WEBVTT - Intel Appoints New CEO, FTC Moves Ahead With Microsoft Antitrust Probe 0:00:02.520 --> 0:00:09.920 Bloomberg Audio Studios, podcasts, radio news from the heart of 0:00:09.960 --> 0:00:15.680 where innovation, money and power collide in Silicon Valley and beyond. 0:00:16.120 --> 0:00:21.400 This is Bloomberg Technology with Caroline Hyde and Ed ludlow. 0:00:35.320 --> 0:00:36.200 A Live from New York. 0:00:36.240 --> 0:00:40.280 I'm Caroline Hyde and I'm Jackie Devalis in Washington. This 0:00:40.360 --> 0:00:42.120 is Bloomberg Technology coming up. 0:00:42.159 --> 0:00:46.640 The FTC is charging ahead with the Biden antitrust probe 0:00:46.840 --> 0:00:49.559 of Microsoft. Will discuss what this means for Trump's new 0:00:49.640 --> 0:00:53.000 FTC chair and his scrutiny of tech giants. Plus Intel 0:00:53.040 --> 0:00:55.560 shares jumping following the news of a new CEO tasking 0:00:55.600 --> 0:00:58.720 Lipbutan with restoring the company's fortunes after a slump in 0:00:58.760 --> 0:01:02.240 earnings and market share, and a conversation with podcaster turned 0:01:02.240 --> 0:01:06.240 investor Harry stebbings On from twenty VC on how one 0:01:06.319 --> 0:01:09.200 hundred and twenty tech founders are joining his project to 0:01:09.200 --> 0:01:12.280 boost European startups. But first to check in on these markets, 0:01:12.360 --> 0:01:14.600 and we were raised yesterday's gains then as that one 0:01:14.640 --> 0:01:17.200 hundred currently off by about a percentage point after yesterday, 0:01:17.200 --> 0:01:19.119 we've got a bit of a reprieve and a push 0:01:19.200 --> 0:01:21.759 higher of more than a percentage point overall, we're once 0:01:21.800 --> 0:01:24.959 again filled with anxiety about US growth and about basically 0:01:25.000 --> 0:01:27.880 still selling some of your key winners, largely within the 0:01:27.920 --> 0:01:30.560 Magnificent seven. Go into some of the individual movers. Look 0:01:30.600 --> 0:01:33.440 the earnings flow still not living up to expectations. I'm 0:01:33.440 --> 0:01:36.679 looking at Adobe down crushed another eleven percent. This is 0:01:36.680 --> 0:01:39.399 that their fiscal first quarter delivered ten percent growth in 0:01:39.440 --> 0:01:42.360 revenue and lived up to expectations. But the current quarter 0:01:42.440 --> 0:01:45.560 that we're operating in, the guidance not good enough. The 0:01:45.560 --> 0:01:48.160 full year guidance remaining the same analysts wanted more. 0:01:48.200 --> 0:01:49.520 Many cut their price targets. 0:01:49.760 --> 0:01:52.000 Intel, though Sauls on the back of a new CEO, 0:01:52.080 --> 0:01:54.480 lip Boutwan, returns he was on the board before, and 0:01:54.480 --> 0:01:56.400 of course he did that turn around at Cadence. Will 0:01:56.440 --> 0:01:58.920 dig into that in a moment. But Microsoft just for 0:01:59.000 --> 0:02:01.760 about two ten percent, but is contributing to the points 0:02:01.840 --> 0:02:04.280 decline on the nasat one hundred. But what does it 0:02:04.360 --> 0:02:08.400 mean that the FTC is looking into that anti competition 0:02:08.680 --> 0:02:12.960 analysis Microsoft? Bloomberg reporter Josh Cisco is with us. You 0:02:13.000 --> 0:02:16.680 look at Microsoft from an FTC and anti competitive concern 0:02:17.280 --> 0:02:20.000 area here, Josh, what is it that the FTC is 0:02:20.040 --> 0:02:22.640 doing because we all thought a new Trump administration would 0:02:22.639 --> 0:02:25.359 mean maybe less struttinly on tech giants. It doesn't seem 0:02:25.400 --> 0:02:25.960 to be the case. 0:02:27.080 --> 0:02:30.600 Well, I mean from the beginning, since before Trump took office, 0:02:31.280 --> 0:02:35.280 both himself and his allies have made it pretty clear 0:02:35.320 --> 0:02:37.800 that tech is going to be a key focus of 0:02:37.840 --> 0:02:42.239 their enforcement and regulatory efforts. It's we're still a little 0:02:42.280 --> 0:02:45.240 sort of uncertain about how exactly that will play out, 0:02:45.280 --> 0:02:47.440 but this is the fact that they are picking up 0:02:47.440 --> 0:02:51.079 this investigation and carrying it forward from the end of 0:02:51.080 --> 0:02:54.560 the Biden administration is a major sign that they're going 0:02:54.600 --> 0:02:58.240 to keep keep an aggressive stance against the tech sector. 0:03:00.040 --> 0:03:04.679 Remind us what other cases this FTC commissioner is inheriting 0:03:04.720 --> 0:03:08.280 from the Biden administration, because this could potentially offer clues 0:03:08.680 --> 0:03:12.120 as to how those might result in as well. 0:03:12.240 --> 0:03:14.359 Yeah, so he's got a bunch of stuff both on 0:03:14.440 --> 0:03:18.040 the competition anti trust and sort of the consumer protection 0:03:18.200 --> 0:03:22.080 side as well that the agency does both enforcement in 0:03:22.120 --> 0:03:22.800 both areas. 0:03:23.120 --> 0:03:24.560 They're going to trial. 0:03:24.400 --> 0:03:27.880 Next month against Meta in a case that was first 0:03:27.919 --> 0:03:33.959 filed actually in the initial Trump administration in December twenty 0:03:34.040 --> 0:03:37.320 twenty to break up META, and that's finally going to 0:03:37.400 --> 0:03:40.800 trial in April that was sort of filed at the 0:03:40.880 --> 0:03:44.320 end of Trump's first term, and then FTC chair under Biden, 0:03:44.400 --> 0:03:49.440 Lena Khan, she carried that forward. They also have a 0:03:49.480 --> 0:03:54.600 lawsuit against Amazon. They could potentially lead to major divestitures 0:03:54.800 --> 0:03:58.520 of Amazon's business. That's not going to trial for about 0:03:58.520 --> 0:04:01.960 a year and a half. There's another loss of your 0:04:02.040 --> 0:04:07.840 challenging Amazon's prime subscription business and how how the FTC 0:04:07.880 --> 0:04:10.960 says it doesn't allow consumers to cancel easily. 0:04:11.560 --> 0:04:13.320 Those are just a few of the big ones. 0:04:13.880 --> 0:04:16.920 Yeah, and interesting that resources is an issue, is why 0:04:16.960 --> 0:04:19.880 they delay the Amazon investigation, Josh, that you've been reporting on. 0:04:20.080 --> 0:04:22.240 But the context here is one where also the DOJ 0:04:22.440 --> 0:04:25.480 seems to still be going after that Google investigation and 0:04:25.920 --> 0:04:29.240 some of the really pretty tough remedies that they're eyeing 0:04:29.800 --> 0:04:32.400 to ensure that Google doesn't seem in some way a 0:04:32.480 --> 0:04:36.280 limitation on competition. From the context of overall this administration, 0:04:36.760 --> 0:04:38.680 it looks as though big tech is not getting off 0:04:38.680 --> 0:04:40.560 the hook here, particularly when it comes to AI. 0:04:42.200 --> 0:04:43.239 Yeah, I think that's true. 0:04:43.279 --> 0:04:47.160 I mean some of the regulatory stuff around AI safety 0:04:47.200 --> 0:04:52.360 and other guardrails that's a little bit sort of up 0:04:52.400 --> 0:04:54.880 in the air, but I think they've made it clear 0:04:54.960 --> 0:04:58.720 so far that they want to see more than two 0:04:58.800 --> 0:05:03.200 or three companies sort of dominate the technology, from Nvidia 0:05:03.240 --> 0:05:07.279 and chips to Microsoft and open Ai and sort of 0:05:07.560 --> 0:05:11.240 more end user applications. It is, I think, at least 0:05:11.320 --> 0:05:14.080 for now, going to be a major focus. 