Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is live
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Speaker 2: This is Bloomberg Tech coming up.
Speaker 3: Disney shares sinking after giving a tepid growth outlook that
Speaker 3: says the market of waits news on who will be
Speaker 3: it's new leader. Plus Oracle raising more debt as a
Speaker 3: software giant looks to raise forty five to fifty billion
Speaker 3: dollars in bonds, an equity for additional cloud in the
Speaker 3: structure capacity and sources, say Elon musk Is in advanced
Speaker 3: talks to combined SpaceX with XAI. Will have all the details,
Speaker 3: but first we check in on these markets. Then in
Speaker 3: certain areas breathe some size of relief after selloff on
Speaker 3: the NASZAC on the s and P five hundred, we're
Speaker 3: actually seeing a bit more of the buying of the
Speaker 3: dip when it comes to stocks, not so much when
Speaker 3: you're looking at commodities rob percent when you're looking at
Speaker 3: the NASAK. Now Bitcoin bounces, but boy did it feel
Speaker 3: the pain. Over the course of the weekend. We're only
Speaker 3: training at seventy eight thousand, so still the pressure on
Speaker 3: on so called digital gold as we actually see that
Speaker 3: continued strain on gold and silver that really catalyzed on
Speaker 3: Friday and the decision of who will be the next
Speaker 3: FED chair. Move on to the individual stocks in video
Speaker 3: is one of the biggest points drags to the downside
Speaker 3: to day off by one point four percent. We're going
Speaker 3: to dig into what really its relationship with Opening Eye
Speaker 3: and how much it's committing to funding. It is going
Speaker 3: to look like we're looking at Oracle now up two
Speaker 3: percentage points. It's selling a whole wealth of debt and equity.
Speaker 3: But does this steady the nerves that it would in
Speaker 3: some way temp junk status on its debt. We're getting
Speaker 3: into that a little bit later. Move on there, because
Speaker 3: then the here and now we're looking at earnings and it
Speaker 3: was tepid growth more broadly that we saw for Disney,
Speaker 3: and that particular seems to be being pointed forward to
Speaker 3: this fiscal quarter that we look at what is the
Speaker 3: worry about people not traveling towards many of the parks
Speaker 3: in the year to come. We're currently off by four
Speaker 3: percent to say, on the interry day basis, but interesting
Speaker 3: news over the course of a weekend as well. About management.
Speaker 3: Felix Chillette joins us. Now, just going to the fundamentals
Speaker 3: of the business. The quarter they just reported was strong,
Speaker 3: particularly in streaming, but it seems to be where we're
Speaker 3: going in parks, which is a slight nervousness.
Speaker 4: Yeah, I mean, they just reported record sales and parks
Speaker 4: for the previous quarter. They hit ten billion dollars of
Speaker 4: sales in the quarter for the first time. But they
Speaker 4: offer this outlook today that said, you know, in the
Speaker 4: current quarter, there are some concerns. There's all this you know,
Speaker 4: volatility in terms of the international market. Are they going
Speaker 4: to have as many international visitors to the parks. They're
Speaker 4: going to shift some of their marketing to try and
Speaker 4: attract more domestic visitors to the domestic parks. There's also
Speaker 4: increased costs. They're launching a new cruise ship. They have
Speaker 4: a new Frozen exhibit opening in the parks in France.
Speaker 4: So yeah, the park's outlook for this quarter is not
Speaker 4: as good coming off a very strong quarter.
Speaker 3: Interesting time for parks though, and it's leadership because we
Speaker 3: understand there's a key vote going on at the boarderlane
Speaker 3: this week.
Speaker 4: Yeah, so the ward is meeting they're expected to vote
Speaker 4: on Bob Isereiger's successor. We've been watching this for three
Speaker 4: years now. They are leaning towards Josh Tomorrow, who's the
Speaker 4: head of Parks, and we're expecting to see that vote
Speaker 4: this week. Disney previously said they're going to announce a
Speaker 4: successor for Bob Biger sometime before the end of March.
Speaker 4: So things are moving forward and it makes sense that
Speaker 4: Josh Tomorrow would be in the lead at this point.
Speaker 4: The Parks and Cruise division is providing the vast amounts
Speaker 4: of profit at this company, and it sort of reflects
Speaker 4: where things are at. The experience is really working well
Speaker 4: for consumers right now, and we've talked about the home
Speaker 4: entertainment is still somewhat tumultuous as we make this transition
Speaker 4: from cable to streaming.
Speaker 2: Felix Junette with the best run up. We so appreciate it.
Speaker 2: Thank you. Meanwhile, Disney CEO Bob Byga.
Speaker 3: Didn't talk about their IP, saying there's no rush to
Speaker 3: acquire any more of it.
Speaker 2: Here he is in Today's Enny's Cool.
Speaker 5: I think we have a great hand. I don't really
Speaker 5: feel that we have a need to buy more iping
Speaker 5: to continue to create our.
Speaker 6: Own and we've got an unbelievable bedrock of stories already
Speaker 6: told to grow.
Speaker 3: From sticking to Disney, streaming landscape and more with Daniel
Speaker 3: Payne his slate Stone Wealth CIO. Just for a moment,
Speaker 3: we're just talking about how important the parks are. But
Speaker 3: from the streaming side, it had a really good innings
Speaker 3: in terms of profitability. Finally, in terms of the previous
Speaker 3: court are just reported on that push us forward.
Speaker 6: Yeah, really good from the entertainment standpoint, and that's where
Speaker 6: they see a lot of their operating leverage leverage.
Speaker 5: In the company.
Speaker 6: But we do believe moving forward there are a few
Speaker 6: catalysts out there on the experiences, which is their parks
Speaker 6: and cruises over the course of the year that really
Speaker 6: could be beneficial to shareholders.
Speaker 5: You know.
Speaker 6: The near term concerns which they mentioned for the first
Speaker 6: quarter because of international travel, you know, might be pressuring
Speaker 6: the stock today along with the management changing. So there's
Speaker 6: a lot going there, you know, under the hood. But
Speaker 6: bottom line is we got massive stimulus and down to
Speaker 6: pipe in this country with the tax cuts, with the
Speaker 6: one big beautiful bill, We're going to have about one
Speaker 6: hundred and fifty billion dollars of tax refunds for consumers,
Speaker 6: and the US consumer they've proven over and over again
Speaker 6: that if they're halfway confident with their job and they
Speaker 6: have excess money in their pocket, they're going to spend it.
Speaker 6: So that could be a catalyst moving forward once we
Speaker 6: get into summer. And another thing that nobody's really talking
Speaker 6: about is that this summer we have a few events
Speaker 6: that are kind of unique for this country. We have
Speaker 6: the World Cup here this summer, and we have the
Speaker 6: two hundred and fiftieth anniversary of our country, which.
