Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. Bloomberg Tech is live
Speaker 1: from coast to coast with Caroline Hide in New York
Speaker 1: and Eva Loow in Sentrancisco.
Speaker 2: This is Bloomberg Tech coming up. AT and T plans
Speaker 2: to buy twenty three billion dollars worth of spectrum licenses
Speaker 2: from EchoStar, having to coverage in virtually every US market,
Speaker 2: plus a digital services tax fight we escalate as President
Speaker 2: Trump threatens more tarifs and restrictions on advanced tech and
Speaker 2: chips in retaliation. This as we await a cabinet meeting
Speaker 2: with President Trump this hour, we'll discuss what to expect.
Speaker 2: The first we check in on these markets, which there
Speaker 2: is a macro story at play here that affects the
Speaker 2: bond market. Stocks actually pretty resilient in light of anxiety
Speaker 2: around French political drama, US fed drama, and that we
Speaker 2: will go into, I'm sure or when we come to
Speaker 2: the cabinet meeting. But right now we're up a ten
Speaker 2: percent on the Nasdaq Big Text still managing to push
Speaker 2: higher ahead of some key earnings this week, of course,
Speaker 2: but also as we delve into an individual stock story
Speaker 2: that affects AT and T and Echo Star. Let's get
Speaker 2: into it, because att Off by one point four percent,
Speaker 2: had trained to hire earlier in the session. As it
Speaker 2: spends big to extend its spectrum, its access to licenses,
Speaker 2: buying them from EchoStar, which remember the chairman of this
Speaker 2: company had actually met with the Trump administration. It's not
Speaker 2: almost eighty percent as they do what was willed of
Speaker 2: them to sell off spectrum. Let's get the details. Casey
Speaker 2: Kelsey Griffiths is with us to dig into the details.
Speaker 2: What the market likes is that they're paying far more
Speaker 2: well at and T is paying far more than originally
Speaker 2: Echo Star did for these licenses. That's right.
Speaker 3: So we're looking at the stocks reacting pretty spectacularly to
Speaker 3: this deal that was announced this morning, and as you mentioned, Caroline,
Speaker 3: we are seeing kind of the latest step to res
Speaker 3: a regulatory probe over EchoStar potentially not putting its licenses
Speaker 3: to the highest and best use. We know that EchoStar
Speaker 3: met with the FCC chair Brendan Carr and also President
Speaker 3: Trump about a month ago, and both companies are saying
Speaker 3: that this is an important step forward toward resolving that probe.
Speaker 2: That probe which well, those Ecosta had said had distracted
Speaker 2: them from actually making the investments into using of the licenses.
Speaker 2: There was a threat of bankruptcy at one point they
Speaker 2: weren't paying on their bonds. But tell us the AT
Speaker 2: and T side of this, why spend big on these
Speaker 2: licenses exactly?
Speaker 3: So AT and T is really kind of making the
Speaker 3: most of this moment. These mid and high band spectrum
Speaker 3: licenses don't come available very often because this is a
Speaker 3: limited and very valuable resource, and AT and T is
Speaker 3: really jumping on the chance to increase its portfolio and
Speaker 3: really beef up its spectrum holdings with this. So even
Speaker 3: though it's a lot of debt to take on right now,
Speaker 3: this is a really valuable investment in their future and
Speaker 3: something that customers are also going to feel the difference
Speaker 3: from pretty immediately.
Speaker 2: They're going to feel the difference. Just remind the consumer,
Speaker 2: Remind the audience why it is so expensive but so
Speaker 2: crucial to reinvest in spectrum. To access.
Speaker 3: Spectrum is what carries all of our wireless communications. It's
Speaker 3: what enables it, and it's sort of like a highway
Speaker 3: that gets jammed during rush hour.
Speaker 2: If you're not able to open.
Speaker 3: Up more lanes, then you're going to experience gridlock, and
Speaker 3: so AT and T is effectively opening more lanes on
Speaker 3: that highway to keep that wireless traffic moving.
Speaker 2: I love that analogy. As always, we thank you so
Speaker 2: much for digging deep, Kelsey Griffiths on all things telecoms.
Speaker 2: Let's get an investigate now. Ted Mortenston's with US is
Speaker 2: managing director over at BED. They have a cool five
Speaker 2: and twenty five billion dollars in assets under management. What's
Speaker 2: so interesting is AT and T here basically reinvesting money
Speaker 2: they save through the recent budget. Ted, are we going
Speaker 2: to see more companies commit to infrastructure in this way?
Speaker 4: I think so. I mean, the big Beautiful Bill gives
Speaker 4: a lot of flexibility and depreciation writing off of assets,
Speaker 4: and I think AT and T had, you know, a
Speaker 4: very very big tex advantage, and they're going to put
Speaker 4: three billion dollars in just into optical. I think what
Speaker 4: this spectrum buy is, you know, low band spectrum is
Speaker 4: incredibly limited, and it gives AT and T a long
Speaker 4: term look at increasing capacity. And I'm sure on the
Speaker 4: roadmap is home internet and expanding that capacity and taking
Speaker 4: share via that as well as long term the roadmap
Speaker 4: on AI at the edge is also probably relevant.
Speaker 2: Very much so. John Stankey's come on this show to
Speaker 2: talk about exactly that the need for data is we'll
Speaker 2: become addicted to each other chat what we're using Ted.
Speaker 2: What's interesting is we're just seeing the echo star Stock reaction.
Speaker 2: In many ways, this is once again the administration playing
Speaker 2: a very key role in as they see them, key assets.
Speaker 2: Bringing in the chair of Ecostar to the administration because
Speaker 2: President Trump was worried about a potential bankruptcy of what
Speaker 2: he saw as a key piece of infrastructure. How much
Speaker 2: are you having to navigate this an ever more active
Speaker 2: administration in big tech?
Speaker 4: This is I think it's unpreceded. You bring a great
Speaker 4: point up, Carolyn, this is unprecedented actually having an administration
Speaker 4: that actually understands the technology issues, whether it be digital
Speaker 4: tax out of Europe basically with additional tariffs, meeting with
Speaker 4: Navidia on getting through the China H twenty issue. The
Speaker 4: topics that this administration is tackling is really in the unprecedented,
Speaker 4: unprecedented area on getting actually involved tech. And then you
Speaker 4: throw an Intel also, yeah, I.
