WEBVTT - Altman's Chip Venture and Sony Scraps Zee Deal 0:00:01.480 --> 0:00:04.440 We're from Bahard where innovation, money and power. 0:00:04.559 --> 0:00:06.880 Collie in Silicon Vallet Nbon. 0:00:07.280 --> 0:00:10.720 This is Bloomberg Technology with Caroline Hyde. 0:00:10.400 --> 0:00:11.320 And Ed Ludlow. 0:00:26.200 --> 0:00:29.160 I Meed Ludlow in San Francisco. Caroline hides off today. 0:00:29.400 --> 0:00:31.960 This is Blombow Technology. Coming up on the program, reports 0:00:32.000 --> 0:00:35.760 that open Ai CEO Sam Outman will meet with Samsung 0:00:35.880 --> 0:00:39.760 chip executives just days after our report on his plans 0:00:39.760 --> 0:00:42.800 to raise billions of dollars for AI chip FECh factories. 0:00:42.840 --> 0:00:46.199 Everything you need to know ahead, plus Sony scrapping its 0:00:46.240 --> 0:00:49.640 ten billion dollar deal for India's z after two years 0:00:49.680 --> 0:00:53.640 of drama and delay, Details on the CEO stalemate that 0:00:53.760 --> 0:00:56.920 led to the collapse, and a big week for big tech. 0:00:56.960 --> 0:00:59.920 We break down what to expect from the Benchmark's main drivers. 0:01:00.160 --> 0:01:02.560 Is they gear up to report earnings results, All that 0:01:02.960 --> 0:01:05.840 and so much more. There is a big story happening 0:01:05.880 --> 0:01:08.160 in the world of technology that we continue to track, 0:01:08.440 --> 0:01:11.479 and that is open AI CEO Sam Outman. Apparently he'll 0:01:11.480 --> 0:01:15.360 meet with Samsung chip executives in Seoul later this week. 0:01:15.440 --> 0:01:18.800 That all, according to Koreas may Ill, it's all about 0:01:18.800 --> 0:01:22.320 a discussion around AI chip production and supply, joining US 0:01:22.319 --> 0:01:24.679 with more is Bloomberg's Ian King, and I mean Ian. 0:01:24.800 --> 0:01:25.759 The timing of this. 0:01:25.680 --> 0:01:31.039 Report is interesting because Friday we myself Dina Bass reporting 0:01:31.480 --> 0:01:34.839 that the focus of Sam Oltman's initiative to raise tens 0:01:34.840 --> 0:01:39.040 of billions of dollars is for chip capacity factories fabs 0:01:39.080 --> 0:01:42.360 call it what you will, and now Samsung, Yeah. 0:01:42.160 --> 0:01:43.679 I mean, if you're going to do this, if you're 0:01:43.720 --> 0:01:46.080 serious about doing this, then you have to speak to 0:01:46.120 --> 0:01:46.800 the Koreans. 0:01:46.880 --> 0:01:47.000 Right. 0:01:47.400 --> 0:01:50.960 Obviously a lot of the focuses on TSMC. They are 0:01:51.000 --> 0:01:53.880 the market leader. But if there's a strong number two, 0:01:54.040 --> 0:01:57.040 it's not Intel, it's some song. They have the money, 0:01:57.080 --> 0:01:59.480 they have the resources, and they have the technology. 0:02:00.640 --> 0:02:03.160 So I think what's interesting here in is that there's 0:02:03.200 --> 0:02:06.000 always a big focus on TSMC because it's the big 0:02:06.040 --> 0:02:06.880 market incumbent. 0:02:06.960 --> 0:02:08.480 Right, it's the big market leader. 0:02:08.880 --> 0:02:13.000 Samsung is a heavyweight in the market for contract manufacturing 0:02:13.080 --> 0:02:14.400 chips in and of its own. 0:02:14.320 --> 0:02:16.600 Right, that's right. I mean, everybody focuses on them. 0:02:16.600 --> 0:02:19.680 Mary the memory guys. You know, memory is a commodity 0:02:19.880 --> 0:02:23.640 or you know, great, it's a big business. But no, 0:02:23.880 --> 0:02:27.440 they are the second biggest contract manufacturer they have had 0:02:27.919 --> 0:02:31.200 in the past, big customers like in video, like Apple, 0:02:31.680 --> 0:02:34.720 they have some serious capabilities and they are way ahead 0:02:34.720 --> 0:02:38.640 of where the third guys they're talking about it Intel 0:02:39.000 --> 0:02:40.320 would be at this point. 