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 Vla Lolow in San Francisco.
Speaker 2: This is Bloomberg Tech coming up.
Speaker 3: President Trump allows Nvidia to ship its eight two hundred
Speaker 3: AI chip to China in exchange for a twenty five
Speaker 3: percent surcharge.
Speaker 4: Plus. We'll drill more into the Warner Brothers, Discovery, SAGA
Speaker 4: and antitrust concerns rising from the proposed.
Speaker 3: Bids, and Microsoft is committing seventeen point five billion dollars
Speaker 3: over four years to help build India's cloud and AI infrastructure.
Speaker 4: We dig into the market's first and foremost so and
Speaker 4: ed not much of a movement. We're up ten percent
Speaker 4: on the NASAK one hundred jolts data. Basically jobs opening
Speaker 4: coming in better than had been anticipated, but scratched beneath
Speaker 4: the hood, and maybe less optimism there the market had
Speaker 4: hoped for. More Broadly, we're in wait and see mode
Speaker 4: for the FED tomorrow, but we're not in wait and
Speaker 4: see mode when it comes to some significant moves to
Speaker 4: one stop.
Speaker 2: Yep in vidio.
Speaker 3: This is how Invidia is traded over a twenty four
Speaker 3: hour period and two sessions, we're down marginally basically flat.
Speaker 3: In Tuesday's session, when news broke from the President that
Speaker 3: Nvidia would be authorized to ship H two hundred to
Speaker 3: China under certain circumstances with a twenty five percent surcharge,
Speaker 3: the stock spiked. But then when reports hit that China
Speaker 3: would move with its own restrictions on how and why
Speaker 3: and which companies could have access with that technology, the
Speaker 3: gains fizzled, and the same can be applied to both
Speaker 3: AMD and Intel.
Speaker 2: Let's stick with the Nvidia story.
Speaker 3: As you look at that two day chart of the
Speaker 3: stock and the big jump that led to a big fate.
Speaker 3: Let's bring in Blue Mosey and King, who leads our
Speaker 3: coverage of semiconductors.
Speaker 2: That's the news broadly.
Speaker 3: What else do we need to know about the calculus
Speaker 3: of America's decision to allow H two hundred in particular
Speaker 3: to go to China in certain circumstances, and whether or
Speaker 3: not China wants it?
Speaker 5: Yeah, I mean, that's exactly it. We've shown a willingness
Speaker 5: to sell. We've effectively said, hey, we were prepared to
Speaker 5: give you something better. The question now is whether China
Speaker 5: actually wants that and how Beijing will react. We have
Speaker 5: the President saying that he's cleared it with his counterpart
Speaker 5: in Beijing, but we haven't really seen a concrete response
Speaker 5: on how that will manifest itself in terms of orders
Speaker 5: or shipments.
Speaker 4: We know that the articulated total addressable market is fifty
Speaker 4: billion dollars for Jensen Wang, But what does the H
Speaker 4: two hundred bring that the H twenty doesn't.
Speaker 6: How much better is it?
Speaker 5: Yeah, I mean it's multiple times better. It's still a
Speaker 5: mainstream chip. It's still in widespread use in the world's
Speaker 5: data centers. It's not, of course in video's latest. It's
Speaker 5: nowhererea as good as the Blackwell generation, but it's still very,
Speaker 5: very good and according to analysiss a lot better, which
Speaker 5: is more important than anything else that the Chinese can
Speaker 5: make themselves.
Speaker 3: So that there is the what happens next. China has
Speaker 3: two domestic players maybe three, that have AI accelerators. They
Speaker 3: are not as performant as H two hundred, we think,
Speaker 3: But the main issue for China is also the supply
Speaker 3: constraint and manufacturing.
Speaker 2: Explain that part of the story.
Speaker 5: Yeah, I mean, as you know, China has been cut
Speaker 5: off from advanced semiconductor manufacturing, including TSMC. So the chips
Speaker 5: that it can make itself are constrained by the actual
Speaker 5: amount that it can make, but also the quality that
Speaker 5: it can make based upon the manufacturing capabilities of plants
Speaker 5: inside China.
Speaker 4: And quickly, just when I reference H twenty, the fifteen
Speaker 4: percent never went to the government because that was never
Speaker 4: signed off legally. Do we know whether the H two hundred, Yes,
Speaker 4: we've got a truth social but will it be signed
Speaker 4: off legally by the US at least?
Speaker 5: Yeah, I mean, as we put in our story yesterday,
Speaker 5: we had some reporting on that. And then exclusive for US,
Speaker 5: this is going to be a different arrangement because these
Speaker 5: ships are made in Taiwan. What's going to happen apparently
Speaker 5: is that they're going to be imported into the US,
Speaker 5: which would make them subject to an import tariff. So
Speaker 5: that's how we basically the US government gets paid and
Speaker 5: then they become re exported to China.
Speaker 6: The nuance always clear. Thank you in King.
Speaker 4: Now let's discuss the broader impact now on the tech markets.
Speaker 4: We bring in Ebeks Deshkaya's analyst at Swiss quote IBEC.
Speaker 4: What do you make of this potential for Invidio at least,
Speaker 4: and whether or not China will indeed import the market
Speaker 4: reaction from your perspective.
Speaker 7: Well, this is a win for Nvidia, but it has
Speaker 7: to be taken with a pinch of salt because we
Speaker 7: already hear that there are attentions among US politicians regarding
Speaker 7: what this means for the national security for US is
Speaker 7: a very sensitive segment of business. China is ensure to
Speaker 7: let its own companies buy these chips for the same
Speaker 7: national security issues and also because they're backing the domestic
Speaker 7: chip production. So for Nvidia, which assumes that is China
Speaker 7: sales are now zero, every chip that is going to
Speaker 7: be sold to China is a bonus. It is a tailwind.
Speaker 7: But for long term forecast with stale remain very much
Speaker 7: coaches regarding what this me is and how stable the
Speaker 7: stale is going to be.
Speaker 2: Upek.
Speaker 3: The base case assumption from Nvidia is right now in
Speaker 3: the fiscal year and maybe next fiscal year, zero revenues
Speaker 3: from China. That clearly this news has led everyone to recalculate.
Speaker 3: Would you assume some upside from Chinese AI data censorship
Speaker 3: revenue next year?
