WEBVTT - SpaceX Said to Pursue 2026 IPO 0:00:02.520 --> 0:00:13.360 Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive 0:00:13.400 --> 0:00:17.200 from coast to coast with Caroline Hide in New York 0:00:17.480 --> 0:00:19.439 and Edva Low in San Francisco. 0:00:22.440 --> 0:00:26.480 This is Bloomberg Tech coming up a Bloomberg exclusive SpaceX 0:00:26.720 --> 0:00:29.760 targeting and IPO next year. The goal to raise far 0:00:29.800 --> 0:00:31.240 beyond thirty billion dollars. 0:00:31.040 --> 0:00:31.920 The most in history. 0:00:32.000 --> 0:00:36.320 The valuation around one point five trillion. Why data centers 0:00:36.360 --> 0:00:40.720 in space plus open then closed meta making a pivot 0:00:40.800 --> 0:00:43.720 on open source models. We had the Bloomberg deep dive 0:00:43.920 --> 0:00:48.240 and reports that deep Seak smuggled thousands of banned Blackwell 0:00:48.320 --> 0:00:52.080 chips into China. Nvidio pushes back, let's get to our 0:00:52.080 --> 0:00:55.240 top story in the private markets and soon to be 0:00:55.280 --> 0:00:59.840 public markets. Bloomberg reporting the SpaceX is very much underway 0:01:00.120 --> 0:01:03.000 targeting in IPO in mid twenty twenty six. They want 0:01:03.000 --> 0:01:05.680 to raise far north of thirty billion dollars. In terms 0:01:05.720 --> 0:01:08.399 of dollar raised, that would be the biggest IPO in history. 0:01:08.480 --> 0:01:12.040 The valuation we're hearing one point five trillion. There's a 0:01:12.040 --> 0:01:15.839 lot in play here, but my understanding this is very real. 0:01:15.959 --> 0:01:17.960 It had an impact in public market. Some of the 0:01:18.040 --> 0:01:22.520 names out there in the space sector, particularly EchoStar that 0:01:22.680 --> 0:01:27.480 is in talks on licensing spectrum deals with SpaceX really 0:01:27.600 --> 0:01:30.160 moving over the course of two sessions in reaction to this. 0:01:30.480 --> 0:01:33.240 I use that as an illustrative example. This is the 0:01:33.280 --> 0:01:36.960 IPO that all corners of the technology market and the 0:01:37.000 --> 0:01:40.080 private market have been waiting for. Let's bring in Bloomberg 0:01:40.120 --> 0:01:43.440 Space editor Eric Johnson. Eric broke this story with me 0:01:43.959 --> 0:01:47.000 yesterday afternoon, and we'll go back to the basics of 0:01:47.000 --> 0:01:49.120 what we're reporting, Eric, because there's a lot of data 0:01:49.160 --> 0:01:52.760 in there, but the main headline, I suppose, beyond the valuation, 0:01:53.040 --> 0:01:56.280 is SpaceX wants to raise north for thirty billion dollars. 0:01:56.600 --> 0:01:58.840 You and I are getting a sense on why they 0:01:58.880 --> 0:01:59.680 need that capital. 0:02:01.160 --> 0:02:03.760 That'd great to be here, and congratulations on your scoop 0:02:03.760 --> 0:02:04.560 and great reporting. 0:02:05.640 --> 0:02:06.400 Yes they are. 0:02:06.760 --> 0:02:10.160 What we're hearing is thirty billion dollar rays, which you know, 0:02:10.160 --> 0:02:12.560 if you look at the history of SpaceX, you know 0:02:12.680 --> 0:02:15.800 Musk is known for his grandiose visions. They're building Starship, 0:02:15.919 --> 0:02:19.079 a colossal rocket which he expects to put humans on 0:02:19.120 --> 0:02:21.520 the Moon and eventually one day go to Mars, so 0:02:21.600 --> 0:02:22.320 the money could. 0:02:22.200 --> 0:02:22.760 Be used for that. 0:02:23.440 --> 0:02:26.160 He also has talked about, as you mentioned, the idea 0:02:26.120 --> 0:02:30.000 of putting data centers in space, harnessing solar power and 0:02:30.040 --> 0:02:33.080 having you know, huge amount of computing resources in space. 0:02:33.960 --> 0:02:35.640 They would need to buy chips to do so, so 0:02:35.680 --> 0:02:38.400 the money could be used for that, you know. Of course, 0:02:38.440 --> 0:02:41.040 the other side of SpaceX is starlink, you know, the 0:02:41.080 --> 0:02:44.960 satellite internet business, which has grown substantially over the past 0:02:44.960 --> 0:02:48.400 few years. So there's a huge portfolio that SpaceX is 0:02:48.440 --> 0:02:50.800 bringing as they transform space travel. 