0:05:15.320 --> 0:05:18.360 That's Bloomberg's Josh Cisco, thanks so much for joining us 0:05:18.800 --> 0:05:22.360 for more on Microsoft and the broader tech market. Rischi Jaluria, 0:05:22.560 --> 0:05:27.919 RBC Capital Market Software Equity Research Managing Director joins us. Now, RACI, 0:05:28.000 --> 0:05:30.880 this isn't the first time that Microsoft is dealing with 0:05:30.920 --> 0:05:35.479 a more strict FTC. Is this latest development sparking you 0:05:35.640 --> 0:05:37.960 to kind of change the risk calculus that you were 0:05:38.000 --> 0:05:40.480 embedding in your modeling for the coming year or are 0:05:40.480 --> 0:05:41.640 you mostly brushing it off? 0:05:42.680 --> 0:05:44.520 Yeah, thanks so much for having me. Look, I don't 0:05:44.520 --> 0:05:46.240 want to say I'm brushing it off, but I do 0:05:46.279 --> 0:05:50.440 feel like the potential impacts we've been prepared for this. 0:05:50.440 --> 0:05:52.360 This is something that has been. 0:05:52.279 --> 0:05:54.839 Talked about for a while. And remember I mean Microsoft 0:05:54.839 --> 0:05:58.080 obviously historically under Bill Gates and later Steve Vahmer had 0:05:58.080 --> 0:05:59.800 gotten themselves on a little bit of hot water when 0:05:59.800 --> 0:06:02.839 it came into antitrust, but under Satian Adela, it's definitely 0:06:02.839 --> 0:06:07.160 been a kinder, gentler Microsoft that has very much embraced interoperability, 0:06:07.240 --> 0:06:10.600 embraced coopetition, and I think we see that playing out here. 0:06:10.960 --> 0:06:12.960 You know, they have they obviously were very early to 0:06:13.000 --> 0:06:16.120 invest in open ai, and they've really gone all in 0:06:16.640 --> 0:06:19.760 on gen Ai become an AI first company. But you 0:06:19.880 --> 0:06:23.200 actually notice over the past several years Micro or really 0:06:23.240 --> 0:06:27.200 sorry pass up of quarters. Microsoft has been diversifying, right, 0:06:27.240 --> 0:06:30.080 They've been building relationships with other vendors. At the same time, 0:06:30.120 --> 0:06:32.920 open Ai themselves has been diversifying where they have their 0:06:32.920 --> 0:06:36.000 own relationship with OCI and including with Stargate. They have 0:06:36.040 --> 0:06:40.159 their own relationship with Core. We've per the reports out there, 0:06:40.400 --> 0:06:43.360 and so really feels like Microsoft is doing the right 0:06:43.440 --> 0:06:47.279 things to show that they're not abusing their position, you know, 0:06:47.279 --> 0:06:49.560 in terms of the relationship with open ai, and I 0:06:49.560 --> 0:06:52.719 think it becomes tougher to make an antitrust case against 0:06:52.720 --> 0:06:55.839 Microsoft with the openI relationship when there is that level 0:06:55.839 --> 0:06:58.920 of interoperability and the other competitors have these sort of 0:06:58.960 --> 0:07:02.400 similar relationships. You think about Amazon with Anthropic, you think 0:07:02.400 --> 0:07:05.760 about Oracle with Coher, even Google buying Deep mind a 0:07:05.800 --> 0:07:08.480 long time ago, and that's a foundation for their AI efforts. 0:07:08.600 --> 0:07:10.080 So I think it's going to be a tough argument 0:07:10.160 --> 0:07:12.680 to make against Microsoft on the anti trust given all 0:07:12.680 --> 0:07:13.280 of these moves. 0:07:13.920 --> 0:07:16.080 Rashid, It is interesting, though, when you think back to 0:07:16.120 --> 0:07:21.360 the inauguration of the current president, how many technology leaders, CEOs, 0:07:21.440 --> 0:07:24.559 founders were there and many felt that we were coming 0:07:24.600 --> 0:07:28.440 into a different type of feel for business. But will 0:07:28.440 --> 0:07:30.160 that be the case, or any of these companies ever 0:07:30.200 --> 0:07:31.960 going to be able to do decent M and A again, 0:07:32.040 --> 0:07:33.960 or any of these companies going to be able to 0:07:34.040 --> 0:07:37.920 dislodge the overall time investment that they have to make 0:07:38.200 --> 0:07:40.000 in proving they're not anti competitive. 0:07:41.400 --> 0:07:43.600 Yeah, Look, I think we're probably going to be in 0:07:43.640 --> 0:07:46.080 a better environment for M and A. I think it'll 0:07:46.120 --> 0:07:48.800 be hard to get away with these sort of acquisitions 0:07:48.800 --> 0:07:51.360 that we saw maybe a decade ago or so of 0:07:51.400 --> 0:07:54.320 you know, Facebook buying Instagram and then WhatsApp and you know, 0:07:54.440 --> 0:07:57.280 Microsoft making some of these big blockbuster acquisitions. 0:07:58.120 --> 0:07:59.080 But I still think we're. 0:07:58.920 --> 0:08:00.680 Going to be in a more favorable environment for M 0:08:00.680 --> 0:08:02.760 and A. And I think you know, there's going to 0:08:02.800 --> 0:08:05.880 be scrutiny on there to prove that there's power to 0:08:06.040 --> 0:08:08.000 prove that, you know, to maybe try to keep the 0:08:08.360 --> 0:08:11.400 big tech companies in check and in line. But I 0:08:11.440 --> 0:08:15.320 still think that the idea of splitting up companies divesting assets, 0:08:15.640 --> 0:08:18.440 that's going to be more unlikely under the new administration. 0:08:18.840 --> 0:08:21.119 To me, this is kind of just a continued show 0:08:21.200 --> 0:08:23.560 of wanting to keep them again in line. 0:08:24.400 --> 0:08:27.200 Appreciate how do we reconcile the fact that President Trump 0:08:27.200 --> 0:08:31.360 has really almost anointed certain tech companies to be the 0:08:31.400 --> 0:08:34.600 shepherds of AI competitive need here in the US. You 0:08:34.640 --> 0:08:37.839 have Oracle Open AI as part of the Stargate deal. 0:08:38.240 --> 0:08:41.839 Could that shield the companies that have stakes in those 0:08:41.880 --> 0:08:45.360 particular companies a little bit more from you know, some 0:08:45.480 --> 0:08:48.640 of the FTC scrutiny that we're seeing, or will we 0:08:48.679 --> 0:08:53.400 see kind of this broader scrutiny across tech overall? 0:08:53.520 --> 0:08:56.319 I think we're going to see broader scrutiny across tech, 0:08:56.760 --> 0:08:58.559 you know, as opposed to at least over the past, 0:08:58.880 --> 0:09:00.319 or at least relative to the. 0:09:00.240 --> 0:09:01.400 First Trump administration. 0:09:01.679 --> 0:09:03.240 But I think it'll be equivalent to what we saw 0:09:03.320 --> 0:09:06.680 during the Biden administration and maybe taking that one step forward, 0:09:07.120 --> 0:09:10.040 I do think very much there is a relationship angle 0:09:10.120 --> 0:09:10.960 to all of this. 0:09:11.040 --> 0:09:12.560 So I think your instinct. 0:09:12.240 --> 0:09:15.560 And the question is accurate, right, that that companies that 0:09:15.640 --> 0:09:19.520 have maybe ties to the administration, you know in somewhere, 0:09:19.559 --> 0:09:22.360 or at least work constructively with them, are going to. 0:09:22.280 --> 0:09:23.440 Be a little bit more protected. 0:09:23.480 --> 0:09:25.120 And so I think it's in a lot of these companies' 0:09:25.160 --> 0:09:28.240 interests at least have a good working relationship with pieces 0:09:28.240 --> 0:09:31.680 of them. But remember the FTC is its own independent entity, 0:09:31.800 --> 0:09:34.120 right and they you know, even if the chair is 0:09:34.120 --> 0:09:38.199 appointed by the Trump administration, the way they act should 0:09:38.240 --> 0:09:39.160 be fully independent. 0:09:39.520 --> 0:09:39.640 You know. 0:09:39.679 --> 0:09:42.440 Again, I think that the case comes down, especially for Microsoft, 0:09:42.800 --> 0:09:45.800 to prove that there's some sort of competitive harm, to 0:09:45.880 --> 0:09:48.319 prove that they are abusing their position, that there are 0:09:48.360 --> 0:09:51.319 anti trust concerns. And the more work we do on that, 0:09:51.360 --> 0:09:53.320 the more we see the moves that both Microsoft and 0:09:53.360 --> 0:09:56.440 open ai are making independent of each other, the diversifying, 0:09:56.480 --> 0:09:59.600 the embracing of interoperability, the harder I think it is 0:09:59.640 --> 0:10:01.760 to make it case for anti trust here. 0:10:02.040 --> 0:10:05.079 So Rishi, we then returned just more broadly to fundamentals 0:10:05.280 --> 0:10:07.400 for the software companies that you cover at the moment, 0:10:07.480 --> 0:10:09.320 Microsoft being one of them, but you'll cover a whole 0:10:09.320 --> 0:10:11.760 host I think of Box, I think of Salesforce, I 0:10:11.800 --> 0:10:15.240 think of Oracle. Software hasn't been as punished as hardware, 0:10:15.600 --> 0:10:19.040 but we are reevaluating our previous winners, Rishi, And at 0:10:19.040 --> 0:10:20.760 this moment, do you think that we're hitting a bottom 0:10:20.760 --> 0:10:21.959 after the setoff of this week. 0:10:23.360 --> 0:10:23.560 Yeah. 0:10:23.559 --> 0:10:25.800 Look, I think this big sale off that we've had 0:10:25.840 --> 0:10:28.040 over this week and really in software over the past month. 