cloud Nebius over
Speaker 2: a five year period. Both seem to be pushing ches higher.
Speaker 2: Nebuus certainly jumping on that deal. Let's get out to
Speaker 2: Blue VIIs Kirk Wagner who covers Meta and Kurt Let's
Speaker 2: start with the report on layoffs, right. That's a big
Speaker 2: potential number, twenty percent that Reuter's is saying, particularly when
Speaker 2: you consider that the layoffs have already happened and taken place.
Speaker 5: Yeah, I mean, I believe metahead something like seventy nine
Speaker 5: thousand employees of the last year, so we're talking more
Speaker 5: than fifteen thousand potential jobs at stake here. If they
Speaker 5: do indeed go as hi as twenty percent, it does
Speaker 5: feel very high. But I can say, having spoken with
Speaker 5: people who work at the company over the last couple weeks,
Speaker 5: this has been something that's been kind of making the
Speaker 5: rounds among employees a lot of concern that all of
Speaker 5: this spending on AI is going to ultimately lead to
Speaker 5: job cuts. So even if it is not a twenty
Speaker 5: percent layoff, there is a lot of sort of anxiety
Speaker 5: that there will be some type of cuts or restructuring
Speaker 5: to you know, basically afford all of these big AI
Speaker 5: deals that the company has been announcing.
Speaker 3: So Jack Dawsey with Block, many others doing similar at
Speaker 3: Lassian with something we're talking about at the end of
Speaker 3: last week. Is this a story of though also AI
Speaker 3: delivering in terms of productivity, not just having to restrain
Speaker 3: spending elsewhere.
Speaker 5: I think that's part of it. Mark Zuckerberg has talked
Speaker 5: on the last several earnings calls about essentially using AI
Speaker 5: to replace some of those mid level engineering tasks, and
Speaker 5: you know, having the engineers sort of oversee AI agents
Speaker 5: instead of necessarily writing all the code themselves, and so
Speaker 5: part of it could be a productivity thing, you know.
Speaker 5: And they're not only trying to say money on these
Speaker 5: deals we talked about, but to your point, Caroline, they
Speaker 5: have something else that's that's doing some of the work
Speaker 5: that the employees used to do, So maybe they don't
Speaker 5: need quite as much headcount for that.
Speaker 2: The second piece of news is a deal with Nebeus.
Speaker 2: What do we need to know?
Speaker 5: There is going to be a twelve billion dollar commitment
Speaker 5: from Meta to buy compute from Nebeus. There is potential
Speaker 5: for fifteen billion dollars more. Nebuus is building some clusters
Speaker 5: that they're going to be selling to third party clients,
Speaker 5: but if there is excess capacity there, Meta has agreed
Speaker 5: to acquire it, essentially giving them a little bit of
Speaker 5: a safety net. So in total this could be up
Speaker 5: to twenty seven billion dollars. You know ed, we've talked
Speaker 5: about the Nvidia deal AMD. Now Nebus Meta is out
Speaker 5: spending aggressively on AI infrastructure. They're pretty mu taking it
Speaker 5: from anyone they can get it from. And this is
Speaker 5: just again a sign of how you know much Mark
Speaker 5: Zuckerberg believes in this AI APF that they're on. They're
Speaker 5: certainly trying to frontload as much of that capacity as.
Speaker 3: Possible and trying to take on the competition with VS.
Speaker 3: Kurt Wagner, Thank you very much. Indeed, let's talk about
Speaker 3: that competition. Open Ai is in advanced discussions to form
Speaker 3: a joint venture AIR with private equity firms likes the
Speaker 3: TPG being capital, it's going to be focusing on a
Speaker 3: bolstering adoption of its AI software across the portfolio companies. Look,
Speaker 3: we kind of saw this start to articulate itself with
Speaker 3: Thrive Holdings and the deal that we saw open Ai
Speaker 3: and helping certain companies basically get on the AI train.
Speaker 3: That perhaps wasn't as adopting as quickly as could be.
Speaker 3: But Anthropic's been talking to PE companies.
Speaker 4: What do we know.
Speaker 2: Yeah, in open AI's case, the overarching goal is to
Speaker 2: make a sales and distribution org have a way of
Speaker 2: going to all kinds of enterprises and actually get them
Speaker 2: to buy stuff. In the first instance, the private equity
Speaker 2: firms that you mentioned, they have a portfolio of companies
Speaker 2: under the p umbrella that they can basically say, hey,
Speaker 2: you know this would make you a lot better, you
Speaker 2: guys should do deals with open Ai. The numbers that
Speaker 2: we reported are ten billion dollar pre money valuation with
Speaker 2: the private equity firms injecting four billion. But for open
Speaker 2: Ai that is off balance sheet capital, which for a
Speaker 2: company that has a sort of insatiable capital appetite kind
Speaker 2: of interesting.
Speaker 3: Yeah, it is interesting, and we just see this hunger
Speaker 3: to satisfy enterprise needs as well as consumer needs at
Speaker 3: this moment. But all of this comes back to we
Speaker 3: need for compute, and we can talk about that a
Speaker 3: little bit more at the moment end because two key
Speaker 3: Democratic lawmakers. In fact, I've been warning that the Trump
Speaker 3: administration's first approval for exports of in Vidia's H two
Speaker 3: hundred AI chips to China were they risk calming US
Speaker 3: national security call for bipartisan legislation to actually keep advanced
Speaker 3: in American technology out of Chinese hands. Bloomberg's senior Tech editor
Speaker 3: Mike Sheppard joins us some more so talk to us
Speaker 3: about the names we need to know in this.
Speaker 6: There are two key names here, really, Caro. It's Elizabeth Warren,
Speaker 6: the senator from Massachusett, and Gregory Meeks, the representative from
Speaker 6: New York. And they wrote oversee, they are the top
Speaker 6: Democrats on the committees that oversee US export control programs,
Speaker 6: and their concerns about allowing China to buy these.
Speaker 7: Age two hundred.