Speaker 7: Well, again, the geopolitical backshop is so uncertain that the
Speaker 7: best thing to do in terms of the safest a
Speaker 7: way to go with these assumptions is to keep that
Speaker 7: forecast at zero percent. But obviously investors are happy to
Speaker 7: hear that there is an opportunity in China for Nvidia,
Speaker 7: but again that opportunity is very much uncertain right now.
Speaker 7: We don't know if China is going to allow these
Speaker 7: chips to be sold. And again we don't even know
Speaker 7: if the Chinese companies will be willing to buy these chips,
Speaker 7: given that it is politically very sensitive, and if they
Speaker 7: could use domestic alternatives, even though they are less efficient,
Speaker 7: maybe it's going to be a better deal for them,
Speaker 7: especially from a political and geopolitical perspective. So in my opinion,
Speaker 7: investors will continue to assume that the Chinese sales is
Speaker 7: in the Nvidia's Chinese sales are going to be zero
Speaker 7: with a little bonus maybe if some of these chips
Speaker 7: actually get sold.
Speaker 4: If I bring us your global perspective, as you sit
Speaker 4: in Switzerland, this tussle between US and China to say
Speaker 4: who's got more dominance, But what do you hear from
Speaker 4: your perspective as to how far along China really is
Speaker 4: with its domestic chip manufacturing and use well.
Speaker 7: Obviously, US and the US technology is ahead of China.
Speaker 7: What China is good at doing is basically to find
Speaker 7: the chips to do manufacture from manufacturer chips in order
Speaker 7: to serve their own needs and serve the basic AI needs.
Speaker 7: So China is generally better in transforming their I investments
Speaker 7: into real revenue, whereas the US is prestige technology. Hope,
Speaker 7: that's really aiming for the best. But even from the
Speaker 7: European perspective, where we could be a little bit more neutral.
Speaker 7: While US is allies first of all, and US is
Speaker 7: well ahead from a technology perspective than China, then China
Speaker 7: is clearly coming and the fact that these chip restrictions
Speaker 7: have hit the Chinese technology sector means that they will
Speaker 7: be accelerating their efforts and do anything in their power
Speaker 7: to catch the US technology.
Speaker 4: It really has been a mounting concern from some of
Speaker 4: these tech leaders that perhaps were underestimating how sophisticated China is,
Speaker 4: is the market, underestimating how superior TPUs are, how other
Speaker 4: chips are being manufactured by big tech players for their
Speaker 4: own inference.
Speaker 6: How much we need to take that into the Nvidia story.
Speaker 7: Well, I think that what TPUs are interesting, but they
Speaker 7: are actually you know, serving in one particular area, and
Speaker 7: that's AI. Obviously, the fact that Google is now out
Speaker 7: there and commercializing the TPUs is a is a negative risk,
Speaker 7: is a negative factor for Nvidia. It is a risk
Speaker 7: in the sense that for those companies who are looking
Speaker 7: only for their AI applications, they would find it cheaper
Speaker 7: and as efficient as buying Mvdia's GPUs. But at the
Speaker 7: end of the day, mvd is not only selling chips,
Speaker 7: They're also selling the ecosystem that comes with it. So
Speaker 7: not every company is going to be comparatable going into
Speaker 7: the TPUs just because as cheaper and as efficient. I
Speaker 7: think that Nvidia still has the GPU market and the
Speaker 7: ecosystem well anchored, and Google, for example, with this TPUs
Speaker 7: doesn't really have it.
Speaker 2: You peck us good.
Speaker 3: This guy a Swiss great senior market analyst. Thank you
Speaker 3: very much for coming up. We'll come back on the
Speaker 3: talk of Hollywood, Warner Brothers, Discovery and the antitrust concerns.
Speaker 3: The proposed bids are definitely raising.
Speaker 8: That's next.
Speaker 2: This is Bloomberg Tech.
Speaker 4: Let's get to what everyone has been talking about in
Speaker 4: Entertainment the rival bids for Warner Brothers Discovery after Paramount
Speaker 4: came out with its own hostile takeover offer yesterday. Netflix
Speaker 4: co CEO Ted Serranos says he's not too worried. He
Speaker 4: spoke at the UBS Global Media and Communications Conference in
Speaker 4: New York yesterday.
Speaker 6: Just take a listen.
Speaker 9: Today's move was entirely expected. We have a deal done,
Speaker 9: and we are incredibly happy with the deal. We think
Speaker 9: it's great for our shareholders, think it's great for consumers.
Speaker 9: We think it's a great way to create and protect
Speaker 9: jobs in the entertainment industry. We're super confident we're going
Speaker 9: to get it across the line of finished.
Speaker 8: So we're excited.
Speaker 4: Let's bringing bloom bags. Luca Sure, author of the screen
Speaker 4: Time newsletter. Should he be as confident Lucas?
Speaker 10: First all, I love those old photos that you have
Speaker 10: of Ted back from I guess that's the release of Lillehimmer.
Speaker 8: Of course he's going to project confidence.
Speaker 10: He agreed to a deal, and what Paramount is proposing
Speaker 10: at the moment is not different from what it proposed
Speaker 10: when it lost this auction last week. Right, they're sticking
Speaker 10: with their thirty dollars a share and their insistence is
Speaker 10: that the board just didn't take the time to really
Speaker 10: consider it, and that if more shareholders hear their point
Speaker 10: of view, that they will be swayed. I think if
Speaker 10: Paramount stays on that current course, Ted has reason to
Speaker 10: be pretty confident because he already won with that. Risk
Speaker 10: for Ted and for Netflix would be if Paramount comes
Speaker 10: back and offers even more money, because then the board
Speaker 10: and the shareholders would likely think about opening back up.
Speaker 3: Lucas you've spoken at length and in some detail in
Speaker 3: the last year and two years with both Ted Surround
Speaker 3: and with David Ellison. The reporting overnight was really focused
Speaker 3: on the coalition that David Ellison has pulled together for
Speaker 3: the financing, and part of that includes people that have
Speaker 3: proximity to the administration, Jared Kushner and his private equity
Speaker 3: firm being the easiest example. Just reflect on what you
Speaker 3: know of both CEOs in the competition between them, but
Speaker 3: also David Ellison's ability here to manage that relationship with
Speaker 3: the White House if there is one.