0:10:28.040 --> 0:10:31.439 You're right, hasn't been punished as much as the hardware names, 0:10:31.559 --> 0:10:33.000 but there's been a lot of names that I cover 0:10:33.080 --> 0:10:35.240 that our high quality business is down thirty percent over 0:10:35.280 --> 0:10:38.160 the past month on really no fundamental news. In our mind, 0:10:38.240 --> 0:10:41.440 it is creating some really great buying opportunities, you know. 0:10:41.480 --> 0:10:43.720 I think, Yeah, some of the big guys like Salesforce 0:10:43.720 --> 0:10:46.200 and into It, I think are our interesting year. Even 0:10:46.200 --> 0:10:48.160 going a little bit more down the cap spectrum. I 0:10:48.160 --> 0:10:51.640 think HubSpot, which is actually a competitor to Salesforce, super 0:10:51.679 --> 0:10:53.160 attractive name, down thirty percent. 0:10:53.200 --> 0:10:54.800 It's one of our favorite names here. 0:10:54.960 --> 0:10:57.120 Mango dB, which I look at as the next gen 0:10:57.200 --> 0:11:00.400 Oracle in the database space, really compelling, you know, with 0:11:00.480 --> 0:11:02.400 this thirty five percent draw down that we've seen over 0:11:02.440 --> 0:11:04.240 the past month. So I do think it is creating 0:11:04.280 --> 0:11:07.360 some buying opportunities because remember software, you know, let's see 0:11:07.360 --> 0:11:10.320 what happens with the broader macro environment of the economy. 0:11:10.480 --> 0:11:12.839 But software is very much a tariff proof sector, and 0:11:12.880 --> 0:11:14.679 I think that's an important point to keep in mind 0:11:14.840 --> 0:11:16.920 as you think about all the rhetoric around tariffs and 0:11:16.960 --> 0:11:17.520 trade wars. 0:11:18.760 --> 0:11:21.599 That's Rishi Juluria of RBC Capital Markets, thank you so 0:11:21.679 --> 0:11:25.200 much for joining us. Still coming up, Open Ai shares 0:11:25.240 --> 0:11:28.880 its suggestions for AI policy with the Trump administration. We'll 0:11:28.880 --> 0:11:31.520 have all those details when we come back, Caroline. 0:11:31.640 --> 0:11:33.280 Meanwhile, we've got to keep an eye on what's happening 0:11:33.320 --> 0:11:36.200 with Intel while the rest of the market fools. Once again, 0:11:36.320 --> 0:11:40.800 Intel outperformance by fifteen percent. Why le Boutan returns to 0:11:40.840 --> 0:11:43.160 the company was on the board until August twenty twenty four. 0:11:43.200 --> 0:11:45.640 Of course, he did the turnaround for Cadence, and now 0:11:46.040 --> 0:11:49.719 his task to turn around Intel to improve its market capitalization. 0:11:50.480 --> 0:11:51.640 This is blue meg technology. 0:12:02.280 --> 0:12:05.840 Opening Eye has responded to a Trump administration request to 0:12:05.880 --> 0:12:09.280 share ways to boost US competitiveness in the global artificial 0:12:09.280 --> 0:12:11.600 intelligence race to tell us what they came out with 0:12:11.960 --> 0:12:13.960 and begs Seth Egerman finely enough. 0:12:14.679 --> 0:12:16.440 Less regulation seems to be the vibes. 0:12:16.520 --> 0:12:19.880 It's shocking. It's a real wish list of a deregulatory 0:12:19.960 --> 0:12:23.160 and heavy investment vibe here. Basically, Opening Eye is saying 0:12:23.200 --> 0:12:27.880 we want laxer rules on copyright, we want more infrastructure investment. 0:12:27.960 --> 0:12:30.760 And perhaps the most surprising thing is they're asking for 0:12:30.920 --> 0:12:34.360 a little bit more protection and relief from the patchwork 0:12:34.440 --> 0:12:37.559 of hundreds of state AI bills out there, saying the government, 0:12:37.640 --> 0:12:39.120 you're kind of weigh in here and say, if we've 0:12:39.120 --> 0:12:42.680 worked with you in providing access to our models to review, 0:12:42.760 --> 0:12:44.840 then give us a little bit of leniency on the 0:12:44.880 --> 0:12:46.679 many AI bills out there in the country. 0:12:47.920 --> 0:12:50.960 Seth talk to us about what that patchwork currently looks like, 0:12:51.000 --> 0:12:54.240 because a lot of these are still underway, and it's 0:12:54.240 --> 0:12:58.319 interesting that they use the word preemption because it hasn't 0:12:58.360 --> 0:13:01.040 exactly happened yet, but it kind of alludes to the 0:13:01.080 --> 0:13:04.120 fact that they want that shield. How many bills out 0:13:04.120 --> 0:13:05.200 there are they afraid of? 0:13:05.600 --> 0:13:07.880 You know, there's hundreds of believe the number was something 0:13:07.920 --> 0:13:11.839 like seven hundred iggy currently in discussion right now. These 0:13:11.960 --> 0:13:14.600 range from bills around you know, deep fakes and bias 0:13:14.600 --> 0:13:17.360 and AI systems to something like the controversial legislation that 0:13:17.360 --> 0:13:19.960 we saw moving through California last year that open I 0:13:20.080 --> 0:13:22.640 was vehemently opposed to. That said we might have civil 0:13:22.679 --> 0:13:26.160 liability here if you have, you know, critical harms from 0:13:26.240 --> 0:13:27.040 your AI models. 0:13:27.040 --> 0:13:29.160 It's clear OPENII is not so. 0:13:29.120 --> 0:13:32.520 Happy with that, despite having previously said they're in favorite regulation. 0:13:32.679 --> 0:13:34.480 They just want it to be from the federal government, 0:13:34.520 --> 0:13:35.880 which has done nothing much to do. 0:13:36.559 --> 0:13:39.120 The minute you said copyright, it made me think of 0:13:39.160 --> 0:13:41.360 what's happening in Europe and the UK in particular. 0:13:42.080 --> 0:13:44.640 We've already seen jd Vance been. 0:13:44.480 --> 0:13:46.440 Put out to Europe to try and fight the good 0:13:46.480 --> 0:13:49.280 fight and say go away with your regulations. But ultimately 0:13:49.520 --> 0:13:51.079 the US is one case. How much do they want 0:13:51.080 --> 0:13:52.920 the US government to do their bidding abroad as well? 0:13:53.000 --> 0:13:54.760 Yeah, it does sound like open is basically saying we 0:13:54.800 --> 0:13:56.760 want you to go out there and advocate for the 0:13:56.800 --> 0:13:58.959 fair use regime that they have been begging on for 0:13:59.040 --> 0:14:01.040 the last couple of years, saying that we have our 0:14:01.120 --> 0:14:04.079 right to use training data that might be copyright it 0:14:04.200 --> 0:14:07.240 because it's fair use. We're seeing that other markets outside 0:14:07.280 --> 0:14:09.320 the US are much more restrictive on that front, and 0:14:09.360 --> 0:14:12.640 it faces lawsuits in numerous countries and it could be 0:14:12.679 --> 0:14:14.480 critical to how they developed this technology. 0:14:15.880 --> 0:14:16.120 Seth. 0:14:16.200 --> 0:14:18.760 Another thing that Opening Eye added to their wish list 0:14:18.840 --> 0:14:21.600 is that they want to use government held data like 0:14:21.800 --> 0:14:24.120 healthcare data to train their models. 0:14:24.200 --> 0:14:26.520 How do we think that's going to go over It's. 0:14:26.400 --> 0:14:28.400 Going to go swimmingly. I'm sure no, I mean, I 0:14:28.400 --> 0:14:31.840 think again. The point is if copyright becomes too strict 0:14:31.880 --> 0:14:33.840 and they have a harder time getting the robust amount 0:14:33.840 --> 0:14:35.600 of data that they need to build new models, they're 0:14:35.640 --> 0:14:37.600 hoping the government can step in and provide a wealth 0:14:37.680 --> 0:14:40.320 or resource of other data. I'm sure not everyone will 0:14:40.360 --> 0:14:43.160 be comfortable having their healthcare information be used to feed these. 0:14:43.040 --> 0:14:47.640 Models, though, Bloomberg Seth Figureman, thank you so much for 0:14:47.760 --> 0:14:51.080 joining us. Turning to shares of Adobe that are sinking 0:14:51.080 --> 0:14:54.720 today after the company gave a disappointing outlook for revenue growth. 0:14:54.960 --> 0:14:57.640 For more on that, an aer Agrana of Bloomberg Intelligence 0:14:57.800 --> 0:15:01.200 joins us now to discuss INNEROG sales in the current 0:15:01.280 --> 0:15:03.640 quarter are expected to be between five point seven to 0:15:03.720 --> 0:15:06.280 seven billion to five point eight two analysts. 0:15:05.840 --> 0:15:07.240 Were projecting five point eight. 0:15:07.320 --> 0:15:10.360 It's really not that far off, So help us understand 0:15:10.400 --> 0:15:12.000 what investors are worried about. 0:15:12.040 --> 0:15:15.000 Here. Is it the execution or the competition. 