WEBVTT - Trump Threatens Tech Tariffs in Digital Taxes Reprisal 0:00:02.520 --> 0:00:13.720 Bloomberg Audio Studios, Podcasts, radio news. Bloomberg Tech is live 0:00:13.760 --> 0:00:17.560 from coast to coast with Caroline Hide in New York 0:00:17.840 --> 0:00:19.800 and Eva Loow in Sentrancisco. 0:00:22.079 --> 0:00:24.560 This is Bloomberg Tech coming up. AT and T plans 0:00:24.600 --> 0:00:27.600 to buy twenty three billion dollars worth of spectrum licenses 0:00:27.800 --> 0:00:31.520 from EchoStar, having to coverage in virtually every US market, 0:00:31.760 --> 0:00:35.640 plus a digital services tax fight we escalate as President 0:00:35.640 --> 0:00:38.680 Trump threatens more tarifs and restrictions on advanced tech and 0:00:38.760 --> 0:00:42.240 chips in retaliation. This as we await a cabinet meeting 0:00:42.280 --> 0:00:45.640 with President Trump this hour, we'll discuss what to expect. 0:00:45.640 --> 0:00:48.120 The first we check in on these markets, which there 0:00:48.159 --> 0:00:50.400 is a macro story at play here that affects the 0:00:50.400 --> 0:00:54.240 bond market. Stocks actually pretty resilient in light of anxiety 0:00:54.280 --> 0:00:59.120 around French political drama, US fed drama, and that we 0:00:59.160 --> 0:01:00.560 will go into, I'm sure or when we come to 0:01:00.640 --> 0:01:02.279 the cabinet meeting. But right now we're up a ten 0:01:02.440 --> 0:01:04.720 percent on the Nasdaq Big Text still managing to push 0:01:04.800 --> 0:01:07.200 higher ahead of some key earnings this week, of course, 0:01:07.440 --> 0:01:10.400 but also as we delve into an individual stock story 0:01:10.520 --> 0:01:12.560 that affects AT and T and Echo Star. Let's get 0:01:12.560 --> 0:01:14.839 into it, because att Off by one point four percent, 0:01:14.920 --> 0:01:16.959 had trained to hire earlier in the session. As it 0:01:17.000 --> 0:01:21.399 spends big to extend its spectrum, its access to licenses, 0:01:21.560 --> 0:01:24.720 buying them from EchoStar, which remember the chairman of this 0:01:24.760 --> 0:01:28.240 company had actually met with the Trump administration. It's not 0:01:28.360 --> 0:01:30.520 almost eighty percent as they do what was willed of 0:01:30.560 --> 0:01:32.919 them to sell off spectrum. Let's get the details. Casey 0:01:33.080 --> 0:01:35.759 Kelsey Griffiths is with us to dig into the details. 0:01:35.760 --> 0:01:38.520 What the market likes is that they're paying far more 0:01:39.160 --> 0:01:41.840 well at and T is paying far more than originally 0:01:41.880 --> 0:01:46.759 Echo Star did for these licenses. That's right. 0:01:47.520 --> 0:01:52.680 So we're looking at the stocks reacting pretty spectacularly to 0:01:53.280 --> 0:01:56.800 this deal that was announced this morning, and as you mentioned, Caroline, 0:01:56.880 --> 0:01:59.840 we are seeing kind of the latest step to res 0:02:00.280 --> 0:02:04.440 a regulatory probe over EchoStar potentially not putting its licenses 0:02:04.520 --> 0:02:07.720 to the highest and best use. We know that EchoStar 0:02:07.920 --> 0:02:11.720 met with the FCC chair Brendan Carr and also President 0:02:11.760 --> 0:02:15.640 Trump about a month ago, and both companies are saying 0:02:15.680 --> 0:02:20.079 that this is an important step forward toward resolving that probe. 0:02:20.120 --> 0:02:24.200 That probe which well, those Ecosta had said had distracted 0:02:24.200 --> 0:02:28.600 them from actually making the investments into using of the licenses. 0:02:28.639 --> 0:02:30.640 There was a threat of bankruptcy at one point they 0:02:30.639 --> 0:02:33.560 weren't paying on their bonds. But tell us the AT 0:02:33.639 --> 0:02:36.119 and T side of this, why spend big on these 0:02:36.160 --> 0:02:39.640 licenses exactly? 0:02:39.720 --> 0:02:42.720 So AT and T is really kind of making the 0:02:42.800 --> 0:02:46.280 most of this moment. These mid and high band spectrum 0:02:46.320 --> 0:02:49.120 licenses don't come available very often because this is a 0:02:49.280 --> 0:02:52.960 limited and very valuable resource, and AT and T is 0:02:53.000 --> 0:02:56.720 really jumping on the chance to increase its portfolio and 0:02:56.760 --> 0:03:01.160 really beef up its spectrum holdings with this. So even 0:03:01.200 --> 0:03:03.120 though it's a lot of debt to take on right now, 0:03:03.320 --> 0:03:06.000 this is a really valuable investment in their future and 0:03:06.080 --> 0:03:08.840 something that customers are also going to feel the difference 0:03:08.880 --> 0:03:10.040 from pretty immediately. 0:03:10.560 --> 0:03:13.480 They're going to feel the difference. Just remind the consumer, 0:03:13.600 --> 0:03:17.360 Remind the audience why it is so expensive but so 0:03:17.480 --> 0:03:20.560 crucial to reinvest in spectrum. To access. 0:03:21.840 --> 0:03:25.120 Spectrum is what carries all of our wireless communications. It's 0:03:25.160 --> 0:03:28.560 what enables it, and it's sort of like a highway 0:03:28.600 --> 0:03:30.480 that gets jammed during rush hour. 0:03:30.840 --> 0:03:32.520 If you're not able to open. 0:03:32.400 --> 0:03:36.640 Up more lanes, then you're going to experience gridlock, and 0:03:36.640 --> 0:03:39.080 so AT and T is effectively opening more lanes on 0:03:39.080 --> 0:03:41.720 that highway to keep that wireless traffic moving. 0:03:42.240 --> 0:03:44.720 I love that analogy. As always, we thank you so 0:03:44.800 --> 0:03:47.800 much for digging deep, Kelsey Griffiths on all things telecoms. 0:03:48.240 --> 0:03:51.040 Let's get an investigate now. Ted Mortenston's with US is 0:03:51.040 --> 0:03:52.920 managing director over at BED. They have a cool five 0:03:52.920 --> 0:03:55.480 and twenty five billion dollars in assets under management. What's 0:03:55.480 --> 0:03:59.320 so interesting is AT and T here basically reinvesting money 0:03:59.320 --> 0:04:02.240 they save through the recent budget. Ted, are we going 0:04:02.240 --> 0:04:04.560 to see more companies commit to infrastructure in this way? 0:04:05.680 --> 0:04:08.040 I think so. I mean, the big Beautiful Bill gives 0:04:08.520 --> 0:04:11.920 a lot of flexibility and depreciation writing off of assets, 0:04:12.400 --> 0:04:16.080 and I think AT and T had, you know, a 0:04:16.320 --> 0:04:19.480 very very big tex advantage, and they're going to put 0:04:19.560 --> 0:04:22.800 three billion dollars in just into optical. I think what 0:04:23.400 --> 0:04:27.880 this spectrum buy is, you know, low band spectrum is 0:04:27.920 --> 0:04:32.039 incredibly limited, and it gives AT and T a long 0:04:32.160 --> 0:04:36.240 term look at increasing capacity. And I'm sure on the 0:04:36.320 --> 0:04:42.080 roadmap is home internet and expanding that capacity and taking 0:04:42.120 --> 0:04:46.520 share via that as well as long term the roadmap 0:04:46.600 --> 0:04:50.680 on AI at the edge is also probably relevant. 0:04:51.120 --> 0:04:53.359 Very much so. John Stankey's come on this show to 0:04:53.400 --> 0:04:55.800 talk about exactly that the need for data is we'll 0:04:56.080 --> 0:04:58.479 become addicted to each other chat what we're using Ted. 0:04:58.720 --> 0:05:01.840 What's interesting is we're just seeing the echo star Stock reaction. 0:05:02.000 --> 0:05:05.520 In many ways, this is once again the administration playing 0:05:05.560 --> 0:05:08.680 a very key role in as they see them, key assets. 0:05:08.720 --> 0:05:11.599 Bringing in the chair of Ecostar to the administration because 0:05:11.760 --> 0:05:14.360 President Trump was worried about a potential bankruptcy of what 0:05:14.400 --> 0:05:17.560 he saw as a key piece of infrastructure. How much 0:05:17.560 --> 0:05:20.200 are you having to navigate this an ever more active 0:05:20.240 --> 0:05:21.760 administration in big tech? 0:05:23.200 --> 0:05:25.800 This is I think it's unpreceded. You bring a great 0:05:25.839 --> 0:05:30.200 point up, Carolyn, this is unprecedented actually having an administration 0:05:30.320 --> 0:05:35.359 that actually understands the technology issues, whether it be digital 0:05:35.480 --> 0:05:40.359 tax out of Europe basically with additional tariffs, meeting with 0:05:40.480 --> 0:05:46.039 Navidia on getting through the China H twenty issue. The 0:05:46.160 --> 0:05:51.520 topics that this administration is tackling is really in the unprecedented, 0:05:51.800 --> 0:05:56.640 unprecedented area on getting actually involved tech. And then you 0:05:56.720 --> 0:05:58.880 throw an Intel also, yeah, I. 0:05:58.800 --> 0:06:03.080 Mean to that point, does the administration generally align with 0:06:03.600 --> 0:06:08.159 fiduciary responsibility of leadership to give money back to shareholders 0:06:08.160 --> 0:06:11.320 in many ways. Do you think that they're generally positive 0:06:11.320 --> 0:06:12.120 for these businesses? 