0:02:51.760 --> 0:02:51.959 Eric. 0:02:52.040 --> 0:02:55.240 We're showing the other parts of what we reported, which 0:02:55.280 --> 0:02:59.840 is through our reporting confirmation of this tender or secondary 0:03:00.280 --> 0:03:04.000 that's going on. In other words, SpaceX allowing employees to 0:03:04.400 --> 0:03:06.480 sell shares. But to do that you need to set 0:03:06.480 --> 0:03:10.799 a price and that gives evaluation. We've now done that reporting, 0:03:10.919 --> 0:03:12.760 run us through the numbers that we need to know 0:03:13.240 --> 0:03:17.480 about this tender, and for me, the important bit here 0:03:17.560 --> 0:03:20.559 is that this kind of settles valuation ahead. 0:03:20.240 --> 0:03:20.920 Of that IPO. 0:03:21.520 --> 0:03:24.680 Absolutely, this level sets the market valuation as they as 0:03:24.680 --> 0:03:28.119 they as a precursor to the IPO. But essentially SpaceX 0:03:28.200 --> 0:03:31.359 runs you know, bi annual tender offers secondary offerings where 0:03:31.360 --> 0:03:35.800 they allow existing you know, shareholders, employees and others insiders 0:03:36.080 --> 0:03:40.960 to essentially generate liquidity from their from their piece of SpaceX, 0:03:41.000 --> 0:03:43.840 and so as part of that they set a valuation 0:03:44.000 --> 0:03:46.960 of eight hundred billion dollars, which is a record, beating 0:03:47.000 --> 0:03:50.920 open AI's latest tally from October a five hundred billion, 0:03:51.080 --> 0:03:53.880 so making it once again the most valuable space startup 0:03:53.880 --> 0:03:58.080 in the world. So this is walking up to that IPO, 0:03:58.320 --> 0:03:59.960 and of course, as you mentioned, the IPO would be 0:04:00.040 --> 0:04:03.840 one point five trillion roughly valuation in. 0:04:03.800 --> 0:04:04.760 The private markets. 0:04:04.760 --> 0:04:07.040 The share price right now is about four hundred and 0:04:07.080 --> 0:04:10.040 twenty four hundred and twenty one dollars a share. There 0:04:10.080 --> 0:04:13.160 is so much that left to discuss. I think that 0:04:13.400 --> 0:04:18.599 a lot of people will say, how expected was this. 0:04:18.880 --> 0:04:22.560 We've done reporting over a number of years actually on 0:04:22.600 --> 0:04:25.760 the Space team that originally the focus was on spinning 0:04:25.839 --> 0:04:28.640 off starlink right because you and I also reported some 0:04:28.720 --> 0:04:31.520 of the financials for SpaceX in this current year and 0:04:31.560 --> 0:04:34.960 next year. Starlink right now is really the cash cow 0:04:35.040 --> 0:04:35.800 for this company. 0:04:36.560 --> 0:04:36.960 That's right. 0:04:37.000 --> 0:04:39.000 They bring in the majority of revenue they're expected to 0:04:39.040 --> 0:04:40.920 do so last year. As I said, they've now they've 0:04:40.960 --> 0:04:43.120 got thousands of satellites and lower Earth orbit. 0:04:43.360 --> 0:04:45.560 It's a booming business. Millions of customers. 0:04:45.880 --> 0:04:49.760 I've flown on many flights around the country that the 0:04:50.000 --> 0:04:52.440 airlines are starting to use starlink. You're starting to you know, 0:04:52.480 --> 0:04:55.200 the customer reviews are favorable. So I think investors are 0:04:55.279 --> 0:04:58.440 seeing that growth. You know, people as they've watched this company, 0:04:58.480 --> 0:05:01.560 they're seeing Musk make these promises and then and then 0:05:01.680 --> 0:05:04.920 is you know, iteratively incrementally delivering on them. So there's 0:05:04.920 --> 0:05:06.479 a lot to be seen as far as you know, 0:05:06.600 --> 0:05:10.599 can he continue the growth of starlink and also direct 0:05:10.600 --> 0:05:14.600 to sell That's another, you know, nascent business area that 0:05:15.000 --> 0:05:18.080 Musk has promised to link regular consumer cell phones with 0:05:18.200 --> 0:05:21.120 this network of satellites and low Earth orbit. There's just 0:05:21.160 --> 0:05:23.320 a lot of growth, a lot of promises, but a 0:05:23.320 --> 0:05:26.920 lot of challenges. Right the company has to meet these expectations, 0:05:26.960 --> 0:05:29.640 live up to them to earn that valuation and to 0:05:29.720 --> 0:05:30.400 excite people. 