0:02:40.440 --> 0:02:42.120 So, you know, the basics of the story of a 0:02:42.200 --> 0:02:45.320 reported Friday is it's a lot of money because chip 0:02:45.320 --> 0:02:46.960 factories cost a lot of money to make in a 0:02:47.040 --> 0:02:49.840 very long time to make. But it's this anxiety that 0:02:49.919 --> 0:02:53.680 in the future the supply of AI specific chips won't 0:02:53.680 --> 0:02:56.920 be there to meet the demand. It's different from what 0:02:56.960 --> 0:02:59.600 we kind of previously reported, which was this idea Well 0:03:00.400 --> 0:03:02.280 wants to take on some of its bigger supplies. Like 0:03:02.280 --> 0:03:05.760 in video, it doesn't seem to be a design of 0:03:05.840 --> 0:03:09.840 their own chip. It's just guaranteeing that when the time comes, 0:03:09.919 --> 0:03:11.480 you can get your hands. 0:03:11.320 --> 0:03:13.880 On what we call day to day AI accelerators. 0:03:13.960 --> 0:03:18.320 Yeah, no, that's absolutely right open AI in Video, AMD. 0:03:18.600 --> 0:03:21.320 All of these chip designers have a shared interest, right, 0:03:21.800 --> 0:03:25.160 a shared goal. They believe that AI is going to 0:03:25.200 --> 0:03:28.320 be utterly pervasive in the world economy and in technology, 0:03:28.840 --> 0:03:32.079 and if according to some of the projections, it's going 0:03:32.120 --> 0:03:35.120 to need more chips, more of a certain type of chip, 0:03:35.160 --> 0:03:37.840 a very high end logic chip than we are currently 0:03:37.920 --> 0:03:41.160 on course to make. If you believe that scenario, then 0:03:41.480 --> 0:03:43.400 we need to start pouring concrete. 0:03:44.040 --> 0:03:47.680 So sam Otman's visits, career and soul is according to 0:03:47.760 --> 0:03:50.480 local reports from al but will continue to trace that 0:03:50.560 --> 0:03:53.440 story of Bloomberg, Z and King, thank you very much. Meanwhile, 0:03:53.480 --> 0:03:57.600 another big story overnight, Sony and Z Entertainment have officially 0:03:57.640 --> 0:04:00.680 called off a plan ten billion dollars meter media merger 0:04:00.720 --> 0:04:03.880 in India after two years of drama and delay. For 0:04:03.880 --> 0:04:06.120 more on what happened, I want to bring in Bloomberg's 0:04:06.120 --> 0:04:08.760 alex Web in London. I mean, we've done so much 0:04:08.800 --> 0:04:12.960 reporting alex around the idea this wasn't going to happen. 0:04:13.520 --> 0:04:16.920 The sticking point ultimately seems to have been who would 0:04:16.920 --> 0:04:19.920 have run this merged entity had it been closed? 0:04:21.600 --> 0:04:24.679 Yes, that's very much at the core of the issue. 0:04:24.760 --> 0:04:28.680 The CEO of Z, who is the son of the founder. 0:04:29.839 --> 0:04:33.360 He has been caught up in a regulatory investigation. He 0:04:33.440 --> 0:04:37.160 can word this very carefully for allegedly faking the recovery 0:04:37.240 --> 0:04:40.440 of loans to cover private financing deals by its founder. 0:04:40.480 --> 0:04:43.560 These allegations, of course, that he denies. Initially, there was 0:04:43.560 --> 0:04:45.760 an interim ruling saying he was not allowed to hold 0:04:45.800 --> 0:04:48.720 directorships and that was then subsequently reprieved. 0:04:49.720 --> 0:04:51.240 He was still. 0:04:50.960 --> 0:04:55.800 Allowed to hold this CEO position, but the investigation is ongoing. 0:04:56.000 --> 0:04:59.039 Sony appears to think that this regulatory overhang is a 0:04:59.120 --> 0:05:02.520 risk would only have be, according to the reporting, to 0:05:02.560 --> 0:05:05.800 close the deal if he was not leading the new company. 0:05:06.320 --> 0:05:08.320 The family would have owned about four percent of the 0:05:08.360 --> 0:05:11.680 new company. Sony would own fifty close to fifty one percent. 0:05:11.760 --> 0:05:15.120 So Sony very much is the bigger fish here and 0:05:15.160 --> 0:05:16.560 they weren't able to reach an agreement. 0:05:16.600 --> 0:05:17.760 The deal has fallen. The part. 0:05:19.160 --> 0:05:21.280 A lot of our audience around the world, Alex are 0:05:21.279 --> 0:05:25.360 going to say, why is Sony interested in doing a 0:05:25.400 --> 0:05:30.039 media deal in India with Z And the reality is 0:05:30.080 --> 0:05:32.760 that it's just a battle ground for eyeballs in the 0:05:32.800 --> 0:05:34.440 world's most populous country. 