0:06:13.240 --> 0:06:15.320 I'll pass on that question. I can only tell you 0:06:15.360 --> 0:06:19.800 what they're doing from the technology standpoint is they're rolling 0:06:20.160 --> 0:06:23.200 the rock uphill very very quickly and getting through all 0:06:23.240 --> 0:06:27.400 the bureaucracy. It gives the US a tremendous advantage from 0:06:27.400 --> 0:06:31.120 the technology standpoint if you look at going head to 0:06:31.160 --> 0:06:35.520 head with China and AI, but also from an infrastructure standpoint, 0:06:35.520 --> 0:06:39.000 we're years ahead of Europe right now, and having a 0:06:39.160 --> 0:06:44.680 non bureaucratic administration that understands the issues around technology is 0:06:45.240 --> 0:06:47.120 a real benefit for the US people. 0:06:48.600 --> 0:06:51.640 Does create perhaps sometimes just general uncertainty for businesses in 0:06:51.680 --> 0:06:53.240 the way in which they run. I'm just thinking of 0:06:53.279 --> 0:06:55.320 perhaps the threat that we've just had today. We're going 0:06:55.360 --> 0:06:58.200 to discuss it more after this conversation Ted, but how 0:06:58.240 --> 0:07:03.560 to tackle digitals his taxes on alphabet and META. He's 0:07:03.560 --> 0:07:07.960 threatening more restrictions on chips made by in video and AMD. 0:07:08.520 --> 0:07:12.360 Just how do you see tariff headwinds for companies or 0:07:12.360 --> 0:07:14.920 can I see through them? Because the tailwinds of generative 0:07:14.920 --> 0:07:17.000 AI just so huge. 0:07:17.840 --> 0:07:20.600 I think there's a few issues this is playing chess 0:07:20.640 --> 0:07:23.000 on four levels. To be honest with you, I mean 0:07:23.440 --> 0:07:28.040 the tariff's long term, we'll see some inflationary impact to it. 0:07:28.640 --> 0:07:33.160 But I think what the administration's doing is they're looking 0:07:33.160 --> 0:07:36.880 at this one of the most prolific builds that I've 0:07:36.960 --> 0:07:42.600 seen in thirty years of doing technology. They understand that 0:07:42.920 --> 0:07:47.440 these stakes on generative AI, whether it be AGI or 0:07:49.240 --> 0:07:57.120 actually agentic based systems, it's crucial that the US actually 0:07:57.240 --> 0:08:03.200 is in the leadership role and is developing AI in 0:08:03.240 --> 0:08:06.680 a way that if you look at the spend this year, 0:08:06.720 --> 0:08:10.880 it's over four hundred billion of fifty three percent. We've 0:08:10.920 --> 0:08:14.280 never seen an architectural build like this. It gives the 0:08:14.440 --> 0:08:19.840 US economy and quite frankly, our defense postures, you know, 0:08:20.920 --> 0:08:24.160 a real advantage from a global perspective. 0:08:24.760 --> 0:08:28.120 And so where is that mispriced in the market right now? Ted? 0:08:28.160 --> 0:08:29.400 Where are their opportunities? 0:08:30.680 --> 0:08:35.880 I think there's tremendous opportunities on just looking at who 0:08:35.960 --> 0:08:40.880 has all the next generation technology. I mean, if you 0:08:40.920 --> 0:08:44.679 look what Navidia is doing with not only Blackwell, but 0:08:44.720 --> 0:08:51.120 the follow on the Ruben silicon advantage, Jensen's doing something 0:08:51.160 --> 0:08:54.840 that no one has ever done in technology from a 0:08:54.920 --> 0:09:00.800 systems approach. He's rewriting the architectural is shoes on high 0:09:00.880 --> 0:09:06.440 performance compute, whether it be from networking memory to the 0:09:06.480 --> 0:09:11.240 core GPUs, but also these Kuda directories on software. He's 0:09:11.240 --> 0:09:13.920 got a three to four year lead on anybody in 0:09:13.960 --> 0:09:18.280 the world done doing this. So just from a Navidia 0:09:18.360 --> 0:09:22.360 standpoint and the picks and shovels that will go into Reuben, 0:09:23.320 --> 0:09:25.360 I would have your viewers do a fair amount of 0:09:25.400 --> 0:09:30.280 work on the optical space because Jensen is pivoting the 0:09:30.320 --> 0:09:34.760 whole architecture from basic a copper infrastructure to optical and 0:09:35.760 --> 0:09:40.480 they're developing one point six terabid solutions that were on 0:09:40.520 --> 0:09:42.719 the drawing board that are getting accelerated. 0:09:43.400 --> 0:09:45.600 And in your notes, as always, you talk about the 0:09:45.600 --> 0:09:47.920 optical option CNA being one of them some of the 0:09:47.920 --> 0:09:50.840 other stocks that give you exposure, Ted Mortenston, so great 0:09:50.840 --> 0:09:54.320 to catch up. Then managing directory. Thank you. Now coming up, 0:09:54.440 --> 0:09:57.560 President Trump fights back against Europe's digital taxes. We're just 0:09:57.559 --> 0:10:00.960 talking about it with Ted Trump saying more tariffs than 0:10:01.000 --> 0:10:03.600 export restrictions could be on the way for those countries 0:10:03.600 --> 0:10:06.480 who impose him. More on that. Next, this is Blomberg 0:10:06.520 --> 0:10:21.400 Tech President Trump and he's vowed to impose new tariff 0:10:21.400 --> 0:10:25.080 and export restrictions on advanced tech and semiconductors in retaliation 0:10:25.160 --> 0:10:29.040 against other nations digital services taxes. Now, the latest move 0:10:29.120 --> 0:10:32.080 raise is uncertainty of a tariff rates for US trading partners. 0:10:32.120 --> 0:10:34.720 Once again, Lumerg's Tyler Kendall joins us now from the 0:10:34.720 --> 0:10:37.439 White House. This is a recurring theme, the iya from 0:10:37.480 --> 0:10:40.439 President Trump around these basically European taxes. 0:10:41.600 --> 0:10:44.600 Right exactly, Caroline in factor will a call back. In February, 0:10:44.640 --> 0:10:47.760 President Trump had actually signed a memorandum then opened the 0:10:47.800 --> 0:10:51.800 door for the second Trump administration to look into how 0:10:51.800 --> 0:10:55.800 to retaliate against digital services taxes so called DSDs, including 0:10:55.880 --> 0:10:59.760 renewing a Section three oh one investigation into alleged trade 0:11:00.200 --> 0:11:04.440 unfair trade practices related to digital services taxes. So this 0:11:04.559 --> 0:11:07.400 has long been something that the Trump administration has taken 0:11:07.440 --> 0:11:09.600 aim at. Take for example, in the first iteration of 0:11:09.640 --> 0:11:12.120 the One Big, Beautiful Bill, there was that so called 0:11:12.160 --> 0:11:15.360 revenge tax section eight ninety nine that was geared towards 0:11:15.400 --> 0:11:19.160 trying to retaliate against those countries that do have these 0:11:19.200 --> 0:11:22.800 taxes in place. We saw them basically derail the Canadian 0:11:23.320 --> 0:11:26.880 negotiations over trade earlier this year when Canada was set 0:11:27.000 --> 0:11:31.280 to collect retroactively revenue from the tax. Ultimately they had 0:11:31.280 --> 0:11:34.240 to stop that collection period in order to keep talking 0:11:34.559 --> 0:11:36.920 with this White House in Prafts. Most notably, and I 0:11:36.960 --> 0:11:39.040 know you were just talking about this in your last segment, 0:11:39.360 --> 0:11:42.400 we saw a delay in that joint statement between the 0:11:42.559 --> 0:11:46.040 US and the European Union just last week when it 0:11:46.080 --> 0:11:49.640 came to their trade framework, and our understanding and reporting 0:11:49.720 --> 0:11:52.440 was it was because of this hold up ultimately on 0:11:52.600 --> 0:11:55.439 trying to get some sort of concession out of the 0:11:55.640 --> 0:11:59.600 EU when it came to digital trade and services regulations. Now, 0:11:59.600 --> 0:12:02.200 of course, our understanding has been that the European Union 0:12:02.440 --> 0:12:04.480 is pushing back on that and that they say that 0:12:04.480 --> 0:12:07.000 that's not going to be part of any trade deal. 0:12:07.000 --> 0:12:09.480 In fact, we got a statement earlier today from the 0:12:09.520 --> 0:12:13.360 European Commission spolkeswoman who ultimately said that it's their sovereign 0:12:13.440 --> 0:12:16.240 right of the EU and its member states to regulate 0:12:16.280 --> 0:12:20.120 our economic activities on our territory that are consistent with 0:12:20.240 --> 0:12:23.560 our own democratic value. So doesn't seem to be backing 0:12:23.600 --> 0:12:26.640 down there, though, Caroline, our reporting had indicated that perhaps 0:12:26.679 --> 0:12:29.200 there were not these concessions quite yet. In a bid 0:12:29.240 --> 0:12:32.280 to maintain some leverage as these trade negotiations continue. 