0:15:16.320 --> 0:15:19.360 Yeah, I've been surprised about the reaction also because you know, 0:15:19.360 --> 0:15:21.760 if you look at it, they reaffirmed their guidance for 0:15:21.800 --> 0:15:24.600 the full year and frankly speaking, in the current environment, 0:15:24.680 --> 0:15:27.600 nobody knows how the economy shapes up. That's not bad 0:15:27.640 --> 0:15:30.440 at all, you know. From our side. They did give 0:15:30.480 --> 0:15:32.840 out a lot more details about their AI initiative. 0:15:33.240 --> 0:15:35.440 The thing where the Adobe is It is. 0:15:35.400 --> 0:15:38.520 Probably the most controversial stock in software right now. The 0:15:38.640 --> 0:15:41.720 valuation it has been a last i would say year 0:15:41.760 --> 0:15:44.520 and a half or so. I haven't seen that. I 0:15:44.560 --> 0:15:46.960 don't even know going back, you know, fifteen twenty years, 0:15:47.080 --> 0:15:49.280 it was always trading at a premium to some of 0:15:49.320 --> 0:15:50.520 the marque names. 0:15:50.800 --> 0:15:52.480 The big issue with Adobe. 0:15:52.160 --> 0:15:55.560 Is people are worried about their core creative business and 0:15:55.600 --> 0:15:58.760 what would the future of that business be. Because of 0:15:59.080 --> 0:16:04.240 free tools, you know, we can develop videos or pictures 0:16:04.280 --> 0:16:04.760 on the fly. 0:16:05.120 --> 0:16:06.640 Then why would you need Adobe? Now? 0:16:06.880 --> 0:16:11.080 I think that's way simplified risk. They have a very 0:16:11.200 --> 0:16:14.320 very strong mote around their products. But again, it's going 0:16:14.400 --> 0:16:16.920 to take a while before people get comfortable. 0:16:16.440 --> 0:16:17.000 With this story. 0:16:17.640 --> 0:16:19.560 I feel that was the story even in the hardware 0:16:19.640 --> 0:16:23.160 names that we saw of last week. Marvel got crushed 0:16:23.200 --> 0:16:26.040 even when ultimately I lived up to expectations. But if 0:16:26.080 --> 0:16:28.440 your forecast is in any way off down you go 0:16:28.480 --> 0:16:31.040 in this in market environment, an K. What else does 0:16:31.040 --> 0:16:33.880 Adobe need to be doing in terms of also fighting 0:16:33.880 --> 0:16:35.720 off the perception that it's really hard to get rid 0:16:35.720 --> 0:16:38.960 of subscriptions and ultimately that they're not getting backed for 0:16:38.960 --> 0:16:39.760 the bart for the customer. 0:16:40.880 --> 0:16:43.480 Yeah, I think you know, frankly speaking, all they need 0:16:43.520 --> 0:16:45.720 to do is steady execution over the next twelve to 0:16:45.880 --> 0:16:49.040 twenty four months and put this risk to rest that 0:16:49.080 --> 0:16:52.240 they will get disrupted because of AI. I think that 0:16:52.360 --> 0:16:55.160 is the single most important thing for them. They keep 0:16:55.200 --> 0:17:00.200 on giving more information about how AI is enhancing their business. 0:17:00.280 --> 0:17:01.120 That's going to be there. 0:17:01.320 --> 0:17:03.080 But one of the things I caught from you know, 0:17:03.120 --> 0:17:06.560 the stock reaction today is that market still seems to 0:17:06.600 --> 0:17:10.760 be in a notion of accelerating growth for the entire 0:17:10.800 --> 0:17:13.240 software industry, which is actually not a good thing for 0:17:13.280 --> 0:17:16.080 the earning season that's coming up, because given where we 0:17:16.160 --> 0:17:19.760 are in the economic uncertainty, I don't think there's going 0:17:19.800 --> 0:17:22.080 to be that much seat growth going forward, or at 0:17:22.119 --> 0:17:24.680 least in the near term, which means a lot more 0:17:24.720 --> 0:17:28.000 volatility for these software names going into next quarter or 0:17:28.040 --> 0:17:28.560 next month. 0:17:29.400 --> 0:17:31.440 I love that you're pointing us towards the next earning 0:17:31.480 --> 0:17:33.960 season where we're still wrapping up. This one never ends. 0:17:34.000 --> 0:17:36.679 Anama Granta of bloem Megan Intelligences, so good to have you. 0:17:36.720 --> 0:17:40.800 Thank You's talk about potential IPOs and what this market 0:17:40.880 --> 0:17:43.080 volatility means for them. Just think of Core Weave. We've 0:17:43.080 --> 0:17:45.440 been talking about a lot initial public offering, one of 0:17:45.480 --> 0:17:48.080 the most hotly anticipated stock launches this year. 0:17:48.520 --> 0:17:49.280 Will it go ahead? 0:17:49.520 --> 0:17:51.120 What does it mean for the investor based mark client 0:17:51.200 --> 0:17:54.360 CEO zero Capital joins us now twenty five million dollars. 0:17:54.200 --> 0:17:55.760 Worth of shares of core Weave. 0:17:56.000 --> 0:18:00.000 You are a publicly traded bench fund basically, and you 0:18:00.000 --> 0:18:03.679 disclosed holdings that you have and ultimately your vision for 0:18:03.720 --> 0:18:05.280 these businesses core Weave. 0:18:05.840 --> 0:18:06.639 Will it go public? 0:18:06.680 --> 0:18:07.560 Do you think in this market? 0:18:08.560 --> 0:18:08.760 Yeah? 0:18:08.800 --> 0:18:08.960 So. 0:18:09.000 --> 0:18:14.159 Sero Capital is a publicly traded fund that invests in 0:18:14.160 --> 0:18:17.840 in venture backed companies. We invested in core Weave about 0:18:17.880 --> 0:18:22.800 a year ago. We found that it's a pretty unique property. 0:18:23.040 --> 0:18:26.880 As you've been reporting and everybody's been reporting, I've never 0:18:27.000 --> 0:18:29.160 in the forty years i've been in the business seed 0:18:29.160 --> 0:18:33.080 and a supply demand and balance in any sort of anything, 0:18:33.119 --> 0:18:36.040 and the idea of the need for compute and the 0:18:36.080 --> 0:18:40.160 supply of compute was so offset in core. We've sat 0:18:40.280 --> 0:18:43.360 right in the place to take advantage of that, so 0:18:43.720 --> 0:18:46.440 we made an investment. It is the largest investment we've 0:18:46.480 --> 0:18:49.119 ever made at Cero Capital in the fourteen years that 0:18:49.160 --> 0:18:52.840 we've been investing, and we're really excited about the IPO. 0:18:52.960 --> 0:18:57.600 We think that obviously market volatility isn't great for the 0:18:57.640 --> 0:18:59.720 IPO market. I'm sure you've all been speaking a lot 0:18:59.760 --> 0:19:02.600 about out that, but I do think that their business 0:19:02.600 --> 0:19:06.200 model is so strong, their growth is so strong that 0:19:06.560 --> 0:19:10.320 the market's going to appreciate appreciate it, and I think 0:19:10.359 --> 0:19:12.119 that we will have the opportunity to go public in 0:19:12.160 --> 0:19:12.600 this market. 0:19:12.680 --> 0:19:15.240 I mean, the market was a little anxious about the 0:19:15.240 --> 0:19:17.840 fact that they're so dependent on a couple of key clients, 0:19:17.880 --> 0:19:19.960 Microsoft being notably one of them. 0:19:20.359 --> 0:19:22.119 How do they prove that diversification. 0:19:22.320 --> 0:19:24.480 There aren't that many hyperscalers out there that need this 0:19:24.520 --> 0:19:26.199 sort of compute, but they need to show that they 0:19:26.200 --> 0:19:28.280 can serve more than just two key right. 0:19:28.359 --> 0:19:31.720 So I think you start with the point that Microsoft 0:19:31.720 --> 0:19:33.800 obviously is a risk factor in the fact that they're 0:19:33.840 --> 0:19:36.399 such a large customer and they do service some of 0:19:36.440 --> 0:19:43.159 the other larger technology type companies, but there aren't that 0:19:43.240 --> 0:19:45.920 many that actually needed It's sort of like looking at 0:19:45.960 --> 0:19:49.560 the health insurance industry. There's a handful of health insurers 0:19:49.640 --> 0:19:52.720 that supply for everybody. In this case, Core Weave supplies 0:19:53.520 --> 0:19:57.200 compute for the folks that need it, and as compute 0:19:57.200 --> 0:20:01.159 becomes less expensive and more the be able to diversify 0:20:01.240 --> 0:20:02.960 their customer base, which I'm sure they'll. 0:20:02.800 --> 0:20:03.280 Be able to do. 0:20:04.800 --> 0:20:08.880 Mark, how are you advising your portfolio companies, particularly those 0:20:08.920 --> 0:20:12.320 that haven't gone public yet. Are there certain sectors that 0:20:12.400 --> 0:20:15.680 should avoid the public markets and just stay private for now? 0:20:16.680 --> 0:20:19.920 Well, I think one of the reasons we built this 0:20:20.000 --> 0:20:23.840 company fourteen years ago is companies wanted to stay private longer, 0:20:24.200 --> 0:20:27.240 and that has certainly proved out. When we first started, 0:20:27.280 --> 0:20:30.399 so there was under one hundred companies that were worth 0:20:30.400 --> 0:20:33.359 over a billion dollars, there was under twenty companies worth 0:20:33.600 --> 0:20:36.800 over a billion dollars. Now there's hundreds of them that 0:20:36.840 --> 0:20:39.879 are worth over a billion dollars, and being public is 0:20:40.320 --> 0:20:43.600 something that's not for any everybody, and I think companies 0:20:43.600 --> 0:20:45.879 that want to go public have to understand the merits 0:20:45.880 --> 0:20:49.480 of going public. I think the advent of the secondary market, 0:20:49.520 --> 0:20:52.600 as well as the tender market that is available now 0:20:52.680 --> 0:20:56.879 for these larger companies allows these larger companies to stay 0:20:56.880 --> 0:21:00.439 private longer and allow them make a determination when it's 0:21:00.520 --> 0:21:03.920 appropriate for them to go public if they it all 0:21:03.960 --> 0:21:04.800 need to go public. 