Speaker 2: Mean to that point, does the administration generally align with
Speaker 2: fiduciary responsibility of leadership to give money back to shareholders
Speaker 2: in many ways. Do you think that they're generally positive
Speaker 2: for these businesses?
Speaker 4: I'll pass on that question. I can only tell you
Speaker 4: what they're doing from the technology standpoint is they're rolling
Speaker 4: the rock uphill very very quickly and getting through all
Speaker 4: the bureaucracy. It gives the US a tremendous advantage from
Speaker 4: the technology standpoint if you look at going head to
Speaker 4: head with China and AI, but also from an infrastructure standpoint,
Speaker 4: we're years ahead of Europe right now, and having a
Speaker 4: non bureaucratic administration that understands the issues around technology is
Speaker 4: a real benefit for the US people.
Speaker 2: Does create perhaps sometimes just general uncertainty for businesses in
Speaker 2: the way in which they run. I'm just thinking of
Speaker 2: perhaps the threat that we've just had today. We're going
Speaker 2: to discuss it more after this conversation Ted, but how
Speaker 2: to tackle digitals his taxes on alphabet and META. He's
Speaker 2: threatening more restrictions on chips made by in video and AMD.
Speaker 2: Just how do you see tariff headwinds for companies or
Speaker 2: can I see through them? Because the tailwinds of generative
Speaker 2: AI just so huge.
Speaker 4: I think there's a few issues this is playing chess
Speaker 4: on four levels. To be honest with you, I mean
Speaker 4: the tariff's long term, we'll see some inflationary impact to it.
Speaker 4: But I think what the administration's doing is they're looking
Speaker 4: at this one of the most prolific builds that I've
Speaker 4: seen in thirty years of doing technology. They understand that
Speaker 4: these stakes on generative AI, whether it be AGI or
Speaker 4: actually agentic based systems, it's crucial that the US actually
Speaker 4: is in the leadership role and is developing AI in
Speaker 4: a way that if you look at the spend this year,
Speaker 4: it's over four hundred billion of fifty three percent. We've
Speaker 4: never seen an architectural build like this. It gives the
Speaker 4: US economy and quite frankly, our defense postures, you know,
Speaker 4: a real advantage from a global perspective.
Speaker 2: And so where is that mispriced in the market right now? Ted?
Speaker 2: Where are their opportunities?
Speaker 4: I think there's tremendous opportunities on just looking at who
Speaker 4: has all the next generation technology. I mean, if you
Speaker 4: look what Navidia is doing with not only Blackwell, but
Speaker 4: the follow on the Ruben silicon advantage, Jensen's doing something
Speaker 4: that no one has ever done in technology from a
Speaker 4: systems approach. He's rewriting the architectural is shoes on high
Speaker 4: performance compute, whether it be from networking memory to the
Speaker 4: core GPUs, but also these Kuda directories on software. He's
Speaker 4: got a three to four year lead on anybody in
Speaker 4: the world done doing this. So just from a Navidia
Speaker 4: standpoint and the picks and shovels that will go into Reuben,
Speaker 4: I would have your viewers do a fair amount of
Speaker 4: work on the optical space because Jensen is pivoting the
Speaker 4: whole architecture from basic a copper infrastructure to optical and
Speaker 4: they're developing one point six terabid solutions that were on
Speaker 4: the drawing board that are getting accelerated.
Speaker 2: And in your notes, as always, you talk about the
Speaker 2: optical option CNA being one of them some of the
Speaker 2: other stocks that give you exposure, Ted Mortenston, so great
Speaker 2: to catch up. Then managing directory. Thank you. Now coming up,
Speaker 2: President Trump fights back against Europe's digital taxes. We're just
Speaker 2: talking about it with Ted Trump saying more tariffs than
Speaker 2: export restrictions could be on the way for those countries
Speaker 2: who impose him. More on that. Next, this is Blomberg
Speaker 2: Tech President Trump and he's vowed to impose new tariff
Speaker 2: and export restrictions on advanced tech and semiconductors in retaliation
Speaker 2: against other nations digital services taxes. Now, the latest move
Speaker 2: raise is uncertainty of a tariff rates for US trading partners.
Speaker 2: Once again, Lumerg's Tyler Kendall joins us now from the
Speaker 2: White House. This is a recurring theme, the iya from
Speaker 2: President Trump around these basically European taxes.
Speaker 5: Right exactly, Caroline in factor will a call back. In February,
Speaker 5: President Trump had actually signed a memorandum then opened the
Speaker 5: door for the second Trump administration to look into how
Speaker 5: to retaliate against digital services taxes so called DSDs, including
Speaker 5: renewing a Section three oh one investigation into alleged trade
Speaker 5: unfair trade practices related to digital services taxes. So this
Speaker 5: has long been something that the Trump administration has taken
Speaker 5: aim at. Take for example, in the first iteration of
Speaker 5: the One Big, Beautiful Bill, there was that so called
Speaker 5: revenge tax section eight ninety nine that was geared towards
Speaker 5: trying to retaliate against those countries that do have these
Speaker 5: taxes in place. We saw them basically derail the Canadian
Speaker 5: negotiations over trade earlier this year when Canada was set
Speaker 5: to collect retroactively revenue from the tax. Ultimately they had
Speaker 5: to stop that collection period in order to keep talking
Speaker 5: with this White House in Prafts. Most notably, and I
Speaker 5: know you were just talking about this in your last segment,
Speaker 5: we saw a delay in that joint statement between the
Speaker 5: US and the European Union just last week when it
Speaker 5: came to their trade framework, and our understanding and reporting
Speaker 5: was it was because of this hold up ultimately on
Speaker 5: trying to get some sort of concession out of the
Speaker 5: EU when it came to digital trade and services regulations. Now,
Speaker 5: of course, our understanding has been that the European Union
Speaker 5: is pushing back on that and that they say that
Speaker 5: that's not going to be part of any trade deal.