0:05:35.000 --> 0:05:36.479 Just explain what Z is. 0:05:37.200 --> 0:05:40.960 My understanding is it has a pretty decent catalog of content, 0:05:41.520 --> 0:05:44.880 but financially it's a bit shaky. 0:05:45.040 --> 0:05:46.960 Yeah, it is in slightly. 0:05:49.040 --> 0:05:50.960 Was The challenge is in India it is one of 0:05:51.080 --> 0:05:55.760 scale because of price sensitivity. So Z in this deal 0:05:55.760 --> 0:05:57.960 with Sony, they would have ended up with seventy five channels, 0:05:58.000 --> 0:06:01.320 as you say, a huge back catalog, but without that scale, 0:06:01.720 --> 0:06:05.280 it is quite hard to make the economics add up. 0:06:05.400 --> 0:06:07.640 You hear plenty of people saying, not least Tim Cook, 0:06:08.120 --> 0:06:12.080 that India is where China was maybe six, eight, ten 0:06:12.240 --> 0:06:16.680 years ago. That means that it could be quite attractive 0:06:16.680 --> 0:06:19.560 in a few years time. Right now, it isn't necessarily 0:06:19.880 --> 0:06:21.839 hyper attractive, but people are trying to get in on 0:06:21.839 --> 0:06:24.679 the ground floor ensure they have a decent market position, 0:06:24.760 --> 0:06:27.119 so that if the wealth that many expect to arrive 0:06:27.240 --> 0:06:30.479 does finally arrive in India, then you have quite a 0:06:30.480 --> 0:06:32.719 big market share. They would have had the combined Sony 0:06:32.800 --> 0:06:36.640 Z thirty seven percent market share by some estimates. Disney, 0:06:36.680 --> 0:06:39.719 which is merging its local business with Reliance, the local 0:06:39.720 --> 0:06:42.520 company Reliance, will actually be the biggest shareholder in that 0:06:42.600 --> 0:06:44.960 new entity would have had twenty four is going to 0:06:45.000 --> 0:06:48.160 have twenty four percent market share. So having gone from 0:06:48.160 --> 0:06:50.720 potentially a more dominant position of that thirty seven percent, 0:06:50.839 --> 0:06:54.120 now the separate Sony and Z are actually likely to 0:06:54.160 --> 0:06:58.760 be smaller than this new Disney Reliance entity. The streaming 0:06:58.800 --> 0:07:01.040 market in India was a store in twenty twenty three, 0:07:01.080 --> 0:07:02.480 and it seems like it's going to be a story 0:07:02.720 --> 0:07:04.720 in twenty twenty four as well. Bloomberg x Alex Ware 0:07:04.720 --> 0:07:08.479 about London, thank you very much. Earning season is here. 0:07:08.520 --> 0:07:09.359 We are excited. 0:07:09.480 --> 0:07:13.920 This week we get fourth quarter results from Netflix, Tesla, IBM, 0:07:14.040 --> 0:07:18.120 and Intel. While the market is super focused on what 0:07:18.160 --> 0:07:20.720 on earth happens with rates and the global economy in 0:07:20.720 --> 0:07:23.480 twenty twenty four, joining us now Janetmuie, head of market 0:07:23.480 --> 0:07:26.200 analysis at RBCBRA and Dolphin. 0:07:26.320 --> 0:07:29.200 And to look forward, you have to kind of look back. 0:07:29.480 --> 0:07:32.880 You know, the Magnificent seven, those megacaps accounted for so 0:07:33.000 --> 0:07:36.600 much of the index performance in twenty twenty three, and 0:07:36.640 --> 0:07:39.640 we go into this earning season saying they're probably going 0:07:39.680 --> 0:07:42.920 to account for the majority of profit growth as well. 0:07:43.880 --> 0:07:44.960 Is that how you look at it? 0:07:47.040 --> 0:07:50.080 Hi Ed, thanks for having me. I think that's entirely likely. 0:07:50.800 --> 0:07:53.680 As you mentioned, you you looked back last year the 0:07:53.800 --> 0:07:56.559 mane cent seven, It is the thirty percent of the SMP, 0:07:56.680 --> 0:07:59.000 but drove two thirsts of the return last year. How 0:07:59.040 --> 0:08:02.080 do you think that the busiasm for the Magnificent seven 0:08:02.360 --> 0:08:04.880 will continue given that? I think actually a lot of 0:08:04.960 --> 0:08:09.360 investors are just about neutral or even slowly underweight at 0:08:09.360 --> 0:08:11.800 the moment in terms of equities. So I think in 0:08:11.880 --> 0:08:14.600 terms of the momentum that is great the SMP five 0:08:14.680 --> 0:08:17.320 hundred region your highs, and I think the flows could 0:08:17.320 --> 0:08:21.800 be coming from the cash allocations from institutions or retail investors. 