Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
Speaker 1: from coast to coast with Caroline Hide in New York
Speaker 1: and Eva Though in San Francisco.
Speaker 2: This is Bloomberg Tech coming up. Another setback for Apple's
Speaker 2: struggling AI efforts as one of its top executives leaves
Speaker 2: for Meta Plus. Amazon Prime Day kicks off, but already
Speaker 2: spending is down about fourteen percent.
Speaker 3: We'll bring you the latest and we sit.
Speaker 2: Down with the CEO of Core Weeve after the company's
Speaker 2: big purchase of Core Scientific for nine billion dollars. But
Speaker 2: first we take you to these publicly traded markets right here,
Speaker 2: right now, just erasing earlier gains. We're now trading about
Speaker 2: flat on the Nasdaq one hundred y Well. Clarity, it seems,
Speaker 2: coming from President Trump on a truth social post saying
Speaker 2: August the first, that is your deadline and will not
Speaker 2: be extended for the impact to be.
Speaker 3: Felt of reciprocal tariffs. Remember, an awful.
Speaker 2: Lot of negotiation still to take place, it would seem
Speaker 2: we also want to be digging into what's happening on
Speaker 2: the individual stock level. I want to shine, like what's
Speaker 2: happening in terms of Apple and Meta. We're up four
Speaker 2: tens percent on Apple and down about three percent on Meta.
Speaker 2: This all after once again, Meta juggernaut that is sucking
Speaker 2: AI talent with promises of tens of millions of dollars,
Speaker 2: takes a top executive, a top AI engineer from Apple.
Speaker 2: Now we've already got some thoughts coming from lead investors
Speaker 2: such as Kathy would just take a listen to what
Speaker 2: she thought about the movement of talent to Meta.
Speaker 4: What we've seen there is one turnover of management teams
Speaker 4: after another, and it's all you know, Autonomous driving is
Speaker 4: an AI project, just the largest AI project on Earth,
Speaker 4: we believe, and so losing the talent that it has,
Speaker 4: and as I understand it lasts another one today to
Speaker 4: Mark Zuckerberg's top fifty. So they've had a lot of
Speaker 4: trouble in this regard, and I think the burden of
Speaker 4: proof is on them.
Speaker 2: And she learned that from our own Mark German, who
Speaker 2: broke the story of the Apple executive lead believing and
Speaker 2: Mark just dig into whom mister Pang is and why
Speaker 2: indeed he's left.
Speaker 5: Yes, so Roman Pang. He is the distinguished engineer and
Speaker 5: manager of the company's Apple Foundation Models team, Now we
Speaker 5: talk about all these AI features, we talk about all
Speaker 5: these AI companies, but how does generative AI actually work well?
Speaker 5: Large language models? These are the models that actually power
Speaker 5: this technology, and so all of these companies are racing
Speaker 5: to get the best engineers in the world who can
Speaker 5: develop these models, and Pang is known as probably the
Speaker 5: best of the best. He was the most respected AI
Speaker 5: engineer at Apple, the most respected AI executive at Apple,
Speaker 5: and one of the most respected model engineers in the
Speaker 5: entire artificial intelligence research community. So this is a massive
Speaker 5: swing for Meta, a major higher by Meta, and as
Speaker 5: big as a hired is for Meta, it's probably even
Speaker 5: a bigger loss for Apple. Yeah, in many ways, this
Speaker 5: was one of the guys holding everything together there. We've
Speaker 5: known their AI features have been struggling, we know their
Speaker 5: models have been struggling. There's a lot of background, you
Speaker 5: can read all my articles about this as to why
Speaker 5: they've been struggling. But this is a pretty big loss
Speaker 5: for Apple. And I'm told in order to get paying
Speaker 5: into Meta, they had to offer him a multi year
Speaker 5: package worth somewhere north of two hundred million dollars.
Speaker 2: That's an extraordinary amount mark and it paints a picture
Speaker 2: of the commitment coming from Mark Zuckerberg, but painting the
Speaker 2: picture of morale left over at Apple because more people
Speaker 2: like you to leave the Foundations Model team.
Speaker 5: I'm told there are more people likely to leave the
Speaker 5: Apple Foundation Models team. Obviously, Paying is the most significant
Speaker 5: AI departure from Apple since the generator of AI boom
Speaker 5: started a few years ago. His top engineer, Tom Gunter,
Speaker 5: he last a couple of weeks ago from the Foundation
Speaker 5: Models team, and now Pang is leaving as well. I'm
Speaker 5: told he'll start at Meta in the coming days, and
Speaker 5: informed Apple yesterday that he would be leaving to Zuckerberg's company.
Speaker 5: This certainly is the beginning I think of more departures
Speaker 5: to your points. Apple just does not compensate in the
Speaker 5: same way as Open AI or Meta. And what this
Speaker 5: has done is it's raised the idea within Apple that
Speaker 5: their points to need to start paying more to retain
Speaker 5: these people, and so far they've shown our reluctance to
Speaker 5: doing so. I'm told they didn't really make the counter
Speaker 5: offer to keep paying. They didn't do much to keep them.
Speaker 5: And when your employees being offered north of two hundred
Speaker 5: million dollars, there's really not much you can do. These
Speaker 5: pay packages from Meta are nearing what CEO of the
Speaker 5: biggest public companies we're getting, So you can't really do
Speaker 5: that for a singular manager or engineer.
Speaker 3: Money talks, so does a vision to win.
Speaker 2: Mark Gurman, thanks so much extraordinary reporting as always.
Speaker 3: Meanwhile, let's get the investor. Take here.
Speaker 2: Jed Ellebrook's with us as portfolio manager at Argent Capital Management, and.