0:12:32.320 --> 0:12:34.480 Yeah, certainly when it comes to TA free treatment for 0:12:34.520 --> 0:12:36.160 wine and spirits, a bit of a tit for TACH 0:12:36.200 --> 0:12:39.560 continues here, Tyler. But what broadly is interesting that President 0:12:39.600 --> 0:12:43.040 Trump is using so one part of the technology ecosystem 0:12:43.080 --> 0:12:47.400 against another with holding perhaps access to chips if you 0:12:47.480 --> 0:12:50.840 stop hurting other big tech names such as Alphabet and Meta. 0:12:51.040 --> 0:12:53.960 How much lobbying have those sorts of companies done against 0:12:54.000 --> 0:12:54.720 these taxes. 0:12:55.559 --> 0:12:57.679 Well, we know that there has been a huge lobbying 0:12:57.720 --> 0:13:01.400 effort here in Washington, with private sector CEOs often visiting 0:13:01.600 --> 0:13:04.520 the White House trying to make some sort of meaningful 0:13:04.559 --> 0:13:08.199 movement when it comes to the policy decisions by this administration. 0:13:08.240 --> 0:13:10.800 And we've seen that perhaps most at the forefront when 0:13:10.800 --> 0:13:14.960 it comes to those tariffs or pending tariffs on semiconductors 0:13:14.960 --> 0:13:15.480 and chips. 0:13:15.520 --> 0:13:16.360 And as you well know. 0:13:16.360 --> 0:13:18.800 And I report on every day on this program, we 0:13:18.920 --> 0:13:21.520 are trying to start to glean those details on what 0:13:21.720 --> 0:13:24.080 those tariffs are actually going to look like. And it 0:13:24.120 --> 0:13:26.120 has to do a lot with the administration pushing that 0:13:26.160 --> 0:13:29.240 it wants to see more US direct investment from these 0:13:29.280 --> 0:13:33.320 companies and shifting their supply chains here to make these 0:13:33.640 --> 0:13:35.880 products and these goods. So it's something that we're watching 0:13:36.000 --> 0:13:38.240 very closely here. But of course it comes sort of 0:13:38.280 --> 0:13:41.120 at this tension point as the White House tries to 0:13:41.160 --> 0:13:43.959 protect this domestic industry, but also by putting on these 0:13:43.960 --> 0:13:47.640 export controls could ultimately end up harming the competition. 0:13:47.160 --> 0:13:50.679 Moving forward, Tyler Kendall, we appreciate it from the White House. 0:13:51.000 --> 0:13:54.360 Let's get the European perspective on this, Bloomberg's Peter Elstrom 0:13:54.400 --> 0:13:57.920 now standing by in London. Europe is very committed to 0:13:57.960 --> 0:14:00.280 these taxes, whether or not it is some sort of 0:14:00.320 --> 0:14:03.719 bargaining chip mentality or waiting what the OBCD eventually does 0:14:03.760 --> 0:14:05.800 in terms of leveling the playing field on taxes on 0:14:05.840 --> 0:14:09.719 such big juggnats. But remind us twenty nineteen France first. 0:14:09.440 --> 0:14:12.120 Put it in right, Yeah, that's exactly right. 0:14:12.160 --> 0:14:12.319 Now. 0:14:12.480 --> 0:14:15.880 Trump was not specific about which countries he was criticizing 0:14:15.920 --> 0:14:19.240 here for having these digital service taxes, as you alluded 0:14:19.240 --> 0:14:21.800 to earlier. The spokeswoman for the EU said that it's 0:14:21.800 --> 0:14:24.720 our sovereign right to impose these taxes, and then she 0:14:24.760 --> 0:14:27.480 went on to say that we're not targeting any particular 0:14:28.280 --> 0:14:31.880 company or country where these companies are coming from. But 0:14:31.960 --> 0:14:34.160 in the end, this is essentially a lot of European 0:14:34.200 --> 0:14:37.400 companies taxing a lot of American companies. You have taxes 0:14:37.400 --> 0:14:41.240 on things like search engines ie Google, on digital advertising 0:14:41.480 --> 0:14:45.720 like Facebook and Meta, and also on streaming services like 0:14:45.800 --> 0:14:48.240 Netflix in particular. So you did see this start with 0:14:48.280 --> 0:14:51.080 France in twenty nineteen where they imposed the tax. Now 0:14:51.120 --> 0:14:55.680 you've got other countries like Austria is taxing advertising. You've 0:14:55.720 --> 0:14:59.600 got Pull in this taxing digital streaming services. And here 0:14:59.600 --> 0:15:02.320 in the u K they're going after search engine revenue 0:15:02.400 --> 0:15:04.720 and advertising too. So it is a bit of a 0:15:04.760 --> 0:15:07.600 patchwork of taxes at this point, but they are getting posed. 0:15:07.600 --> 0:15:11.360 And now this this broadside from Trump is saying we're 0:15:11.360 --> 0:15:14.120 going to retaliate if in fact these countries proceed with 0:15:14.160 --> 0:15:15.440 these kind of digital taxes. 0:15:15.680 --> 0:15:17.200 But as we can see you from this graphic, at 0:15:17.200 --> 0:15:19.680 the moment, it's a nice little learner for countries such 0:15:19.720 --> 0:15:21.760 as France to get about three quarters of a billion 0:15:21.840 --> 0:15:25.160 per year by getting these sorts of taxes on revenues. 0:15:25.240 --> 0:15:30.000 Peter more broadly, could we see a not backing away 0:15:30.000 --> 0:15:34.160 with Canada and but certainly a view from companies that 0:15:34.200 --> 0:15:36.520 are actually based out making money in Europe like this. 0:15:36.800 --> 0:15:38.840 Is there anything that Meta in Alphabet have tried to 0:15:38.840 --> 0:15:42.080 do to restrict the amount of ultimate revenue that is 0:15:42.120 --> 0:15:43.800 going in that direction to Europe. 0:15:45.360 --> 0:15:48.440 I mean, certainly these companies, as Tyler was alluding to earlier, 0:15:48.520 --> 0:15:51.480 they've been lobbying a lot within Washington. They've also been 0:15:51.520 --> 0:15:54.880 a lobby lobbying a lot here in Europe to be 0:15:54.920 --> 0:15:57.280 able to get some sort of advantages, whether those are 0:15:57.320 --> 0:16:00.920 tax advantages, relief from some of these tax in particular, 0:16:01.120 --> 0:16:03.120 they've been pushing very hard to be able to do that, 0:16:03.200 --> 0:16:04.840 and they have not been afraid to go to the 0:16:04.840 --> 0:16:07.320 Trump White House to be able to get their backing 0:16:07.360 --> 0:16:09.920 to push back on some of these issues. Sometimes it's 0:16:09.920 --> 0:16:13.280 been about free speech online. Sometimes it's been about taxes. 0:16:13.480 --> 0:16:16.240 Sometimes it's been about their treatment. It's probably because the 0:16:16.320 --> 0:16:19.120 US does have the biggest technology companies, they are very 0:16:19.160 --> 0:16:21.240 active in Europe and they want to be able to 0:16:21.440 --> 0:16:23.720 affect the playing field as much as they can to 0:16:23.760 --> 0:16:24.880 their own advantage. 0:16:25.120 --> 0:16:27.600 I have to see also how an OECD agreement could 0:16:27.680 --> 0:16:30.360 change all of this. Bloomberg's Peter Elstrom, it's so good 0:16:30.400 --> 0:16:33.080 to get the European perspective. We appreciate it. Now coming up, 0:16:33.200 --> 0:16:35.880 Elon Musk says Apple is unfairly favoring open Ai on 0:16:35.960 --> 0:16:39.040 iPhones in a new lawsuit. We'll context from that. Next. 0:16:39.080 --> 0:16:53.640 This is Bloomberg Tech in a new lawsuit. Elon Musk 0:16:53.720 --> 0:16:57.760 alleges that Apple and open Ai are thwarting competition, saying 0:16:57.800 --> 0:17:01.240 the tech giant is unfairly favoring open AA across its iPhones. 