Speaker 5: Is going to be a lot of steamless in and
Speaker 5: of itself.
Speaker 6: I've seen some projections that the World Cup is going
Speaker 6: to generate about six point five people coming for the event,
Speaker 6: it's going to generate roughly seventeen billion in GDP for
Speaker 6: this country. And you know, with those kind of visitors,
Speaker 6: who's not to say they might stay a little bit
Speaker 6: longer and bolt on a trip to one of the
Speaker 6: Disney parks moving forward, So I think longer term, there
Speaker 6: could be some catalyst to get this stock out of
Speaker 6: the fund that has been in over the past four
Speaker 6: years under the current management.
Speaker 3: We'll talk about management and current management, how do you
Speaker 3: feel about maybe the person who's helped drive the park's
Speaker 3: business becoming the CEO of the whole business again.
Speaker 6: Well, that could be the reason why we've seen some
Speaker 6: weakness today because it could be like, you know, here
Speaker 6: we go again, because if you remember back in twenty twenty,
Speaker 6: we had the same thing happen when I Eiger, you know,
Speaker 6: placed his hand picked successor, Bob Chappick, in control, and
Speaker 6: you know, unfortunately for Chapick, he was put in control
Speaker 6: of the entire operations in February of twenty twenty, so
Speaker 6: we know exactly what happened a month or two later.
Speaker 6: It's kind of hard to run a company when the
Speaker 6: whole economy shuts down and discretionary spending comes to a halt.
Speaker 6: So you know, that might be kind of unfair to
Speaker 6: judge Chappick on that, but there could be some nervousness
Speaker 6: with investors by doing the same thing once again, putting
Speaker 6: the head of the experiences, which again is parts and
Speaker 6: cruise line and gaming ahead at the charge of the company.
Speaker 5: So there might be some hesitancy there.
Speaker 6: But I will say Disney over the past four years
Speaker 6: has nearly doubled their EPs, but yet the stock has
Speaker 6: been essentially flats. We've had massive valuation contraction. And if
Speaker 6: they get the right person in charge that can pull
Speaker 6: the various levers of this company, you know, we can
Speaker 6: have a premium brand once again trading at a premium valuation.
Speaker 6: So right now the stock trades at roughly seventeen times
Speaker 6: to twenty twenty six earn exestimus about six sixty. You know,
Speaker 6: if a market multiple is placed upon this premium brand,
Speaker 6: you know the stock could get into the mid one
Speaker 6: fifties with pretty much ease.
Speaker 5: And so that is significant.
Speaker 6: Upside potential if the right person can make the right
Speaker 6: decisions moving forward.
Speaker 3: If we hear it's Josh, and we know the board
Speaker 3: is voting this week and then they've promised us that
Speaker 3: we would hear by the end of March. If that's
Speaker 3: the case, then where do you think they can drive
Speaker 3: the realization that their IP is worth so much more
Speaker 3: that the spending isn't having to just go up into
Speaker 3: the right when they're trying to market the latest Avatar movie,
Speaker 3: or when they're having to really pay top dollar for
Speaker 3: sporting events. I mean, you just went at length and
Speaker 3: what the soccer means for the US more broadly, but
Speaker 3: when you're trying to stream it or show it, it
Speaker 3: gets very expensive.
Speaker 5: And that's the problem with that side of the business.
Speaker 6: There's significant operating leverage with the variable cost and you know,
Speaker 6: you spend all that variable cost money up front and
Speaker 6: it's almost.
Speaker 5: Like you build it and you hope they show up.
Speaker 6: And so you know, if you get the formula right,
Speaker 6: you spend the money on the content and it's success,
Speaker 6: then that significant leverage for the earnings growth of the company.
Speaker 6: And that's kind of the factor that investors are weighing
Speaker 6: right now with especially with this change in leadership. Could
Speaker 6: it just adds uncertainty to the stock but you know,
Speaker 6: once again, you know, and uncertainty lead to opportunity, and
Speaker 6: their opportunities how you make money in the stock over
Speaker 6: market cycle.
Speaker 2: Daniel Payne a Slate Stone Wealth.
Speaker 3: I appreciate it coming on today and coming up the US.
Speaker 2: It aims to slash.
Speaker 3: Its reliance on Chinese rare earths and other metals. We'll
Speaker 3: tell you all about the plans for the first of
Speaker 3: its kind stockpile for the US private sector.
Speaker 2: That's next as a blomleg tech.
Speaker 3: President Trump, Well, it's set to launch a twelve billion
Speaker 3: dollar stockpile of strategic critical minerals. The move set to
Speaker 3: count US lance on Chinese rare earth but send prices
Speaker 3: for related companies higher. But it's all according to sources
Speaker 3: thus far. Let's bring in Bloomberg's tech editor in DC,
Speaker 3: Mike Shephard, tell us about this first of its kind
Speaker 3: store for US private sector. What do we know is
Speaker 3: set to potentially be announced here, Mike.
Speaker 7: Well, what we're looking for is the US Export Import
Speaker 7: Bank to take a vote later today on approving this package.
Speaker 7: The private sector will kick in about one point six
Speaker 7: to seven billion dollars as part of this seed money,
Speaker 7: and the US Export Import Bank will kick in another
Speaker 7: ten billion dollars, and this would be the biggest such
Speaker 7: deal in the Bank's history by far. And it really
Speaker 7: is a sign of just how much the administration is
Speaker 7: pushing in this area of rare roots and critical minerals
Speaker 7: and trying to wean the US from its dependence on
Speaker 7: China as a key source for these inputs. They're so
Speaker 7: essential to the private sector, to autos, to iPhones, to
Speaker 7: gas turbines even and without access to them, we risk
Speaker 7: seeing a manufacturing supply chain disruption akin to what we
Speaker 7: risk experiencing earlier last year when the Chinese government started
Speaker 7: to impose some of those export controls on rare earth.
Speaker 7: So the US is trying to diversify around it and
Speaker 7: ensure both pricing stability and supply stability.
Speaker 8: Here.
Speaker 3: Caro administration officials have been detailing what could be announced.
Speaker 3: But what's interesting, Mike is through which countries are we
Speaker 3: going to be sourcing from and what sort of backstops
Speaker 3: do these The export import back need to know that
Speaker 3: they can sell this on correctly and not be landed
Speaker 3: with an awful lot of minerals.
Speaker 7: Well, the idea is to ensure that US manufacturers have
Speaker 7: this access, and it would create this stockpile akin to
Speaker 7: the Strategic Petroleum Reserve here that manufacturers here in the
Speaker 7: US could access is needed, they would have to pay
Speaker 7: into it to be able to eventually make purchases and
Speaker 7: then promise to replenish it down the road. But this
Speaker 7: is just one of several steps in the area of
Speaker 7: rare earth that the US government is taking right now.