Speaker 6: Chips from Nvidia. It's not new. But what's new here
Speaker 6: is that they actually got a look at the paperwork itself,
Speaker 6: and they can't go into the details of what they
Speaker 6: saw owing to disclosure restrictions, but what they would have
Speaker 6: seen in there possibly would include potential buyers, the numbers
Speaker 6: of chips, and what safeguards might be in place under
Speaker 6: the license to prevent unauthorized use. And they emerge from
Speaker 6: that review of this license with even greater concerns and
Speaker 6: further calls for steps to prevent China from gaining access
Speaker 6: to American technology and using it improperly. And Nvidia has
Speaker 6: pushed back on this, seeing that critics of the Trump
Speaker 6: administration's move to allow these Age two hundred sales simply
Speaker 6: allows America's competitors abroad, and without saying so, pointing toward Huawei,
Speaker 6: which is a company that they would like to be
Speaker 6: able to compete against in the Chinese market.
Speaker 2: Those steps that Senator Warren and Representative Meeks are cooling
Speaker 2: for is a bipartisan piece of legislation to block China.
Speaker 2: On the face of it, what does that look like,
Speaker 2: shp and is there real momentum behind such a thing?
Speaker 6: Well, the legislation would essentially give lawmakers a greater say
Speaker 6: in the export control process, akin to what they have
Speaker 6: over arm sales right now. Typically, administrations have to go
Speaker 6: to Congress for any foreign arm sales, say to Taiwan,
Speaker 6: to get you know, in essence a mother may I
Speaker 6: on this, and they would like to have that authority
Speaker 6: over chip sales. Right now, that is run by the
Speaker 6: Commerce Department's Bureau of Industry and Security in conjunction largely
Speaker 6: with the White House and as well the State Department,
Speaker 6: which get us say too. But lawmakers would like to
Speaker 6: have a little bit of a veto on that. And
Speaker 6: this measure of the AI Overwatch Bill, which has been
Speaker 6: introduced in the House, we're still waiting a companion version
Speaker 6: in the Senate. Elizabeth Warren has said she would support
Speaker 6: something like that. There does seem to be bipartisan interest
Speaker 6: in it. And yet for Republican lawmakers to go against
Speaker 6: the administration on any piece of legislation heading into an
Speaker 6: election year, midterm election year where they are depending on
Speaker 6: access to not only funding but endorsements from the President
Speaker 6: and his allies, it is very tricky and it may
Speaker 6: come down to whether this gets attached ed to a
Speaker 6: key piece of must pass legislation, such as one of
Speaker 6: the defense bills that would move later this year.
Speaker 2: Thinkbanks. Michael Sheppard, thank you very much. The real market
Speaker 2: focus for Nvidia right now. GtC in the conference comes
Speaker 2: on the heels of banner earnings that still fail to
Speaker 2: impress some investors. So what does the chip maker have
Speaker 2: to do to us a difficult year at least for
Speaker 2: the start. Let's discussed with Margi Battel, head of the
Speaker 2: capital allocation team at all Spring Global Investments six hundred
Speaker 2: and twenty eight billion dollars in assets under management, and
Speaker 2: you and I and Car have talked about in video
Speaker 2: a lot when you've been on the program. In a
Speaker 2: really simple breakdown of the story. The stock has kind
Speaker 2: of traded sideways for about six months now, and a
Speaker 2: lot of the work behind the stock was this five
Speaker 2: hundred billion dollar figure in data center sales just Blackwell
Speaker 2: and Rubin through the end of this calendar year. And
Speaker 2: for many it seems like that number is going to
Speaker 2: have to grow significantly or Jensen's going to have to
Speaker 2: say something about it to move the needle.
Speaker 8: This week, well, I think that just to confirm what
Speaker 8: we already know, what he's already said about the growth playoff,
Speaker 8: I think should be sufficient. I think was really a
Speaker 8: bigger thing that really took a lot of the megastocks
Speaker 8: down last far and some started to recover in Video Housard.
Speaker 8: But you know, if you look at Video right now,
Speaker 8: it's at a price earnings ratio of twenty two times earnings,
Speaker 8: and that really puts an average for the whole S
Speaker 8: and P, whereas it has the margins and growth rates
Speaker 8: of revenues and cash flow materially higher than that. So
Speaker 8: I think whatever he says to confirm the outlook that
Speaker 8: we pretty much know should be sufficient. I think it's
Speaker 8: really these other things.
Speaker 4: I think some people I.
Speaker 8: Think were maybe cut the wrong way, and being in
Speaker 8: software and being in private credit relating to software, and
Speaker 8: just looking to take some chips off the table. So
Speaker 8: in Vidia is a very easy liquid target to say
Speaker 8: reduce exposure. But I think that what Invidia says will
Speaker 8: be good enough to keep the stock to keep on
Speaker 8: moving higher.
Speaker 2: Really, it wasn't that long ago that GtC was just
Speaker 2: a developer's conference. In your career, have you ever known
Speaker 2: something like this to have such a macro level impact
Speaker 2: on financial markets?
Speaker 8: No, because it's a little similar when Apple was a
Speaker 8: religion stock everyone owned, and it didn't matter what they said,
Speaker 8: they knew Apple would continue to go up. And once
Speaker 8: you introduce these other aspects into in video, whether it's
Speaker 8: you know, controls on exports or development new products that
Speaker 8: in video maybe losing their edge to competition, then I
Speaker 8: think that's what you have. But I think it's been
Speaker 8: such a widely owned stock, it's natural to see nervousness
Speaker 8: come out of that stock. But when you look at
Speaker 8: it and if all you knew about the company was
Speaker 8: where it's trading at and what its prospects were, even
Speaker 8: if you champ down some of the optimistic expectations, you'd
Speaker 8: have to say, this is still a great long term holding.
Speaker 3: Even when we're seeing some of that competition coming to Bay.
Speaker 3: You just said, whether we get any size that there
Speaker 3: is competition coming for an Nvidia, and thus far they
Speaker 3: managed to Bay the way the AMD news cycle. But
Speaker 3: there is more and more assets coming, more and more
Speaker 3: companies wanting to make their own chips.
Speaker 4: M's have been one of them.
Speaker 8: Well, that's right, But you know, when you look at technology,
Speaker 8: that's always been the story. There's a market leader, you
Speaker 8: have smaller competitors come in and maybe they take share,
Speaker 8: maybe they don't, maybe they're successful, and so it's just
Speaker 8: really the price you pay when you invest in tech
Speaker 8: that sometimes winners become losers. But I think in Vidia.