0:08:21.840 --> 0:08:24.520 And I do think that so far, if you look back, 0:08:24.680 --> 0:08:26.960 not just last year, but in the past five years, right, 0:08:27.360 --> 0:08:31.560 the compounded annual growth rates of these megacap tech companies 0:08:31.680 --> 0:08:34.480 has been great, you know, ranging from fifteen percent to 0:08:35.200 --> 0:08:38.240 even thirty percent for the EPs growth. So I do 0:08:38.400 --> 0:08:43.880 think that the earnings expectation is likely to be justified. 0:08:43.920 --> 0:08:46.840 They will still continue to deliver growth, of course, supported 0:08:46.880 --> 0:08:50.319 by these structural talent that is artificial intelligence. 0:08:51.480 --> 0:08:54.920 You have to differentiate between stock performance and then actual 0:08:55.000 --> 0:08:58.920 growth in earnings, right, I think the average estimate or 0:08:58.920 --> 0:09:03.240 the Bloomberg Intelligence forecast is across the Magnificent seven EPs 0:09:03.240 --> 0:09:06.640 growth of forty six percent, which is like slight deceleration 0:09:06.800 --> 0:09:09.760 from fifty three percent in the prior qorder. The only 0:09:09.840 --> 0:09:13.200 subsector that's comparable is utilities, And we know everything that's 0:09:13.240 --> 0:09:16.240 kind of going on in energy markets and geopolitically globally, 0:09:16.720 --> 0:09:19.120 what is it that the Magnificent seven are able to 0:09:19.200 --> 0:09:22.760 do to keep boosting the bottom line that the broader 0:09:22.800 --> 0:09:25.360 tech sector cannot. 0:09:26.000 --> 0:09:26.160 Well. 0:09:26.200 --> 0:09:29.760 I think there are both cyclical and structural aspects. In 0:09:29.880 --> 0:09:32.480 terms of second coal, we're actually quite constructive on the 0:09:32.480 --> 0:09:37.040 semiconductor sector. That's primal because there is evidence that that 0:09:37.600 --> 0:09:40.960 infratructory cycle has come to an end, particularly if you 0:09:41.000 --> 0:09:46.719 look at the guidance from TSMC. There's further evidence that 0:09:47.200 --> 0:09:49.760 the destock kit is over and you're starting to see 0:09:49.800 --> 0:09:53.000 that you pick up in the global semiconductor orders. I 0:09:53.000 --> 0:09:56.400 think one that is lagging is probably autole semiconductors. There's 0:09:56.400 --> 0:09:59.319 still some inventry drag there, but generally if you talk 0:09:59.360 --> 0:10:03.880 about the hardware upgrade for phones, that's a three year 0:10:03.960 --> 0:10:06.280 cycle and I think we're starting to get a recovery 0:10:06.320 --> 0:10:09.400 from there, and so I think the cycle call uplift 0:10:09.440 --> 0:10:13.720 for those companies would be pretty good. And structurally, of course, 0:10:13.720 --> 0:10:18.520 it's the artificial intelligence boom that to us is still 0:10:18.600 --> 0:10:21.080 pretty much in the early stages. You're talking about first 0:10:21.120 --> 0:10:23.680 of all the pext and shovels play, which is slightly 0:10:23.880 --> 0:10:27.320 could you do well, but broader speaker, I think it 0:10:27.400 --> 0:10:31.040 is going to broaden out to the other applications, which 0:10:31.080 --> 0:10:33.360 is still in the very early stages, and there's this 0:10:33.600 --> 0:10:38.400 creating this completely new demand for these high performance AI 0:10:38.480 --> 0:10:39.480 chips for instance. 0:10:40.559 --> 0:10:42.800 That makes for an interesting week. You said that your 0:10:42.840 --> 0:10:46.160 firm kind of constructive on semis. You know, the one 0:10:46.200 --> 0:10:49.120 that we're watching closely on the show is Intel Thursday, 0:10:49.120 --> 0:10:52.040 and we'll speak to the CEO on Friday. But within 0:10:52.120 --> 0:10:54.280 that you also have Texas Instruments, which is kind of 0:10:54.800 --> 0:10:57.520 the other end of the excitement gauge, right, more analog 0:10:57.640 --> 0:10:59.920 device is a much wider range of end market. 