0:17:01.560 --> 0:17:03.680 Joining us now to discuss is David Baltow? Do you 0:17:03.680 --> 0:17:05.840 trust lawyer? A former policy director of the Bureau of 0:17:05.880 --> 0:17:08.280 Competition of the FTC. We come to you for your 0:17:08.280 --> 0:17:11.359 expertise in competition. Is there a leg to stand on 0:17:11.400 --> 0:17:15.200 here legally speaking that with a partnership and allowing open 0:17:15.240 --> 0:17:19.840 Ai basically to be intertwined with Siri, that it's stopping 0:17:19.960 --> 0:17:22.600 fair competition for the other genai chatbots. 0:17:23.520 --> 0:17:26.200 Well, I'm afraid this is a case that's not really 0:17:26.240 --> 0:17:31.439 going to launch. The Apple has a broad range of 0:17:31.480 --> 0:17:34.760 power to select who it's going to partner with, and 0:17:35.760 --> 0:17:38.800 I don't think there's a really compelling story here that 0:17:38.880 --> 0:17:42.480 competition is harmed through the arrangement that Apple has made, 0:17:42.520 --> 0:17:46.840 which seems to be clearly consistent with mainstream anti trestlaw. 0:17:47.359 --> 0:17:50.280 Okay, so if he doesn't have perhaps the legal leg 0:17:50.320 --> 0:17:53.840 to stand on, maybe more of a public relations argument 0:17:53.920 --> 0:17:56.000 in many ways, Is there anything you can do about 0:17:56.040 --> 0:17:58.119 the ratings within the app store, do you think and 0:17:58.160 --> 0:17:59.879 the way in which that is deemed to be by 0:18:00.280 --> 0:18:00.480 or not. 0:18:02.000 --> 0:18:04.720 You know, I think Apple's been tested on this in 0:18:04.760 --> 0:18:08.000 a number of areas, and of course there's been litigation 0:18:08.160 --> 0:18:11.359 in this area, and I think Apple's quite careful to 0:18:11.440 --> 0:18:15.399 make sure it's not violating the law, just you know, 0:18:15.760 --> 0:18:21.320 fundamental principles of competition law. Apple has the ability to 0:18:21.400 --> 0:18:23.760 decide who it's going to partner with and what those 0:18:23.840 --> 0:18:30.680 arrangements are. Unless it's you know, unnecessarily exclusionary, it really 0:18:30.720 --> 0:18:35.680 prevents rivals from being able to effectively compete. And here 0:18:35.880 --> 0:18:39.520 Apple has said in a straightforward fashion, this arrangement is 0:18:39.640 --> 0:18:43.040 not exclusive. This is a question of just Elon Musk 0:18:43.080 --> 0:18:45.600 coming to the table with Apple and coming up with 0:18:45.680 --> 0:18:50.680 a better deal to convince them to you know, include 0:18:50.720 --> 0:18:51.880 his AI product. 0:18:52.080 --> 0:18:54.439 Yeah, because the idea was always when the announcement was 0:18:54.440 --> 0:18:56.679 first made by Apple, the other third parties will be 0:18:56.680 --> 0:19:00.359 invited to the table. Of course, there's an ongoing anti 0:19:00.400 --> 0:19:04.439 trust investigation that overwhelms perhaps Alphabet at the moment and 0:19:04.480 --> 0:19:06.760 the way in which payments go between Apple and Alphabet, 0:19:06.840 --> 0:19:09.840 but certainly Jim and I AI getting closer to Apple. 0:19:09.920 --> 0:19:13.520 We know that maybe a perplexity others eventually will make 0:19:13.560 --> 0:19:16.800 some sort of agreement and that could iron out any 0:19:16.800 --> 0:19:17.800 anti trust issues. 0:19:18.480 --> 0:19:21.359 Yes, and you know I definitely think so. But you 0:19:21.400 --> 0:19:24.199 know this is Elon Musk again trying to use the 0:19:24.280 --> 0:19:28.560 muscle of the antitrust laws to Coher's arrival into entering 0:19:28.720 --> 0:19:32.359 two arrangement. That's just not going to work. A court's 0:19:32.359 --> 0:19:33.480 going to see right through there. 0:19:34.200 --> 0:19:36.159 Okay, you say this once again. I mean we do 0:19:36.280 --> 0:19:38.639 know that, you know, Musk has I think leveled at 0:19:38.720 --> 0:19:43.480 least one or two cases the direction of open AI 0:19:43.840 --> 0:19:46.439 and open AI have now been calling it harassment on 0:19:46.480 --> 0:19:49.560 that respect, but he's never really targeted Apple before. How 0:19:49.640 --> 0:19:52.240 much is it a distraction? How expensive is it for 0:19:52.440 --> 0:19:53.280 companies to do this? 0:19:55.040 --> 0:19:59.480 You know Apple's you know, Apple has heavy, you know, 0:19:59.840 --> 0:20:03.080 very strong armor, and they're used to this area. You know, 0:20:03.119 --> 0:20:06.760 there's a cost with being a firm that develops very 0:20:06.800 --> 0:20:10.800 successful products and has an important market position, and that 0:20:10.960 --> 0:20:13.560 cost is you're often subject to these types of anti 0:20:13.680 --> 0:20:17.840 trust suits. Apple is a very well consoled company. I'm 0:20:17.880 --> 0:20:21.080 sure that they've figured out ways of entering into this 0:20:21.200 --> 0:20:24.119 arrangement with open Ai that do not put them in 0:20:24.160 --> 0:20:24.720 hot water. 0:20:25.680 --> 0:20:27.760 And what's also interesting in the context of all of 0:20:27.760 --> 0:20:32.200 this is that Gemini Ai is the competitor owned by Alphabet, 0:20:32.280 --> 0:20:35.840 which of course has the Android ecosystem and relationships with 0:20:35.880 --> 0:20:40.880 Samsung that of course integrates. Therefore gemini Ai is there 0:20:41.000 --> 0:20:43.560 is that part of the argument also here that plenty 0:20:43.600 --> 0:20:46.320 of people are downloading apps, plenty of people have standalone 0:20:46.400 --> 0:20:49.520 use cases, these chatbots, and it's not just using open 0:20:49.520 --> 0:20:51.440 Ai purely through the Apple ecosystem. 0:20:52.720 --> 0:20:56.840 You know, I think that's true, and I but there 0:20:56.880 --> 0:21:00.679 are you know, there are plenty of alternatives, and this 0:21:00.880 --> 0:21:03.880 is just a question of being able to enter into 0:21:03.920 --> 0:21:07.359 a business arrangement. You know, Musk may not like the 0:21:07.480 --> 0:21:13.399 terms that Apple is offering offering him, but ultimately, the 0:21:13.520 --> 0:21:16.680 anti trust laws, the purpose of the anti trust laws, 0:21:16.880 --> 0:21:20.760 Justice Brennan said sixty years ago is to protect competition 0:21:21.240 --> 0:21:25.560 and consumers and not competitors, and that you know, basically, 0:21:25.640 --> 0:21:28.920 Musk is asking a court to stand anti trust law 0:21:29.000 --> 0:21:31.560 on its head and put it in the position of 0:21:31.640 --> 0:21:35.040 protecting his interests and not the interests of consumers. 0:21:35.920 --> 0:21:39.160 Now, we appreciate all of your expertise on throughout all 0:21:39.200 --> 0:21:41.720 of this. Of course, we want to just break some 0:21:41.920 --> 0:21:45.040 other news when it comes to the legal system. Right now, 0:21:45.480 --> 0:21:48.639 we understand that a lawyer for Lisa Cook fed the 0:21:48.680 --> 0:21:51.840 Federal Reserves Lisa Cook, has saying that they will file 0:21:51.880 --> 0:21:56.400 a lawsuit challenging the firing. The firing currently being demanded by, 0:21:56.480 --> 0:21:58.600 of course, President Trump. We knew that Donald Trump and 0:21:58.640 --> 0:22:01.800 made moves to OUs for Reserve Governor Lisa Cook following 0:22:01.840 --> 0:22:06.120 allegations that she had indeed falsified mortgage documents. It's dramactic 0:22:06.359 --> 0:22:09.240 escalation and what has been an ongoing battle the President 0:22:09.240 --> 0:22:12.080 has been having with the Federal Reserve. It's unnerved some investors. 0:22:12.119 --> 0:22:14.200 We've seen that in the bond market earlier today, with 0:22:14.320 --> 0:22:16.480 yields pushing higher, particularly at the thirty year, the dollar 0:22:16.520 --> 0:22:19.080 has been coming lower. And now we do get a statement, 0:22:19.119 --> 0:22:21.639 it would seem from the lawyer of Lisa Cook of 0:22:21.680 --> 0:22:24.600 the Federal Reserve saying that they will file a lawsuit 0:22:24.840 --> 0:22:28.520 challenging this firing, and is ultimately something that is likely 0:22:28.560 --> 0:22:30.400 to be discussed at the cabinet meeting that we will 0:22:30.440 --> 0:22:32.359 take life view in a little bit as when it 0:22:32.359 --> 0:22:34.520 gets kicked off. But for now we do want to say, oh, 0:22:34.640 --> 0:22:37.199 thanks to David Bowto. He's the antitrust lawyer who is 0:22:37.320 --> 0:22:41.040 just discussing that fight between Eenil musk opening I and Apple. 0:22:41.119 --> 0:22:42.880 But coming up in the tech space for you now, 0:22:43.119 --> 0:22:45.480 investors are waiting in video earnings for a gauge in 0:22:45.480 --> 0:22:48.760 the chip sector as President Trump vows potential new tariffs. 