0:21:05.600 --> 0:21:08.280 Look, you've invested before in the key winners of Facebook, Twitter, 0:21:08.280 --> 0:21:12.120 Snap Spotify, Lift, but you're also in open Ai. Would 0:21:12.160 --> 0:21:14.639 you ever envisage that open Ai would do anything but 0:21:14.680 --> 0:21:17.080 stay private for the time being. They can access deep 0:21:17.119 --> 0:21:18.960 troves of capital, but they must be one of the 0:21:18.960 --> 0:21:22.680 most sought after holdings for the retail community and indep 0:21:22.680 --> 0:21:24.719 people who can't access private funds. 0:21:25.119 --> 0:21:30.240 Sure you know open Ai, which is widely reported, is 0:21:30.720 --> 0:21:33.159 in the process of going from a not for profit 0:21:33.280 --> 0:21:34.120 to for profit. 0:21:35.160 --> 0:21:35.960 Can you support that? 0:21:37.040 --> 0:21:38.160 I think that's appropriate. 0:21:38.240 --> 0:21:41.240 I think if they want to continue to aggregate capital 0:21:41.240 --> 0:21:43.200 in the way that they need to do to continue 0:21:43.280 --> 0:21:46.680 on their mission to build out what is a phenomenal company, 0:21:47.359 --> 0:21:49.919 they're going to need a more normalized capital structure to 0:21:49.960 --> 0:21:51.639 do that. 0:21:51.640 --> 0:21:55.040 That's smart. Client, CEO of Cerro Capital, Thank you so much. 0:21:55.040 --> 0:22:02.879 For joining us. 0:22:03.880 --> 0:22:05.160 Welcome back to Blue meg Techology. 0:22:05.200 --> 0:22:08.240 I'm Caroine Hide in New York and I'm Jackie Devalas 0:22:08.240 --> 0:22:10.199 in Washington. Let's check in on these markets. 0:22:10.240 --> 0:22:13.960 Once again, the trade wars, the anxiety, this time between 0:22:14.000 --> 0:22:16.919 Europe and US, styling back up grue. Sentiment is pushed 0:22:16.920 --> 0:22:19.320 back lower. After yesterday, We've got a reprieve with a 0:22:19.359 --> 0:22:21.720 lower than expected CPI reading, But once again we're under 0:22:21.760 --> 0:22:23.400 pressure on the NASAK one hundred off by one point 0:22:23.400 --> 0:22:26.720 thirty percent, completely erasing yesterday's games. We move under the 0:22:26.720 --> 0:22:28.879 hood though, of who is outperforming, because most of the 0:22:28.920 --> 0:22:31.920 Magnificent Seven are on the downside, dragging lower on a 0:22:31.960 --> 0:22:35.240 points perspective. But look at Intel to the rescue. It's 0:22:35.280 --> 0:22:37.600 from a points contributor, one of the best performers on 0:22:37.600 --> 0:22:38.040 the upside. 0:22:38.040 --> 0:22:39.240 We're up fifteen percent. 0:22:39.320 --> 0:22:42.520 And why because lip Broutan comes back not as a 0:22:42.520 --> 0:22:45.879 board member but actually as CEO starting next week. Bluemeg's 0:22:45.880 --> 0:22:49.640 Ian King has been following the trails and tribulations of Intel. 0:22:50.000 --> 0:22:52.960 Is he the right man to steer this company back 0:22:52.960 --> 0:22:53.919 to good fortune? 0:22:54.760 --> 0:22:57.880 I mean, the reaction tells you that people are clearly 0:22:57.920 --> 0:23:00.159 happy about that. Whether it's a case of them being 0:23:00.240 --> 0:23:03.240 happy that Intel have just got somebody in that crucial 0:23:03.280 --> 0:23:05.800 seat at a crucial time for the company, or whether 0:23:05.880 --> 0:23:10.840 it's because they're enthusiastic about his capabilities and his fit 0:23:10.920 --> 0:23:13.399 for the role. We'll see how that plays out of 0:23:13.440 --> 0:23:15.520 the long term, but certainly today people are very happy 0:23:15.520 --> 0:23:15.879 about that. 0:23:18.080 --> 0:23:21.159 Ian talk to us about what this has looked like 0:23:21.200 --> 0:23:23.960 in the past. Because this is the fourth permanent CEO 0:23:24.200 --> 0:23:27.920 over the last seven years, Our investors. 0:23:27.520 --> 0:23:29.480 Going to look for something more other than just a 0:23:29.520 --> 0:23:30.439 new person on the. 0:23:30.480 --> 0:23:32.639 Job because the company also has some support from the 0:23:32.640 --> 0:23:38.080 Trump administration. But what other questions are still open about 0:23:38.119 --> 0:23:42.040 whether they can actually execute on this to stay relevant. 0:23:42.359 --> 0:23:45.080 Yeah, I mean that is the giant question here, and 0:23:45.080 --> 0:23:47.840 we don't have an answer in terms of what direction 0:23:47.960 --> 0:23:48.840 he's going to choose. 0:23:48.840 --> 0:23:49.600 It's whether. 0:23:50.880 --> 0:23:53.560 Bhutan has come in as a CEO who's going to 0:23:53.600 --> 0:23:56.520 try to make him tell what it once was which 0:23:56.600 --> 0:24:00.000 was dominant in this industry, or whether he's a caretaker 0:24:00.160 --> 0:24:03.239 who's going to preside over it being broken up. We 0:24:03.280 --> 0:24:05.359 didn't really get the answer to that and the things 0:24:05.400 --> 0:24:08.399 that he put out there publicly yesterday, and that's going 0:24:08.480 --> 0:24:10.520 to be something that people will be really focused on. 0:24:11.000 --> 0:24:14.000 And the chip sacked money in When is this eight 0:24:14.040 --> 0:24:16.400 and a half billion dollars potentially going to come its way? 0:24:17.080 --> 0:24:19.320 What do you make of his interactions going forward with 0:24:19.640 --> 0:24:22.520 the current administration do you think yeah? 0:24:22.520 --> 0:24:25.199 I mean that is a wild card for anybody in 0:24:25.240 --> 0:24:28.919 the CEO role in the semiconductor industry, whether it's trade, 0:24:28.960 --> 0:24:31.119 whether it's the Chips Act or anything like that. But 0:24:31.560 --> 0:24:33.840 all along the Chips Act has been a very structured 0:24:34.160 --> 0:24:36.800 situation where you have to build these plants, you have 0:24:36.880 --> 0:24:39.879 to equip them, you have to start production, otherwise you 0:24:39.920 --> 0:24:42.000 don't get the money. You know, it's very much a 0:24:42.080 --> 0:24:46.560 mild post kind of triggered events. So they'll have to 0:24:46.560 --> 0:24:47.680 do what they said they were going to do or 0:24:47.680 --> 0:24:50.480 they won't get the money anyway, regardless of whether President 0:24:50.480 --> 0:24:51.880 Trump turns against the Act. 0:24:51.760 --> 0:24:55.480 Or not, it's Bloomberg's Ian King. Thank you so much 0:24:55.520 --> 0:24:56.160 for joining us. 0:24:56.880 --> 0:25:02.560 Next, Janet we from RBC Brewin Dolphin, head of market Analysis. Thanks, 0:25:02.760 --> 0:25:05.400 thank you so much for joining us. Let's talk keep 0:25:05.440 --> 0:25:09.199 talking about the semiconductor space here. Intel is one big player, 0:25:09.200 --> 0:25:11.240 but I want to understand how you're thinking about the 0:25:11.320 --> 0:25:15.040 space coming off of a really busy week that got 0:25:15.160 --> 0:25:18.919 rattled by tariffs and other announcements the trip and Science 0:25:19.000 --> 0:25:22.080 Act as another How are you thinking about the space 0:25:22.119 --> 0:25:23.399 and the catalyst going forward? 