0:11:00.600 --> 0:11:01.760 Do you care more. 0:11:01.600 --> 0:11:04.800 About learning about the health of the end markets or 0:11:04.840 --> 0:11:07.719 the forward looking commentary on how AI is going to 0:11:07.800 --> 0:11:09.559 change the game to these companies? 0:11:10.720 --> 0:11:13.840 To be honest, I think it's both really So for 0:11:14.120 --> 0:11:17.920 the more boring kind of areas of semiconductors, it was 0:11:17.960 --> 0:11:23.719 really dragged by the infantry d stocking for our films 0:11:23.840 --> 0:11:26.200 for the laptop, for example, because we had such a 0:11:26.200 --> 0:11:29.040 boom during the pandemic, right, So, as I said, there's 0:11:29.120 --> 0:11:31.520 just more evidence of that coming to an end, and 0:11:31.520 --> 0:11:34.560 so the mexicoical outlooks could last one and a half 0:11:35.040 --> 0:11:37.640 years plus. So I think that's pretty exciting. So I 0:11:37.720 --> 0:11:41.000 think a bit of that is about that is very 0:11:41.040 --> 0:11:44.120 important and of course the AI commentary would be very important, right. 0:11:44.240 --> 0:11:47.400 I think investors will be continuing looking for evidence that 0:11:47.440 --> 0:11:52.120 this ordest growth is indeed very robust and will continue 0:11:52.160 --> 0:11:54.079 to justify the share price. 0:11:56.320 --> 0:11:59.080 Janet, we're about fifteen minutes away from the close of 0:11:59.160 --> 0:12:03.600 trading in Europe. Something interesting happened today. As it stands, ASML, 0:12:04.400 --> 0:12:07.319 the chip equipment maker, is going to leap frog Nesle 0:12:08.080 --> 0:12:10.439 you see just at the right hand bottom of your screen, 0:12:11.040 --> 0:12:16.960 to become the third most valuable European stock behind lvmh Nova. Notice, 0:12:17.000 --> 0:12:19.800 and it got me thinking about European tech. The SML 0:12:19.920 --> 0:12:23.600 story is caught up in the geopolitics of the US 0:12:23.760 --> 0:12:28.280 China relationship and in the context of AI. But with 0:12:28.440 --> 0:12:31.440 ASML jumping up the value chain, how do you view 0:12:31.480 --> 0:12:34.439 them and how do you view European tech in twenty 0:12:34.480 --> 0:12:35.000 twenty four. 0:12:37.040 --> 0:12:41.480 We actually we have ASML on our individual equity list, 0:12:41.600 --> 0:12:45.040 so we're constructive on the launcher prospect for ASML, primarily 0:12:45.080 --> 0:12:48.199 because it is a monopoly for these advanced set making 0:12:48.840 --> 0:12:52.200 and I think that you are for European tech. Arguably, 0:12:52.240 --> 0:12:54.560 there's not a lot of choices if you look at 0:12:54.559 --> 0:12:58.920 the megacap TAC space, so I finger ASMAN is one 0:12:58.960 --> 0:13:04.280 of the few options there that would deliver promising prospects. 0:13:04.280 --> 0:13:06.600 And I think in terms of the dual politics, I 0:13:06.600 --> 0:13:09.240 think the China risk is in the background, but I 0:13:09.240 --> 0:13:11.480 think a large part of it has already been digested 0:13:11.520 --> 0:13:14.120 by investors. A lot of bad news have already been 0:13:14.120 --> 0:13:16.040 the past. We already know that they're not going to 0:13:16.080 --> 0:13:19.320 send the high end chips to China, right. I think 0:13:19.640 --> 0:13:22.720 that there has been some sensus steadably to the stock price, 0:13:23.040 --> 0:13:25.640 but we have already digested it. And I think the 0:13:25.760 --> 0:13:29.960 long term demount, the structural demound globally it's China is 0:13:29.960 --> 0:13:32.880 still very exciting, and I think that may not be 0:13:32.960 --> 0:13:35.560 fully reflected in the stock price yet. Then we do 0:13:35.640 --> 0:13:40.280 have a continual constructive view on ASML and generally the 0:13:40.600 --> 0:13:42.040 global ship manufacturing sector. 