0:05:31.400 --> 0:05:35.400 Bloomberg's Eric Johnson, who leads the team on space coverage, 0:05:35.440 --> 0:05:37.880 thank you very much. I point out SpaceX hasn't commented 0:05:37.920 --> 0:05:40.560 on this as it stands. Elon Musk has not posted 0:05:40.600 --> 0:05:43.960 on X about it. That's just the Bloomberg reporting. Let's 0:05:43.960 --> 0:05:44.240 bring it. 0:05:44.279 --> 0:05:45.360 Phil Haslitt for more. 0:05:45.600 --> 0:05:48.719 He's the chief strategy off sobe at Equisizen, one of 0:05:48.720 --> 0:05:52.359 the largest platforms for pre i PO shares. There's a 0:05:52.360 --> 0:05:53.839 lot that you and I have to cover on a 0:05:53.880 --> 0:05:57.880 potential SpaceX IPO, which we've reported is for the entirety 0:05:57.920 --> 0:06:01.560 of the business, right, not just starlink, but actually important 0:06:01.600 --> 0:06:06.560 to start with, you would note that SpaceX is the 0:06:06.760 --> 0:06:12.599 private company that uses of your platform are most interested in. 0:06:12.600 --> 0:06:17.160 In quantifying that for us, just transparently explain what equity 0:06:17.279 --> 0:06:20.400 zen relationship to SpaceX's private market shares is. 0:06:22.040 --> 0:06:24.640 Sure, thanks for having me ed. Yeah, you hit the 0:06:24.760 --> 0:06:25.400 nail on the head. 0:06:25.680 --> 0:06:30.400 SpaceX is the most popularly requested private company on equity Zen. 0:06:30.600 --> 0:06:34.000 It's been that way for probably our entire existence as 0:06:34.000 --> 0:06:36.880 a business over the last thirteen years. And that really 0:06:36.920 --> 0:06:41.280 just means that there is retail exuberance about investing in SpaceX. 0:06:41.480 --> 0:06:43.680 You know, the company is twenty three years old, it's 0:06:43.800 --> 0:06:47.760 older than a lot of my employees. It has garnered interests, 0:06:47.800 --> 0:06:50.440 it's had success, it's out in the public. People have 0:06:50.480 --> 0:06:53.359 done incredibly well with Tesla as public market investors, and 0:06:53.400 --> 0:06:55.520 so there's a lot of enthusiasm to invest in the 0:06:55.520 --> 0:06:57.640 company while it's private. And what seems to be now 0:06:57.680 --> 0:06:59.640 an opportunity to invest in it. Well, it's public and 0:06:59.680 --> 0:07:02.279 maybe even less than a year, which is pretty surprising. 0:07:03.680 --> 0:07:05.600 There is, of course a lot that we don't know 0:07:05.960 --> 0:07:08.920 what percentage of the company is SpaceX going to offer, 0:07:09.240 --> 0:07:11.480 what is the structure of the IPO going to be. 0:07:11.960 --> 0:07:15.040 But in reporting this story, Phil, one of the things 0:07:15.080 --> 0:07:20.160 I reflect on is that existing SpaceX shareholders. 0:07:19.480 --> 0:07:20.640 Aren't that diverse. 0:07:21.080 --> 0:07:25.560 You have founders fund fidelity Google through Google Ventures and 0:07:25.920 --> 0:07:30.400 through Corp dev one three seven Ventures, and then like 0:07:30.760 --> 0:07:33.240 others in the world of venture capital and strategics. But 0:07:33.240 --> 0:07:35.240 my point is that quite a lot of the company 0:07:35.280 --> 0:07:37.000 is owned by quite a small group. And then there's 0:07:37.000 --> 0:07:39.960 the Elon Musk factor as well. How does that translate 0:07:40.000 --> 0:07:42.840 in an IPO environment for anyone that wanted to get 0:07:42.840 --> 0:07:43.640 into the company. 