0:25:24.840 --> 0:25:26.160 Hi, thanks for having me. 0:25:26.400 --> 0:25:30.040 I think over the longer term, AI would remain a 0:25:30.119 --> 0:25:32.840 very relevant theme and a very key driver for the 0:25:32.840 --> 0:25:36.680 semiconductors industry and the whole ecosystem. So on that, we're 0:25:36.720 --> 0:25:40.119 still very confident on the psycho outlook. There's still plenty 0:25:40.160 --> 0:25:43.960 of support for that, but unfortunately, we're in a very 0:25:45.240 --> 0:25:50.240 complex and st microeconomic landscape at the moment, where you know, 0:25:50.359 --> 0:25:53.800 companies with the most complex supply chains are likely to 0:25:53.880 --> 0:25:57.760 be at risk, and that is included the semiconductor sector. 0:25:57.840 --> 0:26:01.439 So unfortunately, given the micro back job, these stars are 0:26:01.480 --> 0:26:04.399 not doing well at the moment. But I think that 0:26:04.480 --> 0:26:07.680 valuations have become more attractive for the sector as a whole, 0:26:07.960 --> 0:26:10.400 and I do believe that if you pick the leaders 0:26:10.960 --> 0:26:15.200 across the semiconductor ecosystem, you are likely to still do 0:26:15.320 --> 0:26:17.000 pretty well for the longer term. 0:26:17.440 --> 0:26:18.320 Is Intel a leader? 0:26:18.480 --> 0:26:21.560 I know whether it's an individual name perspective, but would 0:26:21.600 --> 0:26:25.360 you put that company alongside some of the winning formulas 0:26:25.359 --> 0:26:27.119 that we see of late with the in videos at 0:26:27.119 --> 0:26:28.679 the top of the list. 0:26:29.600 --> 0:26:32.600 So for now, probably not. We have to await more 0:26:33.160 --> 0:26:35.800 strategic direction from the new CEO. I think Intel Face 0:26:35.920 --> 0:26:39.040 is a bunch of challenges regardless of who is in charge. 0:26:39.200 --> 0:26:43.160 Basically on the design front is you know, it's lagging 0:26:43.440 --> 0:26:48.399 our companients like Nvidia and am D, and you know, 0:26:48.480 --> 0:26:51.320 as a foundry business is also you know, it's direction 0:26:51.520 --> 0:26:53.840 is not clear and they really have to revive that 0:26:53.960 --> 0:26:58.359 boundary business in order to secure its position in the sector. 0:26:58.480 --> 0:27:00.639 So I guess we'll just have to wait and see. 0:27:00.920 --> 0:27:04.159 Apparently the market is very enthusiastic about the new. 0:27:04.080 --> 0:27:06.439 CEO, Jenna. 0:27:06.480 --> 0:27:09.040 Let's talk about software for a moment, because we had 0:27:09.040 --> 0:27:11.640 a guest earlier this morning kind of tell us that 0:27:11.760 --> 0:27:15.160 these software names are a little bit more insulated from 0:27:15.200 --> 0:27:17.280 a lot of the tariff woes that we're seeing other 0:27:17.400 --> 0:27:18.840 names really get battered by. 0:27:19.240 --> 0:27:20.280 Would you agree with that? 0:27:20.480 --> 0:27:22.640 How much more of that protection do some of those 0:27:22.720 --> 0:27:23.200 names get? 0:27:25.560 --> 0:27:27.280 Yeah, I would tend to agree with that. I think 0:27:27.840 --> 0:27:30.600 in terms of the supply chain impact, I think obviously 0:27:30.640 --> 0:27:34.320 the hardware the industrial sector would be more badly heat 0:27:34.400 --> 0:27:39.679 where the software it would be fundamentally less heat. So 0:27:40.640 --> 0:27:43.399 I would agree on that point. But obviously, given the 0:27:43.800 --> 0:27:46.600 various macro uncertainties that we have, ultimately a lot of 0:27:46.600 --> 0:27:50.200 these software companies, if you look at the megacap tech 0:27:50.240 --> 0:27:54.720 companies there, they're still heavily uh exposed to domestic US 0:27:54.760 --> 0:27:58.920 economy in terms of say advertising, cloud revenue, et cetera. 0:27:59.040 --> 0:28:02.560 Ultimately is still dependent on the business cycle. I mean 0:28:02.600 --> 0:28:05.880 oarguably less cyclical, less sensitive, but it's still dependent. 0:28:05.920 --> 0:28:08.160 And obviously the valuations have. 0:28:08.160 --> 0:28:10.800 Come off because of the sentiment ed So I guess 0:28:10.960 --> 0:28:15.080 in the term, I think it is best to stay 0:28:15.119 --> 0:28:19.840 cautious because we still have potentially a range of uncertainty 0:28:19.840 --> 0:28:22.640 coming from the reciprocal towerfront that is going to heat 0:28:22.680 --> 0:28:23.679 the sentiment channel. 0:28:25.000 --> 0:28:27.960 The reason I'm curious is because more recession fears have 0:28:28.040 --> 0:28:31.120 started to come to the foe, and when we think 0:28:31.119 --> 0:28:34.120 about the tech sector, you know, we don't really remember 0:28:34.200 --> 0:28:37.120 the fact that all of these software names, many of them, 0:28:37.160 --> 0:28:40.360 and thinking like the social media companies are sensitive to 0:28:40.400 --> 0:28:44.960 that digital advertising, how much of that is vulnerable to. 0:28:44.960 --> 0:28:46.760 The swings in the economy. 0:28:47.120 --> 0:28:50.360 Could there be more vulnerability there going forward if these 0:28:50.400 --> 0:28:51.920 recession fears do play out. 0:28:54.520 --> 0:28:57.040 Yes, I think there's not only some risks because what 0:28:57.080 --> 0:28:59.360 we are saying now is basically the heat by the 0:28:59.440 --> 0:29:03.120 sentiment channel. We haven't really actually seen too much of 0:29:03.240 --> 0:29:07.080 the hat to actual earnings and the real economy. I mean, 0:29:07.080 --> 0:29:11.719 there is recession anxiety, but I wouldn't still put that 0:29:11.760 --> 0:29:16.400 at a central case. But if that eventually did play out, 0:29:16.440 --> 0:29:18.840 I think there could be more to go in terms 0:29:18.840 --> 0:29:22.160 of the hit to the earnings outlook. So that would 0:29:22.240 --> 0:29:26.800 be quite bad to these companies because advertising, I think 0:29:26.920 --> 0:29:29.560 is very cyplical. They probably the first to be cut. 0:29:30.080 --> 0:29:33.400 If a company wants to reduce the spending and if 0:29:33.440 --> 0:29:37.480 consumer confidence is falling, then consumers are going to tighten 0:29:37.480 --> 0:29:39.640 the belt and spend less. That that's all going to 0:29:39.760 --> 0:29:43.880 hit all these companies eventually. But I think, as I said, 0:29:43.920 --> 0:29:48.720 it's currently still the sentiment that is, you know, playing out. 0:29:48.760 --> 0:29:51.320 There is not really real hits to the earnings yet. 0:29:51.320 --> 0:29:53.560 We just have to wait and see. 0:29:54.720 --> 0:29:58.440 And what about overseas because some of the woes here 0:29:58.920 --> 0:30:01.920 in the United States might be a gain for let's 0:30:01.920 --> 0:30:04.440 say Chinese stocks. It seems like every time a new 0:30:04.480 --> 0:30:08.240 model comes out of China, it sends US tech stocks 0:30:08.280 --> 0:30:12.239 really freaking out, especially those with exposure to AI. How 0:30:12.280 --> 0:30:14.760 are you thinking about positioning outside of the US. 0:30:16.600 --> 0:30:19.240 Yeah, I think there's certainly more enthusiasm or in Chinese 0:30:19.440 --> 0:30:23.760 tech stocks. I think mainly it's because sentiment has been 0:30:23.760 --> 0:30:26.800 way too depressed and basically a lot of obasease investors 0:30:26.800 --> 0:30:29.600 have written of Chinese tech for a while, and there's 0:30:29.640 --> 0:30:33.240 suddenly a bunch of good news, including some shift in 0:30:33.240 --> 0:30:36.640 a tone from the politician, a bit more welcoming tone, 0:30:37.000 --> 0:30:40.160 a bit more supportive to the private sector, and of 0:30:40.200 --> 0:30:45.280 course the innovation in AI and bordling out of using 0:30:45.320 --> 0:30:48.080 AI in various sectors in China. So I would say, 0:30:48.120 --> 0:30:50.640 in a new trauma, I think is reasonable to feel 0:30:50.680 --> 0:30:53.680 more optimistic. I think there could still be more influence 0:30:53.720 --> 0:30:56.000 going into that sector. But I think we have to 0:30:56.040 --> 0:30:58.960 be a bit more cautious because we understand Chinese stock 0:30:59.000 --> 0:31:01.640 market is very volatile and you know, a lot of 0:31:01.680 --> 0:31:04.480 retail participation. I don't think this time would change. I 0:31:04.520 --> 0:31:08.840 think that's still a lot of volatility and profit takeing 0:31:08.880 --> 0:31:11.320 activity if the index continues to go on from here. 0:31:11.400 --> 0:31:12.920 So I think we've got to be a bit more 0:31:12.960 --> 0:31:13.760 careful here. 0:31:15.160 --> 0:31:17.600 Seems like forever ago that the market was freaking out 0:31:17.640 --> 0:31:20.000 about deep seek and all of a sudden with some 0:31:20.160 --> 0:31:23.480 earnings that have come out, CAB backs has been reaffirmed. 