Speaker 8: Having said that, I think Nvidia is still is in
Speaker 8: the number one position, and these other some of the
Speaker 8: marginal companies really won't make much of a difference. I
Speaker 8: think something like AMD, I think is a very strong competitor.
Speaker 8: But in a market that's expanding, I think there's really
Speaker 8: room for the leading companies to continue to have these
Speaker 8: very very rapid growth.
Speaker 3: Rates a market that is expanding because people want to
Speaker 3: see productivity games, and the flip side of the productivity
Speaker 3: is that we're losing labor. This news reporting that maybe
Speaker 3: met as the latest company to start making waves of layoffs.
Speaker 3: Margie is that's something you just have to brace yourself
Speaker 3: for in this market.
Speaker 8: Well, again, that's what we've seen. We've seen technology often
Speaker 8: cause companies to reduce their employment. And what happens is
Speaker 8: by using technology, these companies productivity their workers go up,
Speaker 8: and then you increase demands. So we've never had a
Speaker 8: permanent erosion, a light approach to creating a greater people
Speaker 8: losing their jobs because of technology. I don't think that'll
Speaker 8: be the case here, and I think in the case
Speaker 8: of Nvidia. I don't own Invidia, but really it's just
Speaker 8: here one of many companies that expanded their hiring after
Speaker 8: COVID and finally said we really don't need all these
Speaker 8: people to be productive. And it's actually very positive to
Speaker 8: say we're looking at where our marginal costs are. Can
Speaker 8: we reduce those costs and better invest our capital? So
Speaker 8: I think that's really actually positive. I hate to be
Speaker 8: positive about everything, but it's hard to be negative about
Speaker 8: technology advancing, even in the case of a company that
Speaker 8: has big layoffs MARGI.
Speaker 2: This week at GCC, there will be a view of
Speaker 2: the world through Jensen Wong's eyes on supply chains. He
Speaker 2: will get asked about the war in Iran. He will
Speaker 2: get asked about the memory chip crunch. Is any of
Speaker 2: that useful to you? At a higher level in what
Speaker 2: he has to say, well, I think.
Speaker 8: The memory crunch is real, and that was the memory
Speaker 8: sector is the Actually, historically it has been extremely cyclical.
Speaker 8: There's a big demand, the companies expand capacity, prices come down,
Speaker 8: earnings come down, and then they start and the star
Speaker 8: price comes down, and then they start to cycle over again.
Speaker 2: But it looks as.
Speaker 8: If there's a rather long term shortage memory chips. That's
Speaker 8: why prices for memory chips have been relatively high, and
Speaker 8: new supply coming on doesn't look as if it's really
Speaker 8: going to do much damage to the prices or to
Speaker 8: saturate their demand. So we think the memory side is
Speaker 8: still quite positive.
Speaker 3: Malgi Vittal, it's so good catching up with you. Thanks
Speaker 3: for the time today, all Spring Global Investments. Now, let's
Speaker 3: talk about what Wall Street Banks are up to, because,
Speaker 3: being led by JP Morgan, they've kicked off a five
Speaker 3: point seventy five billion dollar cross border leverage loan sale
Speaker 3: to help finance the buyout of video game Make It
Speaker 3: Electric Electronic Arts, one of the largest transactions of its kind.
Speaker 3: In fact, now EA is being acquired by a consultum
Speaker 3: led by private equity fund Civil Management Saldi, Arabia's public
Speaker 3: investment fund and Affinity Partners, which is managed by President
Speaker 3: Trump's son in law Jared Kushner. That the deal values
Speaker 3: a video game company at about fifty five billion dollars
Speaker 3: and will be a test. This particular loan syndication is
Speaker 3: going to be a test of appetite amid market turbainance
Speaker 3: driven by the war in Iran concerns around AI disruption
Speaker 3: and all of that has pummeled secondary loan prices.
Speaker 2: Ed Okay coming up. China's Ali Barba reorganizes its AI endeavors.
Speaker 4: We have more on that next.
Speaker 2: This is Bloomberg Tech.
Speaker 4: Time now for Talking Tech and first up.
Speaker 3: Chinese AI startup Moonshot is aiming to raise one billion
Speaker 3: dollars in an expanded running round that would value the
Speaker 3: company at about eighteen billion, and the fundraising reflects really
Speaker 3: strong investor appetite for Chinese AI startups and Moonshot's valuation.
Speaker 3: It's more than quadrupled in the past three months after
Speaker 3: it raised more than seven hundred million dollars just earlier
Speaker 3: this year.
Speaker 4: Plus in Vidio.
Speaker 3: Partner Honheim is projecting strong sales growth in twenty twenty
Speaker 3: six after disappointing in its latest quarterly earnings. Now the
Speaker 3: company is a to ease concerns about demand for its
Speaker 3: Nvidio powered AI servers, but says the war in the
Speaker 3: Middle East is creating some uncertainty and China's open AI
Speaker 3: frenzy is beginning to reveal some really clear winners.
Speaker 4: JB.
Speaker 3: Morgan says Minimax Jubu could be from the first leg
Speaker 3: of the trade as model and influenced companies see early gains,
Speaker 3: but the bank expects a later rotation into Ali Baba,
Speaker 3: ten Cent Baidu as the market shifts from installation towards monetization.
Speaker 6: Edit.
Speaker 2: I'll stay with Ali Baba and AI. The company is
Speaker 2: setting up a new business unit to bring its sprawling
Speaker 2: AI services under a single umbrella. For more. We're joined
Speaker 2: by Bloomberg Executive editor for Global Tech Peter Elstrom, who
Speaker 2: also leads the team covering Asia and China Tech. The
Speaker 2: headline is a major revamp and the focus is on
Speaker 2: AI profits. What do we need to know.
Speaker 9: Right?
Speaker 7: So, Oli Barber has been doing very well in AI
Speaker 7: so far, best known, of course for its e commerce business.