Speaker 7: Later this week there will be meetings with dozens of
Speaker 7: foreign ministers here in Washington to agree on trying to
Speaker 7: find some way to create a mechanism to stabilize prices
Speaker 7: and supply around the world, not just here in the US,
Speaker 7: but with allies, so that collectively they can reduce some
Speaker 7: of their dependence on China and increase extraction, mining and
Speaker 7: refining in a number of other countries. While we call
Speaker 7: them rare earths, they are actually fairly common. It is
Speaker 7: just that they are not extracted or exploited in as
Speaker 7: many places as they are, and to the extent that
Speaker 7: China has come to dominate the market and cara. The
Speaker 7: clock is ticking. Remember that the trade truths that the
Speaker 7: President signed with Shijinping late last year, it's only good
Speaker 7: for one year, so they have to start making these
Speaker 7: moves to ensure that supply won't be as disrupted as
Speaker 7: a risk being facing earlier last year before the trade agreement.
Speaker 3: I'll see how project vaulted it is known continues being
Speaker 3: by to Smack Shepherd. Thanks for detailing all of this.
Speaker 3: Let's get the broader economic picture now to well what's
Speaker 3: moving tech stocks in particular Natal Gallagher's with US principal
Speaker 3: economists and director at Board.
Speaker 2: Just going back to that rarer suggestion, is.
Speaker 3: That positive do we need is supply chain, real headache
Speaker 3: for the this is out there right now.
Speaker 9: Yeah.
Speaker 10: Absolutely, you know what we're seeing as a fundamental shift
Speaker 10: in how the US has really been addressing supply chain
Speaker 10: resilience over the past few years and absolutely top of
Speaker 10: mind following the export control measures by China back in
Speaker 10: twenty twenty five. You know what, in essence we're doing
Speaker 10: is we're creating a strategic preserve of rare earth menerals
Speaker 10: for the digital economy, which means that we're less at
Speaker 10: the behest of foreign entities as we try to continue
Speaker 10: to move forward right in AI innovation and all the
Speaker 10: potential for the economy that that really houses.
Speaker 3: A lot of the focus has been not so much
Speaker 3: on supply chain of rare US as well as that,
Speaker 3: but also really just the bottlenecks that we see in
Speaker 3: delivering the AI hope and euphoria that is built into
Speaker 3: the market, whether that's power, that's energy, whether it's land. Natalie,
Speaker 3: where do you stand in terms of the reality of
Speaker 3: AI and what has been thus far driving a lot
Speaker 3: a lot of stock share and shares high this year?
Speaker 11: Yeah?
Speaker 10: Absolutely, I mean twenty twenty five we saw a really
Speaker 10: intense increase in valuations there's a lot of hope in
Speaker 10: what AI can deliver. We heard that at the DeVos
Speaker 10: Economic Forum, also allowed and clear by many key tech
Speaker 10: and political leaders as well. Now, in order for these
Speaker 10: valuations to hold in twenty twenty six, and what we're
Speaker 10: really going to have to see and it's going to
Speaker 10: sort of earmark the year, is a close right in
Speaker 10: the gap between how much is being spent on AI
Speaker 10: and the ROI that we're actually going to achieve. If
Speaker 10: we get those productivity gains, then this is absolutely a
Speaker 10: great story of foresight. If we don't see those productivity gains,
Speaker 10: then we're going to have a conversation much more housed
Speaker 10: around capital misallocation.
Speaker 3: But now, Sie, how's that going to show up? As
Speaker 3: an economist? You looking at job's data? I mean, because
Speaker 3: at the moment, all we're seeing is jobs cuts upon
Speaker 3: jobs cut, which in some way seems to be going
Speaker 3: back to AI.
Speaker 10: Yeah, I mean, it's fascinating right what we're seeing in
Speaker 10: the overall jobs data. I'll first sort of approach that
Speaker 10: and then tell you as an economist what I'm looking at.
Speaker 10: We look at the jobs data, there's not a whole
Speaker 10: lot of evidence that the jobs that are currently being
Speaker 10: cut is.
Speaker 11: Due to AI.
Speaker 10: Right, we know that that's what companies are saying. At
Speaker 10: the same time, it's not really showing up in a
Speaker 10: clear way in the data.
Speaker 11: On the other hand, what.
Speaker 10: We do really need to see is almost a discontinuous
Speaker 10: jump in the productivity data. Right, So if we're sort
Speaker 10: of on this level increase, what we really want to
Speaker 10: see with AI is we're jumping up and then we're
Speaker 10: on a totally new level playing field when we see that,
Speaker 10: and there should be early adopters in some key industries.
Speaker 10: I'm thinking, you know, healthcare, consulting, finance, we should see
Speaker 10: those early signals and they should be showing up in the.
Speaker 2: Data as soon as twenty twenty six. You think.
Speaker 10: That, I firmly believe that's going to need to happen
Speaker 10: in twenty twenty six in order for these valuations to
Speaker 10: be deemed worthwhile.
Speaker 3: We're going to be getting into these big stories that
Speaker 3: are in the market today of how.
Speaker 2: At the moment we continue to fuel.
Speaker 3: The ever needing expansion of AI infrastructure, whether it's oracles
Speaker 3: selling debt and equity, whether it's well whether or not
Speaker 3: in video is going to be giving up to one
Speaker 3: hundred billion dollars or not to open AI. How are
Speaker 3: you seeing that narrative continue in twenty twenty six, and
Speaker 3: we're going to have to see a pullback in the
Speaker 3: amount that the companies are committing.
Speaker 10: You know, I think it's more so we're really going
Speaker 10: to have to see the ROI in a meaningful way
Speaker 10: that we can go back to. And again that gets
Speaker 10: back to productivity, and the risk really is as we
Speaker 10: sort of pull all of these levers and they get
Speaker 10: more and more complex, it becomes a much more opaic environment,
Speaker 10: right for investors to really operate in, and so the
Speaker 10: risk of those valuations maybe being artificially bolstered goes up.
Speaker 3: Just from your perspective, the narrative of circular deals is
Speaker 3: that actually, in many ways we often put it in
Speaker 3: a negative context, but that's exactly what in VIDEOS should
Speaker 3: be doing, investing in its own clients to be able
Speaker 3: to foster the potential ROI that we might see in
Speaker 3: this locks that jump.
Speaker 11: Yeah, I mean absolutely right.
Speaker 10: So if we see this truly meaningful transformation in the
Speaker 10: economy that's sort of promised with AI, then.
Speaker 11: We're in a great spot, right.
Speaker 10: These circular investing schemes that is excellent foresight by these companies.
Speaker 10: If we don't see that, right, that's the real risk
Speaker 10: of pretty significant market correction, right because that investing scheme,
Speaker 10: it is bolstering the overall revenue numbers that we're seeing.