Speaker 10: Right well, look, I think one of the reasons that
Speaker 10: Netflix prevailed in the initial auction was that you put
Speaker 10: Ted Surrandos in a room with the Warner Brothers, Discovery
Speaker 10: board and leadership, and he is charming and charismatic and
Speaker 10: it is generally very good in those situations.
Speaker 11: Right.
Speaker 10: It's one of the reasons that he is Netflix's primary
Speaker 10: person when it comes to wooing talent. David Ellison has
Speaker 10: a little bit less experience with that, right, he's younger.
Speaker 10: He is very amiable, but he doesn't have that He's
Speaker 10: not kind of like oozing the charm in the same
Speaker 10: way that Ted is. We've now entered a different phase
Speaker 10: of this to your point, where a lot of it
Speaker 10: is more about who you know and their proximity to
Speaker 10: people in positions of power. That's an area where Ted
Speaker 10: surround us is still very strong. But he comes from
Speaker 10: the generally from the democratic side of the political aisle,
Speaker 10: and so Netflix is having to kind of find the
Speaker 10: people who can help them get into the Trump administration.
Speaker 10: To your point, David Allison, in part because of his
Speaker 10: father Larry, and then also the various financiers he has,
Speaker 10: he has a lot of different ways to access the president. Now,
Speaker 10: of course all of this is moot, or should be
Speaker 10: moot if the board decides one way or the other.
Speaker 8: But you know, times are different.
Speaker 6: Now, I guess times are different.
Speaker 4: But let's just go back to cold hard cash here,
Speaker 4: because this really comes down to how much the investors
Speaker 4: are going to think the cable networks are worth.
Speaker 8: Right, That's a big part of it.
Speaker 10: Yeah, I mean the fundamental breakdown between what Paramount thinks
Speaker 10: of the state of play and what Warner Brothers Discovery
Speaker 10: thinks of the state of play is the value of
Speaker 10: the cable networks and the importance of cash. Paramounts bid
Speaker 10: is all cash. Netflix is bid is primarily cash, but
Speaker 10: not all cash. Paramount is valuing those cable networks at
Speaker 10: about a dollar a share. By that valuation, their bid
Speaker 10: is superior to Netflix. Warner Brothers Discovery is valuing it
Speaker 10: at three or four dollars a share, which and.
Speaker 8: By that metric, Netflix is superior. That's why I.
Speaker 10: Think it feels almost inevitable that Paramount if it really
Speaker 10: wants it will have to come over the top and
Speaker 10: just add let's say, three dollars to its bid.
Speaker 8: But we're not there yet.
Speaker 2: Bloom most Lucas, sure, thank you very much.
Speaker 3: President Trump first raised anti trust concerns over Netflix's market
Speaker 3: share if the deal goes through. Now, Senator Elizabeth Warren
Speaker 3: also weighing in on paramount spid, saying that merger would
Speaker 3: be quote a five alarm antitrust fire. Let's break it
Speaker 3: all down with Jennifer Huddleston, Senior tech Fellow at the
Speaker 3: Cato Institute whose work covers antitrust. A deal, a proposed
Speaker 3: deal of this scale and size and value is inevitably
Speaker 3: going to be looked at by regulators and reviewed, in
Speaker 3: part because we have a set of codified guidelines and
Speaker 3: rules from twenty twenty three that allow for that to
Speaker 3: be the case when regulators do look at it. Jennifer,
Speaker 3: what is the top consideration about this market that they'll
Speaker 3: be making.
Speaker 12: Thank you so much for having me, and you're right.
Speaker 12: One of the things we're going to see in this
Speaker 12: conversation is how do these twenty twenty three guidelines potentially
Speaker 12: play out in this case and what does that mean
Speaker 12: if such ends up in court, as well as what
Speaker 12: does that mean for any challenges. One of the interesting
Speaker 12: things is going to really be around this question of
Speaker 12: market definition. What is the market that these two platforms
Speaker 12: are potentially competing in and what does that mean for
Speaker 12: the actual average consumer? Is this online streaming subscription services.
Speaker 12: Is this some kind of bigger attention economy issue or
Speaker 12: is this something you know specific about the amount of
Speaker 12: time individuals spend on any type of entertainment.
Speaker 3: As it goes about Jennifer, will any of the regulators
Speaker 3: involves look at what the benefit is to the consumer
Speaker 3: in either merger or deal going through.
Speaker 12: I mean, we can certainly hope so. US antitrust law
Speaker 12: is supposed to be based in the consumer Welfare Standard,
Speaker 12: which means what regulators should really be looking at is
Speaker 12: will this mergerer acquisition harm consumers in some way? Will
Speaker 12: it negatively impact prices? Will it negatively impact the ability
Speaker 12: to have to have a certain quality or certain other
Speaker 12: elements that really should be based on sound economic factors.
Speaker 12: This shouldn't be about a subjective idea of how many
Speaker 12: players should be in the streaming market. It should really
Speaker 12: be focused on this question of our consumers going to
Speaker 12: be harmed. Our consumer is going to be worse off
Speaker 12: if they have this combined company as opposed to two
Speaker 12: separate companies.
Speaker 4: The Cato Institute is so interesting because it's a libertarian
Speaker 4: think tank and it's really thinking about individual liberty, about
Speaker 4: limited government, free markets. You come in it from that angle,
Speaker 4: which Jennifer, give us your global perspective here a bit,
Speaker 4: because this doesn't just get sign off from the United States.
Speaker 6: We go worldwide.
Speaker 4: We're just seeing what the EU is doing again today,
Speaker 4: for example, with Alphabet and competition within AI. Are they
Speaker 4: going to hit roadblocks there as well?
Speaker 12: I mean, that's certainly going to be a question depending
Speaker 12: on the nature of any particular transaction. And we've seen
Speaker 12: this happen in other cases when it comes to questions
Speaker 12: around large US tech companies and their potential acquisitions. For example,
Speaker 12: we certainly saw a large debate around the Microsoft Activision
Speaker 12: acquisition in Europe as well, and ultimately that was able
Speaker 12: to go through. We've also seen European regulators trying to
Speaker 12: put up various structural roadblocks that would allow some of
Speaker 12: America's leading tech companies to continue to innovate, continue to
Speaker 12: go into new markets. So I think it's certainly a
Speaker 12: worthy question of not only how might such transactions play
Speaker 12: out when it comes to US regulators, but if this
Speaker 12: is something that's a global international debate, are there other
Speaker 12: regulators where there might be other conversations that get had
Speaker 12: along the way.