Speaker 3: I just want to go broader here.
Speaker 2: The commitment that we're seeing from certain companies, take Meta,
Speaker 2: but also Microsoft and Google. The so called hyperscaler is
Speaker 2: to invest with such certainty in winning the so called
Speaker 2: superintelligence race. Is this the right thing you want to
Speaker 2: be hearing and seeing?
Speaker 4: Yeah?
Speaker 6: I think it is.
Speaker 7: This is an exceptionally big money competition. It takes really
Speaker 7: deep pockets to attract the engineering talent to get the
Speaker 7: compute power. So the big companies are flexing their muscles
Speaker 7: and showing great commitment, and they're seeing the demand signs
Speaker 7: thus far that that effort is worthwhile. And I think
Speaker 7: it's going to continue, and I think we're going to
Speaker 7: get a really good indication of that here in a
Speaker 7: few weeks when Microsoft reports their fiscal fourth quarter earnings,
Speaker 7: they will announce CAPEX intentions for their next fiscal year,
Speaker 7: and I think we're going to see another big increase,
Speaker 7: probably not as big as last year, but still a
Speaker 7: double digit percentage increase to a number that's north of
Speaker 7: one hundred million dollars.
Speaker 2: So, before I dig more into the hyperscale in the
Speaker 2: AI trade, jed with your more than two decades of
Speaker 2: experience managing money here in large caps, is Apple just
Speaker 2: one that you have to view in a different manner
Speaker 2: now the way in which the company sees future growth.
Speaker 7: Yeah, Apple is a defensive tech business for investors. It
Speaker 7: is not a dynamic growth business, hasn't been for some
Speaker 7: time and won't be in the future. They're behind in
Speaker 7: AI capabilities and talent and resources, and that is a
Speaker 7: concern for investors. But I do think it was kind
Speaker 7: of interesting that a week or two ago, when word
Speaker 7: was got out that Apple was considering using anthropic and
Speaker 7: a open AI models more for their customer interactions on
Speaker 7: the phone, that the stock went up three or four
Speaker 7: percent on that news. The market liked Apple de emphasizing
Speaker 7: its own internal AI research.
Speaker 3: Effort, and that was Mark Guman's reporting as well.
Speaker 2: So Pivot therefore, to the companies that are committed that
Speaker 2: are building the large language models. I know, in particular,
Speaker 2: you think Amazon's a winner here.
Speaker 8: Why I do.
Speaker 7: I think that their AWS cloud computing business is very
Speaker 7: well positioned to ride the wave of AI spending. Enterprises
Speaker 7: are deploying AI tools on their cloud platforms, and I
Speaker 7: think that AWS, Azure, and GCP all have really outstanding
Speaker 7: growth prospects. And I guess we should throw Oracle in
Speaker 7: there as well.
Speaker 2: Interesting that Oracle is also navigating a future of more
Speaker 2: hurdles when it comes to accessing chips by the country.
Speaker 2: You think of Oracle, which has been investing a lot
Speaker 2: in Malaysia, for example, And we understand from reporting here
Speaker 2: at Bloomberg that maybe the administration is going to make
Speaker 2: it harder and get your own video chips into countries
Speaker 2: such as this without licenses. But I'm also interested more
Speaker 2: broadly about how any of these tech giants are navigating
Speaker 2: the current trade environment. We've just had the latest headline
Speaker 2: out of President Trump that August the first is where
Speaker 2: he's sticking.
Speaker 7: Yeah, I think he said. I think he said the
Speaker 7: opposite more or less yesterday. So it's hard to put
Speaker 7: too much stock in one day's worth of comments from him.
Speaker 7: But yeah, the big tech companies have incredible advantages. Their
Speaker 7: balance sheets are incredibly strong, They're producing prodigious cash flow,
Speaker 7: and they have you know, all the AI capabilities that
Speaker 7: we listed earlier, So they're ready to flex those muscles.
Speaker 7: They are ready to pivot and adjust, and I think
Speaker 7: that they're all really well positioned to succeed. AI is
Speaker 7: a big money game, and is.
Speaker 2: It one you want to commit more money to at
Speaker 2: this moment? Jed, we're basically near record highes.
Speaker 5: Yeah.
Speaker 7: I think for some of them the answer is yes.
Speaker 7: You know, meta valuation is higher than normal. I think
Speaker 7: maybe that's one where you don't need to rush into
Speaker 7: it right now. But I think others are you know,
Speaker 7: fairly compelling. Amazon, like I said, is our personal favorite Microsoft.
Speaker 7: Is that a huge run up here in the last
Speaker 7: month and a half. Maybe no need to rush on
Speaker 7: that one. In Nvidia, I think is pretty compelling, you know,
Speaker 7: exceptionally strong competitive.
Speaker 6: Position with the GPU chips.
Speaker 7: They they just sent out Blackwell Ultra, the first one
Speaker 7: into the wild last week.
Speaker 6: That's going to be.
Speaker 7: An incredibly compelling product for enterprises and hyper scalers to
Speaker 7: put in their data center. So yeah, there are places,
Speaker 7: I think where you can put money to work confidently
Speaker 7: today in businesses that are AI beneficiaries.
Speaker 2: They said out into the world to call weave. And
Speaker 2: we've got the core vav CEO coming on a little
Speaker 2: bit later in the show. But Jen, last question for you.
Speaker 2: Is it all about American exceptionalism here?
Speaker 3: Still?
Speaker 7: Yeah, it's such an interesting investing environment today. We have,
Speaker 7: you know, I think a fairly moderate growth US economy,
Speaker 7: but with an AI revolution over here on the side
Speaker 7: that is very compelling is going to continue I think
Speaker 7: for quite some time, both the investment and then you know,
Speaker 7: the inference demand, the software deployment of these tools. So yeah,
Speaker 7: I think I think that the outlook for US stock markets,
Speaker 7: for tech stocks in particular, is pretty bright.