Speaker 5: In fact, we got a statement earlier today from the
Speaker 5: European Commission spolkeswoman who ultimately said that it's their sovereign
Speaker 5: right of the EU and its member states to regulate
Speaker 5: our economic activities on our territory that are consistent with
Speaker 5: our own democratic value. So doesn't seem to be backing
Speaker 5: down there, though, Caroline, our reporting had indicated that perhaps
Speaker 5: there were not these concessions quite yet. In a bid
Speaker 5: to maintain some leverage as these trade negotiations continue.
Speaker 2: Yeah, certainly when it comes to TA free treatment for
Speaker 2: wine and spirits, a bit of a tit for TACH
Speaker 2: continues here, Tyler. But what broadly is interesting that President
Speaker 2: Trump is using so one part of the technology ecosystem
Speaker 2: against another with holding perhaps access to chips if you
Speaker 2: stop hurting other big tech names such as Alphabet and Meta.
Speaker 2: How much lobbying have those sorts of companies done against
Speaker 2: these taxes.
Speaker 5: Well, we know that there has been a huge lobbying
Speaker 5: effort here in Washington, with private sector CEOs often visiting
Speaker 5: the White House trying to make some sort of meaningful
Speaker 5: movement when it comes to the policy decisions by this administration.
Speaker 5: And we've seen that perhaps most at the forefront when
Speaker 5: it comes to those tariffs or pending tariffs on semiconductors
Speaker 5: and chips.
Speaker 2: And as you well know.
Speaker 5: And I report on every day on this program, we
Speaker 5: are trying to start to glean those details on what
Speaker 5: those tariffs are actually going to look like. And it
Speaker 5: has to do a lot with the administration pushing that
Speaker 5: it wants to see more US direct investment from these
Speaker 5: companies and shifting their supply chains here to make these
Speaker 5: products and these goods. So it's something that we're watching
Speaker 5: very closely here. But of course it comes sort of
Speaker 5: at this tension point as the White House tries to
Speaker 5: protect this domestic industry, but also by putting on these
Speaker 5: export controls could ultimately end up harming the competition.
Speaker 2: Moving forward, Tyler Kendall, we appreciate it from the White House.
Speaker 2: Let's get the European perspective on this, Bloomberg's Peter Elstrom
Speaker 2: now standing by in London. Europe is very committed to
Speaker 2: these taxes, whether or not it is some sort of
Speaker 2: bargaining chip mentality or waiting what the OBCD eventually does
Speaker 2: in terms of leveling the playing field on taxes on
Speaker 2: such big juggnats. But remind us twenty nineteen France first.
Speaker 6: Put it in right, Yeah, that's exactly right.
Speaker 7: Now.
Speaker 6: Trump was not specific about which countries he was criticizing
Speaker 6: here for having these digital service taxes, as you alluded
Speaker 6: to earlier. The spokeswoman for the EU said that it's
Speaker 6: our sovereign right to impose these taxes, and then she
Speaker 6: went on to say that we're not targeting any particular
Speaker 6: company or country where these companies are coming from. But
Speaker 6: in the end, this is essentially a lot of European
Speaker 6: companies taxing a lot of American companies. You have taxes
Speaker 6: on things like search engines ie Google, on digital advertising
Speaker 6: like Facebook and Meta, and also on streaming services like
Speaker 6: Netflix in particular. So you did see this start with
Speaker 6: France in twenty nineteen where they imposed the tax. Now
Speaker 6: you've got other countries like Austria is taxing advertising. You've
Speaker 6: got Pull in this taxing digital streaming services. And here
Speaker 6: in the u K they're going after search engine revenue
Speaker 6: and advertising too. So it is a bit of a
Speaker 6: patchwork of taxes at this point, but they are getting posed.
Speaker 6: And now this this broadside from Trump is saying we're
Speaker 6: going to retaliate if in fact these countries proceed with
Speaker 6: these kind of digital taxes.
Speaker 2: But as we can see you from this graphic, at
Speaker 2: the moment, it's a nice little learner for countries such
Speaker 2: as France to get about three quarters of a billion
Speaker 2: per year by getting these sorts of taxes on revenues.
Speaker 2: Peter more broadly, could we see a not backing away
Speaker 2: with Canada and but certainly a view from companies that
Speaker 2: are actually based out making money in Europe like this.
Speaker 2: Is there anything that Meta in Alphabet have tried to
Speaker 2: do to restrict the amount of ultimate revenue that is
Speaker 2: going in that direction to Europe.
Speaker 6: I mean, certainly these companies, as Tyler was alluding to earlier,
Speaker 6: they've been lobbying a lot within Washington. They've also been
Speaker 6: a lobby lobbying a lot here in Europe to be
Speaker 6: able to get some sort of advantages, whether those are
Speaker 6: tax advantages, relief from some of these tax in particular,
Speaker 6: they've been pushing very hard to be able to do that,
Speaker 6: and they have not been afraid to go to the
Speaker 6: Trump White House to be able to get their backing
Speaker 6: to push back on some of these issues. Sometimes it's
Speaker 6: been about free speech online. Sometimes it's been about taxes.
Speaker 6: Sometimes it's been about their treatment. It's probably because the
Speaker 6: US does have the biggest technology companies, they are very
Speaker 6: active in Europe and they want to be able to
Speaker 6: affect the playing field as much as they can to
Speaker 6: their own advantage.
Speaker 2: I have to see also how an OECD agreement could
Speaker 2: change all of this. Bloomberg's Peter Elstrom, it's so good
Speaker 2: to get the European perspective. We appreciate it. Now coming up,
Speaker 2: Elon Musk says Apple is unfairly favoring open Ai on
Speaker 2: iPhones in a new lawsuit. We'll context from that. Next.
Speaker 2: This is Bloomberg Tech in a new lawsuit. Elon Musk
Speaker 2: alleges that Apple and open Ai are thwarting competition, saying
Speaker 2: the tech giant is unfairly favoring open AA across its iPhones.
Speaker 2: Joining us now to discuss is David Baltow? Do you
Speaker 2: trust lawyer? A former policy director of the Bureau of
Speaker 2: Competition of the FTC. We come to you for your
Speaker 2: expertise in competition. Is there a leg to stand on
Speaker 2: here legally speaking that with a partnership and allowing open
Speaker 2: Ai basically to be intertwined with Siri, that it's stopping
Speaker 2: fair competition for the other genai chatbots.