Speaker 4: It's interesting Jennifer that Netflix has tried to front run
Speaker 4: a lot of these concerns by putting out the statement
Speaker 4: that consumers will win from their perspective because already they'll
Speaker 4: signed up to Netflix and HBO and we'll broadly they'll
Speaker 4: probably get more bang for the bug. But they're also
Speaker 4: having to talk about how they're going to benefit content
Speaker 4: creation or indeed the industry of Hollywood writ large.
Speaker 6: Should they have to do that?
Speaker 4: Will the narrative be based on that in any way
Speaker 4: as to how this might help jobs and creativity.
Speaker 12: I think one of the big questions is going to
Speaker 12: be around that market definition. Is the market the definition
Speaker 12: definition include markets for content creation? And if so, what
Speaker 12: does that mean in this today and age where we
Speaker 12: have such significant amounts of user generator content. Is it
Speaker 12: only about studio created content or is it also about
Speaker 12: looking at content more holistically the way short form video
Speaker 12: or even long form video on platforms like YouTube have
Speaker 12: arisen to allow creative's new outlets. So we'll certainly see
Speaker 12: that be part of the conversation as well, possibly if
Speaker 12: that gets included in the market definition.
Speaker 4: Jennifer hudleson great to catch up with you, Senior Tech
Speaker 4: fellow over at the Cato Institute. Now we're going to
Speaker 4: think about entertainment a little bit more because Walt Disney
Speaker 4: is bringing Jimmy Kimmel back for at least one more
Speaker 4: year now, the late night star who was suspended in
Speaker 4: September over remarks about slain GOP activist Charlie Kirk. Where
Speaker 4: he's going to continue to host Jimmy Kimmel Live until
Speaker 4: May twenty twenty seven under a new one year deal
Speaker 4: with Disney's ABC network.
Speaker 6: It's all according to sources.
Speaker 2: Ed okay, coming up.
Speaker 3: Investors have been disappointed in Apple's lack of AI strategy.
Speaker 3: Now that weakness maybe a strength. We're going to talk
Speaker 3: about why next. This has been big ten.
Speaker 6: Take a look at Apple shares since June. Have you
Speaker 6: noticed this?
Speaker 4: Back then, analysts were talking about the iPhone maker falling
Speaker 4: behind big rivals in the AI race, But now the
Speaker 4: company is the beneficiary of rising doubts about the AI trade.
Speaker 6: Here to talk us through is Brumberg Gequiti's reporter.
Speaker 4: Carmen Ranicky, who is gonna help us really illustrate a
Speaker 4: story that everyone is reading today. If almost we'd forgot,
Speaker 4: we'd all thought Apple had been beaten up, and actually
Speaker 4: it is worth four point one trillion dollars and the
Speaker 4: second most valuable company on the SP five hundred.
Speaker 6: The narrative shifted, Yeah, it totally shifted.
Speaker 13: It's really like a complete turnaround from the beginning of
Speaker 13: the year. Now it's you know, in spitting distance of
Speaker 13: taking over there's the biggest company from Nvidia, right that
Speaker 13: gap is ever narrowing in terms of market caps. So really,
Speaker 13: what we've seen is that people are getting more worried
Speaker 13: about the AI trend. They're looking at these companies more critically,
Speaker 13: and Apple sort of at the same time has benefited
Speaker 13: because it's not seen as this huge AI play I think.
Speaker 13: At the same time as well, what we've seen is
Speaker 13: that there's been a little bit more shine around the
Speaker 13: new iPhone iPhone seventeen. The big story for Apple, at
Speaker 13: least I've been hearing for the last few years, is
Speaker 13: the upgrade cycle, right, people getting the new phones that
Speaker 13: they've had for four or five years, and analysts and
Speaker 13: investors are starting to see that happen and they're excited
Speaker 13: about it more and more going forward. But you know,
Speaker 13: at the same time, Apple's valuation is near record high
Speaker 13: as it trades at thirty two times forward earnings or
Speaker 13: nearly thirty three times forward earnings. That's more than any
Speaker 13: other stock in the mag seven aside from Tesla.
Speaker 4: So it's expensive. And what's extraordinary is that thirty three times.
Speaker 4: I mean, we hardly have.
Speaker 13: A C trade at those sources of levels, right, Yeah,
Speaker 13: And if you think about it, it's pretty incredible because
Speaker 13: Apple's revenue growth is very small compared to Nvidia, for example.
Speaker 13: I mean, they've been doubling revenue and having these you know,
Speaker 13: huge numbers. Apple's not been doing that.
Speaker 6: But its revenue is so massive.
Speaker 13: It is, it's so mad. It's not that it's not
Speaker 13: putting up big numbers, but the growth, the percentage gain,
Speaker 13: you know, year over year, is not really comparable to
Speaker 13: in videos. So it's interesting to see it become more expensive.
Speaker 2: Have you studied the technical charts?
Speaker 3: We think Apple in the short term might fade a little,
Speaker 3: but long term, the ball thesis is really simple. Right
Speaker 3: when AI goes mainstream common, where are people going to
Speaker 3: be using that technology?
Speaker 2: Yeah?
Speaker 13: So one thing that I keep hearing, and I just
Speaker 13: spoke to an investor about this, is they really want
Speaker 13: in a gentic series. They want that you know, conversational
Speaker 13: experience with the phone. And so this is something that
Speaker 13: actually I think we see from Apple we've seen in
Speaker 13: the past, is that they wait on the new technology
Speaker 13: until they can really get it right. Obviously they've introduced
Speaker 13: some you know, Apple AI, but I think we're going
Speaker 13: to see just leaps and bounds going forward. And that's
Speaker 13: when investors are looking at that true you know conversational.
Speaker 3: Assistant, looking at A and R, the consensus ratings on
Speaker 3: the stock. Where are we right now in the cell
Speaker 3: side's position on Apple.
Speaker 13: So I think what we've been seeing, or what I've
Speaker 13: heard at least from technical analysts, is that there could
Speaker 13: be a little bit of downside sort of baked in here.