0:31:23.520 --> 0:31:26.880 Investors seem assured that maybe we're a little bit past this. 0:31:27.120 --> 0:31:31.520 Do you still see the deep seek fear showing up anywhere, 0:31:31.720 --> 0:31:36.000 if that's something that's going to drive the market going forward. 0:31:38.440 --> 0:31:38.600 Yeah. 0:31:38.640 --> 0:31:42.200 The thing is that I think fundamentally we are of 0:31:42.320 --> 0:31:49.200 the view that deep six appearance. It shows that these 0:31:49.200 --> 0:31:51.160 models can be run in a more efficient way and 0:31:51.200 --> 0:31:54.240 thereby lowing the cost of running it and training, and 0:31:54.320 --> 0:31:57.320 thereby eventually it would e stimulate the demand if the 0:31:57.360 --> 0:31:59.760 cost goes down, so more people would be using it. 0:31:59.800 --> 0:32:02.440 So not only that's going to be beneficial for the 0:32:02.440 --> 0:32:05.560 whole sector, but at the same time, the thing is 0:32:06.320 --> 0:32:09.320 we don't know yet, and if you look at the 0:32:09.360 --> 0:32:12.800 latest earnings results from say Nvidia, you won't be able 0:32:12.840 --> 0:32:16.640 to see that impact yet. Actually it's more more distant 0:32:16.640 --> 0:32:19.560 in the future whether the hyperscalers are going to reduce 0:32:19.600 --> 0:32:22.600 their capital spending because of the more efficient models. So 0:32:23.200 --> 0:32:26.240 there's a lot of questions that are yet to be answered. 0:32:26.520 --> 0:32:30.160 But I think from our view, if you look back 0:32:30.160 --> 0:32:33.760 at history of the semiconductors of our cost impact demand, 0:32:34.080 --> 0:32:39.040 usually when costs are lowered, then eventually demand actually grows exponentially. 0:32:39.720 --> 0:32:41.720 But of course you have to also consider that the 0:32:41.760 --> 0:32:44.560 tie is going to be shared by potentially more players, 0:32:45.240 --> 0:32:48.920 So I think just focusing on say one or two 0:32:49.240 --> 0:32:53.960 particular leaders is potentially more risky. That's why our strategy 0:32:54.000 --> 0:32:57.280 is always to get exposure to a whole range of 0:32:57.360 --> 0:33:02.840 the stocks in the semiconductor ecosal stump, we don't have. 0:33:02.840 --> 0:33:07.280 A crystal Baldoy Janet Janet Mooly from RBC brewin Dolphin, 0:33:07.360 --> 0:33:08.720 thank you so much for joining us. 0:33:09.000 --> 0:33:24.720 More coming up next. This is Bloomberg time now for 0:33:24.760 --> 0:33:25.240 talking tech. 0:33:25.280 --> 0:33:27.560 First up, SpaceX is the layed its mission to bring 0:33:27.840 --> 0:33:31.200 back two struck stock or astronauts from the International Space 0:33:31.240 --> 0:33:33.560 Station due to an issue with ground equipment, and the 0:33:33.560 --> 0:33:35.960 mission would have launched a new crew to the ISS 0:33:36.120 --> 0:33:39.000 brought back those two astronauts the maroon since last year. 0:33:39.120 --> 0:33:42.680 Now the launch has been rescheduled to place no earlier 0:33:42.680 --> 0:33:45.320 than tomorrow evening. Plus, Ali Baba has launched a new 0:33:45.400 --> 0:33:48.880 version of its quad AI agent incorporating chat what deep 0:33:48.920 --> 0:33:52.000 Thinking and tasket secution features in one app. Now What 0:33:52.200 --> 0:33:55.000 utilizes Ali Baba's own reasoning models and is the latest 0:33:55.000 --> 0:33:57.600 attempt by the company to keep pace with China riveals 0:33:57.960 --> 0:34:00.720 and shares a Delivero. They're falling today as much as 0:34:00.760 --> 0:34:04.000 ten percent in London trading. That says most since all 0:34:04.000 --> 0:34:06.120 the way back in twenty twenty two. The food delivery 0:34:06.120 --> 0:34:09.040 company gave an earnings forecast that disappointed investors and comes 0:34:09.160 --> 0:34:12.040 just days after I announced it would exit the Hong 0:34:12.160 --> 0:34:12.880 Kong market. 0:34:13.080 --> 0:34:18.120 Jackie, the head of Ali Baba Group's original core business, 0:34:18.320 --> 0:34:21.160 says the use of various AI applications are having a 0:34:21.239 --> 0:34:25.200 profound impact on the company. Earlier this week, Alibaba dot 0:34:25.239 --> 0:34:29.319 COM's president Quo Jong told Bloomberg exclusively its vendors are 0:34:29.320 --> 0:34:31.200 having an easier time finding. 0:34:30.880 --> 0:34:32.320 New markets for their goods. 0:34:32.520 --> 0:34:37.480 Take a listen, take the buyer as example. So if 0:34:37.520 --> 0:34:41.640 we think about the search volume for the information or 0:34:41.640 --> 0:34:45.480 for a product, as in the search volume for the 0:34:45.560 --> 0:34:46.960 information parts. 0:34:46.600 --> 0:34:50.560 Ten times than the products park. So think about it. 0:34:50.560 --> 0:34:52.640 If you want to start a business, you will not 0:34:53.040 --> 0:34:55.960 specifically go to a products or go to a kind 0:34:55.960 --> 0:34:58.400 of suppliers. You will come up on this idea like 0:34:58.440 --> 0:35:02.400 it was trending and with a specific kind of textile 0:35:02.400 --> 0:35:05.359 you're going to use in your product, and then it's 0:35:05.440 --> 0:35:07.879 kind of the big business plend Then it's come to 0:35:07.920 --> 0:35:11.200 the products. So now using AI have this kind of 0:35:11.360 --> 0:35:15.200 multi round the dialogue kind of search a lot of people. 0:35:15.320 --> 0:35:19.360 Now it's more easy to do business online. And for 0:35:19.440 --> 0:35:23.520 the sellers we see current our kind of for agent 0:35:23.920 --> 0:35:28.320 these tools, it's already better than sixty or seventy percent 0:35:28.600 --> 0:35:31.000 of the seller if they are new on olib dot 0:35:31.000 --> 0:35:35.800 com in terms of the conversion rate for the customer 0:35:35.800 --> 0:35:37.760 engagement and for the product management. 0:35:38.360 --> 0:35:41.200 But how many businesses I think there's around two hundred 0:35:41.320 --> 0:35:45.000 thousand smsider on the platform. How many businesses are actually 0:35:45.080 --> 0:35:45.960 using AI today? 0:35:46.560 --> 0:35:50.960 So currently the weekly active sellers are more than one 0:35:51.000 --> 0:35:53.800 hundred percent, so it's more than half of the sellers 0:35:53.920 --> 0:35:58.040 is already equipped by this agent based tools. And for 0:35:58.160 --> 0:36:01.959 the buyer side, actually we want the AX. From last 0:36:02.160 --> 0:36:07.080 November until now, there are accumulately more than one million users. 0:36:06.880 --> 0:36:10.120 Is using using this AI based power search. 0:36:10.680 --> 0:36:14.080 How much do you feel the competitive pressure on AI 0:36:14.640 --> 0:36:16.760 given the amount of innovation that's. 0:36:16.640 --> 0:36:17.360 Coming from China. 0:36:17.680 --> 0:36:20.919 Okay, so first of all, we think there's a lot 0:36:21.200 --> 0:36:24.200 we can do so far. For example, we talk about 0:36:24.239 --> 0:36:28.319 the reasoning models, but based on language there's a lot 0:36:29.040 --> 0:36:34.320 on the modimodel multimodel stuff that we can do and 0:36:34.480 --> 0:36:37.680 later on, like you can based on anything. 0:36:37.440 --> 0:36:39.959 An image, a video or a. 0:36:39.920 --> 0:36:43.600 File that you uploaded the fail that the reasoning model 0:36:43.640 --> 0:36:46.640 can help you to interpret and to a upon. So 0:36:46.920 --> 0:36:49.000 all those kinds of sill we still believe there's a 0:36:49.080 --> 0:36:52.280 huge space to grow and we can leverish the most. 0:36:52.960 --> 0:36:56.799 I mean the models from matter, from deepsy, from art 0:36:56.920 --> 0:36:58.120 cloud to Chailman. 0:36:58.520 --> 0:37:00.080 So all these models actually. 0:36:59.840 --> 0:37:04.000 Can help us to boost the capability of the applications 0:37:04.160 --> 0:37:07.680 that we believe. Application actually is the key here and 0:37:07.880 --> 0:37:10.080 why we think we can do it here we can 0:37:10.120 --> 0:37:13.040 do better than others. Is not going to be a 0:37:13.080 --> 0:37:16.320 few tools that play for the people answer the easy questions. 