0:22:48.920 --> 0:23:01.680 That's next. This is Bloomberg Tech. Welcome back to Bloomberg Tech. 0:23:01.720 --> 0:23:03.800 We take a look at these markets, so it actually 0:23:04.040 --> 0:23:07.159 stocks remaining relatively resilient in the face of what is 0:23:07.240 --> 0:23:10.320 a concerning picture of the Federal Reserve's irking some market 0:23:10.320 --> 0:23:12.399 participants in the bond market. Now, I look at a 0:23:12.400 --> 0:23:15.399 ten tenth of a percent higher on the Nasdaq one hundred, 0:23:15.600 --> 0:23:17.520 big tech on deck in terms of their earnings. Later 0:23:17.560 --> 0:23:19.280 this week we'll dig into that. In a moment, I 0:23:19.280 --> 0:23:21.520 wanted to shine light on the thirty year on right now, 0:23:21.600 --> 0:23:24.280 yields are up some three basis points. Who are asking pressure 0:23:24.359 --> 0:23:26.040 on the bond market at the longer end and on 0:23:26.080 --> 0:23:28.560 the US dollar which is lower today as that fight 0:23:28.640 --> 0:23:30.959 between Lisa Cook of the Federal Reserve seems to be 0:23:31.200 --> 0:23:34.000 amping up versus President Trump and his call for her 0:23:34.119 --> 0:23:37.280 resignation or her firing. We understand from a lawyer for 0:23:37.320 --> 0:23:39.439 Lisa Cook, then indeed they're going to fight that and 0:23:39.560 --> 0:23:42.600 challenge that with a lawsuit of their own. We'll turn 0:23:42.640 --> 0:23:44.159 now attention to that a little bit later, but for 0:23:44.240 --> 0:23:46.160 now we want to get back to what's really dictating 0:23:46.200 --> 0:23:49.040 trade here in the tech markets. I'm looking at what's 0:23:49.080 --> 0:23:51.760 happening in a Semis index. We're up seven tens of percent. Look, 0:23:51.760 --> 0:23:53.600 we're having a nice day for AMD at one point 0:23:53.640 --> 0:23:55.840 is that more than two percent a deal with IBM. 0:23:55.920 --> 0:23:58.280 They're partnering on the future of technology, the use of 0:23:58.320 --> 0:24:00.840 GPUs when it comes to quantum computer and we saw 0:24:00.880 --> 0:24:02.439 a nice rally in AMD on the back of that, 0:24:02.520 --> 0:24:05.200 and Video up sevent ten percent as many Weight with 0:24:05.280 --> 0:24:08.720 baited breath for their earnings after the belt tomorrow in 0:24:08.880 --> 0:24:10.359 King as a man we can do that with of 0:24:10.400 --> 0:24:13.600 course he owns the semiconductor coverage for US at Bloomberg 0:24:13.680 --> 0:24:17.640 and in many weight for in Video as some sort 0:24:17.680 --> 0:24:20.920 of macro bell Weather here for me and for many. 0:24:20.960 --> 0:24:23.280 It's going to be whether we get any clarity. 0:24:22.880 --> 0:24:26.439 On China, right, Yeah, Now this is the big confusion. 0:24:26.480 --> 0:24:31.040 I mean, the underlying market for this company's products is 0:24:31.359 --> 0:24:35.720 looking fantastic according to all of the indicators that we're seeing. 0:24:36.640 --> 0:24:39.480 But this one market, this which is the biggest market 0:24:39.520 --> 0:24:42.359 for semiconductors but not that important for InVideo, is this 0:24:42.480 --> 0:24:45.719 massive swirl of uncertainty. What is the US government going 0:24:45.760 --> 0:24:48.480 to do next, What is the Chinese government going to 0:24:48.480 --> 0:24:51.160 do next? What products will be allowed to be shipped there? 0:24:51.480 --> 0:24:55.400 And the unfortunate problem is we don't know too many 0:24:55.440 --> 0:24:57.679 answers here, and that is what's kind of muddying the 0:24:57.680 --> 0:25:01.399 waters massively, because even though it's relatively and important for nvideo, 0:25:01.680 --> 0:25:04.240 there's still multiple billions of dollars at stake. 0:25:04.640 --> 0:25:10.199 In talking of swirling and uncertainty. Yet another element to 0:25:10.240 --> 0:25:13.159 that was injected with President Trump once again saying that 0:25:13.200 --> 0:25:17.240 maybe he'll increase tariffs on certain semiconductor chips to those 0:25:17.280 --> 0:25:21.240 that impose digital services taxes. He means basically Europe in 0:25:21.760 --> 0:25:23.920 there's no stock reaction to that. So does it feel 0:25:23.920 --> 0:25:25.879 as though that sort of elopment of things is priced in? 0:25:26.080 --> 0:25:28.280 Is that? Do we think that that could become a reality. 0:25:28.320 --> 0:25:31.040 We're still waiting on certain semiconductor tariffs to come in. 0:25:31.880 --> 0:25:34.199 Yeah. I mean you talk to investors as well, and 0:25:34.240 --> 0:25:36.240 I think the reaction you'll get is the same one 0:25:36.240 --> 0:25:38.600 that I get, which is, how can we worry about 0:25:38.600 --> 0:25:40.800 what we don't know, what seems to change from one 0:25:40.880 --> 0:25:44.640 day to the next, what doesn't have a very constant 0:25:45.440 --> 0:25:48.240 element to it, whether these things come and go. It's 0:25:48.240 --> 0:25:52.720 obviously a lot of negotiations being done in public. There 0:25:52.760 --> 0:25:57.200 are concerns, of course, because this country exports a massive 0:25:57.240 --> 0:25:59.880 amount of technology in some respects and imports a lot 0:26:00.080 --> 0:26:03.160 and others. But really it's the impact on end goods 0:26:03.400 --> 0:26:06.840 in terms of semiconductors that's been the big concerns so far, 0:26:07.000 --> 0:26:10.760 rather than the pure sort of impact on raw imports 0:26:10.760 --> 0:26:12.520 of chips, which aren't that huge. 0:26:12.720 --> 0:26:15.960 And with nervousness going back to perhaps access of H 0:26:16.040 --> 0:26:20.040 twenties to China comes in always the exuberance of what's next. 0:26:20.440 --> 0:26:22.720 Just take us up to speed with where are we 0:26:22.760 --> 0:26:26.119 in terms of getting actually sort of dumbed down, to 0:26:26.280 --> 0:26:29.320 use a technical term, Blackwell chips into China. In the 0:26:29.359 --> 0:26:31.560 long term, that seems to be where we're all talking 0:26:31.600 --> 0:26:32.160 about now. 0:26:33.040 --> 0:26:36.240 Yeah, I mean this was something that was hinted about 0:26:36.320 --> 0:26:40.200 buying video and then President Trump went out and said, oh, hey, yeah, 0:26:40.240 --> 0:26:42.000 if they bring me one of these, maybe I'll look 0:26:42.000 --> 0:26:44.000 at it and maybe we can make a bit more 0:26:44.200 --> 0:26:46.600 of a revenue cut on that one too, And that 0:26:46.640 --> 0:26:48.520 would be a move forward for Invidia. That would give 0:26:48.560 --> 0:26:52.560 them a path forward to having, you know, keeping their 0:26:52.640 --> 0:26:55.080 Chinese customers at least a little bit happy, not as 0:26:55.119 --> 0:26:56.879 happy as they would be if they could buy everything. 0:26:56.880 --> 0:27:00.080 Of course, So that's again we're going to be you know, 0:27:00.240 --> 0:27:03.080 hearing I would imagine from the video management tomorrow, they'll 0:27:03.080 --> 0:27:04.960 certainly be asked about this, and people want to know 0:27:05.080 --> 0:27:07.920 is like, can you find a way to stay relevant 0:27:07.960 --> 0:27:10.199 in China? And if that happens, then I think there 0:27:10.240 --> 0:27:12.879 would be a sigh of relief and maybe some of 0:27:12.920 --> 0:27:15.040 the tension would go away. But right now there's just 0:27:15.440 --> 0:27:19.080 a myriad of questions that we don't know the answers to, unfortunately. 0:27:18.680 --> 0:27:21.119 But still an expectation for at least sort of fifty 0:27:21.160 --> 0:27:24.560 percent growth on earning pusher and indeed revenue. We anticipay 0:27:24.600 --> 0:27:26.840 that after the well tomorrow, Ian King, so great to 0:27:26.840 --> 0:27:29.400 speak with you. Thank you. Let's get the investor take 0:27:29.760 --> 0:27:33.360 chip sector. Bethkin, nig Io Fund, lead tech analyst with US. 0:27:33.440 --> 0:27:37.480 Now the China overhang, Beth, how much does it matter 0:27:37.520 --> 0:27:38.800 to the investor base right now? 0:27:40.720 --> 0:27:40.920 Yeah? 0:27:40.960 --> 0:27:43.880 What I would say is all the information around China 0:27:44.000 --> 0:27:45.200 is important to consider. 