Speaker 2: What therefore are some more of the headwinds.
Speaker 3: Other than waiting for ROAI, we're also still tackling tariffs,
Speaker 3: We're still worried about South Korea's relationship with the United States,
Speaker 3: for example in the here and now, let alone China.
Speaker 3: What could be the headwind that you're looking out for?
Speaker 10: You know, one head wind I'm particularly interested in tracking
Speaker 10: is actually jobs. Right, So we're in a labor market overall.
Speaker 10: When we talk about the macroeconomy that's quite soft. But
Speaker 10: when we speak specifically to AI, machine learning, sort of
Speaker 10: these high powered tech jobs, we have a little bit
Speaker 10: of a bottleneck there. And so something really interesting that
Speaker 10: came out of the US Taiwan trade deal just a
Speaker 10: few weeks ago was this goal, right of onshoring significant
Speaker 10: supply chain efforts from Taiwan to the US.
Speaker 11: In order to do that, we're also.
Speaker 10: Going to need significant changes in our workforce development. And
Speaker 10: there's a risk there, right, because We've had meaningful policy
Speaker 10: changes over the last year alone.
Speaker 3: Fascinating Take Massady Gaga come back soon, we hope. Principal
Speaker 3: economist over at Board coming up, elamsk will is in
Speaker 3: advanced talks to combine SpaceX with Xai. Will have all
Speaker 3: the details. Next, this is Broombed Tech checking on on
Speaker 3: Tesla shares well. We're seeing the impact of European sluggishness again.
Speaker 3: You saw it throughout twenty twenty five, but down two.
Speaker 2: And a half percent.
Speaker 3: As we understand, European car sales of Tesla's in particular
Speaker 3: slumped into twenty twenty six, in particular absolutely plummeting French
Speaker 3: shells down forty two percent. They only sold six hundred
Speaker 3: and sixty one cars. Norway registrations plunging eighty eight percent.
Speaker 2: But that says we.
Speaker 3: Hear specific changes in policy over in Noise in particular,
Speaker 3: but look generally Evy registrations going higher in Europe, but
Speaker 3: just not the Tesla, whether it's a political read across
Speaker 3: or whether indeed it continues to be something around the
Speaker 3: brand and a slower adoption of older models versus the
Speaker 3: Chinese one. But let's move on to other areas of
Speaker 3: Elon Musk's empire right now, because we understand that he
Speaker 3: is in advanced talks to combine SpaceX with Xai, according
Speaker 3: to sources, a deal that would combine, of course, two
Speaker 3: of the largest closely held companies in the world. I
Speaker 3: just think XAAA is valued two hundred billion dollars. SpaceX
Speaker 3: is currently worth eight hundred billion dollars at the last
Speaker 3: Camp and their Deals Team Managing editor Ianna Baker joins
Speaker 3: us some more, there's been a lot of conversation about
Speaker 3: somehow his empire combining forces, whether it's Tesla and SpaceX
Speaker 3: or Xai and SpaceX. It looks like the latter is
Speaker 3: the more likely at the moment.
Speaker 12: That's the idea that's gained traction in you know, late
Speaker 12: last week and over the weekend, that it looks like
Speaker 12: these two private companies SpaceX and Xai, which also on X,
Speaker 12: would come together. It's possible, and the future Tesla could
Speaker 12: be involved. There's a lot of theories that one day
Speaker 12: there's just going to be one huge Elon must conglomerate.
Speaker 12: But for now, at least it looks like this is
Speaker 12: the plan and that SpaceX would still go public later
Speaker 12: this year.
Speaker 2: I can see that.
Speaker 3: The benefit for xais that it needs a ton of money.
Speaker 3: What is in theory the benefit to investors of both
Speaker 3: these companies buy culbination.
Speaker 12: A lot of this is futuristic. If investors in SpaceX
Speaker 12: want to see these data centers in space one day,
Speaker 12: which there's been some filings that could indicate maybe that's
Speaker 12: something they're working on. This is a way to bring
Speaker 12: that together. But definitely, you know, is it a bailout
Speaker 12: of XAI, you know, compared to SpaceX hard to say.
Speaker 12: We don't know any details on what is the structure
Speaker 12: right now, what shares will be transferred or exchange or
Speaker 12: swaps for each other, so those details still need to
Speaker 12: come out to see, you know, how shareholders make out.
Speaker 3: And what sort of approvals do they need because we
Speaker 3: understand a lot of this has got investors support, but
Speaker 3: do they need to Can it just be done because
Speaker 3: it must thinks it's the right thing to do.
Speaker 12: It's hard to say, but last year when x and
Speaker 12: Xai merge, it kind of just happened in an ex
Speaker 12: post and that's fat A lot of this, especially when
Speaker 12: there's private companies, the M and A is very much
Speaker 12: behind the scenes. Maybe an investment bank gets brought on
Speaker 12: for a fairness opinion, or there's certainly law firms, but
Speaker 12: it's hard to say. It's not like a public shareholder
Speaker 12: deal or you know, there might be committees, but a lot.
Speaker 11: Of it's done behind the scenes.
Speaker 12: And if Tesla had been part of this merger, then
Speaker 12: you might see more public information or independent board shareholder
Speaker 12: votes and whatnot. But this is all going to be
Speaker 12: happening kind of under the radar.
Speaker 2: Briefly, who would run it?
Speaker 11: That's a great question.
Speaker 12: You know, Xai has brought on Anthony Armstrong, a former
Speaker 12: investment banker and who worked in the government. You know,
Speaker 12: SpaceX has leadership, and our reporting you know, doesn't have
Speaker 12: the answers. But there's certainly a few people in Elon
Speaker 12: Musk's sphere that could you know, potentially run this. Apparently
Speaker 12: all his executives do everything at all the company, so
Speaker 12: maybe it's just everyone.
Speaker 3: Certainly there's cross pollination already. Leanna Baker is a great
Speaker 3: scoop that came out earlier today. We so appreciate it. Meanwhile,
Speaker 3: coming up Oracle, it's raising to build out to day
Speaker 3: our infrastructure, with plans to raise up to fifty billion
Speaker 3: dollars on that.
Speaker 2: Next, this is blue Beg Tech. Welcome back to Blue
Speaker 2: Beg Tech. We check in on these market.
Speaker 3: It's a bit of a reprieve if you're in stocks
Speaker 3: and the dollar today, not so much if you're in
Speaker 3: gold and silver or up nineteen percent on the Nasdaq
Speaker 3: one hundred is we get a bit of a bounce
Speaker 3: back after a couple of days selling on big tech stocks.
Speaker 3: We're looking at Bitcoin, It's seventy nine thousand. Look it's
Speaker 3: up on the day, but boy was it sold off
Speaker 3: hard throughout the weekend. Once again, we're questioning people's desire
Speaker 3: full risk assets. More broadly, at these sorts of valuations.