Speaker 7: It's moved very aggressive into AI through its GWEN services
Speaker 7: in particular. They've been gaining quite a bit about a
Speaker 7: momentum there, but they did lose the key executive who
Speaker 7: was leading this GWEN effort, Justin Linn, departed. There's some
Speaker 7: questions about why exactly it departed. I think they lost
Speaker 7: a little bit of momentum. So what you're seeing is
Speaker 7: you're seeing the company trying to show that it can
Speaker 7: continue to progress with its products continue to kind of
Speaker 7: make progress in the market as we're introducing these new
Speaker 7: AI services, especially the ones who are alluding to the
Speaker 7: agentic services that have been made so popular with open
Speaker 7: Claw in particular. And Tencent is coming on now, the
Speaker 7: big rival to Alibaba. Tencent is coming on quite strong.
Speaker 7: They're starting to incorporate their AI services into we Chat,
Speaker 7: the messaging service that's so popular. It's dominant in China,
Speaker 7: has more than a billion users. So Alibaba is trying
Speaker 7: to show that it can keep pace and maybe even
Speaker 7: stay ahead here. We're also waiting for earnings from both
Speaker 7: of those two big companies later on this week.
Speaker 3: Peter, your global man, sat in Europe talking about Asia,
Speaker 3: and I'm thinking about what's happening in the US at
Speaker 3: the same time, because look ed Ludlow writing today all
Speaker 3: about how we're seeing open Ai finding ever more ways
Speaker 3: to really get into the enterprise, this time by teaming
Speaker 3: potentially with private equity giants. Is this what Ali Baba
Speaker 3: is all about right now as well? It's about trying
Speaker 3: to do the agentic adoption in enterprise.
Speaker 7: Right. Enterprise is a key part of the story, as
Speaker 7: we've seen with Anthropic in particular and now more and
Speaker 7: more with companies like open Ai too. They want to
Speaker 7: go after those corporate customers that they see is a
Speaker 7: bit more stable. At this point, enterprise is really coding services.
Speaker 7: So far we've seen some of that develop, but you
Speaker 7: want to also be able to get deeper into the enterprise,
Speaker 7: have these long lasting relationships with corporate customers that are
Speaker 7: going to keep paying their bills. Consumers may be a
Speaker 7: little bit more fickle here. So you're seeing all of
Speaker 7: these companies in China, Alibaba, Tencent, Moonshot as you mentioned before,
Speaker 7: and Jipu competing for corporate attention, competing for consumer attention.
Speaker 7: I think Tencent and Ali Baba have a leading role
Speaker 7: when it comes to the consumer market here, but they
Speaker 7: do want corporate customers.
Speaker 3: To Peter Alstrom, we thank you so much always joining
Speaker 3: the show from wherever we are.
Speaker 4: We appreciate it.
Speaker 3: Let's talk about another key Chinese name byd of course,
Speaker 3: it's all about electric vehicles. Look at the share move
Speaker 3: the most in thirteen months. In fact, why we're getting
Speaker 3: really signals of overseas sales doing well for this company,
Speaker 3: particularly in Latin America, and that's going to really be
Speaker 3: driving some forward growth.
Speaker 4: Export orders.
Speaker 3: We understand about one hundred thousand units from Argentina and Mexico.
Speaker 3: That seems to be what the McCrary analysts are currently
Speaker 3: talking about.
Speaker 4: Big move for bo Idea.
Speaker 2: Okay, coming up on the show, Peloton goes commercial diversifying
Speaker 2: beyond the home bit. More on that next, this is
Speaker 2: Bloomberg Tech.
Speaker 3: Peloton what is having a new category into its product lineup,
Speaker 3: introducing a series of commercial bites treadmills design for gym's.
Speaker 4: Bloomberg Senior Tech editor Daniel Rlman is here to talk
Speaker 4: us through it dinner.
Speaker 3: I see them in gyms of hotels, but what we're
Speaker 3: going to suddenly have a myria out of them at
Speaker 3: big gyms of scale.
Speaker 10: Yeah.
Speaker 11: So I don't think people necessarily realize that Peloton acquired
Speaker 11: pre Corp, the big name in gym exercise equipment, quite
Speaker 11: a few years ago, and it really only integrated them
Speaker 11: formally into a new business unit last year. And so
Speaker 11: this is the byproduct of that Peloton getting into that
Speaker 11: business of gym equipment that really was designed for gyms
Speaker 11: as opposed to the home, which is the CEO Peter
Speaker 11: stern Te's today would mean that the machines are a
Speaker 11: little more durable than what you might be used to.
Speaker 2: Right the foot traffic of the gym versus my tread
Speaker 2: at home, which is getting reasonable use, probably not as
Speaker 2: much as it should. Where does this fit in in
Speaker 2: the big story of Peloton We always talk about them
Speaker 2: in the context of many consecutive turnaround plans.
Speaker 11: Yes, so the company is coming off of a really
Speaker 11: lackluster launch. Last fall. It introduced new bike, new treadmills,
Speaker 11: and new rowing machine, really betting big on AI across
Speaker 11: its lineup, and so far the sales have been pretty lackluster,
Speaker 11: and so the company is just try trying again it.
Speaker 11: In addition to possibly rolling out new products in the
Speaker 11: next year year and a half, which is quite a
Speaker 11: ways away, it is diversifying beyond home fitness into as
Speaker 11: we said, locations like the gym, sort of amping up
Speaker 11: on its existing commercial business and potentially it hopes winning
Speaker 11: over more long term customers by introducing people to the
Speaker 11: equipment in other settings beyond just getting them to invest
Speaker 11: in this really expensive gear for their living rooms.
Speaker 4: Yeah.
Speaker 3: I mean, once again, this is a company that did
Speaker 3: incredibly well during COVID, and suddenly we thought that what
Speaker 3: is a pretty luxurious item should be owned by one
Speaker 3: and all.
Speaker 4: How is he just trying to re kilta the business.
Speaker 11: Yes, absolutely, As you said, the company was really high
Speaker 11: flying during the pandemic when lockdowns really forced people to
Speaker 11: stay at home and do almost everything home, including workout.
Speaker 11: And so lockdowns of course eventually eased and gym's reopened,
Speaker 11: and so Peloton is trying to find people where they are,
Speaker 11: including hotels, gyms, that sort of thing.