Speaker 13: I mean, Apple is near record highs. It's you know,
Speaker 13: price to earnings ratio is near fifteen year highs I
Speaker 13: think for the stock, or at least the highest since twenty twenty,
Speaker 13: and they think that there could be a little bit
Speaker 13: of a shakeout, right, or that some healthy selling might
Speaker 13: give a new place for investors to jump back in
Speaker 13: and actually really start buying with momentum.
Speaker 3: Bloombos come and Ryan Okey with the Apple stock story.
Speaker 3: Thank you very much like coming out on the show.
Speaker 3: We're going to get back to Warner Brothers saga and
Speaker 3: discuss with Ross Gerba from Gerba Kawasaki, who's got skin
Speaker 3: on the game with Netflix. What's his take We'll find
Speaker 3: out next. This is Bloomberg Tech. Welcome back to Bloomberg Tech.
Speaker 3: Our top story is Nvidia getting approval from the government
Speaker 3: to export H two hundred chips to China, but with
Speaker 3: the condition of a twenty five percent surcharge. And yes
Speaker 3: they session the stock spike tire we're now softer two
Speaker 3: tens to one percent. That same rule applies to both
Speaker 3: AMD and Intel, but in their cases, of course, much
Speaker 3: smaller exposure in the market, although it'll be interesting to
Speaker 3: see how the dynamic goes going forward. The reports overnight
Speaker 3: very much focused that China will put in place some
Speaker 3: rules that will move to restrict the access of Chinese
Speaker 3: technology companies to those chips, even if America is allowing it.
Speaker 3: The other top story the saga behind Warner Brothers Discovery.
Speaker 3: We have the bid from Netflix cash and stock twenty
Speaker 3: seven dollars seventy five cents a share. We have the
Speaker 3: bid now from paramount S Guidance thirty dollars per share,
Speaker 3: and we are looking deeply into the financing of both.
Speaker 3: There is the Wall Street take, which we'll get into,
Speaker 3: but there's also the Hollywood takes. What is this moo
Speaker 3: for the industry going forward Later in the program, Carroc,
Speaker 3: we'll get to that.
Speaker 2: What are the news?
Speaker 4: Yeah, it's time now for talking tech head and first start,
Speaker 4: we're talking Microsoft committing seventeen point five billion dollars to
Speaker 4: help build India's cloud and AI infrastructure.
Speaker 6: The spend coming over four years.
Speaker 4: We'll focus on scale, skills and sovereignty, according to Microsoft,
Speaker 4: so aligning with Prime Minister Nerenda.
Speaker 6: Modi's AI goals for his country.
Speaker 4: Then there's the EU who's investigating whether Google is abusing
Speaker 4: its market power in its AI rollout. Regulators are probing
Speaker 4: whether Google is favoring its own model and how AI
Speaker 4: overviews and AI mode use and compensate publishers for content.
Speaker 4: Google argues the probe quote risks stifling innovation and then
Speaker 4: sticking with Google remember these Google Glass been ahead of
Speaker 4: its time, now developing two new smart glass designs as
Speaker 4: it battles Meta in the AI device race. We understand
Speaker 4: one with displays, the other audio only first pair's expected
Speaker 4: next year, and.
Speaker 2: Let's go back to that in video story.
Speaker 3: President Trump has announced a major policy shift on Invidia,
Speaker 3: allowing the company to sell its H two hundred AI
Speaker 3: chips to China in exchange for a twenty five percent surcharge.
Speaker 3: And as Bloombozi and King explained, because the chips are
Speaker 3: manufactured in Taiwan, they enter the United States, that's the
Speaker 3: point of surcharge in tariff. But there's more about the
Speaker 3: market opportunity Bloomberg Intelligence, as man Deep Singh joins, us,
Speaker 3: I was really interested in Bi's reaction to this because
Speaker 3: prior to yesterday, this was about opportunity lost in China,
Speaker 3: a market that Jensen Wang has said is fifty billion
Speaker 3: dollars of addressable market and market opportunity. You've done some
Speaker 3: math on where you think at BI there is some
Speaker 3: revenue to now be had in China.
Speaker 2: What is that number?
Speaker 14: Yeah?
Speaker 11: Look, I mean it's hard to pinpoint exactly what portion
Speaker 11: of their fifty billion and Video can capture through H
Speaker 11: two hundreds, But there is no doubt that you know
Speaker 11: frontier ll M companies, you know from Deep Seek to
Speaker 11: you know the Alibaba, Quinn and Kimmy all these models
Speaker 11: have been trained and they have kept up in terms
Speaker 11: of you know, functionality with the frontier models here, whether
Speaker 11: it's Gemini or open Ai. And so from that perspective,
Speaker 11: you have to ask yourself, how have these companies trained
Speaker 11: their models and is it all based on their in
Speaker 11: house or you know, Huawei chips and the answer it's
Speaker 11: hard to discern, you know, sitting here, but to my mind,
Speaker 11: they would welcome any opportunity to get a big Nvidia
Speaker 11: cluster because at the end of the day, when it
Speaker 11: comes to training, Nvidia is proven to be the one
Speaker 11: chip company that is the most useful for building the
Speaker 11: big training clusters. Yes, we have the TPU news and
Speaker 11: all that, but everyone universally wants to train their models
Speaker 11: on Nvidia. And so from that perspective, it's two hundred,
Speaker 11: just on the training side, could be a pretty sizable
Speaker 11: twenty five to thirty billion dollars opportunity next year.
Speaker 4: Twenty five to thirty billion when the total addressable market
Speaker 4: is fifty billion. From Jensen's perspective, so the narrative goes
Speaker 4: that maybe Ali Baba and the others are able to
Speaker 4: access h two hundreds, will there than be this building
Speaker 4: of momentum that they can convince the Chinese government that
Speaker 4: they should be allowed them and indeed that they can
Speaker 4: therefore jostle in for even more sophisticated Blackwell architecture even
Speaker 4: the next.
Speaker 11: Yeah, and that's where you know, the continuity is the
Speaker 11: main point, because what Nvidia gives you is that backward comparatibility.