0:07:44.920 --> 0:07:46.520 Well, there's a couple of other things to think about, 0:07:46.560 --> 0:07:48.640 which is that a twenty three year old company has 0:07:48.640 --> 0:07:52.120 had a lot of employees come, stay, leave, right, and 0:07:52.160 --> 0:07:54.520 so you have a wide slot of shareholders, kind of 0:07:54.560 --> 0:07:57.760 like a long tale of ownership. And so sure there's 0:07:57.760 --> 0:08:00.240 some concentration in some of their biggest investors and in 0:08:00.320 --> 0:08:03.600 the founder shares, but this thing is pretty widely held. 0:08:03.640 --> 0:08:05.400 I'd go so far as to say that an IPO 0:08:05.520 --> 0:08:07.760 might also be a solve for the fact that the 0:08:07.800 --> 0:08:10.640 company is a private entity and can only have two 0:08:10.680 --> 0:08:13.640 thousand shareholders that is a requirement before they have to 0:08:13.680 --> 0:08:16.480 start filing financials. That may actually be a bit of 0:08:16.480 --> 0:08:18.560 a driver here as well. But as far as what 0:08:18.600 --> 0:08:21.000 the IPO is going to look like, this is uncharted 0:08:21.040 --> 0:08:25.520 waters right, Saudi Ramco, Ali Baba, those would actually be 0:08:25.560 --> 0:08:28.280 smaller than these IPOs, right, And we don't know or 0:08:28.320 --> 0:08:30.000 than this IPO, and we don't know if it's going 0:08:30.040 --> 0:08:33.319 to be primarily secondary liquidity to existing, if it's going 0:08:33.320 --> 0:08:35.640 to be new capital. Though I would posit it's probably 0:08:35.720 --> 0:08:37.480 going to be new capital based on a lot of 0:08:37.480 --> 0:08:40.079 your reporting as well, because there's going to need to 0:08:40.120 --> 0:08:44.240 be investment from SpaceX into new computing and processing power. 0:08:45.200 --> 0:08:47.560 So to a big portion of the Bloomberg Tech audience 0:08:47.559 --> 0:08:50.320 that work in the world of technology tenders and the 0:08:50.360 --> 0:08:53.480 secondary market is something they'll be familiar with. Loads of 0:08:53.520 --> 0:08:55.840 people will not be familiar with that, And so what 0:08:55.960 --> 0:08:59.640 usually happens with a big IPO is in late stage growth, 0:08:59.720 --> 0:09:03.160 prior Marie rounds, where the company raises money issues new equity. 0:09:03.520 --> 0:09:06.440 You get these kind of anchor investors that come in 0:09:06.640 --> 0:09:08.640 ahead of an IPO might be a year in advance. 0:09:09.040 --> 0:09:12.199 In this case, what we're reporting is the tender is confirmed, 0:09:12.400 --> 0:09:15.040 eight hundred billion dollar valuation, four hundred and twenty one. 0:09:14.880 --> 0:09:16.000 Dollar share price. 0:09:16.200 --> 0:09:19.800 Could you explain that dynamic ahead of a big IPO, 0:09:19.920 --> 0:09:23.640 how there isn't any new primary round not raising new money, which, 0:09:23.800 --> 0:09:25.640 as you know Elon Musk has been at pains to 0:09:25.640 --> 0:09:26.240 point out on. 0:09:26.440 --> 0:09:30.200 X sure in as simplest form, if you're a business 0:09:30.200 --> 0:09:34.400 that's profitable and you don't need new capital to continue growing, 0:09:34.880 --> 0:09:38.640 why dilute yourself by taking in new investment injection? You know, 0:09:38.720 --> 0:09:41.880 through a primary a secondary liquidity offering is a way 0:09:41.920 --> 0:09:46.600 to reward employees or perhaps early investors by getting them 0:09:46.640 --> 0:09:51.040 liquidity for their shares without diluting ownership overall for everybody else. 0:09:51.280 --> 0:09:53.320 And this is something that SpaceX has elected to do 0:09:53.400 --> 0:09:55.480 over the past few years, I believe, kind of semi 0:09:55.520 --> 0:09:59.960 annually in a way to provide liquidity not dilute themselve 0:10:00.000 --> 0:10:02.560 we also set a new kind of external price for 0:10:02.600 --> 0:10:05.880 their shares, but still maintaining an immense amount of control 0:10:06.240 --> 0:10:07.839 and the only thing I would call out here, Ed 0:10:07.960 --> 0:10:10.920 is that obviously two billion dollars of liquidity is a 0:10:10.920 --> 0:10:13.800 big number, but it's actually only probably two to five 0:10:13.880 --> 0:10:16.640 percent of the valuation of this company. And so I 0:10:16.720 --> 0:10:20.160 hesitate to kind of identify that eight hundred billion is 0:10:20.160 --> 0:10:22.640 the new market price for SpaceX, more so that it 0:10:22.679 --> 0:10:26.000 is the market price that SpaceX has decided is out there. 