Speaker 2: Bluebersday in a woman with the Peloton latest, Thank you
Speaker 2: very much. Coming up, we're going to discuss IPO expectations
Speaker 2: with Matt with Eiler, head of Late Stage Growth and
Speaker 2: Wellington Management. As we often say, we're halfway through the
Speaker 2: program and it is halftime. Stay with us. This is
Speaker 2: Bloomberg Tech. Welcome back to Bloomberg Tech. And it comes
Speaker 2: to markets, the war in Iran is still a big factor,
Speaker 2: and this is kind of what the picture looks like.
Speaker 2: It's pretty simple. We do see technology stocks in particular
Speaker 2: pushing higher without performance and semiconductors. Although there's a story
Speaker 2: on the Bloomberg Term of this morning about some of
Speaker 2: the potential disruption to the chip industry from the war
Speaker 2: in Iran and its supply chain, things like helium and
Speaker 2: sulfur may be impacted. That's worth a read, but the
Speaker 2: market pretty sanguine and Brent the global benchmark for oil
Speaker 2: one hundred and two dollars per barrel kind of off slightly.
Speaker 2: We got reduced capacity numbers from a number of the
Speaker 2: key golf players this morning. We are expecting, of course,
Speaker 2: to hear from the President of the United States in
Speaker 2: the next thirty minutes or so. In the context of
Speaker 2: a news conference.
Speaker 4: Carrat an important one to watch.
Speaker 3: In the interim, let's turn our attention from those public names,
Speaker 3: but also those that are soon to be public as well.
Speaker 4: Matt Whyler is with us.
Speaker 3: He's the head of late stage growth at Wellington Management,
Speaker 3: nearly eleven billion dollars an assets under management on its
Speaker 3: private investing platform.
Speaker 4: And Matt, if we didn't have the tensions in Iran.
Speaker 3: Are we still liking to be quiet on the IPO
Speaker 3: front until we have the juggernaut come into the market.
Speaker 4: How much are you anticipating SpaceX?
Speaker 10: Yeah, I think things would be slow until the big
Speaker 10: ones go out and we talk about SpaceX a lot.
Speaker 10: Obviously you all spent a lot of time on that subject,
Speaker 10: but I think you can add into that mix and
Speaker 10: Anthropic potentially a data bricks. I think that's really what
Speaker 10: the market catalyst will be for the IPO.
Speaker 4: It's coming forward.
Speaker 3: That's so funny because we had Ali Goodci on the
Speaker 3: show last week and he pushes back, he doesn't want
Speaker 3: the money, he doesn't particularly want to be publicly performing
Speaker 3: at this moment.
Speaker 4: He likes being a private company.
Speaker 3: He's got washed with money coming from the private side.
Speaker 3: Why do some of these giants need to be going
Speaker 3: into the public market?
Speaker 4: Why the catalyst?
Speaker 10: I mean, I think if you just think about the
Speaker 10: capital intensity of some of these businesses, maybe set data
Speaker 10: bricks aside for a second, but you think about SpaceX,
Speaker 10: Open AI, and Anthropic, the capital consumption that these businesses
Speaker 10: are going through really necessitates tapping into a bigger pool
Speaker 10: of capital that you can't really get access to on
Speaker 10: the private side. So I do think it's not if
Speaker 10: it's when for those companies for.
Speaker 2: Sure, Matt, I have a series of mechanical questions for you.
Speaker 2: If that's okay, I whether right, you're wrongly. I've been
Speaker 2: thinking about a lot of late. So if you take
Speaker 2: all these names that we've mentioned, SpaceX, anthropic open AI
Speaker 2: data bricks. They have a lot of investors in common
Speaker 2: across their cap tables. Does that make things complicated when
Speaker 2: it comes to who will or won't ipo first and
Speaker 2: in which order?
Speaker 10: I'm not really sure that it impacts the order or
Speaker 10: timing of the IPOs. And I think the reason why
Speaker 10: you have some name overlap in the investor set for
Speaker 10: those names is simply due to the fact that those
Speaker 10: three companies have raised a tremendous amount of money. So
Speaker 10: it's less a reflection of some market dynamic and more
Speaker 10: reflection of the fact that when you're raising ten twenty
Speaker 10: fifty billion dollars in financing on the private side, there's
Speaker 10: only a limited pool of investors you can go to.
Speaker 2: And then similarly, you know there are a group of
Speaker 2: the four big US banks all competing for different parts
Speaker 2: of the brief across names that, if you go through
Speaker 2: the news cycle, are all preparing to go public in
Speaker 2: a similar window.
Speaker 10: Is that complicated again, I don't think that's super complicated.
Speaker 10: I think that the banks is seeing these companies and
Speaker 10: helping them to list, will figure out ways to solidify
Speaker 10: their position in those books in order to capitalize on
Speaker 10: the opportunity, because we're really talking about the potential for
Speaker 10: some of the biggest listings ever becoming to market this year.
Speaker 4: And that's where Wellington's so interesting.
Speaker 3: And you know, you've been on the Midas List however
Speaker 3: many years running.
Speaker 4: You understand private markets.
Speaker 3: You also understand as a crossover investor and into the
Speaker 3: public markets.
Speaker 4: How much are you growing.
Speaker 3: Some anxiety that these companies are finding that their shares
Speaker 3: are being marketed in places they didn't realize that. We've
Speaker 3: done a lot of deep dives on these SPVs that
Speaker 3: claim to own a lot of Android or a load
Speaker 3: of SpaceX, and people aren't actually owning what they thought.
Speaker 3: How are you telling your friends around a dinner party
Speaker 3: right now?
Speaker 10: Yeah, No, I think it's a great question. Obviously, sitting
Speaker 10: inside of Wellington, we have the benefit of seeing the
Speaker 10: full picture of what's going on the public market versus
Speaker 10: what happens in the private market, and there definitely are
Speaker 10: instances where these SPVs may come into the private companies
Speaker 10: and even the companies them selves aren't sure who's actually
Speaker 10: buying pieces of their shares. And I think what an
Speaker 10: interesting trend has been recently is we have seen the
Speaker 10: more in demand companies really clamping down on the number
Speaker 10: of SPVs and the ability for SPVs to come into
Speaker 10: their financings because they know in the private markets they
Speaker 10: get to choose who goes on their cap table, they
Speaker 10: get to decide who's they're going to let invest. When
Speaker 10: they go public, anybody can buy their shares, and so
Speaker 10: the companies on the private side are really starting to
Speaker 10: clamp down on who am I comfortable with coming into
Speaker 10: my cap table VINSPV.