Speaker 8: Well, I'm afraid this is a case that's not really
Speaker 8: going to launch. The Apple has a broad range of
Speaker 8: power to select who it's going to partner with, and
Speaker 8: I don't think there's a really compelling story here that
Speaker 8: competition is harmed through the arrangement that Apple has made,
Speaker 8: which seems to be clearly consistent with mainstream anti trestlaw.
Speaker 2: Okay, so if he doesn't have perhaps the legal leg
Speaker 2: to stand on, maybe more of a public relations argument
Speaker 2: in many ways, Is there anything you can do about
Speaker 2: the ratings within the app store, do you think and
Speaker 2: the way in which that is deemed to be by
Speaker 2: or not.
Speaker 8: You know, I think Apple's been tested on this in
Speaker 8: a number of areas, and of course there's been litigation
Speaker 8: in this area, and I think Apple's quite careful to
Speaker 8: make sure it's not violating the law, just you know,
Speaker 8: fundamental principles of competition law. Apple has the ability to
Speaker 8: decide who it's going to partner with and what those
Speaker 8: arrangements are. Unless it's you know, unnecessarily exclusionary, it really
Speaker 8: prevents rivals from being able to effectively compete. And here
Speaker 8: Apple has said in a straightforward fashion, this arrangement is
Speaker 8: not exclusive. This is a question of just Elon Musk
Speaker 8: coming to the table with Apple and coming up with
Speaker 8: a better deal to convince them to you know, include
Speaker 8: his AI product.
Speaker 2: Yeah, because the idea was always when the announcement was
Speaker 2: first made by Apple, the other third parties will be
Speaker 2: invited to the table. Of course, there's an ongoing anti
Speaker 2: trust investigation that overwhelms perhaps Alphabet at the moment and
Speaker 2: the way in which payments go between Apple and Alphabet,
Speaker 2: but certainly Jim and I AI getting closer to Apple.
Speaker 2: We know that maybe a perplexity others eventually will make
Speaker 2: some sort of agreement and that could iron out any
Speaker 2: anti trust issues.
Speaker 8: Yes, and you know I definitely think so. But you
Speaker 8: know this is Elon Musk again trying to use the
Speaker 8: muscle of the antitrust laws to Coher's arrival into entering
Speaker 8: two arrangement. That's just not going to work. A court's
Speaker 8: going to see right through there.
Speaker 2: Okay, you say this once again. I mean we do
Speaker 2: know that, you know, Musk has I think leveled at
Speaker 2: least one or two cases the direction of open AI
Speaker 2: and open AI have now been calling it harassment on
Speaker 2: that respect, but he's never really targeted Apple before. How
Speaker 2: much is it a distraction? How expensive is it for
Speaker 2: companies to do this?
Speaker 8: You know Apple's you know, Apple has heavy, you know,
Speaker 8: very strong armor, and they're used to this area. You know,
Speaker 8: there's a cost with being a firm that develops very
Speaker 8: successful products and has an important market position, and that
Speaker 8: cost is you're often subject to these types of anti
Speaker 8: trust suits. Apple is a very well consoled company. I'm
Speaker 8: sure that they've figured out ways of entering into this
Speaker 8: arrangement with open Ai that do not put them in
Speaker 8: hot water.
Speaker 2: And what's also interesting in the context of all of
Speaker 2: this is that Gemini Ai is the competitor owned by Alphabet,
Speaker 2: which of course has the Android ecosystem and relationships with
Speaker 2: Samsung that of course integrates. Therefore gemini Ai is there
Speaker 2: is that part of the argument also here that plenty
Speaker 2: of people are downloading apps, plenty of people have standalone
Speaker 2: use cases, these chatbots, and it's not just using open
Speaker 2: Ai purely through the Apple ecosystem.
Speaker 8: You know, I think that's true, and I but there
Speaker 8: are you know, there are plenty of alternatives, and this
Speaker 8: is just a question of being able to enter into
Speaker 8: a business arrangement. You know, Musk may not like the
Speaker 8: terms that Apple is offering offering him, but ultimately, the
Speaker 8: anti trust laws, the purpose of the anti trust laws,
Speaker 8: Justice Brennan said sixty years ago is to protect competition
Speaker 8: and consumers and not competitors, and that you know, basically,
Speaker 8: Musk is asking a court to stand anti trust law
Speaker 8: on its head and put it in the position of
Speaker 8: protecting his interests and not the interests of consumers.
Speaker 2: Now, we appreciate all of your expertise on throughout all
Speaker 2: of this. Of course, we want to just break some
Speaker 2: other news when it comes to the legal system. Right now,
Speaker 2: we understand that a lawyer for Lisa Cook fed the
Speaker 2: Federal Reserves Lisa Cook, has saying that they will file
Speaker 2: a lawsuit challenging the firing. The firing currently being demanded by,
Speaker 2: of course, President Trump. We knew that Donald Trump and
Speaker 2: made moves to OUs for Reserve Governor Lisa Cook following
Speaker 2: allegations that she had indeed falsified mortgage documents. It's dramactic
Speaker 2: escalation and what has been an ongoing battle the President
Speaker 2: has been having with the Federal Reserve. It's unnerved some investors.
Speaker 2: We've seen that in the bond market earlier today, with
Speaker 2: yields pushing higher, particularly at the thirty year, the dollar
Speaker 2: has been coming lower. And now we do get a statement,
Speaker 2: it would seem from the lawyer of Lisa Cook of
Speaker 2: the Federal Reserve saying that they will file a lawsuit
Speaker 2: challenging this firing, and is ultimately something that is likely
Speaker 2: to be discussed at the cabinet meeting that we will
Speaker 2: take life view in a little bit as when it
Speaker 2: gets kicked off. But for now we do want to say, oh,
Speaker 2: thanks to David Bowto. He's the antitrust lawyer who is
Speaker 2: just discussing that fight between Eenil musk opening I and Apple.
Speaker 2: But coming up in the tech space for you now,
Speaker 2: investors are waiting in video earnings for a gauge in
Speaker 2: the chip sector as President Trump vows potential new tariffs.