0:37:16.400 --> 0:37:20.440 You need to be highly integrated into the big scenarios 0:37:20.680 --> 0:37:24.400 like global trade is a thirty treating US dollar business. 0:37:24.480 --> 0:37:27.080 I don't think any other business is larger than this. 0:37:27.680 --> 0:37:30.520 So if we can apply AI in this business and 0:37:30.680 --> 0:37:34.839 helping a lot of SMBs, so who cannot participate in 0:37:34.840 --> 0:37:37.239 the global trade and now they can, so as think 0:37:37.239 --> 0:37:39.240 this is a big success for us. 0:37:40.080 --> 0:37:43.320 A lot of people are expecting industry consolidation or AI 0:37:43.400 --> 0:37:47.640 consolidation in China this coming year. How many winners do 0:37:47.680 --> 0:37:49.960 you see in the AI space in China? 0:37:50.840 --> 0:37:53.960 So actually, for that part, I can only speak of 0:37:54.080 --> 0:37:58.920 my opinion. So if you ask this question in January 0:37:59.360 --> 0:38:03.160 plenty twenty five, as seeing that nobody can anticipate it, 0:38:03.200 --> 0:38:04.760 there's a company called Diepsick. 0:38:05.560 --> 0:38:07.560 I think you ask this question in March. 0:38:08.200 --> 0:38:10.520 I don't think that anybody can antipates to what's going 0:38:10.560 --> 0:38:13.800 to happen in April as well. This industry is moving 0:38:13.880 --> 0:38:16.120 so fast and a lot of people doing a lot 0:38:16.160 --> 0:38:19.120 of innovations. We just need to focus on what are 0:38:19.160 --> 0:38:23.560 the right problems we need to tackle as people in 0:38:23.600 --> 0:38:27.640 this technology domain. I don't think anybody can anticipate what's 0:38:27.680 --> 0:38:28.839 going on for this year. 0:38:29.520 --> 0:38:34.640 Alibaba dot Com president Quosine speaking exclusively with Bluemeg's Annabelt Drowners. 0:38:42.600 --> 0:38:46.040 Let's just take a quick check on Apple shares year today. 0:38:46.680 --> 0:38:50.239 Their erosion in market capitalization is to the tune of 0:38:50.239 --> 0:38:53.080 about half a trillion dollars a fifteen percent wipeout is 0:38:53.160 --> 0:38:55.319 actually far worse. And then as that one hundred which 0:38:55.320 --> 0:38:57.680 is off about eight percent, why is it underperforming? There 0:38:57.719 --> 0:39:01.080 is a myriad of risks which round Rosseella really writes 0:39:01.080 --> 0:39:04.240 about to our audience today, talking about the wives of tariffs, 0:39:04.280 --> 0:39:07.279 about the uncertainty in China, about the AI offerings really 0:39:07.400 --> 0:39:09.839 fizzling of course of late, the SERI concerns, and then 0:39:09.840 --> 0:39:13.160 there's that lucrative partnership with Google parent Alphabet and whether 0:39:13.239 --> 0:39:16.360 or not those payments will still come for exclusive access 0:39:16.400 --> 0:39:19.279 to Google Search within the iPhone. Well, let's talk all 0:39:19.320 --> 0:39:20.879 about Apple and maybe the way in which is trying 0:39:20.880 --> 0:39:24.040 to offset some of these headwinds, the affordable iPhone sixteen 0:39:24.040 --> 0:39:26.960 and e howforfordable actually is it? Mark German is beginning 0:39:26.960 --> 0:39:29.320 his hands on some of the products, and Bloomberg writes 0:39:29.360 --> 0:39:31.759 about how it's kind of a tough sell at this 0:39:31.800 --> 0:39:32.360 price point. 0:39:32.400 --> 0:39:36.440 Mark, Yeah, to your point, it's not affordable enough. At 0:39:36.480 --> 0:39:39.359 six hundred dollars. It puts it basically at the very 0:39:39.440 --> 0:39:43.840 high end the budget range, right, But it's specifications, one camera, 0:39:44.640 --> 0:39:48.319 it's processing, its AI capabilities really puts it sort of at. 0:39:48.239 --> 0:39:49.760 The bottom barrel of budget phones. 0:39:49.760 --> 0:39:52.399 You can get Android phones for a couple hundred dollars less, 0:39:52.719 --> 0:39:56.279 particularly overseas, where you're getting three or four cameras, where 0:39:56.320 --> 0:39:59.160 you're getting better AI features, where you're getting better displays, 0:39:59.440 --> 0:40:03.080 you're getting higher resolution panels with improved frame rates for scrolling, 0:40:03.360 --> 0:40:07.080 you're getting better gaming, etc. So they have a lot 0:40:07.120 --> 0:40:09.640 of competition there, and it continues to be mind boggling 0:40:09.880 --> 0:40:11.319 that they abandoned that three to. 0:40:11.280 --> 0:40:12.480 Four hundred dollars price point. 0:40:12.640 --> 0:40:15.160 I really think something like that, while out of the 0:40:15.160 --> 0:40:18.920 typical Apple premium range, would have helped them tremendously with growth, 0:40:18.960 --> 0:40:24.440 particularly for services in places like India, Southeast Asia, Eastern Europe. 0:40:24.840 --> 0:40:28.320 To your point, when you first reported about this products 0:40:28.360 --> 0:40:31.239 coming out, the idea was actually it was very like 0:40:31.320 --> 0:40:34.160 and iphoned sixteen. There wasn't really much you were having 0:40:34.239 --> 0:40:36.759 to leave on the table by not going down to 0:40:36.800 --> 0:40:39.319 this particular phone. So will they ever bring anything out 0:40:39.400 --> 0:40:41.520 in that price range that you think could tempt more 0:40:41.520 --> 0:40:42.760 of an emerging market purchaser. 0:40:44.760 --> 0:40:47.239 I would never say never, but my belief is that 0:40:47.280 --> 0:40:49.360 the plan is eventually to bring the price down of 0:40:49.400 --> 0:40:52.520 this particular model. Right today it's six hundred dollars, but 0:40:52.600 --> 0:40:54.720 maybe in a year and a half, two years from now, 0:40:54.880 --> 0:40:56.640 maybe I'll get it down to the five hundred dollars 0:40:56.640 --> 0:40:59.400 price range. At that point, it's going to be even 0:40:59.400 --> 0:41:03.160 more outdated specification wise, but from a price point perspective, 0:41:03.360 --> 0:41:06.680 it'll actually be quite a bit more compelling. It would 0:41:06.680 --> 0:41:09.160 put it squarely in the same price range as the 0:41:09.200 --> 0:41:11.719 Google Pixel A series. Right they have the eight A 0:41:11.960 --> 0:41:14.360 eight right now, they have the nine A coming. This 0:41:14.440 --> 0:41:16.680 is an annual thing. They do a lower end pixel phone, 0:41:16.960 --> 0:41:20.560 so better competition there. The concern is right for Googles, 0:41:20.560 --> 0:41:23.000 no one's really buying the Pixel phones as great as 0:41:23.040 --> 0:41:23.319 they are. 0:41:23.400 --> 0:41:24.279 For Apple, they're at. 0:41:24.200 --> 0:41:27.600 Least getting some momentum because this is a phone. It's 0:41:27.680 --> 0:41:30.160 not going to get switchers, but it's a phone that's 0:41:30.160 --> 0:41:33.160 going to be able to upgrade from older iPhones. So 0:41:33.200 --> 0:41:36.200 from that standpoint it's compelling for some people. But they 0:41:36.239 --> 0:41:39.400 have the opportunity to do something even bolder, even bigger, 0:41:39.440 --> 0:41:40.040 even cheaper. 0:41:41.480 --> 0:41:43.759 Well, for now, we still wonder what's happening in terms 0:41:43.800 --> 0:41:47.000 of the generative AI integration, Apple Intelligence, Siri as well. 0:41:47.000 --> 0:41:49.319 There's a lot going on for this particular company. Mark German, 0:41:49.360 --> 0:41:51.319 as always, you can break it down for us, thank you. 0:41:51.680 --> 0:41:53.400 Let's just return to what is a key mover on 0:41:53.440 --> 0:41:56.920 the day, though, because at last the relief floods the 0:41:56.960 --> 0:42:00.319 market that Intel has a single CEO for the law term. 0:42:00.400 --> 0:42:02.960 The interim CEOs go back to their day jobs as 0:42:03.000 --> 0:42:05.759 CFO and chief a product. We're up fourteen percent as 0:42:05.800 --> 0:42:08.160 lip Boutang comes back to the business, can he be 0:42:08.320 --> 0:42:10.960 a turnaround king for Intel as he was for Cadence Designs. 0:42:11.680 --> 0:42:14.000 That does it for this edition of Bloomberg Technology. Do 0:42:14.160 --> 0:42:15.839 not forget to check out our podcast. You can find 0:42:15.840 --> 0:42:18.520 it online on the terminal as well as Apple, Spotify, 0:42:18.560 --> 0:42:19.120 and iHeart. 0:42:19.440 --> 0:42:23.560 This is Bloomberg Technology.