Speaker 3: Digital gold has not been particularly loved. Meanwhile, gold got
Speaker 3: absolutely hammered on Friday and continuing into Monday. But let's
Speaker 3: look at some of the other areas of focus when
Speaker 3: it comes to individual stocks. The mood because underneath the
Speaker 3: hood and Video has been one of the ways down
Speaker 3: in terms of points. We're going to dig into why
Speaker 3: in Video is perhaps reassessing how much is going to
Speaker 3: be committing to Open AI's infrastructure build out, how it
Speaker 3: commits to that as well. So we also see how
Speaker 3: Oracle is up to and a half percent, having brought
Speaker 3: a little bit more transparency as to what they need
Speaker 3: to raise for its own AI infrastructure, largely to open
Speaker 3: AI bonds stock. The sales are upon us already. Bloomberg's
Speaker 3: Brodie Ford joins us, who was working hard all weekend
Speaker 3: because it was on a Sunday that we learn that
Speaker 3: here's a company that's looking to raise what up to
Speaker 3: fifty billion and a make sure of equity and.
Speaker 13: Debt Sunday night, it's time to raise more money. Yeah,
Speaker 13: it was kind of a unique situation to have this
Speaker 13: kind of large announcement from a company as mature as
Speaker 13: Oracle on a Sunday. But what that really underscores is
Speaker 13: how Oracle has become this poster child of all the
Speaker 13: AI financing fears. It's expected to be negative free cash
Speaker 13: flow for the next couple of years as it builds
Speaker 13: massive data centers, and the big question has been and
Speaker 13: how much money will they have to borrow to do that?
Speaker 13: Will they be able to maintain their investment grade? And
Speaker 13: they essentially were trying to respond to these concerns and
Speaker 13: say that no, we have a solid plan.
Speaker 3: And it's interesting maybe they've been learned from past haste
Speaker 3: with a previous bond sell at the end of last
Speaker 3: year where Bonholder was an own suing because.
Speaker 2: They felt that they didn't get enough.
Speaker 3: Well clear transparency that this was a company that will
Speaker 3: be tapping the debt market a lot.
Speaker 2: When we're looking at what they're getting.
Speaker 3: Today, though there's three year floating rate notes, there's three
Speaker 3: a fixed, five year fixed, seven year fixed, what's a
Speaker 3: long seventy.
Speaker 2: Ar, ten year, thirty or forty year.
Speaker 3: How much they're having to pay for the debt side
Speaker 3: of the equation, which they actually say is the only
Speaker 3: time they're going to be tapping the bond markets.
Speaker 13: This year, Well they're gonna be. They're expected to get
Speaker 13: a ton of free cash flow once you look a
Speaker 13: couple of years out, once those OAI contracts and others
Speaker 13: start flowing. And what's particularly interesting today is to see
Speaker 13: them issue equity and often when that happens, investors don't
Speaker 13: like dilution and the stock goes down. So it's funny
Speaker 13: to see the stock go up on an equity insurance.
Speaker 13: And what that means is that the company is willing
Speaker 13: to do what it takes to keep investment grade. It
Speaker 13: does not want to get saddled with some incredible interest rates.
Speaker 13: We've heard a lot of concerns on these loans, and
Speaker 13: so they're trying to show that they're going to do
Speaker 13: what it takes to maintain a good rating.
Speaker 3: And actually that was really what we heard from the
Speaker 3: analyst space coming out here, saying this should be positive
Speaker 3: sign that they are really committed to avoiding junk.
Speaker 13: Absolutely, and I think what it is too is just clarity.
Speaker 13: I mean, there's been so much uncertainty about Hey, is
Speaker 13: Oracle going to be able to get all of the
Speaker 13: loans it needs? Is it going to be able to
Speaker 13: complete this build out seamlessly? Is Open AI going to
Speaker 13: pay its bills? That's a lot of the questions that
Speaker 13: have been weighing on the stock and so kind of
Speaker 13: any new information that shows a specific plan, almost whatever
Speaker 13: that plan is, as long as it seems reasonable, is
Speaker 13: going to be read as good news.
Speaker 3: We'll see how the up to twenty five billion dollars
Speaker 3: on sale goes today and and need some of those
Speaker 3: convertible notes as well. Broddie Ford all over the Oracle story,
Speaker 3: and let's stay with the AI related debt story now,
Speaker 3: because the cost of data center build out, it is
Speaker 3: expected to.
Speaker 2: Top three trillion dollars.
Speaker 3: An Oracle isn't the only tech company borrowing to finance
Speaker 3: their plans, but he works senior private credit reporter policylks.
Speaker 2: And joins us.
Speaker 3: Now, who you've been looking across the board at the
Speaker 3: panacee all ways in which companies are trying to finance
Speaker 3: an extraordinary amount of build out right now? How much
Speaker 3: are they leaning on public bond markets or indeed the
Speaker 3: rest of the debt system.
Speaker 14: So the best way to think about this is they
Speaker 14: are tapping all debt markets. So we have obviously the
Speaker 14: typical unbalanced sheet corporate borrowing, which you see like with
Speaker 14: the Oracle deal today. That can be an investment grade bond,
Speaker 14: a hiled bond, or a leverage loan, or even a
Speaker 14: private credit direct loan. But there's a lot of off
Speaker 14: balance sheet borrowing happening as well. I know that sounds
Speaker 14: a little bit scary when you first hear the words
Speaker 14: off balance sheet, but what it simply means is that
Speaker 14: instead of an investor lending to the company, they're lending
Speaker 14: to the actual data center project itself. So they create
Speaker 14: a special purpose vehicle that is the actual building, or
Speaker 14: an owner and borrower to create the data center. When
Speaker 14: you tap that, that opens up a whole other realm
Speaker 14: of markets. So, for example, the bank project finance construction
Speaker 14: loan market has been heavily involved in this space. You're
Speaker 14: seeing private placements, which are typically insurance companies. You're seeing
Speaker 14: structured finance investors in the form of commercial mortgage.
Speaker 11: Backed securities and asset backed securities.
Speaker 14: You're seeing private credit, You're seeing GPU finance for the chips.
Speaker 11: It is touching all parts of the debt markets, and.
Speaker 3: We think about cole Weaves very much thinking about financing
Speaker 3: of the chips to begin with, we saw that deal
Speaker 3: between blue Out a meta is a real pin up.
Speaker 2: And the private slubpot of the business. What are they
Speaker 2: having to pay for all of this?
Speaker 14: It really depends, and it can range from just a
Speaker 14: little bit over investment grade all the way to double
Speaker 14: digit teams mid teens yields.
Speaker 11: It just kind of depends on the structure.