Speaker 2: That's next. This is Bloomberg Tech. Welcome back to Bloomberg Tech.
Speaker 2: We take a look at these markets, so it actually
Speaker 2: stocks remaining relatively resilient in the face of what is
Speaker 2: a concerning picture of the Federal Reserve's irking some market
Speaker 2: participants in the bond market. Now, I look at a
Speaker 2: ten tenth of a percent higher on the Nasdaq one hundred,
Speaker 2: big tech on deck in terms of their earnings. Later
Speaker 2: this week we'll dig into that. In a moment, I
Speaker 2: wanted to shine light on the thirty year on right now,
Speaker 2: yields are up some three basis points. Who are asking pressure
Speaker 2: on the bond market at the longer end and on
Speaker 2: the US dollar which is lower today as that fight
Speaker 2: between Lisa Cook of the Federal Reserve seems to be
Speaker 2: amping up versus President Trump and his call for her
Speaker 2: resignation or her firing. We understand from a lawyer for
Speaker 2: Lisa Cook, then indeed they're going to fight that and
Speaker 2: challenge that with a lawsuit of their own. We'll turn
Speaker 2: now attention to that a little bit later, but for
Speaker 2: now we want to get back to what's really dictating
Speaker 2: trade here in the tech markets. I'm looking at what's
Speaker 2: happening in a Semis index. We're up seven tens of percent. Look,
Speaker 2: we're having a nice day for AMD at one point
Speaker 2: is that more than two percent a deal with IBM.
Speaker 2: They're partnering on the future of technology, the use of
Speaker 2: GPUs when it comes to quantum computer and we saw
Speaker 2: a nice rally in AMD on the back of that,
Speaker 2: and Video up sevent ten percent as many Weight with
Speaker 2: baited breath for their earnings after the belt tomorrow in
Speaker 2: King as a man we can do that with of
Speaker 2: course he owns the semiconductor coverage for US at Bloomberg
Speaker 2: and in many weight for in Video as some sort
Speaker 2: of macro bell Weather here for me and for many.
Speaker 2: It's going to be whether we get any clarity.
Speaker 9: On China, right, Yeah, Now this is the big confusion.
Speaker 9: I mean, the underlying market for this company's products is
Speaker 9: looking fantastic according to all of the indicators that we're seeing.
Speaker 9: But this one market, this which is the biggest market
Speaker 9: for semiconductors but not that important for InVideo, is this
Speaker 9: massive swirl of uncertainty. What is the US government going
Speaker 9: to do next, What is the Chinese government going to
Speaker 9: do next? What products will be allowed to be shipped there?
Speaker 9: And the unfortunate problem is we don't know too many
Speaker 9: answers here, and that is what's kind of muddying the
Speaker 9: waters massively, because even though it's relatively and important for nvideo,
Speaker 9: there's still multiple billions of dollars at stake.
Speaker 2: In talking of swirling and uncertainty. Yet another element to
Speaker 2: that was injected with President Trump once again saying that
Speaker 2: maybe he'll increase tariffs on certain semiconductor chips to those
Speaker 2: that impose digital services taxes. He means basically Europe in
Speaker 2: there's no stock reaction to that. So does it feel
Speaker 2: as though that sort of elopment of things is priced in?
Speaker 2: Is that? Do we think that that could become a reality.
Speaker 2: We're still waiting on certain semiconductor tariffs to come in.
Speaker 9: Yeah. I mean you talk to investors as well, and
Speaker 9: I think the reaction you'll get is the same one
Speaker 9: that I get, which is, how can we worry about
Speaker 9: what we don't know, what seems to change from one
Speaker 9: day to the next, what doesn't have a very constant
Speaker 9: element to it, whether these things come and go. It's
Speaker 9: obviously a lot of negotiations being done in public. There
Speaker 9: are concerns, of course, because this country exports a massive
Speaker 9: amount of technology in some respects and imports a lot
Speaker 9: and others. But really it's the impact on end goods
Speaker 9: in terms of semiconductors that's been the big concerns so far,
Speaker 9: rather than the pure sort of impact on raw imports
Speaker 9: of chips, which aren't that huge.
Speaker 2: And with nervousness going back to perhaps access of H
Speaker 2: twenties to China comes in always the exuberance of what's next.
Speaker 2: Just take us up to speed with where are we
Speaker 2: in terms of getting actually sort of dumbed down, to
Speaker 2: use a technical term, Blackwell chips into China. In the
Speaker 2: long term, that seems to be where we're all talking
Speaker 2: about now.
Speaker 9: Yeah, I mean this was something that was hinted about
Speaker 9: buying video and then President Trump went out and said, oh, hey, yeah,
Speaker 9: if they bring me one of these, maybe I'll look
Speaker 9: at it and maybe we can make a bit more
Speaker 9: of a revenue cut on that one too, And that
Speaker 9: would be a move forward for Invidia. That would give
Speaker 9: them a path forward to having, you know, keeping their
Speaker 9: Chinese customers at least a little bit happy, not as
Speaker 9: happy as they would be if they could buy everything.
Speaker 9: Of course, So that's again we're going to be you know,
Speaker 9: hearing I would imagine from the video management tomorrow, they'll
Speaker 9: certainly be asked about this, and people want to know
Speaker 9: is like, can you find a way to stay relevant
Speaker 9: in China? And if that happens, then I think there
Speaker 9: would be a sigh of relief and maybe some of
Speaker 9: the tension would go away. But right now there's just
Speaker 9: a myriad of questions that we don't know the answers to, unfortunately.
Speaker 2: But still an expectation for at least sort of fifty
Speaker 2: percent growth on earning pusher and indeed revenue. We anticipay
Speaker 2: that after the well tomorrow, Ian King, so great to
Speaker 2: speak with you. Thank you. Let's get the investor take
Speaker 2: chip sector. Bethkin, nig Io Fund, lead tech analyst with US.
Speaker 2: Now the China overhang, Beth, how much does it matter
Speaker 2: to the investor base right now?
Speaker 10: Yeah?
Speaker 7: What I would say is all the information around China
Speaker 7: is important to consider.
Speaker 2: It is going to be a.