0:10:26.080 --> 0:10:28.680 Yes, yeah, the tender was capped at two billion dollars. 0:10:28.679 --> 0:10:32.320 That's what I reported. We just have thirty seconds valuation 0:10:32.400 --> 0:10:34.720 at IPO one point five trillion dollars. 0:10:35.040 --> 0:10:37.160 What do you make of that? 0:10:37.160 --> 0:10:39.440 That I think would put it in uncharted waters? 0:10:39.480 --> 0:10:41.840 Right, You've got three public companies that are worth north 0:10:41.880 --> 0:10:43.040 of three trillion dollars. 0:10:43.080 --> 0:10:45.360 Where's the upside from one point five? I'm not sure. 0:10:45.600 --> 0:10:48.560 At the same time, the bull in me, says Palenteer, 0:10:48.600 --> 0:10:51.560 how a robust retail investor audience, it trades it north 0:10:51.559 --> 0:10:53.640 of one hundred times revenue. So the art of the 0:10:53.640 --> 0:10:56.520 possible is somewhere in between those numbers. I do know 0:10:56.520 --> 0:10:59.360 that this would probably be literally the most exciting IPO 0:10:59.400 --> 0:10:59.920 we've ever seen. 0:11:01.080 --> 0:11:04.920 Phil Haslich, chief strategy officer at Equiszen, thank you very much. 0:11:05.480 --> 0:11:09.360 Coming up Meta making moves toward a new AI model 0:11:10.120 --> 0:11:12.240 from open to close. 0:11:12.400 --> 0:11:14.240 That's next. This is Bloomberg Tech. 0:11:26.240 --> 0:11:29.679 Metas Mark Zuckerberg is shifting the company's focus toward a 0:11:29.720 --> 0:11:32.760 new artificial intelligence model that can make it some money. 0:11:32.840 --> 0:11:36.199 One new model is expected to launch next spring, potentially 0:11:36.200 --> 0:11:39.280 as a closed model that Meta can sell access to. 0:11:39.760 --> 0:11:42.440 This would mark Meta's biggest move yet away from open 0:11:42.520 --> 0:11:46.360 source models. The reporting comes from Bloomberg Tech's Riley Griffin. 0:11:47.160 --> 0:11:50.240 There's a case study. The case study is Avocado. So 0:11:50.600 --> 0:11:53.200 let's start there. This is all what we're hearing from sources. 0:11:53.280 --> 0:11:56.000 But my under saying it is originally Avocado might have 0:11:56.000 --> 0:11:58.600 been an open source model. It's now not going to 0:11:58.640 --> 0:12:01.200 be based on our reporting. Take it from there and 0:12:01.200 --> 0:12:02.480 then we'll get into the bigger picture. 0:12:02.640 --> 0:12:06.680 Yeah. Essentially Meta is working on this Avocado model that 0:12:06.800 --> 0:12:10.120 is the code name internally, and they have not officially 0:12:10.160 --> 0:12:13.080 decided whether it will be open or closed, but closed 0:12:13.240 --> 0:12:15.680 is the way they are leaning out the moment. And 0:12:15.840 --> 0:12:18.840 this is a really important distinction because it points to 0:12:19.040 --> 0:12:22.720 a monetization strategy, and as you know, Meta is under 0:12:22.760 --> 0:12:26.439 pressure to show that it can return on its multi 0:12:26.640 --> 0:12:30.439 hundred billion dollar investment in AI, and this is one 0:12:30.440 --> 0:12:31.120 path towards that. 0:12:31.559 --> 0:12:34.280 There's detail in the reporting about how Alexander Wang, who's 0:12:34.320 --> 0:12:37.920 basically you know, the lieutenant leading the AI lab effort, 0:12:38.120 --> 0:12:42.560 is pro closed model. In July, Mark Zarkobak kind of 0:12:42.559 --> 0:12:46.040 told us why open source in this environment isn't that great? 0:12:46.160 --> 0:12:49.080 As the models get bigger, there are fewer people that 0:12:49.120 --> 0:12:52.920 can access them. It's a resource and constraint issue. But 0:12:53.040 --> 0:12:55.120 what else are you putting in the story here? Because 0:12:55.679 --> 0:12:58.520 you know Meta was the sort of flag waiver for 0:12:58.720 --> 0:12:59.360 open source. 