Speaker 2: Urgent Capital Management, Jed Eliver, it's been great having your perspective.
Speaker 3: Thank you.
Speaker 2: No, let's shift gears and look at what the shares
Speaker 2: of Samsung currently doing trading in London as we speak ADRs,
Speaker 2: and look they are down by eight ten percent. Profit
Speaker 2: fell for the first time since twenty twenty three. In fact,
Speaker 2: it plummeted fifty six percent. This is once again about
Speaker 2: the chip maker not managing to win when it comes
Speaker 2: to high bandwidth memory yet.
Speaker 3: But is this the bottom?
Speaker 2: Some analysts feeling that way, investors feeling that way, particularly
Speaker 2: over at CLSA, and notably, we keep an eye on
Speaker 2: how these companies perform out of their earnings.
Speaker 3: Meanwhile, coming up.
Speaker 2: President Trump unveils a wave of letters again threatening key
Speaker 2: trading partners with high tariff rate impact on big tech
Speaker 2: is coming up next for you.
Speaker 3: This is Greenberg Tech.
Speaker 2: Wednesday was the original tariff deadline, but less than a
Speaker 2: handful of agreements are ready to announce, and President Trump
Speaker 2: instead is now saying his new August first tariff deadline
Speaker 2: will not be extended. Let's get to the latest bluegg's
Speaker 2: Balance of Power host Kaylee Lines is with us taking
Speaker 2: to truth social to well try and tell us this
Speaker 2: commitment to this one.
Speaker 4: Yeah.
Speaker 9: This is after he was asked at the White House
Speaker 9: yesterday Caroline if this was a firm deadline, and he
Speaker 9: said yes, August versus firm, though not one hundred percent firm,
Speaker 9: indicating some degree of flexibility. And it seems that's what
Speaker 9: he's trying to course correct for with this true social
Speaker 9: post today, saying that on August first, tariffs will start
Speaker 9: being paid. He says, there has been no change to
Speaker 9: that date, and there will be no change to that date.
Speaker 9: I would just keep in mind that initially he had
Speaker 9: suggested there wouldn't be a change to the July ninth
Speaker 9: date either, and that is the action he signed yesterday
Speaker 9: to extend the deadline from July ninth to August first
Speaker 9: for various trading partners that we don't have trade deals
Speaker 9: with yet. He of course, yesterday wrote fourteen letters and
Speaker 9: sent them to the heads of fourteen different countries outlining
Speaker 9: the tariff rate that they will start paying next month
Speaker 9: in the absence of a deal, ranging from twenty five
Speaker 9: percent for countries like Japan and South Korea up to
Speaker 9: forty percent for countries like Mianmark and Laos. So he
Speaker 9: did say in the letter that if countries would like
Speaker 9: to open their financial markets eliminate tariff and non tariff barriers,
Speaker 9: the tariff set out in the letter could be revisited,
Speaker 9: so still leaving some wiggle room for negotiations here. The President,
Speaker 9: also in on Tru's Social today, is saying additional letters
Speaker 9: will be sent today, tomorrow and for the next short
Speaker 9: period of time. So we do expect to get news
Speaker 9: on new tariff rates that are set on various countries,
Speaker 9: and we also could still see news on deals. Our
Speaker 9: understanding is that deals are getting closer for countries like India,
Speaker 9: for Taiwan, for the European Union as well. Signals that
Speaker 9: there has been progress there. It's just not clear when
Speaker 9: may be announced, in how robust they will be, or
Speaker 9: whether or not. It's really just trade frameworks we're talking
Speaker 9: about here, knowing that the team that the administration has
Speaker 9: put together to work on these has struggled to make
Speaker 9: progress in a lot of arenas, not only because it's
Speaker 9: about the teri free countries could pay overall, but there's
Speaker 9: also sectoral tariffs to contend with existing ones like tariffs
Speaker 9: on autos and steel and aluminum, for example, but also
Speaker 9: ones that have been threatened that have opened Section two
Speaker 9: thirty two investigations into them, like semiconductors and pharmaceuticals, and
Speaker 9: that could be a sticking point in all of these talks.
Speaker 2: Caroline, and of course semiconductor's key to this audience putting bags,
Speaker 2: Kaylee lines, thank you so much. Now let's bring in
Speaker 2: Michelle Guider now from more perspectives, she is the CEO
Speaker 2: of the Kruck Institute for Tech Diplomacy over at Purdue.
Speaker 2: You served as an Assistant Secretary of State for Global
Speaker 2: Public Affairs under the first Trump administration that was twenty
Speaker 2: eighteen to twenty twenty. And Michelle, what the big picture
Speaker 2: we need to remind ourselves is what the ultimate goal
Speaker 2: is here. Yes, they might have to push back deadlines,
Speaker 2: but the aim is to have fairer trade.
Speaker 3: Oh, we actually be getting to that point.
Speaker 6: You're so right, Caroline. The big picture is really important here.