Speaker 7: Couple of billion dollar impact one way or another. And
Speaker 7: there are so many sudden shifts going into this print
Speaker 7: around whether China was going to take that supply or not.
Speaker 7: But I would say ultimately any dip should be bought.
Speaker 7: And this is where a broader view is extremely important.
Speaker 7: Right now, the market has never seen a product like
Speaker 7: in Vidia's previous GPUs Hopper. Ever, nobody in the tech
Speaker 7: industry has seen that before in terms of the amount
Speaker 7: of revenue it drove. Now imagine they have two generations
Speaker 7: of GPUs Blackwell and Blackwell Ultra. They are simultaneously preparing
Speaker 7: to ramp. So this is going to be a back
Speaker 7: half loaded year for in Nvidia, and that piece. I
Speaker 7: would not let the China noise interrupt that piece.
Speaker 2: Okay, talk to us about therefore, the scale of the
Speaker 2: demand issue that they face. Everyone says, this is not
Speaker 2: a demand issue. They've got plenty of it. It's always
Speaker 2: a supply issue how much cannibalization goes on, and to
Speaker 2: ultimately what happens with the older GPUs. How much have
Speaker 2: you seen in your numbers and your data crunching real
Speaker 2: appetite and sales of the latest Blackwell architecture.
Speaker 7: Yeah, to keep it simple, we still see alpha here.
Speaker 7: A year ago I had put into print in an
Speaker 7: analysis we would see a fifty billion data center segment
Speaker 7: by the close of this year, analysts had thirty three billion.
Speaker 7: Now this quarter, with only half the year through, we're
Speaker 7: at forty one or forty two billion for the data
Speaker 7: center tomorrow evening, meaning the likelihood we closed this year
Speaker 7: at fifty billion data center is very high. Now keep
Speaker 7: in mind this is still happening for next year. Analysts
Speaker 7: are far too low, not only with their Nvidia estimates
Speaker 7: but their cap X estimates. So we get to look
Speaker 7: at both things, right. We get to look at how
Speaker 7: Nvidia is preparing to ramp these GPUs, and we also
Speaker 7: have a beautiful number around the demand in cap X,
Speaker 7: perfectly packaged for us, and it's blowing away analyst estimates.
Speaker 7: As of two three weeks ago, when Big Tech reported.
Speaker 2: So how big could in Vidia become.
Speaker 7: I have a two hundred billion data center segment, you know,
Speaker 7: over the next couple quarters, I I think we see
Speaker 7: a three hundred billion data center segment, which would translate
Speaker 7: to a six trillion market cap off Blackwell and Blackwell Ultra.
Speaker 7: I like to go by GPU generation. That's how I
Speaker 7: form this thesis. For seven years, so Blackwell, Blackwell Ultra,
Speaker 7: we should see six trillion from Nvidia and again on
Speaker 7: a run rate two hundred billion to three hundred billion
Speaker 7: data center revenue. So I'm talking potentially another one hundred
Speaker 7: percent between now and the close of fiscal year twenty
Speaker 7: twenty seven.
Speaker 2: But we're not even talking about Rubin, which of course
Speaker 2: Jensen one's been over in Taiwan talking to CSNC about already.
Speaker 2: So scale that again, where do we go from the
Speaker 2: six trillion?
Speaker 7: And that is where that's a great point, and the
Speaker 7: one reason I haven't brought up Reuben is I would
Speaker 7: want to see more of the ai data center energy
Speaker 7: problem resolved, and that is where diversification within the energy area.
Speaker 7: You know, these companies that can provide time to power
Speaker 7: is a great way to position. Once we go into Ruben,
Speaker 7: which will really push the upper limits of what the
Speaker 7: grid is capable of today.
Speaker 2: Okay, so therefore you're thinking about the power providers. You're
Speaker 2: thinking though, even in these edge cases, there are other
Speaker 2: chip companies out there wely trying to show their prowess
Speaker 2: when it comes to energy efficiency. Do you dare to
Speaker 2: go there or is it more actually the underlying infrastructure.
Speaker 7: I think it's a combination of looking at alternative forms
Speaker 7: of energy. And what I would say is that right
Speaker 7: now we are all really focused on COOSK capacity from
Speaker 7: TSM and the supply and the hardware side. Where the
Speaker 7: constraint will become is the power side, and that piece
Speaker 7: needs to be resolved somewhere between black while Alter and Reuben.
Speaker 2: And so that is a bet on a g Venova
Speaker 2: or like a company that's going into nuclear or is
Speaker 2: it somewhere else.
Speaker 7: Beth Blue Energy is one that we've held successfully. They
Speaker 7: saw that time to power nuclear can take many years
Speaker 7: to build out. And again we're really looking pretty soon
Speaker 7: here as in like these GPUs are just going to
Speaker 7: sit on a shelf if you can't power them. Nobody
Speaker 7: wants that. Nobody's spending their capex for that reason. So
Speaker 7: Blackwell black Well Altra is really nudging the power supply
Speaker 7: deals we're seeing. But now Ruben's going to require it,
Speaker 7: and I think it's somewhere between you the next one
Speaker 7: to two years where a great AI portfolio is diversified
Speaker 7: with exposure to energy.
Speaker 2: Beth buying on weakness, Beth Kendy gets so good to
Speaker 2: catch up with you with a deep fundamental analysis of
Speaker 2: biofund We thank you coming out. Why two Texas senators
Speaker 2: have made it their mission to bring one of NASA's
Speaker 2: retired space shuttles so Houston. That's next. That's a brute
Speaker 2: bag tech. SpaceX delayed a critical test of its massive
Speaker 2: Starship rocket again just a few minutes before lift off yesterday,
Speaker 2: citing unfavorable weather conditions. Now Starship was slated to take
Speaker 2: off on its tenth major mission in the company's South
Speaker 2: Texas launch facility called Starbase. SpaceX says it is targeting
Speaker 2: another flight test where no tonight, studying at seven to
Speaker 2: thirty pm Eastern time. Well elsewhere in Texas. Two Senators
Speaker 2: Ted Cruz John Cornyn are on a crusade to bring
Speaker 2: one of NASA's retired space shuttles to Houston. But that
Speaker 2: could be a logistical nightmare. Bloomberg Space reporter Lauren Grush
Speaker 2: has been writing about this, Lauren the basics, where are
Speaker 2: they getting it from and for what reason?