0:27:46.080 --> 0:27:47.200 It is going to be a. 0:27:47.160 --> 0:27:49.919 Couple of billion dollar impact one way or another. And 0:27:49.960 --> 0:27:52.359 there are so many sudden shifts going into this print 0:27:53.119 --> 0:27:56.960 around whether China was going to take that supply or not. 0:27:57.520 --> 0:27:59.960 But I would say ultimately any dip should be bought. 0:28:00.119 --> 0:28:05.120 And this is where a broader view is extremely important. 0:28:05.160 --> 0:28:09.360 Right now, the market has never seen a product like 0:28:09.560 --> 0:28:13.560 in Vidia's previous GPUs Hopper. Ever, nobody in the tech 0:28:13.560 --> 0:28:15.760 industry has seen that before in terms of the amount 0:28:15.760 --> 0:28:19.960 of revenue it drove. Now imagine they have two generations 0:28:19.960 --> 0:28:25.040 of GPUs Blackwell and Blackwell Ultra. They are simultaneously preparing 0:28:25.119 --> 0:28:27.760 to ramp. So this is going to be a back 0:28:27.840 --> 0:28:31.320 half loaded year for in Nvidia, and that piece. I 0:28:31.359 --> 0:28:34.000 would not let the China noise interrupt that piece. 0:28:34.320 --> 0:28:36.439 Okay, talk to us about therefore, the scale of the 0:28:36.440 --> 0:28:38.959 demand issue that they face. Everyone says, this is not 0:28:39.320 --> 0:28:41.280 a demand issue. They've got plenty of it. It's always 0:28:41.280 --> 0:28:44.400 a supply issue how much cannibalization goes on, and to 0:28:44.520 --> 0:28:48.280 ultimately what happens with the older GPUs. How much have 0:28:48.360 --> 0:28:51.560 you seen in your numbers and your data crunching real 0:28:51.680 --> 0:28:54.960 appetite and sales of the latest Blackwell architecture. 0:28:55.960 --> 0:28:58.720 Yeah, to keep it simple, we still see alpha here. 0:28:59.200 --> 0:29:01.560 A year ago I had put into print in an 0:29:01.600 --> 0:29:05.800 analysis we would see a fifty billion data center segment 0:29:05.800 --> 0:29:08.840 by the close of this year, analysts had thirty three billion. 0:29:09.280 --> 0:29:11.880 Now this quarter, with only half the year through, we're 0:29:11.880 --> 0:29:14.160 at forty one or forty two billion for the data 0:29:14.160 --> 0:29:18.640 center tomorrow evening, meaning the likelihood we closed this year 0:29:18.640 --> 0:29:22.680 at fifty billion data center is very high. Now keep 0:29:22.720 --> 0:29:25.680 in mind this is still happening for next year. Analysts 0:29:25.720 --> 0:29:29.760 are far too low, not only with their Nvidia estimates 0:29:29.800 --> 0:29:32.440 but their cap X estimates. So we get to look 0:29:32.440 --> 0:29:34.840 at both things, right. We get to look at how 0:29:35.000 --> 0:29:38.280 Nvidia is preparing to ramp these GPUs, and we also 0:29:38.600 --> 0:29:41.680 have a beautiful number around the demand in cap X, 0:29:41.720 --> 0:29:45.680 perfectly packaged for us, and it's blowing away analyst estimates. 0:29:45.960 --> 0:29:49.560 As of two three weeks ago, when Big Tech reported. 0:29:50.080 --> 0:29:52.840 So how big could in Vidia become. 0:29:54.400 --> 0:29:58.240 I have a two hundred billion data center segment, you know, 0:29:58.360 --> 0:30:00.760 over the next couple quarters, I I think we see 0:30:00.840 --> 0:30:05.240 a three hundred billion data center segment, which would translate 0:30:05.360 --> 0:30:10.320 to a six trillion market cap off Blackwell and Blackwell Ultra. 0:30:10.520 --> 0:30:12.720 I like to go by GPU generation. That's how I 0:30:12.960 --> 0:30:16.480 form this thesis. For seven years, so Blackwell, Blackwell Ultra, 0:30:16.880 --> 0:30:20.920 we should see six trillion from Nvidia and again on 0:30:21.000 --> 0:30:23.920 a run rate two hundred billion to three hundred billion 0:30:24.000 --> 0:30:28.240 data center revenue. So I'm talking potentially another one hundred 0:30:28.240 --> 0:30:31.320 percent between now and the close of fiscal year twenty 0:30:31.360 --> 0:30:31.920 twenty seven. 0:30:32.160 --> 0:30:35.000 But we're not even talking about Rubin, which of course 0:30:35.280 --> 0:30:39.400 Jensen one's been over in Taiwan talking to CSNC about already. 0:30:39.440 --> 0:30:41.840 So scale that again, where do we go from the 0:30:41.840 --> 0:30:42.520 six trillion? 0:30:43.600 --> 0:30:46.120 And that is where that's a great point, and the 0:30:46.160 --> 0:30:48.560 one reason I haven't brought up Reuben is I would 0:30:48.640 --> 0:30:52.680 want to see more of the ai data center energy 0:30:52.760 --> 0:30:57.880 problem resolved, and that is where diversification within the energy area. 0:30:58.680 --> 0:31:01.360 You know, these companies that can provide time to power 0:31:01.760 --> 0:31:04.440 is a great way to position. Once we go into Ruben, 0:31:04.800 --> 0:31:07.320 which will really push the upper limits of what the 0:31:07.360 --> 0:31:08.800 grid is capable of today. 0:31:09.320 --> 0:31:12.760 Okay, so therefore you're thinking about the power providers. You're 0:31:12.800 --> 0:31:15.240 thinking though, even in these edge cases, there are other 0:31:15.320 --> 0:31:17.720 chip companies out there wely trying to show their prowess 0:31:17.800 --> 0:31:20.320 when it comes to energy efficiency. Do you dare to 0:31:20.360 --> 0:31:23.040 go there or is it more actually the underlying infrastructure. 0:31:24.600 --> 0:31:27.320 I think it's a combination of looking at alternative forms 0:31:27.320 --> 0:31:31.200 of energy. And what I would say is that right 0:31:31.240 --> 0:31:35.280 now we are all really focused on COOSK capacity from 0:31:35.280 --> 0:31:39.800 TSM and the supply and the hardware side. Where the 0:31:39.840 --> 0:31:43.840 constraint will become is the power side, and that piece 0:31:44.120 --> 0:31:46.959 needs to be resolved somewhere between black while Alter and Reuben. 0:31:47.480 --> 0:31:50.480 And so that is a bet on a g Venova 0:31:50.600 --> 0:31:53.160 or like a company that's going into nuclear or is 0:31:53.160 --> 0:31:54.040 it somewhere else. 0:31:54.080 --> 0:31:59.440 Beth Blue Energy is one that we've held successfully. They 0:31:59.640 --> 0:32:02.800 saw that time to power nuclear can take many years 0:32:03.880 --> 0:32:08.400 to build out. And again we're really looking pretty soon 0:32:08.480 --> 0:32:10.320 here as in like these GPUs are just going to 0:32:10.360 --> 0:32:12.200 sit on a shelf if you can't power them. Nobody 0:32:12.280 --> 0:32:15.760 wants that. Nobody's spending their capex for that reason. So 0:32:15.840 --> 0:32:20.840 Blackwell black Well Altra is really nudging the power supply 0:32:21.080 --> 0:32:23.959 deals we're seeing. But now Ruben's going to require it, 0:32:24.000 --> 0:32:26.760 and I think it's somewhere between you the next one 0:32:26.760 --> 0:32:31.400 to two years where a great AI portfolio is diversified 0:32:31.880 --> 0:32:33.920 with exposure to energy. 0:32:34.840 --> 0:32:37.280 Beth buying on weakness, Beth Kendy gets so good to 0:32:37.280 --> 0:32:39.720 catch up with you with a deep fundamental analysis of 0:32:39.760 --> 0:32:43.840 biofund We thank you coming out. Why two Texas senators 0:32:43.920 --> 0:32:46.640 have made it their mission to bring one of NASA's 0:32:46.760 --> 0:32:50.960 retired space shuttles so Houston. That's next. That's a brute 0:32:50.960 --> 0:33:08.640 bag tech. SpaceX delayed a critical test of its massive 0:33:08.680 --> 0:33:11.920 Starship rocket again just a few minutes before lift off yesterday, 0:33:12.040 --> 0:33:15.080 citing unfavorable weather conditions. Now Starship was slated to take 0:33:15.120 --> 0:33:18.040 off on its tenth major mission in the company's South 0:33:18.040 --> 0:33:21.840 Texas launch facility called Starbase. SpaceX says it is targeting 0:33:21.840 --> 0:33:24.160 another flight test where no tonight, studying at seven to 0:33:24.240 --> 0:33:29.080 thirty pm Eastern time. Well elsewhere in Texas. Two Senators 0:33:29.160 --> 0:33:32.200 Ted Cruz John Cornyn are on a crusade to bring 0:33:32.240 --> 0:33:36.160 one of NASA's retired space shuttles to Houston. But that 0:33:36.200 --> 0:33:39.520 could be a logistical nightmare. Bloomberg Space reporter Lauren Grush 0:33:39.560 --> 0:33:43.080 has been writing about this, Lauren the basics, where are 0:33:43.080 --> 0:33:45.560 they getting it from and for what reason? 