Speaker 11: Even if you move to you know, the newer version
Speaker 11: of their architecture, which Nvidia will be releasing Rubin and so, yes,
Speaker 11: Chinese market will be delayed from that standpoint, But what
Speaker 11: you want to see is they being able to use
Speaker 11: you know, whenever the black Hole version is available to
Speaker 11: the Chinese market, they should be able to use that,
Speaker 11: because then it becomes a cluster that they could use
Speaker 11: for inferencing down the line. Right now they use you know,
Speaker 11: the same chips for training, but over time they could
Speaker 11: use it for inferencing. And what we have heard from
Speaker 11: the neocloud providers here is the nvideo chips have a
Speaker 11: very long useful life, and you know, everyone wants to
Speaker 11: use them for as long as possible. And the Chinese
Speaker 11: market has no shortage of power, unlike you know the
Speaker 11: market here. So from that perspective, it does make sense,
Speaker 11: you know, for them to use those clusters for as
Speaker 11: long as they can.
Speaker 2: In considering policy.
Speaker 3: I'm sure the White House made an assessment of China's
Speaker 3: energy capabilities, right, Has Bloomberg Intelligence done any of its
Speaker 3: own study or aggregation of maybe third party data on
Speaker 3: realistically the production volume capabilities of a Huawei, a Cambra
Speaker 3: con because no matter the technology's performance visa VI any
Speaker 3: generation of American technology, the limit to China seems to
Speaker 3: be supply constraint.
Speaker 11: Yeah, and look, every executive has called out, you know,
Speaker 11: tokens per what as a key metric that they are
Speaker 11: focused on, and that's a measure of intelligence. Right, So
Speaker 11: per unit of power, how many tokens can you generate?
Speaker 11: So from that perspective, you know, the Chinese market is
Speaker 11: now different. They want to maximize the tokens generated per
Speaker 11: what for you know, their model companies, even though they
Speaker 11: have more wats available. And look over here to your
Speaker 11: prior question, I mean right now, the estimates are we
Speaker 11: will probably be adding up to hundred gigawatts of capacity
Speaker 11: over the next five years. And we've heard commitments from
Speaker 11: Open Ai which everyone has started to question. Now in
Speaker 11: terms of you know the twenty six gigawatts that they
Speaker 11: have been talking about, but clearly the numbers are big
Speaker 11: in terms of, you know, the gigawatts that are in
Speaker 11: the pipeline, in terms of, you know, the capacity that
Speaker 11: companies want to add. But you know, the efficiency part
Speaker 11: when it comes to token per what will remain a
Speaker 11: key metric because you won't be able to bring all
Speaker 11: their power online, you know, in the next twelve months,
Speaker 11: and it's going to be a lot more staggered than
Speaker 11: people can imagine.
Speaker 4: You recently visited Asia, Yeah, do they think China is
Speaker 4: as far behind the US as US thinks China's behind
Speaker 4: the US.
Speaker 11: Well, their notion of you know, model layer as an
Speaker 11: intelligence layer is to open source a lot of their models,
Speaker 11: and that's where they have kind of taken a different approach.
Speaker 11: The models are available for any company to use. In fact,
Speaker 11: they want to build an ecosystem outside of China where
Speaker 11: Europeans or other companies adopt their open source models. And
Speaker 11: from that perspective, they're trying to distill a lot of
Speaker 11: their models to smaller versions so that they can run
Speaker 11: on the phones. I just feel like they have espoused
Speaker 11: that open source concept and you see that with Bydance
Speaker 11: and all these companies, and they're trying to get to
Speaker 11: agentic use case a lot quicker in terms of models
Speaker 11: being able to you know, book your travel or book
Speaker 11: your restaurant. And I mean we've seen that how good
Speaker 11: the v chat app is in terms of you know,
Speaker 11: being that super apps. So that's what they're trying to
Speaker 11: get to with the agentic use cases is deploy a
Speaker 11: lot more of that using the LLLM layer and do
Speaker 11: that at a very efficient price. Because at the end
Speaker 11: of the day, you know, they have a spouse cost
Speaker 11: and efficiency when it comes to running their infrastructure, so
Speaker 11: they want that to be reflected at the agent layer
Speaker 11: as well.
Speaker 4: And they have to be And yep, saying great analysis
Speaker 4: from Bloemberg Intelligence.
Speaker 6: We appreciate him. Now coming up, we're going.
Speaker 4: To be speaking with the CEO of Generative Media platform
Speaker 4: File about the startup's latest fundraise.
Speaker 6: What g youp use there using this is blue bag tech.
Speaker 3: AI starts up Fall has raised a one hundred and
Speaker 3: forty million dollars year. According to a Bloomberg source, It
Speaker 3: gives the company a four point.
Speaker 2: Five billion dollar valuation.
Speaker 3: Just months after closing a Series C round at a
Speaker 3: one point.
Speaker 2: Five billion dollar valuation.
Speaker 3: File hosts AI models specifically for images, video and audio generation,
Speaker 3: aiming to give developers and enterprises unified access to those tools.
Speaker 3: Files CEO and co founder Muckiger joins us now here
Speaker 3: in San Francisco.
Speaker 2: Congratulations on the round.
Speaker 8: Thank you, Ed.
Speaker 3: You have used m and A as a strategy. You
Speaker 3: have very interesting infrastructure where you're running h one hundreds
Speaker 3: principally upgrading to Blackwell generation. Yes, those are very specific
Speaker 3: to the modalities of image and audio, that's right, right.
Speaker 3: But outside of that infrastructure, you've gone out buying companies.
Speaker 3: Are you going to use some of the money raised
Speaker 3: for that purpose?
Speaker 15: Absolutely?
Speaker 2: Yes, Why what's the logic hit?
Speaker 8: Definitely?
Speaker 15: I mean it's definitely a very fast race right now
Speaker 15: trying to become one of the largest companies right now
Speaker 15: in the space. And you know, one of the ways
Speaker 15: we get talent is buying buying companies. So MNA is
Speaker 15: definitely a very good way of doing that.
Speaker 4: Well, I want to go back a step, because you
Speaker 4: claim to have the fastest inference that for modern generative
Speaker 4: models multimodus. How what are you doing to remove the
Speaker 4: technical economic barriers that you say exist when deploying GPUs.
Speaker 14: Yeah.
Speaker 2: Absolutely.
Speaker 15: So what we have is we have this inference engine
Speaker 15: that is a proprietary engine that can run image and
Speaker 15: video models up to three to four times faster, and
Speaker 15: we do that by optimizing en video chips to run
Speaker 15: these workloads.
Speaker 8: So this is a proprietary technology that we built in house.
Speaker 2: It's software that you've built.