Speaker 6: So let's remember that tariffs are a tool that are
Speaker 6: a means to an end of a very big objective here,
Speaker 6: and that is for America to both design and physically
Speaker 6: build the technology infrastructure that is going to be the
Speaker 6: backbone of the free world in the next century. And
Speaker 6: so in order to do that, we have to build
Speaker 6: and in some cases rebuild a lot of critical industries
Speaker 6: here at home, and we have to rebalance the trade
Speaker 6: ecosystem in order to do that, because the current system
Speaker 6: right now disincentivises our leadership and critical industry. It rewards offshoring,
Speaker 6: it punishes production here at home, and ultimately exports leadership
Speaker 6: in a lot of really important industries to countries overseas,
Speaker 6: and that can't be the case if we're going to
Speaker 6: lead in the new technology era. And I'll give you
Speaker 6: a really good example. For the AI revolution to happen,
Speaker 6: we have to build a lot of data centers, and
Speaker 6: in the pipeline at the end of twenty twenty four,
Speaker 6: we had fifty two million square feet of data centers
Speaker 6: that we have to build in the United States. Do
Speaker 6: you know how much steel that that requires. It's billions
Speaker 6: and billions of dollars of steel. How great for that
Speaker 6: to be built by American companies with American workers, rather
Speaker 6: than from artificially cheap steel from international partners overseas. So
Speaker 6: that's what's at sake. It's American leadership in many critical
Speaker 6: industries are going to be good for us, and it's
Speaker 6: going to be good for our allies.
Speaker 2: Many would say, though, taking out of chips, looking at
Speaker 2: defense for example, or indeed looking at magnets and electric
Speaker 2: vehicles and the electrification of our economy here in the
Speaker 2: United States, we yet need more clarity on ultimate demand
Speaker 2: hearing time and time again than the defense tech startups
Speaker 2: that they need the DoD to actually buy the stuff
Speaker 2: commit to we're hearing time and time again that we
Speaker 2: can't start extracting rare earth that we don't have access
Speaker 2: to in the United States yet because there's not clarity
Speaker 2: on whether the energy field will already transition the way
Speaker 2: that they thought, particularly as you see the big beautiful
Speaker 2: bill as so cooled, seeming to drown out some of
Speaker 2: that movement to electrifications. So, Michelle, how did they garner
Speaker 2: clarity and security here?
Speaker 6: Well, when it comes to clarity and it comes to certainty,
Speaker 6: I don't think there was anything more certain than the
Speaker 6: fact that tariffs were coming. When Donald Trump was re
Speaker 6: elected president. It was a core pillar of his first administration.
Speaker 6: When I served as Assistant secretary, Fair and reciprocal trade
Speaker 6: was a core message that we were communicating to every
Speaker 6: international partner in one hundred and eighty five missions across
Speaker 6: the world. And you can even go back to nineteen
Speaker 6: eighty eight. There's a interview that Donald Trump did with
Speaker 6: Oprah Winfrey talking about how he would revamp US foreign policy,
Speaker 6: and in that he talks about asking our allies to
Speaker 6: pay their fair share, and he focuses on allies, he says,
Speaker 6: because they're much easier to talk to than our enemies,
Speaker 6: and he highlights what country. He highlights Japan, and he
Speaker 6: talks about how they're dumping cars and dumping VCRs into
Speaker 6: the American market. At the same time they're making it
Speaker 6: really hard for Americans to do BIS. So this has
Speaker 6: been a long time coming, but we're trying to rebalance
Speaker 6: a trade system that's existed for fifty sixty, seventy, in
Speaker 6: some cases eighty years across ninety countries. It's going to
Speaker 6: take some time, and some deadlines are going to be pushed,
Speaker 6: and it's going to be a little bit messy. But
Speaker 6: at the end of this, if American America can come
Speaker 6: out leading in critical industries, that'll give really good certainty
Speaker 6: to our businesses in the long term.
Speaker 2: Should if we've got the talent to be able to
Speaker 2: do the manufacturing here, particularly as we look at making
Speaker 2: H one BVS is tougher, for example, I'd.
Speaker 6: Say yes, and we would benefit from all the brilliant
Speaker 6: talent from across the world. The Crock Institute is based
Speaker 6: at Purdue University. It is the largest engineering school in
Speaker 6: the country, graduates more engineers than any other top university
Speaker 6: in the countries. It's engineering excellence at scale that type
Speaker 6: of talent is ready for national security jobs in commercial
Speaker 6: industries and in defense industries that are going to matter
Speaker 6: to our leadership in the twenty for a century, and
Speaker 6: the same is true in many other places across the country.
Speaker 6: So we have the talent. What we need to do
Speaker 6: is incentivize the economic landscape and the trade landscape in
Speaker 6: order to let them flourish.
Speaker 2: Michelle Geider, great to catch up with you at the
Speaker 2: Crack Institute for Tech Dipromacy over at Purdue. Now coming up,
Speaker 2: Amazon's Prime Day is kicked off, but shoppers they might
Speaker 2: not see the heavy discounts like years prior. We're on
Speaker 2: that next. This is Bloomberg Tech.
Speaker 3: Time.
Speaker 2: Now for talking tech and first up, your sensitive data
Speaker 2: or should from today be safer? After a Justice Department
Speaker 2: rule takes effect today after an end of a ninety
Speaker 2: day grace period. Now companies across sectors must now comply
Speaker 2: to the safeguard of bulk transfers and sensitive data from
Speaker 2: countries the post of National Security risk, including China and Iran,
Speaker 2: plus Epic Games. While it is settled an anti trust
Speaker 2: case against Samsung alleging that the company was conspiring with
Speaker 2: Google in blocking rival at marketplaces.
Speaker 3: By default, Epic dismissed all.
Speaker 2: Anti trust claims against Samsung and Google, but Google remains
Speaker 2: defendant on several non anti trust claims. And some brands
Speaker 2: and consumers are sitting out on this year's Amazon Prime Day.
Speaker 2: Is President Trump's trade wark really rattles shopping sentiment? Some
Speaker 2: mergents are actually unable to offer discounts due to increased
Speaker 2: costs from tariffs. Some shoppers, well, they're planning to skip
Speaker 2: Prime Day altogether.