0:33:46.560 --> 0:33:50.160 Well, there's still some open questions about exactly which shuttle 0:33:50.280 --> 0:33:53.520 that they want, but it's pretty clear that they ultimately 0:33:53.520 --> 0:33:57.040 want Space Shuttle Discovery, which is currently at the Smithsonian in. 0:33:57.160 --> 0:33:59.640 Washington, DC or in the Washington DC area. 0:34:00.240 --> 0:34:03.880 And for them, they say, they're writing an egregious wrong 0:34:04.280 --> 0:34:06.600 that happened back at the end of the shuttle program 0:34:06.840 --> 0:34:11.240 when those shuttles were allocated to different cities and museums. 0:34:11.320 --> 0:34:14.160 You know, at the time, the people making those decisions 0:34:14.200 --> 0:34:17.960 said that they prioritized visitors and how many people would 0:34:17.960 --> 0:34:21.080 actually see the shuttles when they were over. But to them, 0:34:21.200 --> 0:34:24.840 they felt like Houston, which oversaw the Space Shuttle program 0:34:24.920 --> 0:34:27.600 out of NASA's Johnson Space Center, should have received a 0:34:27.640 --> 0:34:29.839 shuttle because of that tied to. 0:34:29.840 --> 0:34:32.720 The shuttle program. Now in the shuttle that's gone to space, 0:34:33.440 --> 0:34:36.440 I mean, e'sifically. What's extraordinary is you've done your digging 0:34:36.480 --> 0:34:39.480 and sort of gone through the One Big Beautiful Bill 0:34:39.480 --> 0:34:41.760 as it was known, and the Act had a provision 0:34:41.800 --> 0:34:46.200 for Space vehicle transfer up to eighty five million dollars. 0:34:46.320 --> 0:34:49.200 I mean, talk to us about the logistical issues here 0:34:49.360 --> 0:34:50.920 and why they would spend so. 0:34:51.000 --> 0:34:53.960 Much, right I had someone told me that, you know, 0:34:54.040 --> 0:34:57.440 nothing is impossible with enough time and money, but this 0:34:57.520 --> 0:35:01.120 might just be impossible with the amount of money and 0:35:01.280 --> 0:35:04.359 time that they are trying to allocate for this. Yes, 0:35:04.400 --> 0:35:08.320 there's eighty five million allocated in the one Big Beautiful 0:35:08.600 --> 0:35:13.279 Bill and only five million for the transfer. But the Smithsonian, 0:35:13.400 --> 0:35:16.319 which seems to be the target of this transfer, has 0:35:16.520 --> 0:35:19.960 estimated about fifty to fifty five million for the transfer, 0:35:20.360 --> 0:35:23.480 and then upwards of three hundred million dollars to prepare 0:35:23.880 --> 0:35:26.520 the transfer, to come up with a new exhibit and 0:35:26.560 --> 0:35:29.880 to display the vehicle at its new location in Houston. 0:35:30.200 --> 0:35:32.239 And then there's also just the concern of what's going 0:35:32.280 --> 0:35:35.000 to happen to the shuttles during transit. You know, they're 0:35:35.120 --> 0:35:38.560 very delicate. They're covered in these very delicate tiles that 0:35:38.640 --> 0:35:41.480 were used to keep the vehicle from overheating when it 0:35:41.520 --> 0:35:44.960 came back to Earth from space, and so the concern 0:35:45.080 --> 0:35:49.440 is just moving that those tiles would probably be irrevocably 0:35:49.520 --> 0:35:54.719 damaged and that would you know, be destroying national asset. 0:35:54.520 --> 0:35:58.160 Essentially about national assets right now, of course, we now 0:35:58.360 --> 0:36:01.240 think about the money being spent on sending actual shuttles 0:36:01.239 --> 0:36:03.279 into actual space at the here and now, Lauren, what 0:36:03.320 --> 0:36:05.240 do you make of the SpaceX delay? 0:36:06.600 --> 0:36:10.239 Yeah, you know, having covered space launches for however long 0:36:10.320 --> 0:36:13.000 I have, you know, there's just one thing that companies 0:36:13.080 --> 0:36:15.239 can't control, and that. 0:36:15.239 --> 0:36:15.680 Is the weather. 0:36:16.600 --> 0:36:18.680 And so as much as you might like to fly, 0:36:18.880 --> 0:36:22.479 they had the wrong kind of clouds over the launch 0:36:22.520 --> 0:36:24.000 site last night and. 0:36:23.960 --> 0:36:25.480 So that forced a delay. 0:36:25.560 --> 0:36:29.080 But hopefully the weather will cooperate tonight and we'll maybe 0:36:29.080 --> 0:36:31.399 see a lift off of that tenth flight that we've 0:36:31.440 --> 0:36:33.839 all been kind of anticipating for a while now. 0:36:34.480 --> 0:36:36.640 And Grash keep us on ten to hooks me. Thank 0:36:36.680 --> 0:36:39.040 you for it. Now coming up, take a look at 0:36:39.080 --> 0:36:41.080 the shares of these software companies, some of the worst 0:36:41.080 --> 0:36:43.000 performers here to date. But we were talking all about 0:36:43.000 --> 0:36:46.800 AI disruption fears that are fueling this decline and also 0:36:47.360 --> 0:36:49.640 what some earnings were about to get after the bell 0:36:49.960 --> 0:36:52.799 tomorrow could say about software demand. That's a blue big 0:36:52.880 --> 0:37:05.320 tech time now for talking tech. First up, Acililar Luxotica 0:37:05.480 --> 0:37:07.560 is said to be exploring a potential deal to increase 0:37:07.600 --> 0:37:10.680 its stake in Japanese optical equipment MA manufacturer and Nikon Now. 0:37:10.719 --> 0:37:12.680 According to people familiar with the matter, the maker of 0:37:12.719 --> 0:37:15.520 the ray baann Meta sunglasses while they're considering boosting the 0:37:15.560 --> 0:37:17.919 state in Nikon by twenty percent of from its current 0:37:17.960 --> 0:37:21.600 holdings of nine percent plus. Saudi Arabia's Humane It broke 0:37:21.640 --> 0:37:23.960 down on the first data centers in the kingdom, and 0:37:24.040 --> 0:37:25.920 the AI company has plans to have them up and 0:37:26.000 --> 0:37:29.040 running in nearly twenty twenty six using semiconductors important from 0:37:29.040 --> 0:37:31.759 the United States. Human plans to add one point nine 0:37:31.960 --> 0:37:36.319 gigawatts worth of data centres by twenty thirty and diplomats 0:37:36.320 --> 0:37:40.720 in Southeast Asia were targeted in a cyber espionage campaign 0:37:40.719 --> 0:37:43.520 earlier this year. According to Google Now, the attacks used 0:37:43.560 --> 0:37:46.839 social engineering and malware disguised as software updates, and are 0:37:46.760 --> 0:37:50.480 attributed to a China linked group. Spokesperson for Chinese Ministry 0:37:50.480 --> 0:37:53.360 of Foreign Affairs said they were not aware of the situation. 0:37:54.239 --> 0:37:58.080 While from software updates to software disruption, AI disruptions creating 0:37:58.120 --> 0:38:00.760 a sense of fear among investors in the software sector, 0:38:00.920 --> 0:38:04.800 Companies like Salesforce, Adobe Service now among the worst performers 0:38:04.840 --> 0:38:06.560 in the s and P five founders so far this year, 0:38:07.160 --> 0:38:10.680 someone's been writing about that. Bloomberg's Ryan Vlastelica, you're joining 0:38:10.760 --> 0:38:13.880 us on this software softness, But Ryan, this really is 0:38:14.200 --> 0:38:17.040 the agitation that we're seeing in Europe too, that generator 0:38:17.080 --> 0:38:18.360 of AI is going to eat their lunch. 0:38:19.480 --> 0:38:19.680 Yeah. 0:38:19.719 --> 0:38:22.080 Absolutely, thank you for having me on. This is a 0:38:22.160 --> 0:38:25.960 growing fear among investors as all these AI models become 0:38:26.040 --> 0:38:30.080 so prolific, they seem to offer all kinds of capabilities. 0:38:30.120 --> 0:38:32.319 The idea that you are going to continue using these 0:38:32.320 --> 0:38:35.640 sort of more niche software platforms, it seems a little 0:38:35.640 --> 0:38:38.080 bit ifpier right now, Why would you pay for a 0:38:38.120 --> 0:38:40.719 second company? If if you're just using open ai or 0:38:40.760 --> 0:38:43.160 Gemini or some of these other services which can do 0:38:43.239 --> 0:38:45.879 all your coding, which can analyze your data, which can 0:38:46.120 --> 0:38:49.440 generate photos, which can do sort of back office in 0:38:49.480 --> 0:38:52.280 front office features like all these kinds of things. Really 0:38:52.320 --> 0:38:54.799 makes a much bigger question what is the growth going 0:38:54.840 --> 0:38:57.439 to look like for other software companies that aren't as 0:38:57.480 --> 0:38:59.920 big in the AI space? What is there demand going 0:39:00.080 --> 0:39:02.280 to look like? It has really been weighing on the stocks, 0:39:02.760 --> 0:39:03.200 weighing on. 0:39:03.160 --> 0:39:05.520 The stocks already, and I think about though they've done 0:39:05.520 --> 0:39:07.440 a lot of talking to try and rectify that. Just 0:39:07.480 --> 0:39:09.799 think about how much Salesforce has been leaning into the 0:39:09.800 --> 0:39:13.719 AGENTICKI offering. What needs to turn this about, because we've 0:39:13.719 --> 0:39:17.319 already thought about underlying fundamentals. Is it that earnings need 0:39:17.360 --> 0:39:19.279 to show growth and that people are going to stick 0:39:19.320 --> 0:39:20.640 with these offerings and products. 