Speaker 8: It is software, that's right.
Speaker 2: You know.
Speaker 3: That's the interesting debate in the world we're in. If
Speaker 3: you look at some of the ASEX and Customs Silicon solutions,
Speaker 3: the concern is they don't have the library of software
Speaker 3: to go with it. We're here to talk about FOLE
Speaker 3: but Wohild, you just reflect on the reality of needing
Speaker 3: to use in video for that reason, but also you
Speaker 3: build your own software.
Speaker 15: Absolutely, yeah, So I'll give you a quick summary of
Speaker 15: the dilemma there. So we could run our workloads on
Speaker 15: a six, but the scale at which we operate is
Speaker 15: a lot larger, and there's no real ACIK out there
Speaker 15: that has the scale.
Speaker 14: That's one.
Speaker 15: And then the second point is that one of our
Speaker 15: key value props is being day zero and if you
Speaker 15: have a model and you want to run that model
Speaker 15: whenever it's available, the first date is available, you actually
Speaker 15: have to have like really good software that's already ready
Speaker 15: to deploy. With A six typically what you have to
Speaker 15: do is actually customizing the software a lot before you
Speaker 15: can actually launch it. So with Nvidia, the software stack
Speaker 15: is so much more mature, so we can actually do
Speaker 15: these day zero releases. So this is one of the
Speaker 15: key reasons why we prefer Nvidia.
Speaker 4: Right now, Okay, we now have the news maybe be
Speaker 4: able to ship is H two hundreds to China. How
Speaker 4: easily accessible is the supply that you need right now?
Speaker 4: Is that a concern for you that sort of power
Speaker 4: going to China as well?
Speaker 14: Right?
Speaker 15: So, for our worklodes, specifically for image and video, H
Speaker 15: two hundreds are a little bit of overkill for us,
Speaker 15: at least for the Hopper generation, so we actually prefer
Speaker 15: H one hundreds and then H two hundreds are more
Speaker 15: preferred for like language models, which is not our domain.
Speaker 15: But when we're actually moving away from the Hopper architecture
Speaker 15: to black Mail architecture, we're actually just going directly from
Speaker 15: H one hundreds to B two hundreds or B three
Speaker 15: hundreds because that actually gives us more flops per watt
Speaker 15: or per dollar, so that we're already rolling this out
Speaker 15: as B two hundreds and B three hundreds are becoming available,
Speaker 15: we're actually moving over. I think you know the economics
Speaker 15: of this is that many of the players are actually
Speaker 15: going to move to Blackwells because you just get better
Speaker 15: price performance.
Speaker 6: Fascinating.
Speaker 4: You're providing developers with over six hundred image, video, audio,
Speaker 4: and three D models.
Speaker 6: So the other person to talk about it all Okaiga.
Speaker 4: Thank you very much, CEO and co founder Afar on
Speaker 4: the fundraising. Now coming up, we'll get back to the
Speaker 4: Warner Brothers saga with Ros Gerbert Gerbert Karasaki.
Speaker 6: This is Bloomberg Tech.
Speaker 3: President Trump has announced a major policy shift on Nvideo,
Speaker 3: allowing the company to sell its H two hundred AI
Speaker 3: chips in China in exchange for a twenty five percent
Speaker 3: surch once. The Financial Times reported regulators in Beijing are
Speaker 3: considering ways to allow only limited access to the H
Speaker 3: two hundred bluemogs. Mike Shepherd joins us from Washington. Mike,
Speaker 3: what do we need to know about the China response
Speaker 3: and the national security implications?
Speaker 16: Well, really, the national security implications are the focus here
Speaker 16: in Washington. The President's decision really broken article of faith
Speaker 16: that has been held here in the Nation's capital for
Speaker 16: so long, and that is that the US must deny
Speaker 16: China and other adversaries access to the latest American technology.
Speaker 16: And yet with this the administration is arguing that, look,
Speaker 16: if we want to compete with China globally and maintain
Speaker 16: the US edge and artificial intelligence, we have to be
Speaker 16: able to compete inside China. And that's an argument we
Speaker 16: have word heard Jensen Wang make here in the Nation's Capital,
Speaker 16: and he's also done so privately with President Donald Trump,
Speaker 16: and the two men did discuss export controls during a
Speaker 16: private meeting last week here in DC while he was
Speaker 16: also visiting members of Congress. So in a way, this
Speaker 16: is giving Nvidia a lot of what it wants, maybe
Speaker 16: not everything. They won't be able to sell their latest
Speaker 16: generation Blackwell chips to China, but the Age two hundred
Speaker 16: is far more powerful.
Speaker 2: Now.
Speaker 16: The question remains what is the US getting in return
Speaker 16: and how much further will the president go in terms
Speaker 16: of looking at national security controls as a trade instrument.
Speaker 4: Mike Shepherd, as always keeping up today, we thank you. Look,
Speaker 4: the government has been potentially weighing in elsewhere as well,
Speaker 4: and it comes to the purchase of Warner Brothers, Discovery,
Speaker 4: Netflix paramount fighting for the assets.
Speaker 6: Let's bring in.
Speaker 4: Ross Gerbert CEO and president of Gerbert Kawasaki for more.
Speaker 4: What's interesting is we've heard from President Trump and there
Speaker 4: might be an issue of Netflix becoming so significant in size.
Speaker 6: You own Netflix shares. What do you make of it?
Speaker 14: Well, I think there's some truth to that.
Speaker 17: Netflix is sort of the big monster out here in Hollywood,
Speaker 17: and there's only so many places to sell your movie.
Speaker 17: So if you take out Warner Brothers, you're basically going
Speaker 17: to Ted even more often to try to sell projects.
Speaker 14: So there is some truth to that. I think when
Speaker 14: you look at.
Speaker 17: The broader media landscape, I'm not worried on a monopolistic
Speaker 17: sort of perspective, but it certainly creates less competition, not more.
Speaker 14: Russ.
Speaker 3: One of the distinctions between the two bids is that
Speaker 3: Netflix is not just being just the studios and streaming
Speaker 3: platform business, but it is a hash and stock deal
Speaker 3: that might seem a little bit dry, but as a
Speaker 3: Netflix shareholder, it assumes that there will be some increase
Speaker 3: in value, right if the merger goes through. What is
Speaker 3: your kind of perspective on that.