Speaker 14: There's also a big difference between something that is a
Speaker 14: hyperscaler borrowing or ultimately backed by a hyperscaler versus some
Speaker 14: of the more risky things where maybe it's a small
Speaker 14: early stage company that needs to borrow money.
Speaker 11: That's all in on AI.
Speaker 2: We've had a lot of new neo clouds.
Speaker 3: It ca'll hang out you for example, just tell us
Speaker 3: about the need for transparency. Though, what so interesting is
Speaker 3: the equity markets response to Oracle today? It's just few
Speaker 3: you're telling us a little bit more. When we have
Speaker 3: so much private credit getting involved, do investors feel they
Speaker 3: have enough information about just how broadly the borrowing is
Speaker 3: going from certain issues?
Speaker 11: I think it depends on the issuer.
Speaker 14: So Oracle, for example, well, it is doing this off
Speaker 14: balance sheet borrowing, it is still tied to those data
Speaker 14: centers through lease commitments, and that does show up publicly
Speaker 14: in their financial statements.
Speaker 11: But I think for a lot.
Speaker 14: Of these deals it's actually pretty much all private. It's
Speaker 14: also a lot of times private company is doing it,
Speaker 14: so then the investor base is just a very different
Speaker 14: investor base. And I hope we're getting disclosures, but it's unclear.
Speaker 14: And I think what makes it nerve wracking for the
Speaker 14: markets is even if those private company investors are learning
Speaker 14: about it, maybe the rest of the market doesn't know,
Speaker 14: and that can just cause unease and uncertainty around the
Speaker 14: absolute scale of the debt being borrowed right now.
Speaker 3: Well, said Bloommegg's polastics and got to go and read
Speaker 3: her offers throughout all about the debt markets. Really interesting stuff. Meanwhile,
Speaker 3: let's go to other Ai build out. In video, CEO
Speaker 3: Jensen Huang says the company has proposed one hundred billion
Speaker 3: dollar investment in open Ai was quote never a commitment.
Speaker 3: Speaking to reporters in time, Hay over the weekend reiterated
Speaker 3: his support for the chat chip tea maker, but did
Speaker 3: not disclose the total investment.
Speaker 6: Just to listen, Sam is closing the realm, and we
Speaker 6: will absolutely be.
Speaker 5: Interupted in their home mode, their home mode.
Speaker 7: We will invest a great deal of money, probably the
Speaker 7: largest investment we've ever made a.
Speaker 3: Large So is that going to be your overall one
Speaker 3: hundred peal?
Speaker 7: No, no, no, no, no, no, nothing like that.
Speaker 3: Fair Figeman joins us now for what was a busy weekend,
Speaker 3: as always from mister Huango for in Taipei. Look are
Speaker 3: we meant to be surprised that when you've inked some
Speaker 3: sort of deal and said look we're good for up
Speaker 3: to one hundred billion dollars that actually that hasn't been
Speaker 3: fully ironed out and agreed and it's up to sch
Speaker 3: Mega walk coming online a little bit.
Speaker 8: I mean, I think it's important to step back. I
Speaker 8: remember when this deal was announced in a few months back.
Speaker 8: It was a monumental moment for both companies. One that
Speaker 8: attested to the scope of the buildout that opening I
Speaker 8: had in mind and Nvidia's role in that, and also
Speaker 8: a lot of the circular deals concerns. To your point,
Speaker 8: there are a lot of daylight there. They've ever set
Speaker 8: a firm timetable or a fixed amount, and so there
Speaker 8: was room to imagine and maybe it wouldn't be one
Speaker 8: hundred billion dollars, But now I think it's a question
Speaker 8: of just how far away is it from that, and
Speaker 8: again over what timetable.
Speaker 3: Some of the reporting from other networks and outlets has
Speaker 3: been that actually in video is getting uncomfortable with a
Speaker 3: competitive landscape, uncomfortable with a so called discipline of open AI.
Speaker 3: Is that something that we're hearing in our reporting or
Speaker 3: is this more this is a company that's maybe he
Speaker 3: is aware of the criticism around circular financing and it's
Speaker 3: just been questioning a little bit more.
Speaker 8: Yeah, I mean, it's unclear, and it's a delicate balance
Speaker 8: here between these two companies. Even if Nvidia is maybe
Speaker 8: having those concerns that you lay out, Opening Eye is
Speaker 8: still very central both to a larger landscape and to
Speaker 8: Nvidia's own deployment of chips. It's clear that the relationship
Speaker 8: between these two firms has not broken down. As Jensen said,
Speaker 8: we'll probably be the largest investment they've ever made, and
Speaker 8: will probably be the largest funding round we've ever seen.
Speaker 8: But it's possible there is some daylight there.
Speaker 3: Let's just go to that funding round because that's what's
Speaker 3: currently under negotiation. We know that Middle Eastern investors has
Speaker 3: been eyed up, we know the Amazon's interested in the round.
Speaker 3: So what sort of scale are we talking and how
Speaker 3: will it be related to using certain companies equipment or
Speaker 3: giga what's coming online?
Speaker 8: Yeah, so, I mean we've reported that up to one
Speaker 8: hundred billion dollars in this funding round, which again would
Speaker 8: be the largest that we've ever seen, trumping Opening Eyes
Speaker 8: prior forty billion dollar funding rounds. We've seen that Amazon,
Speaker 8: SoftBank and Vidia each willing to potentially commit billions or
Speaker 8: tens of billions of dollars to this round. Does not
Speaker 8: currently feel like Opening Eye is hurting for money in
Speaker 8: that one respect remains to be seen. And then to
Speaker 8: your question, not just in Vidia, but certainly Amazon, Microsoft,
Speaker 8: like these are all, if not circular relationships. Then continued
Speaker 8: examples of the companies using the suppliers to fund their ambitions.
Speaker 3: Well, we'll keep a track of it, figure and breaking
Speaker 3: it all down on that relationship between the video and
Speaker 3: open Ai. Meanwhile, coming up, let's talk about crypto exchanges.
Speaker 2: They're under pressure.
Speaker 3: Plunging trading volumes is really the issue. At the moment,
Speaker 3: we're off by just a couple of percent. We've cooped
Speaker 3: some of our losses on the day, but we'll dig
Speaker 3: into it next.
Speaker 2: This has been their tech bearish sentiment in crypto.
Speaker 3: It is weighing on the exchanges as investors pull back
Speaker 3: on trading platforms like coinbase and Gemini, Well, they're seeing
Speaker 3: stock prices and training volumes drop more on the entire ecosystem.
Speaker 3: Let's bring in Boombog cross asset reporter Isabel Lee and
Speaker 3: no Wonder. Companies exposed to trading and volume are going
Speaker 3: to be feeling the pain when everyone probably takes.
Speaker 2: A bit of a step back at this moment, definitely
Speaker 2: a step back.