Speaker 3: Prime Day spending has already fallen.
Speaker 2: It currently seems fourteen percent in early hours compared to
Speaker 2: twenty twenty four. So let's get to it, Bloomberg, Spenser's
Speaker 2: Soapa and give us the inside track.
Speaker 3: Is it all about tariff's here, Spencer?
Speaker 10: Yeah, tariffs are definitely a key factor. This is like
Speaker 10: our first Prime Day, you know, since Trump's President Trump's
Speaker 10: Liberation Day tariffs, and that really just created Even though
Speaker 10: a lot of the tariffs are still on again, off
Speaker 10: again and being negotiated, it's just this cloud of uncertainty
Speaker 10: that has forced a lot of businesses to just be cautious.
Speaker 10: You know, how much inventory do we have in the country.
Speaker 10: Do we really want to discount it? That deeply if
Speaker 10: we're trying to protect our margins from tires down the road.
Speaker 10: So all of that stuff is kind of weighing down
Speaker 10: on Prime Day this year.
Speaker 2: So why they're making it so long, such an extended period,
Speaker 2: and what ultimately do you think they'll end up offering here.
Speaker 10: That's a really great question. So Prime Day started as
Speaker 10: one day, you know, when they started in twenty fifteen,
Speaker 10: and it gradually got longer. It was two days last year,
Speaker 10: now it's four days this year. The best thing to
Speaker 10: see is that like a lot of their competitors, like
Speaker 10: Walmart has like a six day sale, and I think
Speaker 10: Target has a week long sale that they might. Amazon's
Speaker 10: likely looking at those and saying, okay, let's just extend
Speaker 10: the number of days and prevent us from losing sale
Speaker 10: to a lot of these competitors, and especially competitors like
Speaker 10: Walmart and Target. The appetite is really strong for everyday
Speaker 10: essentials things like snack packs for lunchboxes. So Amazon needs
Speaker 10: to to fight them on the you know, the grocery
Speaker 10: aisle as much as for electronics.
Speaker 2: Yeah, and when you think of electronics, you will immediately
Speaker 2: think of China. Just more broadly, how have the companies
Speaker 2: you speak to the SELVI Amazon been navigating me on again,
Speaker 2: off again, feeling around tariffs.
Speaker 10: Well right now in terms of Prime Day, we're seeing
Speaker 10: Apple is going very hard on discounts, you know, very
Speaker 10: very deep discounts. I spoke with the Crazy Coupon Lady earlier.
Speaker 10: They kind of track all of these deals, you know,
Speaker 10: and they use They used Black Friday last year as
Speaker 10: at benchmark, and they're seeing Apple kind of, you know,
Speaker 10: going even less than some of their Black Friday deals
Speaker 10: a year ago. They call that. One thing in particular,
Speaker 10: like app the AirPods for you know, earbudds were discounted
Speaker 10: very steeply, but then you contrast that with Amazon's own devices,
Speaker 10: and the discounts on things like their echo speakers and
Speaker 10: stuff were pretty soft. So well, we're seeing these these
Speaker 10: companies react react differently, you know, to the tariff situation.
Speaker 2: And question is how the shopper reacts. We'll get the
Speaker 2: data throughout the day. Spencer SOFA brilliant to have you.
Speaker 3: Thank you.
Speaker 2: Coming up, we're going to be speaking with the care
Speaker 2: We've CEO Michael and Trader under the company's nine million
Speaker 2: dollar purchase for Core Scientific. That's next, this is Blue
Speaker 2: meg Tech. Welcome back to Blue meg Tech. Quick check
Speaker 2: on these markets because we're being knocked around about by
Speaker 2: the tariff headlines. The latest coming out of President Trump
Speaker 2: is that August the first is hard and fast. You
Speaker 2: will see those reciprocal tariffs put into force on that date.
Speaker 2: We're currently just off by about a ten percent. On
Speaker 2: the upside is the likes of Tesla and in video
Speaker 2: from a point's perspective. On the downside, Amazon drags as
Speaker 2: we see Prime Day off to a slow start. So
Speaker 2: is Google and Microsoft on the red. But let's look
Speaker 2: at Data Dog for a moment, because this is a
Speaker 2: company that's about to enter the S and P five
Speaker 2: hundred this week. We're off by three point eight percent.
Speaker 2: This is as we get a key downgrade from Googenheim.
Speaker 2: Why open ai optimization risks, So they say they cut
Speaker 2: to a cell from neutral, worrying about the longevity of
Speaker 2: that particular client. So it says Howard Marr, So keep
Speaker 2: an eye on that company. But remember it's rallied hard
Speaker 2: after the news that it will be entering the big
Speaker 2: dogs for Data Dogs. Now, let's also take a look
Speaker 2: at the shares a core weave and core Scientific that.
Speaker 3: Huge deal announced yesterday that.
Speaker 2: Core Weave is indeed acquiring core Scientific in a nine
Speaker 2: billion dollar all stock deal. Now we're currently off by
Speaker 2: two point four percent as you'll see on core Weave
Speaker 2: just a bit. But all of this is about boosting
Speaker 2: Corey's infrastructure to meet the insatiable AI demand. We get
Speaker 2: the inside track with Michael and Tracho's the core We've
Speaker 2: CEO now on hot off the heels on this particular deal.
Speaker 2: Why Michael go vertically integrated?
Speaker 3: Explain it for us.