0:12:59.600 --> 0:13:00.360 Yeah, I mean. 0:13:00.320 --> 0:13:03.520 Things we heard from in and around the company. For one, 0:13:04.240 --> 0:13:07.080 employees after July were told that they should not be 0:13:07.160 --> 0:13:10.880 talking publicly about open source as Meta reset its strategy. Remember, 0:13:11.240 --> 0:13:15.080 Mark Zuckerberg brought in all of these expensive researchers and 0:13:15.160 --> 0:13:18.240 had to reset after a very disappointing release of Lama 0:13:18.320 --> 0:13:21.880 for that was their open source model earlier this year. 0:13:22.400 --> 0:13:23.120 And so this is a. 0:13:23.160 --> 0:13:27.320 Resetting of the strategy under Alex's leadership, with close involvement 0:13:27.360 --> 0:13:28.480 from Mark Zuckerberg who. 0:13:28.440 --> 0:13:30.319 Sits quite close to Alex. 0:13:30.800 --> 0:13:33.600 And the pressure is leading to tensions too, but that 0:13:33.800 --> 0:13:37.800 steer to employees internally to not be speaking publicly about 0:13:37.800 --> 0:13:39.720 open source should be a big tell. 0:13:40.280 --> 0:13:42.760 The report is a muster read Bluemog's Riley Griffin with 0:13:42.840 --> 0:13:46.240 the reporting alongside Kurt Wagnan. Thank you very much. President 0:13:46.240 --> 0:13:48.600 Trump decided to let him videos. So it's h two 0:13:48.679 --> 0:13:52.080 hundred AI chips to China, after concluding the move carried 0:13:52.120 --> 0:13:56.160 a lowest security risk because the company's Chinese arts rival, 0:13:56.280 --> 0:14:01.400 Huawei already offers some AI systems with parapol performance. That's 0:14:01.440 --> 0:14:04.720 according to a Bloomberg source Bloomberg Tech report. Maggie Eastland 0:14:04.760 --> 0:14:07.400 joins us. Maggie, you and I broke this story together yesterday. 0:14:08.080 --> 0:14:11.080 As we understand it right, the President was presented with 0:14:11.120 --> 0:14:14.160 a range of options from exporting no technology at all 0:14:14.480 --> 0:14:17.440 to the latest technology, and they landed somewhere in the middle. 0:14:17.960 --> 0:14:20.120 Take it from there. And what else we reported and 0:14:20.160 --> 0:14:23.520 what we know about the Huawei Cloud Matrix three eighty 0:14:23.520 --> 0:14:25.520 four system. 0:14:26.080 --> 0:14:30.400 Yes, one key detail we've reported is that this Cloud 0:14:30.400 --> 0:14:33.560 Matrix three eighty four system, which can link together hundreds 0:14:33.600 --> 0:14:37.920 of chips, was a key rationale underpinning the White House's 0:14:37.960 --> 0:14:40.720 logic to allow these advanced chips, which are better on 0:14:40.760 --> 0:14:43.840 a per chip basis than what Chinese companies. 0:14:43.520 --> 0:14:44.280 Are capable of. 0:14:44.720 --> 0:14:48.040 However, as was made clear in our reporting, the White 0:14:48.080 --> 0:14:50.680 House is looking at this more at a system level, 0:14:50.920 --> 0:14:54.200 and their understanding was that Huawei's systems are actually advancing 0:14:54.280 --> 0:14:57.920 quite quickly, so that was the rationale here. And though 0:14:57.960 --> 0:15:02.400 this is a paradigm shift from previous administrations during which 0:15:02.520 --> 0:15:06.520 Huawei's advancements were an impetus to actually crack down and 0:15:06.640 --> 0:15:10.840 further restrict those Chinese companies, now that same evidence is 0:15:10.920 --> 0:15:14.800 being used as a reason to loosen controls and kick 0:15:14.800 --> 0:15:18.160 off this new strategy of selling in video chips to China. 