Speaker 15: I was sitting in my SOFA nicely over the weekend,
Speaker 15: and then bitcoin fell. It fell to as slower since April,
Speaker 15: the tarify of in volatility. So it's made a lot
Speaker 15: of investors panic. Granted, thin liquidity over the weekend and
Speaker 15: fewer traders, fewer online, and we know they've been Bitcoin falls.
Speaker 15: It triggers a wave of liquidations. We saw billions and
Speaker 15: billions of long and short positions liquidated. But still investors
Speaker 15: have been increasingly becoming a little unhappy with bitcoin because
Speaker 15: macro factors that used to help it before haven't been
Speaker 15: really helping. Like a weeker dollar that's supposed to be
Speaker 15: good for bitcoin, but it's not really helping right now.
Speaker 15: So now we're seeing January decline and it's really one
Speaker 15: of the longest streaks. I think it's a fourth straight
Speaker 15: monthly decline, the longest streak since twenty eighteen.
Speaker 3: I mean, bitcoin shed nearly eleven percent in January. At
Speaker 3: one point it was trading the lowest since President Trump's
Speaker 3: returned to the White House. Much had been hoped for
Speaker 3: regulatory changes, in particular what white get through Congress that
Speaker 3: seems to be put on ice.
Speaker 2: Is that also an issue? Definitely, it's put on.
Speaker 15: Ice because if this president, which is supposed to be
Speaker 15: the most crypto friendly president, can't help it, what can
Speaker 15: And you also see it and flows flows are drying up.
Speaker 15: I mean, sure it's just a bucket and this we
Speaker 15: still have more than a billion dollars in assets, but
Speaker 15: you see flows drying up. I think investors have been
Speaker 15: spoiled because it used to be always green on disc
Speaker 15: green inflos after inflows. When bitcoin ETF's launch in twenty
Speaker 15: twenty four, which is crazy, two years ago, it made
Speaker 15: records after records, and now I mean some would say
Speaker 15: it's consolidation. Some would say, oh great, now I can
Speaker 15: buy it's an attractive entry point because for a while
Speaker 15: Bitcoin has been too high, and if it's too high,
Speaker 15: I mean, how will that be an attractive entry point.
Speaker 15: So it's a mixed sentiment out there, but for now,
Speaker 15: you can't deny that there's some gloom in crypto.
Speaker 3: World, some blue for Michael Sailor in particular. I mean,
Speaker 3: just talk to us about these digital asset treasury companies
Speaker 3: and how much this pain must be hurting.
Speaker 11: Them, just like bitcoin.
Speaker 15: I think digital asset treasuries are whether you love them
Speaker 15: or you hate them. But today headlines are making for
Speaker 15: Michael Sailor because for the first time, the plunge token's
Speaker 15: price fell below the purchase cost of Michael Sailor's leverage
Speaker 15: bitcoin proxy and strategy. So that's really something. There are
Speaker 15: no margin calls yet. I want to make sure there's
Speaker 15: no immediate financial stress, no expectation to sell bitcoin. But
Speaker 15: it's just something worth noting. Could this be the beginning
Speaker 15: of something? Maybe, but maybe it's also just like a
Speaker 15: bad day, a bad week, a bad month. But it's
Speaker 15: definitely worth noting because he is the biggest, biggest bull
Speaker 15: of bigcoin and lots Street.
Speaker 3: Yeah, the company's cost basis is about seventy six thousand,
Speaker 3: and we went below that for a moment. I mean,
Speaker 3: we see the shot stock price just get off of
Speaker 3: its lows, but still under pressure. Once again, isabell lee
Speaker 3: across the sasset class for us, we appreciate it. Now
Speaker 3: coming up Palenteer earnings, they come up after the bell.
Speaker 3: We're going to discuss what to expect. That's in Bloomberg Tech.
Speaker 2: Earning.
Speaker 3: Still coming all lies on pal Andeer reporting after the
Speaker 3: closing bell today and actually, for the first time in
Speaker 3: two years, Palentiner's shares are not rallying into a.
Speaker 2: Quarterly earnings report.
Speaker 3: Let's break it all down Bloomberg's Tech Equity Reporter com
Speaker 3: and rhaning key on the day, they're up just a
Speaker 3: little bit, but yet to date it's been brutal.
Speaker 11: Right, it has.
Speaker 9: And if you look even further back to November when
Speaker 9: they hit the record high ahead of their last earnings report,
Speaker 9: the drawdown is about twenty five percent, which is pretty
Speaker 9: significant for Palenti, for any stock, and a very different
Speaker 9: setup that we've seen going into our earnings from previous reports.
Speaker 9: So it's definitely looking like, you know, the stock could
Speaker 9: get a little bit of help. Its valuation is still
Speaker 9: very high, even though it's come in a little bit.
Speaker 9: With this, you know, the stocks decline, so investors are
Speaker 9: looking for some very key things. I mean, pounds expected
Speaker 9: to put up another great quarter. The guidance will really
Speaker 9: be paramount, and there's a lot of volatility in this name,
Speaker 9: so we could really see big swings in either direction.
Speaker 3: I mean, revenue is still meant to be sixty one
Speaker 3: percent growth fifty more than fifty percent for the fiscal
Speaker 3: full year. But doctor CoP's got to be aware of
Speaker 3: how many ways has deemed a bit of a mean stock,
Speaker 3: and as we've just been discussing with crypto and bitcoin,
Speaker 3: we've seen a lot of changes where people have been
Speaker 3: wanting to allocate.
Speaker 2: Is that anything to do.
Speaker 3: With it, It's more about just a terrible time for software
Speaker 3: in general.
Speaker 9: I think it's a little bit more tied to the
Speaker 9: software you know sell off. We've seen a couple analysts
Speaker 9: commenting on that it's just gotten weighed down with the
Speaker 9: rest of the sector. I think there also could be
Speaker 9: you know, there's been some of a rotation away from
Speaker 9: you know, the most expensive tech names. This definitely is
Speaker 9: in that camp. And you know, a source said to me,
Speaker 9: if you're looking to rotate in something's over one hundred
Speaker 9: times you know forward earnings, that's not really maybe the
Speaker 9: place that you're going to be looking to buy. So yeah,
Speaker 9: we'll just really see I think doctor Karp as well,
Speaker 9: you know, he's such a passionate CEO. People will definitely
Speaker 9: be listening for his comments on the call, and that could,
Speaker 9: you know, really go either way as well.
Speaker 3: We always get some pretty choice words from doctor Carp,
Speaker 3: pretty most common Rhyanikey, great to have you on today.
Speaker 3: Thank you, Look Palente isn't the only big tech name
Speaker 3: reporting earningxist week. Look how many we've got coming and
Speaker 3: please to say Fiona Sincotter's senior analysta City Index Financial can.