0:13:43.280 --> 0:13:45.480 Janet, there are times on this program where I sound 0:13:45.480 --> 0:13:47.079 like a bit of a broken record. I'm going to 0:13:47.120 --> 0:13:49.600 say the same thing again. We're looking at the FED 0:13:49.640 --> 0:13:52.760 and we're looking at rates because higher rates discount the 0:13:52.760 --> 0:13:55.839 present value of future cash flows. In the context of 0:13:55.920 --> 0:14:00.480 big tech, you know, there is an interesting inflation happening 0:14:00.520 --> 0:14:03.439 around the world, and there's a question in the market 0:14:04.480 --> 0:14:08.080 of whether we are getting our rates expectations wrong. 0:14:08.920 --> 0:14:10.280 Are we getting it wrong? Janet? 0:14:12.240 --> 0:14:16.040 I think there is a possibility, given that we initially 0:14:16.160 --> 0:14:19.480 expect sex, I mean, the marketing expects sex, and then 0:14:19.560 --> 0:14:22.040 now they have to tribute to five rate cut expectations. 0:14:22.440 --> 0:14:26.720 But interestingly, during this period of recalibrating interest rate expectation, 0:14:27.400 --> 0:14:29.680 the markets continue to go up in the US. I 0:14:29.720 --> 0:14:33.320 think it's not saying that this interest rate cut expectations 0:14:33.320 --> 0:14:37.520 doesn't matter. It matters, but for these quality companies, for 0:14:37.600 --> 0:14:41.840 these merrical companies, I think they demonstrated they actually managed 0:14:41.840 --> 0:14:44.400 to do well last year in the rising interest rate 0:14:44.440 --> 0:14:47.840 and bone new environment. And I think we may get 0:14:47.880 --> 0:14:50.280 it wrong right. It could be two recoup, three racous. 0:14:50.320 --> 0:14:52.920 We don't know, But generally we saw that rates have 0:14:53.080 --> 0:14:56.160 picked and that provides a stable anchor for investors. And 0:14:56.400 --> 0:14:58.400 it's still more likely than not we are going to 0:14:58.400 --> 0:15:01.440 see a couple of rate pass this year. So I 0:15:01.480 --> 0:15:04.800 think in general investors are still very much focused on 0:15:04.880 --> 0:15:09.560 this stoft blending direction, which we saw more your data confirmation, 0:15:10.120 --> 0:15:13.760 especially from last Fridays the University of Michigan confidence or 0:15:13.920 --> 0:15:17.040 it you the best of data right, Low inflation expectation, 0:15:17.280 --> 0:15:20.240 higher consumer confidence. So I think I think the soft 0:15:20.280 --> 0:15:24.440 lending direction is actually driving more of that market movement 0:15:24.680 --> 0:15:26.640 compared to that expectation. 0:15:27.800 --> 0:15:30.800 Hey, there's something refreshing in the honesty of saying we 0:15:30.920 --> 0:15:34.600 just don't know. Janet Mouly, headed market analysis at RBCB 0:15:34.760 --> 0:15:36.360 and Dolphin. Great to have you on the program and 0:15:36.480 --> 0:15:39.960 coming up here on Bloomberg Technology, Elon Musk's AI company 0:15:40.240 --> 0:15:43.520 gets a five hundred million dollars boost. Get those details 0:15:43.520 --> 0:15:55.880 coming up next. This is Bloomberg Technology. Okay, time for 0:15:55.920 --> 0:15:58.280 talking tech and in the news and video. Co founder 0:15:58.360 --> 0:16:02.760 Jensen Wang celebrated the Chinese New Year with staff during 0:16:02.760 --> 0:16:05.640 a trip to China, is first in four years, a 0:16:05.720 --> 0:16:10.040 low key tour that coincided with frankly growing concerns about 0:16:10.080 --> 0:16:14.160 Beijing's ability to get around US chip restrictions, and speaking 0:16:14.160 --> 0:16:16.480 of which, as firms wrapped up investment to try and 0:16:16.520 --> 0:16:20.560 get around those restrictions, China's imports of chip making machines 0:16:20.640 --> 0:16:24.920 jumped fourteen percent last year to almost forty billion US dollars, 0:16:24.960 --> 0:16:29.560 the second largest amount on record since twenty fifteen. Plus, 0:16:29.600 --> 0:16:32.840 the US Supreme Court asked the Biden