0:15:19.200 --> 0:15:21.160 The main focus, as I understand it, is that age 0:15:21.200 --> 0:15:24.680 two hundred is eighteen months behind Blackwell generation to generation, 0:15:25.240 --> 0:15:28.760 and that's the comfort level this administration has. In Vidia's 0:15:28.760 --> 0:15:30.640 down one point three percent in the session right now. 0:15:30.680 --> 0:15:33.280 The other big report out there is from the Information 0:15:33.840 --> 0:15:39.160 which reported that deep Seek smuggled in thousands of Blackwell 0:15:39.280 --> 0:15:43.440 chips into China, getting them from countries of origin where 0:15:43.440 --> 0:15:47.440 they were allowed dismantling the servers. Nvidia has come out 0:15:47.480 --> 0:15:51.000 with a statement, Maggie, pushing back on that report. Let's 0:15:51.000 --> 0:15:52.800 start with that in Vidia's statement. 0:15:52.480 --> 0:15:58.080 Please, yes, So Nvidia has said that these smuggling claims 0:15:58.320 --> 0:16:00.920 are a bit far fetched in its own words, and 0:16:01.000 --> 0:16:04.680 while it investigates every tip it receives, it hasn't seen 0:16:04.760 --> 0:16:05.360 evidence of this. 0:16:05.520 --> 0:16:05.680 Now. 0:16:05.800 --> 0:16:08.880 One interesting thing from the report. Jensen Wong has said 0:16:08.920 --> 0:16:11.800 before that these Blackwell racks are just a bit too 0:16:11.840 --> 0:16:14.800 heavy to be feasible to smuggle, but this report from 0:16:14.840 --> 0:16:17.600 the Information did say that the smuggling for a deepseek 0:16:17.640 --> 0:16:20.280 took place in these sort of eight chip segments that 0:16:20.320 --> 0:16:22.240 could potentially fit in the suitcase. 0:16:23.640 --> 0:16:26.560 Bloomberg's Maggie east Land, who's out in DC, covers the 0:16:26.600 --> 0:16:29.360 intersection of tech and politics with the reporting. 0:16:29.480 --> 0:16:30.520 Thank you very much. 0:16:30.720 --> 0:16:33.800 Another story, Amazon pledged to invest thirty five billion dollars 0:16:33.800 --> 0:16:37.120 in India over the next five years, boosting its spending 0:16:37.160 --> 0:16:40.080 in the key growth market to expand in businesses from 0:16:40.160 --> 0:16:43.400 quick commerce to cloud computing. The e commerce giant says 0:16:43.440 --> 0:16:47.000 it will invest in areas such as AI and logistics infrastructure, 0:16:47.120 --> 0:16:49.880 and that the planned outlay through twenty thirty will help 0:16:50.000 --> 0:16:54.400 create an additional one million jobs in India. 0:17:00.480 --> 0:17:02.160 Oracle reporting earnings. 0:17:01.800 --> 0:17:04.560 After the bell, this is the story they expect on 0:17:04.600 --> 0:17:09.480 the street. The backlog to grow, remaining performance obligations basically 0:17:09.520 --> 0:17:12.720 deals signed but revenue not booked to continue pushing north 0:17:12.720 --> 0:17:15.439 for five hundred billion dollars. But Oracle's got a very 0:17:15.440 --> 0:17:18.240 big debt pile and the one metric we're looking at 0:17:18.440 --> 0:17:21.200 negative free cash flow expected to be almost six billion 0:17:21.240 --> 0:17:25.320 dollars in the quarter. Let's preview, let's discuss City Panagrahi 0:17:25.560 --> 0:17:29.600 Managing director, senior analyst and Mazuho covering SAS but also 0:17:29.640 --> 0:17:30.440 covering Oracle. 0:17:30.920 --> 0:17:31.840 This is the equation. 0:17:32.400 --> 0:17:35.760 We want to see growth in the cloud division OCI 0:17:35.800 --> 0:17:40.680 in particular. But in the background there's that stat Oracle 0:17:40.720 --> 0:17:43.000 swinging to negative free cash flow for the first time 0:17:43.040 --> 0:17:46.280 since nineteen ninety two. Remind us what your price target 0:17:46.280 --> 0:17:48.159 and call is on the stock, and then how you 0:17:48.200 --> 0:17:49.280 feel about that stat. 0:17:51.040 --> 0:17:53.040 That's great, thanks for having me here. 0:17:53.520 --> 0:17:56.320 Look, I think what you said right at this point, 0:17:56.359 --> 0:17:58.520 investors are concerned about. 