0:39:21.480 --> 0:39:23.759 Yeah, So Salesforce reports next week, and that's going to 0:39:23.760 --> 0:39:26.239 be a very interesting report for what they say about 0:39:26.239 --> 0:39:28.880 what their growth looks like going forward, their demand trends, 0:39:29.080 --> 0:39:31.439 if they are seeing a lot of adoption of its 0:39:31.440 --> 0:39:34.279 Agent Force product and services right now. This is the 0:39:34.360 --> 0:39:36.560 kind of company, like you said, it's been very aggressive 0:39:36.560 --> 0:39:39.240 in AI. They've done a lot of acquisitions, They've really 0:39:39.239 --> 0:39:41.920 been sort of fore grounding their AI services, but it 0:39:41.960 --> 0:39:44.279 hasn't really been enough to support the stock. I think 0:39:44.280 --> 0:39:47.239 there is just sort of this overarching concern how much 0:39:47.280 --> 0:39:50.359 competition are these companies going to face from AI? What 0:39:50.400 --> 0:39:51.960 does it mean for their stocks? What does it mean 0:39:52.040 --> 0:39:55.160 for their demand? Their valuations? Right now, people are taking 0:39:55.239 --> 0:39:57.640 very much sort of a shoot first, ask questions later 0:39:57.680 --> 0:39:58.560 sort of policy on this. 0:39:59.000 --> 0:40:01.560 Ryan less selca brilliant writing, I mean thank you for 0:40:01.600 --> 0:40:03.960 joining us on it. Let's stick with the impacts of 0:40:03.960 --> 0:40:07.440 AI demands on certain software companies and in the infrastructure 0:40:07.440 --> 0:40:09.600 around it. Looking video comes out out of the bell tomorrow, 0:40:09.600 --> 0:40:12.200 but remember Snowflake, Mungo dB, they're on deck this week 0:40:12.200 --> 0:40:15.000 as well. Man Leipsingh head of Tech Research and Blue 0:40:15.040 --> 0:40:16.880 Make Intelligence some places to say is with us. So 0:40:16.920 --> 0:40:21.120 the overarching bell weather is of course in video, and 0:40:21.120 --> 0:40:23.359 we're expecting the fifty percent ramp and earnings for share 0:40:23.719 --> 0:40:27.279 and more broadly in sales there. But people too optimistic 0:40:27.360 --> 0:40:28.280 going into the print. 0:40:28.480 --> 0:40:31.759 I mean, the framework that we have is we know 0:40:31.960 --> 0:40:35.360 about the demand side. CAPEX expectations have gone up for 0:40:35.440 --> 0:40:40.040 twenty twenty six from Hyperscalers, so that's positive. TSMC isn't 0:40:40.160 --> 0:40:43.960 ramping up supply of coos to like, not to the 0:40:44.000 --> 0:40:47.520 extent where they can solve all the supply constraints. So 0:40:47.960 --> 0:40:51.359 all the setup that we have is good. The key 0:40:51.440 --> 0:40:56.080 vector for me is scaling laws versus reinforcement learning. Right now, 0:40:56.160 --> 0:41:00.120 what we are seeing is everyone has fivoted to reasoning models. 0:41:00.160 --> 0:41:03.839 In fact, Meta said they want to lease you know, 0:41:03.920 --> 0:41:09.360 compute capacity from Hyperscalers and focus more on reinforcement learning 0:41:09.360 --> 0:41:13.080 with the new superintelligence lab. I mean that was Alexander 0:41:13.160 --> 0:41:18.240 Zwang's focus at SCALEII is reinforcement learning data tagging for training, 0:41:18.600 --> 0:41:21.520 and so they seem to be moving away from scaling 0:41:21.600 --> 0:41:24.759 laws at least that's how we are interpreting it. So 0:41:24.880 --> 0:41:28.160 from that perspective, it does have an impact on someone 0:41:28.239 --> 0:41:32.479 like Nvidia. If everyone has slowly started to shift away 0:41:32.520 --> 0:41:35.640 from training to more reinforcement learning, I think that will 0:41:35.680 --> 0:41:36.200 have a bearing. 0:41:36.239 --> 0:41:39.080 But Jensen's spend a lot of time trying to say 0:41:39.160 --> 0:41:41.279 that inference is still their sweet spot and that's not 0:41:41.360 --> 0:41:42.600 going to be an issue for them in terms of 0:41:42.640 --> 0:41:43.000 a month. 0:41:43.000 --> 0:41:45.160 So let's put it this way. In Vidia has one 0:41:45.280 --> 0:41:48.879 hundred percent share when it comes to training, but when 0:41:48.880 --> 0:41:51.800 it comes to inferencing, they are in the nineties. Oh 0:41:51.840 --> 0:41:55.839 so you know mean and look, Google GPUs is ramping up. 0:41:55.960 --> 0:41:59.520 We know they're offering more capacity on GCP so that's 0:41:59.560 --> 0:42:03.319 a LEVI some of their supply constraints, But at the 0:42:03.440 --> 0:42:06.359 end of the day, training is where you need need 0:42:06.400 --> 0:42:10.399 the highest performance chips. Nvidia still makes those, but if 0:42:10.440 --> 0:42:13.439 the other players are able to take even one two 0:42:13.440 --> 0:42:16.759 percent share, that will have an impact on Nvidia's growth 0:42:16.840 --> 0:42:19.520 rates because they continue to raise the bar. I mean, 0:42:19.600 --> 0:42:22.799 you need to see the estimates keep getting higher. And look, 0:42:22.840 --> 0:42:26.160 there is the geopolitical aspect around selling to China all that, 0:42:26.520 --> 0:42:28.520 but in the end it comes down to wolf will 0:42:28.560 --> 0:42:31.920 be Blackwell demand and what will be Ruben's demand. And 0:42:32.000 --> 0:42:34.520 right now all these models are trained on Harper, so 0:42:34.560 --> 0:42:37.399 we want to know how big of a cluster there 0:42:37.400 --> 0:42:38.560 will be with black Row. 0:42:39.160 --> 0:42:42.319 And then we think about the ROAI that everyone's been 0:42:42.360 --> 0:42:44.080 nervous about in the last few weeks. We think a 0:42:44.160 --> 0:42:46.759 Palenteers beat up a little bit, but push us forward 0:42:46.800 --> 0:42:49.479 to what the ROAI is on for these software names 0:42:49.480 --> 0:42:51.680 that are coming out. The Snowflake has been leaning very 0:42:51.760 --> 0:42:54.120 much into AI, but is it managed to keep its 0:42:54.120 --> 0:42:54.759 customers happening? 0:42:54.880 --> 0:42:57.000 I just can make sense of the you know, the 0:42:57.520 --> 0:43:01.080 difference in valuation for Snowflake versus Pier when both of 0:43:01.120 --> 0:43:04.640 them have a similar growth profile. Yes, Palenteer probably has 0:43:04.680 --> 0:43:08.880 seen more with AI pilots, but Snowflake is a growth company. 0:43:08.920 --> 0:43:11.799 They've got a big customer base. So from that perspective, 0:43:12.120 --> 0:43:14.960 why can't they lean in on AI models and do 0:43:15.080 --> 0:43:18.959 something similar to Snowflake. To Palenteer, I don't understand same 0:43:18.960 --> 0:43:21.600 thing with Mango deb and it sounds like the stack 0:43:21.719 --> 0:43:24.640 is changing with AI agents. In fact, one anecdote I 0:43:24.680 --> 0:43:28.240 heard was eighty percent of new databases are being created 0:43:28.239 --> 0:43:32.640 by AI agents. So you're not creating databases for manual 0:43:32.719 --> 0:43:36.799 human transactions, it's the AI agent's creating new databases. 0:43:36.840 --> 0:43:37.000 Now. 0:43:37.000 --> 0:43:40.239 That does impact someone like Mango dB in a big 0:43:40.239 --> 0:43:43.400 way because if they need to be part of that stack. 0:43:44.000 --> 0:43:46.439 And so I think in the end it comes down 0:43:46.480 --> 0:43:48.280 to how you integrate lart of that and with models. 0:43:48.440 --> 0:43:50.319 See how those arnings come out This week as well, 0:43:50.280 --> 0:43:54.200 boom meg Intelligence is Mandeep saying always got great takes. 0:43:54.280 --> 0:43:56.359 That does it for this edition of boombg Tech. Don't 0:43:56.400 --> 0:43:58.800 forget to check out our podcast find on the terminal 0:43:58.880 --> 0:44:01.520 as well as online on app, on Spotify and iHeart 0:44:01.760 --> 0:44:02.560 this is Bloomberg.