Speaker 4: And this is about FOMO.
Speaker 3: This is about a retail investor or more are an
Speaker 3: accredited investor more broadly, who hasn't had access to the
Speaker 3: whopping markups that they've seen in the private market like
Speaker 3: Wellington has, and doesn't want to just be left having
Speaker 3: to buy it in the public market after it's iPod.
Speaker 3: Is there enough juice left on the table for these
Speaker 3: companies once they go public for the shares still to perform.
Speaker 10: I definitely think so. I mean, if you think about
Speaker 10: the public market in general, perhaps the return expectations in
Speaker 10: the private market and public market are different, but the
Speaker 10: risk profile is also totally different, and so I believe that,
Speaker 10: you know, if you think about some of the names
Speaker 10: coming out in the growth rate of those names, the
Speaker 10: scale of those names, and the potential market opportunities for
Speaker 10: those names. I think there's still a lot of return
Speaker 10: potential ahead, which opens the door for even the Wellington
Speaker 10: public teams to invest in some of these names ultimately
Speaker 10: when they go public and generate exciting returns for the
Speaker 10: clients hopefully.
Speaker 2: Matt, what's Wellington going to do in the late stage
Speaker 2: space for the balance of this year, with the context
Speaker 2: of all that environment that's going on, what's the strategy?
Speaker 9: You know?
Speaker 10: I think there's opportunity to be had in some of
Speaker 10: the larger names that are attracting larger dollars and think
Speaker 10: about some of the bigger financings coming to play. But
Speaker 10: I don't think for us, at least, the right strategy
Speaker 10: is put all of our chips in that basket. For
Speaker 10: us on the late stage private side, we augment the
Speaker 10: opportunities of some of these larger financings with comparatively smaller
Speaker 10: yet still late stage businesses. Because as great as AI is,
Speaker 10: as great as some of those names we just talked
Speaker 10: about are, you don't have to be an AI business
Speaker 10: to go public. You can be a great consumer business,
Speaker 10: healthcare business, fintech business and go public, and you don't
Speaker 10: need to be a trillion dollars in market, Cab. There
Speaker 10: are plenty of exciting MidCap names, even small cap names
Speaker 10: in the public market that I know our public teams
Speaker 10: would be excited to add to when those names ultimately
Speaker 10: do enter the public market.
Speaker 2: Matthew with hilerhead of late stage growth at Wellington Management.
Speaker 2: Great to have you back on the program, Thank you
Speaker 2: very much. Elon Musk's Xai is looking to hire bankers, equity,
Speaker 2: credit and crypto experts. According to job postings on its website.
Speaker 2: The recruits will help train the company's Chatbock Grock on
Speaker 2: financial strategy as it joins rivals pushing software for investing professionals.
Speaker 4: Caroen fascinating.
Speaker 2: I know.
Speaker 3: Let's just stick in with XAI because Senator Elizabeth Warren's
Speaker 3: been busy sending a letter to Defense Secretary Pete Hegseth
Speaker 3: demanding information about Pentagon's reported decision to give XAI access
Speaker 3: to classified networks now. Warren calls grog a quote controversial
Speaker 3: AI model and says it has provided disturbing outputs for users.
Speaker 4: According to the latter.
Speaker 3: And coming up companies are on high alert from potential
Speaker 3: or Iranian cyber attacks.
Speaker 4: We speak with Ali Melon. That's Forester analyst focusing on
Speaker 4: cyber threats. That's next. This is Blue meg Tech.
Speaker 3: As the war in Iran enters its third week, companies
Speaker 3: are on high alert for potential cyber threats.
Speaker 4: Look.
Speaker 3: Medical tech maker Striker says its operations remain disrupted after
Speaker 3: a cyber attack hit order processing, manufacturing, even shipping. Now
Speaker 3: a pro Ranian group known as Handella has claimed responsibility,
Speaker 3: but Striker and cybersecurity firms have not confirmed the hacker's identity.
Speaker 3: For more on the cyber threats facing global enterprises, please
Speaker 3: to say. We're joined bout Ali menon Forester, anlist covering
Speaker 3: security operations at ANAI. And she's got this great new
Speaker 3: book out Code War, How nations hack, spy and shape
Speaker 3: the digital battlefield. And here is Roan trying to do
Speaker 3: just that. Adding but from Melba spikes, if when do
Speaker 3: we get a definefitive answet that it was indeed who
Speaker 3: claims to dune the attack.
Speaker 9: We really need technical indicators. That's what we're looking for here,
Speaker 9: and unfortunately that could take weeks to months, depending on
Speaker 9: how the recovery process goes. It's ultimately the decision of
Speaker 9: the cybersecurity team that is working with Striker to come
Speaker 9: out with that information, and that process typically does take
Speaker 9: weeks or even months.
Speaker 3: How much should industries, institutions, individuals be worrying about the
Speaker 3: Iranian threat right now?
Speaker 9: They should actively be preparing their systems and they should
Speaker 9: be doing that whether they are large enterprises or even
Speaker 9: smaller companies.
Speaker 4: One of the things that we've seen over.
Speaker 9: The past several years is that many of these attackers
Speaker 9: will target smaller companies that have access to larger companies
Speaker 9: as part of their customer base and use that as
Speaker 9: their vehicle to get.
Speaker 4: Into some of these larger companies.
Speaker 9: So it's something that everyone needs to be thinking about
Speaker 9: right now.
Speaker 2: Pali, this is a war and there's human life involved.
Speaker 2: I don't mean to trivialize it in any sense or fashion,
Speaker 2: but in this environment, how much of a positive is
Speaker 2: it for the cybersecurity sector? You know, if you try
Speaker 2: to look in aggregate about what whether spending on cyber
Speaker 2: goes up or down, one would imagine that as a
Speaker 2: result of the conflict, it would go up.