0:17:58.440 --> 0:17:59.960 Free cast flow more. 0:18:00.520 --> 0:18:03.840 You know, they have to build massive CAPEX build out 0:18:03.880 --> 0:18:08.120 for AI capacity data center build out, and also they 0:18:08.160 --> 0:18:10.280 need to do the funding for that. 0:18:10.800 --> 0:18:12.280 So what matters at. 0:18:12.160 --> 0:18:15.720 This today in the earnings call, is Oracle during some 0:18:15.800 --> 0:18:18.919 kind of clarity on that. Look, I think what investors 0:18:18.960 --> 0:18:22.800 missing is that Oracle has multiple options. They don't have 0:18:22.880 --> 0:18:25.879 to raise data or CAPEX. They can also go for 0:18:25.960 --> 0:18:30.399 alternative financing like vendor financing or capital leasing. Then you 0:18:30.440 --> 0:18:33.840 won't see that in a capex. But at this point 0:18:33.960 --> 0:18:36.720 Oracle is not able to tell you how much you 0:18:36.840 --> 0:18:40.919 the capex as how much they have to raise because 0:18:40.960 --> 0:18:44.399 they are going to evaluate this as they are building 0:18:44.400 --> 0:18:46.680 out data center. Each data center, they are going to 0:18:46.720 --> 0:18:49.560 look at their own cost of capital and compare that 0:18:49.640 --> 0:18:52.440 to the leasing. So that's what I think the one 0:18:52.480 --> 0:18:56.800 of the concerns we hope to hear from management on 0:18:56.840 --> 0:19:00.280 that how they are going to fund the capex they're 0:19:00.320 --> 0:19:02.000 going to build their data center. 0:19:02.280 --> 0:19:05.119 Right, I've been trying to learn as much as I 0:19:05.200 --> 0:19:09.359 can about how this world works. CT Remaining performance obligation 0:19:09.600 --> 0:19:12.680 RPO is a term that gets bandied around all the time, 0:19:13.000 --> 0:19:16.840 but basically it's a backlog right of business five hundred 0:19:16.880 --> 0:19:20.119 billion as it stands as Bloomberg's reported it, quite a 0:19:20.160 --> 0:19:23.359 lot of that is open AI. Now in the future, 0:19:23.359 --> 0:19:26.720 if something happens and a deal falls through, often in 0:19:26.760 --> 0:19:30.600 the contracts there's some kind of penalty for cancelation or severance. 0:19:31.160 --> 0:19:33.720 But the question still out there, how do we know 0:19:33.800 --> 0:19:36.840 that open AI in particular is good for it that 0:19:36.920 --> 0:19:39.920 they'll be able to actually front up on the projects 0:19:39.920 --> 0:19:40.720 that they're committed to. 0:19:42.680 --> 0:19:42.960 Yeah. 0:19:43.040 --> 0:19:45.439 I mean that's a fair point, as you say, But 0:19:45.520 --> 0:19:48.560 if you look at right now, they're only handful of 0:19:48.800 --> 0:19:52.879 EI companies like clear or four, Open Ai Andthropy, Mata 0:19:53.960 --> 0:19:58.959 and Xai. So Oracle got most of them except Anthropic, 0:19:59.320 --> 0:20:02.560 so yes, and open Ai is a trail blazer in that, 0:20:03.119 --> 0:20:06.040 so they have that as a customer. That's I think 0:20:06.080 --> 0:20:09.840 most important at this point. To your point, can open 0:20:09.880 --> 0:20:13.359 Ai pay or that contract will fall apart. Look, this 0:20:13.440 --> 0:20:17.200 is a non cancellable contract, what Oracle says. 0:20:17.440 --> 0:20:20.080 So with that and there will be demand. 0:20:19.720 --> 0:20:22.120 If we think about AI at this point, the rate 0:20:22.240 --> 0:20:26.119 it's growing, probably probably will need that demand at this point. 0:20:26.560 --> 0:20:29.600 But I think if you look at the concern Oracle 0:20:29.680 --> 0:20:33.320 lost more than three hundred billion dollar market gap, you know, 0:20:33.359 --> 0:20:35.920 and or open a contract is only three hundred billion 0:20:36.000 --> 0:20:38.199 I think if I remember, it's three hundred twenty two 0:20:38.240 --> 0:20:43.080 billion market dollar market cap loss. So even investors are 0:20:43.119 --> 0:20:46.320 more skeptical beyond even open Ai at this point, which 0:20:46.359 --> 0:20:49.000 we don't think like core business is still doing well 0:20:49.440 --> 0:20:51.240 the way we are looking at You asked about the 0:20:51.240 --> 0:20:55.720 price target. I think if you're an investor, you need 0:20:55.760 --> 0:20:59.440 to believe on this long term AI story. Growth is 0:20:59.520 --> 0:21:03.359