administration to respond 0:16:32.880 --> 0:16:35.600 to an appeal by Elon Musk, who is seeking to 0:16:35.640 --> 0:16:38.840 overturn an agreement he reached with the SEC to have 0:16:38.960 --> 0:16:43.760 his social media posts about Tesla screen in advance the 0:16:43.800 --> 0:16:46.720 Twitter sidter if you remember. And in other Musk news, 0:16:46.760 --> 0:16:50.840 his artificial intelligence company Xai has secured five hundred million 0:16:50.880 --> 0:16:54.320 dollars in commitments from investors, the end goal being one 0:16:54.360 --> 0:16:57.360 billion dollars. That all according to Bloomberg sources. I want 0:16:57.400 --> 0:16:59.840 to bring in Bloomberg's KD Ruth for more and K 0:17:00.120 --> 0:17:03.080 you and I reported this story together, and let's get 0:17:03.160 --> 0:17:06.240 right to it. After we published the story, Elon Musk 0:17:06.280 --> 0:17:09.040 said on x the platform for me known as Twitter, 0:17:09.400 --> 0:17:12.480 that this is fake news. But what are the details 0:17:12.480 --> 0:17:13.280 that we reported? 0:17:15.000 --> 0:17:15.280 Sure? 0:17:15.359 --> 0:17:17.520 Yeah, so it's not clear what part of the story 0:17:17.600 --> 0:17:20.760 he's denying. But a number of sources have told us 0:17:20.760 --> 0:17:23.680 that there have been conversations about a new fundraising round. 0:17:23.840 --> 0:17:26.880 There's actually even been a filing about this, that they 0:17:27.040 --> 0:17:34.439 are seeking roughly a billion dollars for XAI, his AI platform, 0:17:34.680 --> 0:17:38.760 and we've heard that they've received maybe five hundred million 0:17:38.840 --> 0:17:41.400 in commitments so far. But to be clear, these are 0:17:41.680 --> 0:17:44.679 what I would call soft commitments because the valuation is 0:17:44.720 --> 0:17:50.359 still being set they have discussed numbers that include fifteen billion, 0:17:50.440 --> 0:17:54.520 twenty billion, but they actually haven't decided and so it's possible. 0:17:54.560 --> 0:17:57.159 That's what he is alluding to here, is that the 0:17:57.240 --> 0:17:59.960 valuation hasn't been set in stone. 0:18:00.520 --> 0:18:02.720 You know what I heard from my sources, what you heard, 0:18:03.240 --> 0:18:06.119 and Lizette Chapman, who we reported this with, heard as well. 0:18:06.160 --> 0:18:09.160 It's like there's a lot of interest of getting in 0:18:09.400 --> 0:18:13.000 on this round and investing in a Musk led company. 0:18:13.480 --> 0:18:16.720 What's interesting to me is like a billion dollars doesn't 0:18:16.760 --> 0:18:19.080 really seem that much if you look at some of 0:18:19.119 --> 0:18:22.440 the vast sums the other leading makers of the l 0:18:22.560 --> 0:18:25.800 lms and generative AI tools of rais, how do these 0:18:25.800 --> 0:18:26.840 things normally shake out? 0:18:26.920 --> 0:18:27.040 Right? 0:18:27.400 --> 0:18:33.440 It's a number of weeks that the rounds are often oversubscribed, sure, and. 0:18:33.359 --> 0:18:36.840 So the target size of around can and often does 0:18:37.000 --> 0:18:41.359 change a lot of times. Usually it's actually not completely 0:18:41.400 --> 0:18:45.199 set until they know the valuation because it's hard to know, 0:18:45.640 --> 0:18:47.360 you know, if you don't know the sheer price, it's 0:18:47.359 --> 0:18:49.719 hard to know what people are going to pay and 0:18:49.760 --> 0:18:51.960 how much you know, how much they're going to invest. 0:18:52.240 --> 0:18:54.879 So we could see the number go up, and we 0:18:54.920 --> 0:18:58.360 can also see the number go down. It's also possible 0:18:58.440 --> 0:19:00.800 they'll do another round in a few months at a 0:19:00.800 --> 0:19:04.280 different share price. So I wouldn't see this as an 0:19:04.400 --> 0:19:06.679 end goal that they'll only raise a billion dollars. They 0:19:06.680 --> 0:19:08.560 could someday raise many billions. 