Speaker 4: Absolutely.
Speaker 9: One of the things that we've seen in one of
Speaker 9: the things that I saw as I was researching and
Speaker 9: writing my book Code War is that at the end
Speaker 9: of the day, during military and wartime scenarios, that's when
Speaker 9: cyber attacks are at their highest and especially most effective,
Speaker 9: And so most organizations are going to be investing more
Speaker 9: in cybersecurity and should and we had previously seen that
Speaker 9: there was a bit of a lull before this where
Speaker 9: they were limiting some of their investment in cybersecurity. I
Speaker 9: absolutely expect that to change and more investment to take
Speaker 9: place in the cybersecurity sector.
Speaker 2: We've looked very closely at how AI, particularly through a
Speaker 2: swarm of autonomous agents in the cybersecurity context, is changing
Speaker 2: the field. Did you see evidence in researching for your
Speaker 2: book that the threat actors also are very focused on
Speaker 2: using AI and AI's capabilities in their attacks, not just
Speaker 2: on the defense side.
Speaker 9: This has been such an evolving situation, as with most
Speaker 9: things related to AI. But yes, we are seeing that attackers,
Speaker 9: especially nation state attackers, are using AI in very effective
Speaker 9: ways in their cyber operations, especially offensively. So they're trying
Speaker 9: to automate as many aspects of the attack as possible,
Speaker 9: which is going to make it much more difficult to
Speaker 9: understand exactly who is targeting you, why they're targeting you,
Speaker 9: and to prevent these types of attacks in the future.
Speaker 4: They are largely.
Speaker 9: Not creating net new zero days and kind of net
Speaker 9: new attacks, but what they are doing is increasing the
Speaker 9: speed of delivery of some of the attacks that they
Speaker 9: had been perpetrating before, and reducing the human load that
Speaker 9: they need and the human resources that they need to
Speaker 9: execute on those attacks.
Speaker 3: The book The Code War already breaks down how in
Speaker 3: a Russia US lead in the field of cyber power,
Speaker 3: But when you're looking at a country like Iran, how
Speaker 3: much are they a threat to this particular moment. I
Speaker 3: think many would have initially at the onset of this conflict,
Speaker 3: was surprised that they didn't do more on that particular event.
Speaker 9: Much of what Iran is doing right now is prepositioning
Speaker 9: and identifying the targets that they need to be sitting
Speaker 9: in be prepared to execute an attack when they want to.
Speaker 9: One of the things that I found in Code War
Speaker 9: is that much of the attacks that take place are
Speaker 9: coordinated with other military operations, whether that's missile strikes or
Speaker 9: other activity. So of course they're doing espionage operations on
Speaker 9: a regular basis to get access to companies or to
Speaker 9: government organizations that could give them more information. But when
Speaker 9: it comes to wiper attacks like we've seen with Striker,
Speaker 9: ultimately they want to time those with more strikes with
Speaker 9: more effective military operations to get the maximum impact possible.
Speaker 3: And the focus of an Iran isn't just to get
Speaker 3: in anywhere, whether it's a vulnerability. There are a reason
Speaker 3: that Strikeer in particular is a medically focused business that
Speaker 3: had relationships with Israel. What many had anticipated was the reason.
Speaker 3: But is there any rym or reason as to when
Speaker 3: they get in and why.
Speaker 9: Absolutely, especially with a threat actor that is this dedicated
Speaker 9: to the supposed cause. They are pushing to get into
Speaker 9: the organizations that make the most sensible from a publicity
Speaker 9: standpoint and an impact standpoint. So the fact that Striker
Speaker 9: had contracts large contracts with the US military, the fact
Speaker 9: that they had a presence in Israel through an acquisition
Speaker 9: in twenty nineteen, and of course that they're a US
Speaker 9: publicly traded large company all factored into why they were
Speaker 9: the perfect target in this situation.
Speaker 2: Ali Melan Forrester, Thank you very much. Coming up on
Speaker 2: the program, The oscars Happened at a time of turmoil
Speaker 2: for the film industry. With the advent of AI. We
Speaker 2: have more in that next. This is Bloomberg Tech. Layoffs, consolidation,
Speaker 2: streaming losses, and the rise of the creator economy are
Speaker 2: reshaping Hollywood's future, raising questions about whether the industry is
Speaker 2: simply in decline or on the brink of extinction. Bloomberg
Speaker 2: Originals investigates.
Speaker 12: Hollywood is very much a factory town, and the widget
Speaker 12: that we make is entertainment.
Speaker 9: Across the board, everyone is creative, from the directors to
Speaker 9: the writers' craft service.
Speaker 4: Everyone has a talent.
Speaker 13: Some people come out here sort of on accident and
Speaker 13: find a place inside of the circus.
Speaker 11: And I think that some people are kind.
Speaker 14: Of called pilot season, upfronts, awards, campaigns. Hollywood moves in cycles,
Speaker 14: but now the cycles have slowed a lot. It's a
Speaker 14: reset and no one knows where the new baseline is.
Speaker 12: If you spoke to the average worker in Hollywood, if
Speaker 12: you'd hear existential dread, you've seen a pretty dramatic reduction
Speaker 12: in outputs, a lot of layoffs, fewer jobs. Such has
Speaker 12: been a dark period. Los Angeles has visibly turned into
Speaker 12: what I would call a ghost tone.
Speaker 14: Employment in California's motion picture industries peaked in twenty sixteen,
Speaker 14: but was decimated by the pandemic, and despite a surgeons streaming,
Speaker 14: the actors and writers' strikes meant a massive loss of
Speaker 14: jobs that show no sign of coming back. Big tech disruption,
Speaker 14: mega mergers, and a looming thread of AI has left
Speaker 14: Hollywood in shambles.
Speaker 4: I never thought this crop but happened in my lifetime.
Speaker 9: We're just in this inflection point right now where everything's converging.
Speaker 3: Not great economics, bad business models, and audiences that are
Speaker 3: fragmented because I forgotten what a star.
Speaker 4: Looks like a bit of a musswash.