Speaker 11: Well, there's still some open questions about exactly which shuttle
Speaker 11: that they want, but it's pretty clear that they ultimately
Speaker 11: want Space Shuttle Discovery, which is currently at the Smithsonian in.
Speaker 2: Washington, DC or in the Washington DC area.
Speaker 11: And for them, they say, they're writing an egregious wrong
Speaker 11: that happened back at the end of the shuttle program
Speaker 11: when those shuttles were allocated to different cities and museums.
Speaker 11: You know, at the time, the people making those decisions
Speaker 11: said that they prioritized visitors and how many people would
Speaker 11: actually see the shuttles when they were over. But to them,
Speaker 11: they felt like Houston, which oversaw the Space Shuttle program
Speaker 11: out of NASA's Johnson Space Center, should have received a
Speaker 11: shuttle because of that tied to.
Speaker 2: The shuttle program. Now in the shuttle that's gone to space,
Speaker 2: I mean, e'sifically. What's extraordinary is you've done your digging
Speaker 2: and sort of gone through the One Big Beautiful Bill
Speaker 2: as it was known, and the Act had a provision
Speaker 2: for Space vehicle transfer up to eighty five million dollars.
Speaker 2: I mean, talk to us about the logistical issues here
Speaker 2: and why they would spend so.
Speaker 11: Much, right I had someone told me that, you know,
Speaker 11: nothing is impossible with enough time and money, but this
Speaker 11: might just be impossible with the amount of money and
Speaker 11: time that they are trying to allocate for this. Yes,
Speaker 11: there's eighty five million allocated in the one Big Beautiful
Speaker 11: Bill and only five million for the transfer. But the Smithsonian,
Speaker 11: which seems to be the target of this transfer, has
Speaker 11: estimated about fifty to fifty five million for the transfer,
Speaker 11: and then upwards of three hundred million dollars to prepare
Speaker 11: the transfer, to come up with a new exhibit and
Speaker 11: to display the vehicle at its new location in Houston.
Speaker 11: And then there's also just the concern of what's going
Speaker 11: to happen to the shuttles during transit. You know, they're
Speaker 11: very delicate. They're covered in these very delicate tiles that
Speaker 11: were used to keep the vehicle from overheating when it
Speaker 11: came back to Earth from space, and so the concern
Speaker 11: is just moving that those tiles would probably be irrevocably
Speaker 11: damaged and that would you know, be destroying national asset.
Speaker 2: Essentially about national assets right now, of course, we now
Speaker 2: think about the money being spent on sending actual shuttles
Speaker 2: into actual space at the here and now, Lauren, what
Speaker 2: do you make of the SpaceX delay?
Speaker 11: Yeah, you know, having covered space launches for however long
Speaker 11: I have, you know, there's just one thing that companies
Speaker 11: can't control, and that.
Speaker 4: Is the weather.
Speaker 11: And so as much as you might like to fly,
Speaker 11: they had the wrong kind of clouds over the launch
Speaker 11: site last night and.
Speaker 4: So that forced a delay.
Speaker 11: But hopefully the weather will cooperate tonight and we'll maybe
Speaker 11: see a lift off of that tenth flight that we've
Speaker 11: all been kind of anticipating for a while now.
Speaker 2: And Grash keep us on ten to hooks me. Thank
Speaker 2: you for it. Now coming up, take a look at
Speaker 2: the shares of these software companies, some of the worst
Speaker 2: performers here to date. But we were talking all about
Speaker 2: AI disruption fears that are fueling this decline and also
Speaker 2: what some earnings were about to get after the bell
Speaker 2: tomorrow could say about software demand. That's a blue big
Speaker 2: tech time now for talking tech. First up, Acililar Luxotica
Speaker 2: is said to be exploring a potential deal to increase
Speaker 2: its stake in Japanese optical equipment MA manufacturer and Nikon Now.
Speaker 2: According to people familiar with the matter, the maker of
Speaker 2: the ray baann Meta sunglasses while they're considering boosting the
Speaker 2: state in Nikon by twenty percent of from its current
Speaker 2: holdings of nine percent plus. Saudi Arabia's Humane It broke
Speaker 2: down on the first data centers in the kingdom, and
Speaker 2: the AI company has plans to have them up and
Speaker 2: running in nearly twenty twenty six using semiconductors important from
Speaker 2: the United States. Human plans to add one point nine
Speaker 2: gigawatts worth of data centres by twenty thirty and diplomats
Speaker 2: in Southeast Asia were targeted in a cyber espionage campaign
Speaker 2: earlier this year. According to Google Now, the attacks used
Speaker 2: social engineering and malware disguised as software updates, and are
Speaker 2: attributed to a China linked group. Spokesperson for Chinese Ministry
Speaker 2: of Foreign Affairs said they were not aware of the situation.
Speaker 2: While from software updates to software disruption, AI disruptions creating
Speaker 2: a sense of fear among investors in the software sector,
Speaker 2: Companies like Salesforce, Adobe Service now among the worst performers
Speaker 2: in the s and P five founders so far this year,
Speaker 2: someone's been writing about that. Bloomberg's Ryan Vlastelica, you're joining
Speaker 2: us on this software softness, But Ryan, this really is
Speaker 2: the agitation that we're seeing in Europe too, that generator
Speaker 2: of AI is going to eat their lunch.
Speaker 3: Yeah.
Speaker 12: Absolutely, thank you for having me on. This is a
Speaker 12: growing fear among investors as all these AI models become
Speaker 12: so prolific, they seem to offer all kinds of capabilities.
Speaker 12: The idea that you are going to continue using these
Speaker 12: sort of more niche software platforms, it seems a little
Speaker 12: bit ifpier right now, Why would you pay for a
Speaker 12: second company? If if you're just using open ai or
Speaker 12: Gemini or some of these other services which can do
Speaker 12: all your coding, which can analyze your data, which can
Speaker 12: generate photos, which can do sort of back office in
Speaker 12: front office features like all these kinds of things. Really
Speaker 12: makes a much bigger question what is the growth going
Speaker 12: to look like for other software companies that aren't as
Speaker 12: big in the AI space? What is there demand going
Speaker 12: to look like? It has really been weighing on the stocks,
Speaker 12: weighing on.