Speaker 15: Talk us to.
Speaker 3: We've got a MD on Tuesday, Qualcom, Alphabet Wednesday, Thursday
Speaker 3: got the big one that is an Amazon far out.
Speaker 3: How do you embrace for some of these numbers, because look,
Speaker 3: Microsoft last week wasn't a bad set of numbers, absolutely
Speaker 3: beaten up when people were worried about the capital expenditure.
Speaker 2: Yeah, that's right.
Speaker 16: I mean, we're definitely seeing this sort of division between
Speaker 16: those techs that are in favor and those that are not.
Speaker 16: And I think that's going to be even more under
Speaker 16: the microscope as these earnings come through, the market is
Speaker 16: very much more selective about where they're looking to direct capital.
Speaker 16: You know, before, as we said, it was just very
Speaker 16: much more jump on that tech trade and ride it higher.
Speaker 16: There really wasn't too much in it. But that's just
Speaker 16: not the case anymore. And we're seeing, you know, even
Speaker 16: numbers that come out relatively good, like we said with Microsoft,
Speaker 16: end up with you know, a ten percent drop in
Speaker 16: the stock. And at the same time we saw Meta
Speaker 16: driving ten percent higher. So it does feel a little
Speaker 16: bit more unpredictable in that respect, and it also means
Speaker 16: that the bar I would say is even higher on
Speaker 16: these companies to impress than it has been before, even
Speaker 16: though valuations in some cases have come down a bit
Speaker 16: given that sort of setout of tech that we had
Speaker 16: seen since the November highs.
Speaker 3: So let's just start with Palenteer for example, what would
Speaker 3: a software company that is going to deliver more than
Speaker 3: sixty percent earnings for share growth more than sixty percent
Speaker 3: revenue growth have to articulate, you think to change the
Speaker 3: sentiment on the name.
Speaker 16: I mean, I think Ford Guidance is going to be
Speaker 16: absolutely key, and I feel that's where sort of, you know,
Speaker 16: Microsoft might have just sort of let the side down
Speaker 16: a little bit compared to Matter for example. So I
Speaker 16: think for Guidance is going to be massively impressive in
Speaker 16: order to support this valuation. I mean, as we spoke about,
Speaker 16: you know, the evaluation here is what one hundred and
Speaker 16: forty times expected earnings.
Speaker 2: So you know, it really has a lot to live
Speaker 2: up to. And given that we've.
Speaker 16: Seen all these questions about the AI spend capital expenditure,
Speaker 16: what's the monetization. This does mean that investors do actually
Speaker 16: want to see that something's coming through now, And for
Speaker 16: that reason, I think Ford guidance is going to be
Speaker 16: key here.
Speaker 3: Yeah, if anyone can show productivity and articulate what AI
Speaker 3: is doing, palentteer like you do that. Meanwhile, Alphabet's that
Speaker 3: one stop shop, vertically integrated, showing what it can do
Speaker 3: with its own chips, doing what it can do with
Speaker 3: its own tech and hardware and the whole shebang. What
Speaker 3: do you anticipate? Alphabet has had a lot of mood
Speaker 3: music to the positive of late. Will that hold?
Speaker 6: Yeah?
Speaker 16: So, I mean I think this is definitely one of
Speaker 16: the stocks that seems to be in the favored few.
Speaker 16: I mean, if we look at up eight percent across January,
Speaker 16: which is you know, pretty good returns for a tex
Speaker 16: stook in January sixty eight percent year on year. But
Speaker 16: I think, you know, Amazon and again with sorry Alphabet,
Speaker 16: again with Amazon, are going to be very much a
Speaker 16: litmus test as far as that whole sort of you
Speaker 16: know AI theme is concerned. Obviously, with Alphabet, you're looking
Speaker 16: at a four trillion dollar valuation, so you know, investors
Speaker 16: are really going to want to see whether there's momentum
Speaker 16: in that Google Cloud and advertising to support that valuation.
Speaker 16: So you know, focus, as I said, will be on
Speaker 16: that cloud, growth, will be on AI initiatives, monetization of that,
Speaker 16: and also spending. I mean, this is what you know
Speaker 16: the market has been getting very nervous about.
Speaker 2: Is you know, what is that AI spending? What are
Speaker 2: we looking at? How much is it expected to go up?
Speaker 2: And what are the returns on the back of that.
Speaker 3: What's interesting is both Alphabet and Amazon will be a
Speaker 3: bit of a tell fro an in video maybe AMD
Speaker 3: as well, which is coming out beforehand, of how well
Speaker 3: are they producing their own chips? How much does that
Speaker 3: matter to InVideo in the future. I mean, we don't
Speaker 3: get their earnings until later in February is always fearing.
Speaker 3: But do you think semiconductor concerns should be start to
Speaker 3: build in in terms of companies being able to build
Speaker 3: their own and just turning to a broad com for example.
Speaker 16: Yeah, I mean it's definitely a question that's on the
Speaker 16: table and a focus that will be there. And I
Speaker 16: mean if we do see that happening, then obviously that
Speaker 16: will move attention away from Nvidia and that sort of
Speaker 16: you know first to market momentum that that stock had.
Speaker 16: I don't think we're necessarily there yet, but I think
Speaker 16: it is right to expect that to slowly start creeping in.
Speaker 16: So attention will be on that as well, as you said,
Speaker 16: you know, and video not for a little while yet,
Speaker 16: but it's always a massive focus as we get past
Speaker 16: these earnings this week.
Speaker 3: How many calls are you taking also about the private side,
Speaker 3: the question marks around Opening Eyes fundraising and what that
Speaker 3: really means the rest of the ecosystem to your public investors.
Speaker 16: For a moment, it's definitely a question, and it's that
Speaker 16: question that we had, and it was very much a
Speaker 16: concern I think, you know, around October November time, where
Speaker 16: there seemed to be a lot of deals going on
Speaker 16: and there was that sense of all that question is
Speaker 16: this sort of an ecosystem that's growing or is it
Speaker 16: just circular investment?
Speaker 2: And I don't think that was ever really resolved.
Speaker 16: The market does seem to be a little bit calmer
Speaker 16: about those questions for the time being, but I wonder
Speaker 16: if we as we move towards and videos, whether those
Speaker 16: questions will start to appear again, and especially after we've
Speaker 16: had the earnings this.
Speaker 3: Week Piana Sincotter bracing us for a big week at
Speaker 3: City Index Financial Markets. Thanks so much for your time
Speaker 3: as always. Meanwhile, that does it for this edition in
Speaker 3: Bloomberg Tech. Do not forget to check out our podcast
Speaker 3: if I'd on the terminal, as well as online on Apple, Spotify,
Speaker 3: and iHeart.
Speaker 2: From New York. This is Bloomberg Tech.