Speaker 3: You can find the full episode on Bloomberg dot com
Speaker 3: or on the Terminal. And this is all the terminal
Speaker 3: Why talk about for the film industry is a context
Speaker 3: in which the Oscars just took place on Sunday.
Speaker 4: Now, one battle after another took home.
Speaker 3: Best Picture Prize at the Academy Awards, delivering a long
Speaker 3: awaited win for the veteran filmmaker Paul Thomas Anderson. Meanwhile,
Speaker 3: Netflix is k Pop Demon Hunters, the most watched film
Speaker 3: ever on the streaming service, one Best Animated Film for
Speaker 3: the Most Entertainment Team leader Chris Palmery joins us for more.
Speaker 3: There were first time awards that we've never seen being given.
Speaker 3: This talk us through the big Winner. It does seem
Speaker 3: to be one battle after another.
Speaker 15: Well, I think, yeah, well, the for sure the big
Speaker 15: winner is Warner Brothers. They went into this with two
Speaker 15: favorites and they came out with the most trophies, for sure,
Speaker 15: of any studio. I think, in general, too, whig winner
Speaker 15: is Hollywood. I mean, as you set up there, I mean,
Speaker 15: there's so much angst in Hollywood right now with mergers
Speaker 15: and AI and job losses, and this was a show
Speaker 15: that really celebrated the best of filmmaking. It didn't go
Speaker 15: too much in a political direction, I think, even though
Speaker 15: I can't imagine one battle after another's on President Trump's
Speaker 15: viewing list, but it could have been much worse for Hollywood,
Speaker 15: and I think it actually it made them look pretty good.
Speaker 2: AI came up in the form of Conan O'Brien's opening monologue,
Speaker 2: along with some other jokes about those in attendance, But
Speaker 2: the AI thing was present, at least on the stream
Speaker 2: I was watching.
Speaker 15: Yeah, you know, as you mentioned, it came up, you know,
Speaker 15: Conan joked that he was going to be the last
Speaker 15: human host of the awards. But again the winners here,
Speaker 15: Paul Thomas Anderson for one battle, Ryan Coogler for sinners.
Speaker 15: These guys are real tours. They are people who tell
Speaker 15: unique stories, and they were big studio movies as well.
Speaker 15: So this was really a celebration of classic Hollywood, not
Speaker 15: not a look forward with dread.
Speaker 2: The most entertainment edits a Chris Palm Mary in La
Speaker 2: thank you very much. This term from Hollywood's big show
Speaker 2: to AI's big sh shares of n Vidio actually pushing
Speaker 2: higher in anticipation of GtC GPU Technology Conference. Bloomberg's executive
Speaker 2: editor Senior executive editor Tom Giles is with us here
Speaker 2: in San Francisco. There's a lot of like, Wow, this
Speaker 2: is the super Bowl of AI, et cetera. But you know,
Speaker 2: I think some smart writing on the Bloombay time this
Speaker 2: morning is that actually, this is a stop that's been
Speaker 2: going sideways for quite a long time.
Speaker 13: For six months, it's gone nowhere, and everybody is looking
Speaker 13: to Jensen Wang this week to say some things to
Speaker 13: reassure the market. Three things stand out for me. One
Speaker 13: that long term projection for sales of advanced chips. He's
Speaker 13: talked about five hundred billion through twenty twenty six. Are
Speaker 13: there going to be any updates to that number? Is
Speaker 13: it going to change the timetable? Is it going to
Speaker 13: up the number people are looking for that? Second of
Speaker 13: all concerns about the war, what is the war going
Speaker 13: to do to global demand? Global growth? And specifically the
Speaker 13: supply chain? The closed straits of horror moves mean that
Speaker 13: supply of helium is constricted and and and chip makers
Speaker 13: need that for uh there for production. And then thirdly
Speaker 13: the question is uh, what happens to what about products?
Speaker 13: What about the product pipeline? Will he do anything with
Speaker 13: that grock purchase that he made very quietly when no
Speaker 13: one was looking? And and will he get into CPUs?
Speaker 3: Yeah, I mean this guy is going to speak for hours,
Speaker 3: hour and a half at least, And then over communicators
Speaker 3: we're all used to what are we anticipating in terms
Speaker 3: of the kinds of questioning around the CPU? For example,
Speaker 3: are we going to get any more details of how
Speaker 3: much he wants to own that side?
Speaker 13: That's right? And and and and eat other chip maker's
Speaker 13: lunch the way he has with so many in so
Speaker 13: many other areas of this industry. So they're going to
Speaker 13: be peppering him with questions about product. They're going to
Speaker 13: be questioning questioning him about China and is the Chinese
Speaker 13: government going to say yes to the importation of those
Speaker 13: futuips that the US government has allowed into China. Remember
Speaker 13: right now, his forecasts are removing China from the picture completely.
Speaker 13: So war China product pipeline and long term growth. The
Speaker 13: market needs reassurance and they're going to be looking to
Speaker 13: Jensen throughout this week to give it to them.
Speaker 2: In your career, so I'm leading this newsroom. What's the
Speaker 2: most analogous someone like Jensen Wong who goes on stage
Speaker 2: and is like a rock star at a concert. You
Speaker 2: know who's he akin to in how we cover him?
Speaker 13: Well, remember, I mean for a long time, Apple products, right,
Speaker 13: an Apple product unveiling was like this high holiday for
Speaker 13: Silicon Valley one more thing, remember, and the ways that
Speaker 13: that captured and moved stocks around the world. I think
Speaker 13: is in many ways similar to that. And then you
Speaker 13: know there's a reason why they call it jensanity.
Speaker 3: Oh, take us back to the times where he's having
Speaker 3: to sign people's T shirts Bluemos, Tom Jarles, so appreciate you.
Speaker 4: Thanks for joining. Now that does it. But this a
Speaker 4: vision Bloomberg Tech. It's a busy week.
Speaker 2: Yeah and jokes aside. You know GtC is a macro
Speaker 2: level event. It will move market and there was a
Speaker 2: great preview to it. So check it out on the podcast.
Speaker 2: You know where to find out on the terminal and
Speaker 2: online on Apple, Spotify and iHeart from New York City
Speaker 2: and San Francisco. This is Bloomberg Tech.