Speaker 11: Sure, thank you for having me and uh, the the
Speaker 11: cloud marketing at large is going through this incredible inflection
Speaker 11: point where the the scale of what needs to be built,
Speaker 11: the type of infrastructure that needs to be built, the
Speaker 11: software that's required to be able to build it, all
Speaker 11: of those things are changing in a generational way. And
Speaker 11: when we have talked about our company, when you know,
Speaker 11: and I have now been shy about this, I believe
Speaker 11: that there is an opportunity to U integrate so that vertically,
Speaker 11: so that you can deliver the best solutions to your
Speaker 11: clients that are the largest, most sophisticated consumers of this infrastructure.
Speaker 11: And so we we you know earlier this year, you
Speaker 11: saw us move up the stack with the acquisition of
Speaker 11: weights and biases, where we an extension on the software
Speaker 11: that we have right, so our software is like really
Speaker 11: focused on orchestration and monitoring of the GBUS. As you
Speaker 11: move up the stack into weights and bias, it connects
Speaker 11: closer to the clients, and if you move down the stack,
Speaker 11: you're down into the physical data centers, the power requirements,
Speaker 11: all of those.
Speaker 2: I think people the investibate saw weights and biases as
Speaker 2: margin a creative, as more able to really bring the
Speaker 2: profitability to bear. But many worry and I cite for example,
Speaker 2: Stifel downgrading the stocks. They seem positive on the long
Speaker 2: term idea of this purchase of core scientific but a
Speaker 2: vertical data center provider changes the valuation structure from their perspective.
Speaker 2: Why go down the stack when perhaps it doesn't mean
Speaker 2: you as profitable.
Speaker 11: Yeah, so I would I would take an issue with
Speaker 11: that assessment. I think that there's enormous opportunities for us
Speaker 11: to capture margin by insourcing the infrastructure component of it.
Speaker 11: One number two is I think that in a market
Speaker 11: that is as dynamic as this market, is the ability
Speaker 11: to have more physical control over your ability to build
Speaker 11: more control over your ability to deliver infrastructure is enormously
Speaker 11: valuable to a company like ours. And what we're doing
Speaker 11: by integrating with Core Scientific a company that we know
Speaker 11: very very well. We have very long standing relationships with them.
Speaker 11: Our first contract was in twenty eighteen.
Speaker 3: And you tried to buy them for about a billion
Speaker 3: last year.
Speaker 11: R We did try to buy them for last year,
Speaker 11: and during that period we've extended our relationship with them.
Speaker 11: We've expanded our relationship with them, and we continue to think,
Speaker 11: as they continue to think, that the integration of the
Speaker 11: two companies is net positive for both investor groups. And
Speaker 11: you know, over time, we believe that that will become
Speaker 11: incredibly clear to the investing public at large.
Speaker 2: And let's talk about that over time perspective, because I
Speaker 2: think Rubin roy over at Stiefel is saying, look, longer term,
Speaker 2: he does get it, but we need to see material
Speaker 2: margin accretion and growth benefits.
Speaker 3: What sort of time frame are you seeing that?
Speaker 11: Yeah, So, look, when when you insource a data center
Speaker 11: that you have a hosting contract with where where you're
Speaker 11: building your infrastructures, immediate right, because as soon as you
Speaker 11: acquire them, you've moved the contract with which you're paying
Speaker 11: them on a monthly basis into internalizing it, and so
Speaker 11: you will see a margin and creative impact associated with
Speaker 11: us purchasing them as soon as this deal closes. And
Speaker 11: so once again I take issue with with with the
Speaker 11: assessment that this is not going to be margin a cretive.
Speaker 11: I actually think it's going to be enormously marginal and
Speaker 11: creative for the combined companies. But I also think it's
Speaker 11: going to be incredibly constructive for our ability to meet
Speaker 11: the demands of the clients. And what gets lost in
Speaker 11: this discussion sometimes is that you have a group of
Speaker 11: clients that are moving so incredibly fast to build infrastructure
Speaker 11: at enormous scale that they require to be able to
Speaker 11: deliver artificial intelligence to the world, our ability to control
Speaker 11: our destiny in terms of how we build, where we build,
Speaker 11: when we build. By integrating the two companies, where we're
Speaker 11: making huge strides in that direction.
Speaker 2: And you get one point three gigawats thereabouts of the
Speaker 2: power that's going to be in the data centers. Just
Speaker 2: talk to us a bit about say the Oracle open
Speaker 2: AI reported deal four and a half gigawatts is what
Speaker 2: they seeing promised to open AI in the longer term
Speaker 2: is not achievable. That sort of measure of scale, of power,
Speaker 2: of necessity to go into the data.
Speaker 11: Centers it is. It's going to take a lot of work.
Speaker 11: It's going to take a lot of of investment. It's
Speaker 11: going to take a lot of thought around how you
Speaker 11: do that. And that once again leans back into the
Speaker 11: idea that you want to vertically integrate so that you
Speaker 11: can do it in the most efficient, most effective way.
Speaker 3: What's the hardest work.
Speaker 11: Oh, there's a lot of hard work here right, Like
Speaker 11: you know, the the integration of two companies is always challenging.
Speaker 11: The ability to continue to extend our capacity to deliver
Speaker 11: infrastructure is always enormously challenging.
Speaker 3: Is energy that bottlening?
Speaker 11: That energy is a bottleneck. The you know, the pipeline
Speaker 11: of projects within the core scientific portfolio positions us to
Speaker 11: jointly be able to deliver infrastructure on the largest scale
Speaker 11: in the world. And so when you when you look
Speaker 11: back over the last several months, you know, we did
Speaker 11: a twelve billion dollar contract, right or just under twelve
Speaker 11: you saw the thirty billion dollar contract. The demand is voracious.
Speaker 2: And is it just coming from Microsoft? Is it coming
Speaker 2: from more players.