0:19:09.200 --> 0:19:11.800 Ultimately, we know the aim was to raise money and 0:19:11.880 --> 0:19:14.120 up to a billion dollars because of a regulatory filing 0:19:14.480 --> 0:19:17.240 that Musk and Xai made. There's two interesting parts here. 0:19:17.359 --> 0:19:20.560 One the X Corps or x the company formerly known 0:19:20.560 --> 0:19:24.800 as Twitter investors seem to be those most likely to participate. 0:19:25.160 --> 0:19:28.560 And one element we reported. Instead of getting equity, something 0:19:28.600 --> 0:19:33.560 being discussed is having access to computes in lieu of equity, 0:19:33.600 --> 0:19:37.400 which is an interesting situation for an investor to find 0:19:37.400 --> 0:19:38.040 themselves in. 0:19:39.760 --> 0:19:43.040 Sure right now, you know, obviously there's it's very competitive 0:19:43.160 --> 0:19:47.239 to get in on the next big AI business, and 0:19:47.320 --> 0:19:51.879 so anything they can do to leverage their technology that 0:19:51.920 --> 0:19:55.840 could be used maybe for other startup investments that investors 0:19:55.840 --> 0:19:59.760 are making, or you know, help you know, potential strategic 0:20:00.520 --> 0:20:04.400 you know, we have relationships with Microsoft and OPENINGI for example, 0:20:05.720 --> 0:20:10.159 anything that any sort of partnerships that add value to 0:20:10.520 --> 0:20:13.840 a company could be mutually beneficial for XAI. 0:20:14.920 --> 0:20:16.960 All right, bombers. Katie Ruth one of the co by 0:20:17.000 --> 0:20:19.240 lines with me on that one. It's a big week 0:20:19.480 --> 0:20:24.040 for technology earnings, Netflix, Tesla, IBM, and Intel towards the 0:20:24.119 --> 0:20:26.680 end of the week. But there's still a debate about 0:20:26.680 --> 0:20:29.320 what the Fed will or will not do in the 0:20:29.359 --> 0:20:32.760 context of when they'll cut rates, if they'll cut rates, 0:20:32.800 --> 0:20:35.119 and how deeply they'll cut rates. And at the same time, 0:20:35.640 --> 0:20:38.080 still a debate about the strength of the global economy 0:20:38.359 --> 0:20:41.400 soft landing here in the US versus entering into a recession. 0:20:41.440 --> 0:20:42.640 Same stuff as last year. 0:20:42.840 --> 0:20:45.560 We carry on the conversation that reflected kind of in 0:20:45.560 --> 0:20:48.160 the movement in yields as well US tenure just below 0:20:48.200 --> 0:20:51.280 four point one percent. It is an election year and 0:20:51.359 --> 0:20:53.879 my goodness did that show itself over the weekend. 0:20:53.920 --> 0:20:55.160 Let's turn to politics. 0:20:55.640 --> 0:20:59.240 Ronda scentists dropping out of the race on X in 0:20:59.280 --> 0:20:59.920 a video. 0:21:00.520 --> 0:21:03.480 Interesting his choice to do that on that platform. 0:21:03.560 --> 0:21:06.359 Let's go out to New Hampshire and join Kaylee Lions, 0:21:06.359 --> 0:21:09.800 who's live on the ground ahead of that primary. Kayley, 0:21:10.000 --> 0:21:13.440 what did you make of the DeSantis timing the announcement 0:21:13.680 --> 0:21:17.640 but also specifically choosing X as the platform to make 0:21:17.680 --> 0:21:18.359 that announcement? 0:21:20.160 --> 0:21:22.439 Well at The timing certainly was interesting, as he just 0:21:22.560 --> 0:21:25.479 last week came in second in Iowa and had been 0:21:25.520 --> 0:21:28.040 saying he was focusing his energy and resources on South 0:21:28.040 --> 0:21:30.320 Carolina but still was going to compete in New Hampshire 0:21:30.359 --> 0:21:32.600 and before we even got to primary day. Now he's 0:21:32.640 --> 0:21:35.120 out of the race. It does seem like a fitting end, though, 0:21:35.119 --> 0:21:38.280 that this ultimately came on that platform, because remember it 0:21:38.320 --> 0:21:40.879 was also on x that DeSantis launched his candidacy in 0:21:40.920 --> 0:21:43.160 a first place in the first place through a spaces 0:21:43.400 --> 0:21:45.200 in which it was a little glitchy, and they tried 0:21:45.200 --> 0:21:47.320 to say that they broke the Internet, but it didn't 0:21:47.320 --> 0:21:49.000 really seem like it went off without a hitch. And 0:21:49.000 --> 0:21:51.920