Speaker 2: The stocks already, and I think about though they've done
Speaker 2: a lot of talking to try and rectify that. Just
Speaker 2: think about how much Salesforce has been leaning into the
Speaker 2: AGENTICKI offering. What needs to turn this about, because we've
Speaker 2: already thought about underlying fundamentals. Is it that earnings need
Speaker 2: to show growth and that people are going to stick
Speaker 2: with these offerings and products.
Speaker 12: Yeah, So Salesforce reports next week, and that's going to
Speaker 12: be a very interesting report for what they say about
Speaker 12: what their growth looks like going forward, their demand trends,
Speaker 12: if they are seeing a lot of adoption of its
Speaker 12: Agent Force product and services right now. This is the
Speaker 12: kind of company, like you said, it's been very aggressive
Speaker 12: in AI. They've done a lot of acquisitions, They've really
Speaker 12: been sort of fore grounding their AI services, but it
Speaker 12: hasn't really been enough to support the stock. I think
Speaker 12: there is just sort of this overarching concern how much
Speaker 12: competition are these companies going to face from AI? What
Speaker 12: does it mean for their stocks? What does it mean
Speaker 12: for their demand? Their valuations? Right now, people are taking
Speaker 12: very much sort of a shoot first, ask questions later
Speaker 12: sort of policy on this.
Speaker 2: Ryan less selca brilliant writing, I mean thank you for
Speaker 2: joining us on it. Let's stick with the impacts of
Speaker 2: AI demands on certain software companies and in the infrastructure
Speaker 2: around it. Looking video comes out out of the bell tomorrow,
Speaker 2: but remember Snowflake, Mungo dB, they're on deck this week
Speaker 2: as well. Man Leipsingh head of Tech Research and Blue
Speaker 2: Make Intelligence some places to say is with us. So
Speaker 2: the overarching bell weather is of course in video, and
Speaker 2: we're expecting the fifty percent ramp and earnings for share
Speaker 2: and more broadly in sales there. But people too optimistic
Speaker 2: going into the print.
Speaker 10: I mean, the framework that we have is we know
Speaker 10: about the demand side. CAPEX expectations have gone up for
Speaker 10: twenty twenty six from Hyperscalers, so that's positive. TSMC isn't
Speaker 10: ramping up supply of coos to like, not to the
Speaker 10: extent where they can solve all the supply constraints. So
Speaker 10: all the setup that we have is good. The key
Speaker 10: vector for me is scaling laws versus reinforcement learning. Right now,
Speaker 10: what we are seeing is everyone has fivoted to reasoning models.
Speaker 10: In fact, Meta said they want to lease you know,
Speaker 10: compute capacity from Hyperscalers and focus more on reinforcement learning
Speaker 10: with the new superintelligence lab. I mean that was Alexander
Speaker 10: Zwang's focus at SCALEII is reinforcement learning data tagging for training,
Speaker 10: and so they seem to be moving away from scaling
Speaker 10: laws at least that's how we are interpreting it. So
Speaker 10: from that perspective, it does have an impact on someone
Speaker 10: like Nvidia. If everyone has slowly started to shift away
Speaker 10: from training to more reinforcement learning, I think that will
Speaker 10: have a bearing.
Speaker 2: But Jensen's spend a lot of time trying to say
Speaker 2: that inference is still their sweet spot and that's not
Speaker 2: going to be an issue for them in terms of
Speaker 2: a month.
Speaker 10: So let's put it this way. In Vidia has one
Speaker 10: hundred percent share when it comes to training, but when
Speaker 10: it comes to inferencing, they are in the nineties. Oh
Speaker 10: so you know mean and look, Google GPUs is ramping up.
Speaker 10: We know they're offering more capacity on GCP so that's
Speaker 10: a LEVI some of their supply constraints, But at the
Speaker 10: end of the day, training is where you need need
Speaker 10: the highest performance chips. Nvidia still makes those, but if
Speaker 10: the other players are able to take even one two
Speaker 10: percent share, that will have an impact on Nvidia's growth
Speaker 10: rates because they continue to raise the bar. I mean,
Speaker 10: you need to see the estimates keep getting higher. And look,
Speaker 10: there is the geopolitical aspect around selling to China all that,
Speaker 10: but in the end it comes down to wolf will
Speaker 10: be Blackwell demand and what will be Ruben's demand. And
Speaker 10: right now all these models are trained on Harper, so
Speaker 10: we want to know how big of a cluster there
Speaker 10: will be with black Row.
Speaker 2: And then we think about the ROAI that everyone's been
Speaker 2: nervous about in the last few weeks. We think a
Speaker 2: Palenteers beat up a little bit, but push us forward
Speaker 2: to what the ROAI is on for these software names
Speaker 2: that are coming out. The Snowflake has been leaning very
Speaker 2: much into AI, but is it managed to keep its
Speaker 2: customers happening?
Speaker 10: I just can make sense of the you know, the
Speaker 10: difference in valuation for Snowflake versus Pier when both of
Speaker 10: them have a similar growth profile. Yes, Palenteer probably has
Speaker 10: seen more with AI pilots, but Snowflake is a growth company.
Speaker 10: They've got a big customer base. So from that perspective,
Speaker 10: why can't they lean in on AI models and do
Speaker 10: something similar to Snowflake. To Palenteer, I don't understand same
Speaker 10: thing with Mango deb and it sounds like the stack
Speaker 10: is changing with AI agents. In fact, one anecdote I
Speaker 10: heard was eighty percent of new databases are being created
Speaker 10: by AI agents. So you're not creating databases for manual
Speaker 10: human transactions, it's the AI agent's creating new databases.
Speaker 2: Now.
Speaker 10: That does impact someone like Mango dB in a big
Speaker 10: way because if they need to be part of that stack.
Speaker 10: And so I think in the end it comes down
Speaker 10: to how you integrate lart of that and with models.
Speaker 2: See how those arnings come out This week as well,
Speaker 2: boom meg Intelligence is Mandeep saying always got great takes.
Speaker 2: That does it for this edition of boombg Tech. Don't
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