Speaker 11: Now for you, it's coming from more players. I mean
Speaker 11: during during our earnings, you know, you heard me talk
Speaker 11: about the fact that we actually had a second hyperscaler
Speaker 11: begin to come on board and use us as a
Speaker 11: solution for building the highest quality infrastructure and delivering compute
Speaker 11: to them. And so you're you're really starting to see
Speaker 11: us broadening our client base, which is going to be
Speaker 11: a work in progress for for for a long time
Speaker 11: because there is concentration with these really large contracts. But
Speaker 11: it's it's been a you know, incredibly important for the
Speaker 11: whole company and for the investors in the company to
Speaker 11: see the progress that we're making bringing on more and
Speaker 11: more names, you know, across the enterprise space, more names
Speaker 11: across the IDAI labs and the AI native, increasingly building
Speaker 11: our footprint among the clouds. It's it's really been a
Speaker 11: great indication of the demand for the product that we deliver,
Speaker 11: and we're positioning ourselves to be able to deliver it
Speaker 11: faster and larger.
Speaker 2: And the share price has rocketed off the back of
Speaker 2: it since your IPO earlier this year. But I try
Speaker 2: and understand a little bit about the acquisition play that
Speaker 2: you're making the fact that looks as though you're im
Speaker 2: boltant to do more.
Speaker 3: Where is it most important to do it? Is it
Speaker 3: the downstack, is it hire and stack? Is it more
Speaker 3: about the software and services?
Speaker 11: So we really do look at it from a long
Speaker 11: term perspective, and it's what's allowed us to build a
Speaker 11: company that is breaking the mold to an extent in
Speaker 11: terms of launching the AI cloud, a new cloud, a
Speaker 11: cloud that doesn't fit into the history of the Big
Speaker 11: three right, and that's been based on the idea that
Speaker 11: you're making decisions about what it takes to deliver the
Speaker 11: highest quality infrastructure and products to your clients. You will
Speaker 11: see us continue to build up the stack. This acquisition,
Speaker 11: of course, Scientific is an example of us going down
Speaker 11: the stack. We have other data centers that we are
Speaker 11: building internal to the company. You know, it's part of
Speaker 11: this strategy of how you get to scale, because only
Speaker 11: by getting to scale are you relevant in this revolution
Speaker 11: that's occurring within the cloud space. And this is an
Speaker 11: important building block, an important step for us to be
Speaker 11: able to ensure that we are able to continue to
Speaker 11: participate in the scale building of this infrastructure.
Speaker 2: We loved hearing the Vision Mia Colent traitor, thanks for
Speaker 2: coming on to join with us, is the CEO of
Speaker 2: cour We've hot on the heels of that big deal. Meanwhile,
Speaker 2: coming up start up Nothing is betting big on a
Speaker 2: phone they designed to be used less then nothing, CEO,
Speaker 2: He'll pay you.
Speaker 3: That's next, the say is blue Bag Tech. Let's take
Speaker 3: a quick.
Speaker 2: Check in on Tesla shares now, because we're trying to
Speaker 2: make up some lost ground today at least, but we
Speaker 2: are still lower of the course of the last three
Speaker 2: training days by more than four percent. After Elon Musk
Speaker 2: announced he's forming a new political.
Speaker 3: Party over the weekend.
Speaker 2: Of course, now Ark in their CEO Kathy Wood joined
Speaker 2: Bluemberg Surveillance earlier to weigh in on this, as some
Speaker 2: analysts call for the company's board to get involved to
Speaker 2: address masks politicking and whether it has hurt Tesla's standing
Speaker 2: with car buyers.
Speaker 4: We've been dealing with controversy around Elon Musk in one
Speaker 4: form or another since we first bought the stock when
Speaker 4: the company was founded in twenty fourteen, and we owned
Speaker 4: Tesla in it's one of the top holdings in three
Speaker 4: of our ETF so arkk W and Q so we
Speaker 4: are watching this like a haark, no question about it.
Speaker 4: But with the experience over the last eleven years, we
Speaker 4: turn around today and see Tesla really not an EV
Speaker 4: manufacturer anymore. Moving into the robotaxi age, we believe successfully
Speaker 4: and we believe it will scale much better than most
Speaker 4: of its competitors. We see SpaceX really only ninety percent
Speaker 4: of all of the satellites out there, neurally transforming lives
Speaker 4: of paralyzed people, people with als, and probably most surprising
Speaker 4: of all, XAI. Now we own all of those again
Speaker 4: in our venture fund, following them very carefully. XAI is
Speaker 4: on some benchmarks. It hit a point that three pro
Speaker 4: hit in June, it hit it in February. So you know,
Speaker 4: we are very focused on barriers to entry technology moats
Speaker 4: and we believe that the moats that Elon has built,
Speaker 4: and obviously this is not just Elon. He's attracting the
Speaker 4: best and the brightest to help solve some of the
Speaker 4: world's biggest problems. So again we do trust the board
Speaker 4: and the board's instincts here and we stay out of politics.
Speaker 8: Well, we'd love your opinion on the current situation, just
Speaker 8: on TESTA specifically, you mentioned some phenomenal companies doing some
Speaker 8: incredible things for Tesla, though, do you believe that Elon
Speaker 8: can pursue his political ambitions at the same time pursuing
Speaker 8: the best interest of Tesla shareholders.
Speaker 4: One of the announcements Elon made recently is that he
Speaker 4: is going to oversee sales in the US and in Europe.
Speaker 4: And when he puts his mind on something, he usually gets.
Speaker 3: The job done.
Speaker 2: I confess CEO and CIO Kathy with them and let's
Speaker 2: talk about nothing. It's the hardware startup taking aim at
Speaker 2: the big smartphone makers like Apple, like Samsung is the
Speaker 2: latest phone three is launching.