Speaker 17: Well, that was what I was thinking about last night
Speaker 17: and what I tweeted this morning that when I really
Speaker 17: sat down and thought about it, I still think the
Speaker 17: Netflix bid is superior because of this issue, because when
Speaker 17: you do an all cash deal, you're basically say all
Speaker 17: current owners will not participate in any future profits of
Speaker 17: the company. And if I was a Warner Brothers shareholder,
Speaker 17: I would want some of the Netflix stock as part
Speaker 17: of the deal, because why would you want to give
Speaker 17: up all the upside of now being a part of
Speaker 17: basically the most powerful company in the history of Hollywood.
Speaker 14: So, you know, that's what I tweeted this morning.
Speaker 17: I think Ellison's going to have to come up with
Speaker 17: another two to three dollars one way or another in
Speaker 17: this bid to really be superior to the Netflix price.
Speaker 4: From what I understand, you don't own Paramount's guidar used
Speaker 4: to No, I don't, but I don't know.
Speaker 17: I bought it, Yeah, I bought it recently because you know,
Speaker 17: with several of the people I know in Hollywood are
Speaker 17: extremely bullish on Allison, and so I bought it recently.
Speaker 17: But when the deal started and it turned into a
Speaker 17: bidding war, Warner isn't worth even close to thirty dollars,
Speaker 17: So everybody's overpaying for this asset right now because.
Speaker 14: It's so rare.
Speaker 17: But what I fear and why I immediately turned around
Speaker 17: and sold the stock, is they're going to end up
Speaker 17: overpaying for this asset. And Warner has been an albatross
Speaker 17: on every company that's that's ever owned it. I've known
Speaker 17: Warner since the days, from the early days. Nobody's ever
Speaker 17: made money owning Warner.
Speaker 4: So why do you think Netflix is just good buying
Speaker 4: the bits of it that it should do? You not
Speaker 4: like their what about paramount Skuyouts wanting the whole kaboodle?
Speaker 6: Is two to three dollars the.
Speaker 4: Right amount they should be forced to pay to inherit
Speaker 4: the cables as.
Speaker 14: Well well, the cable assets.
Speaker 17: By keeping it is really a power play because they
Speaker 17: want to take control of CNN, So it's a way
Speaker 17: for the right to take control of CNN. And it
Speaker 17: really has nothing to do with any value because cable
Speaker 17: assets are being spun off, for example with Comcast, and
Speaker 17: I think Disney needs to do the same thing because cable's,
Speaker 17: you know, a dying business and it's the numbers go
Speaker 17: down so when you think about why would they really
Speaker 17: want this, that's just politics and that's I think a
Speaker 17: big issue in this deal that people in Hollywood who
Speaker 17: are generally on the left eating Netflix, don't want the
Speaker 17: right to get a hold of these assets. So there's
Speaker 17: a lot more to this than just money, and that's
Speaker 17: the cable assets.
Speaker 4: I just want to push back on what makes you
Speaker 4: articulate you think this is about politics, because I think
Speaker 4: more broadly, certainly the Edison family would come in and say,
Speaker 4: this is about the future of content, about delivery. This
Speaker 4: is not about in any way us having any bearing
Speaker 4: on the editorial decisions that we're making at CNN in
Speaker 4: the same way that they've articulated that about CBS.
Speaker 17: Well, I don't look at Paramount Sky Garance is really
Speaker 17: innovating anything, you know, like they're actually more like a
Speaker 17: traditional studio than anybody else. And that's kind of why
Speaker 17: Hollywood wants them to succeed, is because it just they
Speaker 17: look like a traditional studio where Netflix is all about
Speaker 17: innovation and they're the big disruptor in the industry that
Speaker 17: most people in Hollywood don't like because of the way
Speaker 17: the contract and the terms are. So if you're in
Speaker 17: with Netflix, you like them. But if you're not in
Speaker 17: with Netflix, you hate them. And that's Hollywood. So so
Speaker 17: you know, once again, I think Paramount Skydance needs Warner
Speaker 17: Brothers to really be a big player, and that's why.
Speaker 14: They're willing to pay so much. And politics isn't the
Speaker 14: main driver.
Speaker 17: I'm not trying to say that it's a secondary driver
Speaker 17: of this, but it's part of it, and I think
Speaker 17: people need to keep that into consideration. And I still
Speaker 17: think in the end, Paramount's going to do whatever's necessary
Speaker 17: to get this.
Speaker 2: Deal in the time we have left.
Speaker 3: There is the Wall Street view on this, which thank
Speaker 3: you you've given us the investor and Netflix investors take
Speaker 3: the politics will put to one side. Actually more interesting
Speaker 3: is the Hollywood view. How does this change Hollywood? And
Speaker 3: one of the things that comes up on this program
Speaker 3: is Netflix powerful algorithm combined with HBO Max Library. What
Speaker 3: is your view on that as a Netflix shareholder?
Speaker 17: See, I don't see any value add on taking HBO
Speaker 17: from the sense of like I need another streamer.
Speaker 14: You know, it's like they're not going to merge them.
Speaker 17: That doesn't make a lot of sense, and nor do
Speaker 17: people want to pay fifty dollars a month for merged streamer,
Speaker 17: even though they're paying that for two Seblis streamers.
Speaker 14: So I think for Netflix that's.
Speaker 17: Really about where do they go in live experiences and
Speaker 17: what they're doing in the malls is really interesting with
Speaker 17: the Netflix experiences that they've opened, like one in Philadelphia,
Speaker 17: and then maybe they just completely changed the movie going
Speaker 17: experience to being something much better than what it is now.
Speaker 14: So that's the Netflix show.
Speaker 3: Us movie theaters is what we wanted to get to.
Speaker 3: We will have you back because this process is going
Speaker 3: to go on for a very long time. Ross Gerber
Speaker 3: of Goerba Kawasaki, thank you very much. That does it
Speaker 3: for this edition of Bloomberg Tech. Towards the end of
Speaker 3: the year.
Speaker 2: I cannot believe this new cycle character.
Speaker 4: I can't and we don't have enough to time and
Speaker 4: bandwidth to get it all in in one hour, but.
Speaker 6: Boy do we try.
Speaker 4: And you've got to go and check it all out
Speaker 4: again on our podcast.
Speaker 6: This is Bloomberg Tech