Speaker 3: With a design actually aimed to be used less.
Speaker 2: Joining us now is Carl Pai Nothing co founder CEO
Speaker 2: are in New York over from London.
Speaker 3: Why do we need a smartphone that we use less?
Speaker 12: Smartphones used to be these tools that were supposed to
Speaker 12: make us more creative and more productive, just like the
Speaker 12: personal computer. Right, it was a bicycle for the mind.
Speaker 12: But today on smartphones we just keep doing scrolling. And
Speaker 12: we wanted to create a product that help people be
Speaker 12: more in focus. Right, So if you put the phone down,
Speaker 12: you can still be notified about the most important things.
Speaker 12: That are happening without always checking your screen. I don't
Speaker 12: know about you, but for me sometimes when I have
Speaker 12: to respond to an important message, I just happened to
Speaker 12: go into my social media and scroll a bit afterwards.
Speaker 3: Yeah, so it's keeping you engaged in the process.
Speaker 2: What's interesting is, well, it looks like nothing else really
Speaker 2: on the market. People have loved that. The geeks in
Speaker 2: particular have loved that. But what sort of scale you're
Speaker 2: getting to now? Who is buying this?
Speaker 12: Yeah, so we're targeting a very different customer base. As
Speaker 12: a startup, we're really focused on our users, the young
Speaker 12: creatives today we are this year, we're doing about a
Speaker 12: billion in revenue. Last year we did north of five
Speaker 12: hundred millions. We're doubling this year and it's a good start,
Speaker 12: but a long way to go.
Speaker 2: What are they trading in for because this is Android
Speaker 2: operating system. Are people ditching their Samsungs? They ditching their apples?
Speaker 3: What are they doing?
Speaker 5: Yeah?
Speaker 12: Our users come from all over the industry. Actually, we
Speaker 12: have two types of products. We have earbuds and smartphones.
Speaker 12: For our earbuds, more than half of the users come
Speaker 12: from iPhone, which is really surprising to us and our
Speaker 12: phones come from all over the market, but we do
Speaker 12: see a lot of iPhone users switching to US.
Speaker 3: Where are these being made?
Speaker 12: We manufacture most of our phones in India, but we
Speaker 12: also have a site in China, and we have a
Speaker 12: new site coming up soon as well.
Speaker 3: Where would that be to be announced? Okay?
Speaker 2: Interesting, because what do you you're a man who's you've
Speaker 2: built companies before. Boy, have you built well over in China?
Speaker 2: You sort of stuck in really in the Chinese smart
Speaker 2: phone industry yourself, and now we're seeing this pushback in America,
Speaker 2: in particular manufacturing in the United States.
Speaker 3: What do you make of.
Speaker 2: That ability, that capability to get the scale the talent
Speaker 2: here in the US.
Speaker 12: It's not something that we thought about a lot because
Speaker 12: we've been really focused on markets like Europe and India,
Speaker 12: and we're manufacturing in India. Recently, we just started exploring
Speaker 12: how to export from India to the rest of the
Speaker 12: world with a phone three. Actually we're exporting from India
Speaker 12: to the US.
Speaker 3: How hard is that with tariff's?
Speaker 12: Uh, it's it's okay. I mean, I don't think the
Speaker 12: tarifts are that bad from India.
Speaker 2: Okay, So you don't think that a little bit of
Speaker 2: a hit to what is a more expensive version of
Speaker 2: the phones that you're now having? What is it sem
Speaker 2: nine to nine as the price point for this particular phone.
Speaker 2: Why go to that upscale level?
Speaker 3: You've been more of a mid range kind of.
Speaker 12: We always wanted to compete on the flagship level, but
Speaker 12: we had to build a lot of our capabilities because
Speaker 12: when we sell a product at eight hundred dollars, people
Speaker 12: expect the best the best camera, the best screen, the
Speaker 12: best of everything. And building a smartphone company is hard,
Speaker 12: like all types of hardware is hard, but smartphones are
Speaker 12: particularly hard. I think we finally got to a space
Speaker 12: where our engineering capability is at the level where we
Speaker 12: can take a shot at the flagship.
Speaker 2: You have that experience having helped build OnePlus now with nothing,
Speaker 2: how much is there now? Focus on the AI integration
Speaker 2: because that's where Apple seems to be stumbling.
Speaker 12: Yeah, we're super excited about AI. We're not really focused
Speaker 12: on the large language models, but we're focused on how
Speaker 12: to apply AI. And I believe that to win in
Speaker 12: consumer AI, you need to own your own hardware. And
Speaker 12: for me, the smartphone is the most exciting piece of
Speaker 12: hardware because of two reasons. It's got the most scale,
Speaker 12: right because more than one point two billions smartphones are
Speaker 12: sold every year, and it's also got the most depth
Speaker 12: in terms of what we do on our phones. We
Speaker 12: do everything. So I think consumer AI needs both scale
Speaker 12: and depth because we want to be able to really
Speaker 12: understand the users, to then automate the smartphone use as
Speaker 12: much as possible.
Speaker 2: For them to do all of that, and to get
Speaker 2: more manufacturing footprint.
Speaker 3: You need money. Are you raising money? What sort of
Speaker 3: scale do you need?
Speaker 12: We raised about two hundred and fifty million dollars so far.
Speaker 12: We've been relatively capital efficient. We've done more than a
Speaker 12: billion dollars in lifetime sales. We're doing a billion dollars
Speaker 12: in sales this year. Of course, we're always entertaining conversations,
Speaker 12: but we have nothing to announce right now.
Speaker 2: Please come back when you do call pay of nothing
Speaker 2: great to have some time with him