Speaker 1: From the heart of where innovation, money and power collide
Speaker 1: in Silicon Valley and beyond. This is Bloomberg Technology with
Speaker 1: Caroline Hyde and Ed Ludlow.
Speaker 2: Live from New York Opsinali Basic, and I'm Jackie Devalas
Speaker 2: in Washington.
Speaker 3: This is Bloomberg Technology coming up.
Speaker 4: Stocks rebound after a positive inflation reading. The relief comes
Speaker 4: after some market turmoil this week on the back of
Speaker 4: President Trump's tariffs.
Speaker 3: Plus, we'll dive into what's.
Speaker 4: Behind the retreat from Musk's ev company, with Tesla being
Speaker 4: the biggest decliner in the S and P five hundred
Speaker 4: index this year, and SpaceX's Crew ten is launching this
Speaker 4: evening for a relief mission for NASA astronauts at the
Speaker 4: International Space Station. Let's get into some of these Intel
Speaker 4: moves right away with Bloomberg's Mike Shephard. Mike, there's still
Speaker 4: a lot we don't know about some of this report
Speaker 4: coming from riders on Intel.
Speaker 3: Fill us in on what we do know.
Speaker 5: Well, one of the questions is really how much of
Speaker 5: this would ultimately bear fruit. And we had reported about
Speaker 5: a month ago now that the Trump administration had approached
Speaker 5: TSMC to perhaps takeover Intel's foundry business That would be
Speaker 5: a big undertaking, of course, given all the malays surrounding
Speaker 5: Intel and some of the business complications therein. But it
Speaker 5: also opened the door to perhaps working together with other companies,
Speaker 5: and this report would certainly fit into that. However, more
Speaker 5: recent events suggest a different direction of travel. Intel announced
Speaker 5: this one hundred billion dollar additional investment in the US
Speaker 5: a little more than a week ago with President Donald Trump,
Speaker 5: and that's the kind of thing that doesn't seem to
Speaker 5: include or leave room for Intel. Also, there are some
Speaker 5: thorny problems involved here. One of them is intellectual property.
Speaker 5: Would TSMC be willing to share some of its precious
Speaker 5: trade secrets with a company that could, in other ways
Speaker 5: also be arrival when it comes to its business. Likewise,
Speaker 5: integrating some of Intel's operations into TSMC would also involve
Speaker 5: a lot of work. So there's a lot of skepticisms
Speaker 5: surrounding this report.
Speaker 6: We'll have to see what actually develops.
Speaker 2: Mike, I want to bring in your broader view here,
Speaker 2: of course, because you're seeing a market today that is
Speaker 2: reacting to some of the relief relative to where we
Speaker 2: were twenty four hours ago in the tariff story. Yet
Speaker 2: you are seeing retaliatory tariffs coming in from around the world.
Speaker 2: Looking at the EU and Canada, how are investors' markets
Speaker 2: digesting the latest coming out of Washington and what is
Speaker 2: still absolutely uncertain?
Speaker 5: Well, there is a lot of uncertainty, as you put
Speaker 5: it earlier in the introm malaise. That really seems to
Speaker 5: be one of the operative words right now when it
Speaker 5: comes to investors, and especially in the tech sector. When
Speaker 5: you look at the now is that one hundred It
Speaker 5: really has taken the brunt of this downdraft and markets.
Speaker 5: Obviously there was a lot of run up ahead of
Speaker 5: time in the past year or so on enthusiasm about
Speaker 5: artificial intelligence, and you know what goes up is now
Speaker 5: coming down. But a lot of that is being fueled
Speaker 5: by uncertainty surrounding the president's tariff policies. And last night
Speaker 5: during a meeting with top CEOs here in Washington, he
Speaker 5: signaled that they should be prepared for more. He sees
Speaker 5: tariffs is a tool for getting companies to invest in
Speaker 5: the US and he is cited in the past Apple's
Speaker 5: decision to invest five hundred billion dollars year in the US,
Speaker 5: and we just talked about TSMC's plans both of those
Speaker 5: he credited to his own tariff policies.
Speaker 3: Let's talk a little bit more about that meeting. There
Speaker 3: was a lot of anticipation.
Speaker 4: We saw chip stocks really take a beating last week,
Speaker 4: but now they're getting a lot little bit of release.
Speaker 3: They're up by about one point six percent.
Speaker 4: What did we learn more from that meeting with tech
Speaker 4: CEOs earlier?
Speaker 5: Well, the tech CEOs meeting a Monday seemed to be
Speaker 5: less of a fireworks event, and then the business roundtable
Speaker 5: meeting last night seemed to be a little bit more
Speaker 5: of a a more cordial give and take, even given
Speaker 5: the circumstances that we're seeing in the market and the
Speaker 5: concerns that CEOs may have about where to take their
Speaker 5: business in light if the way tariffs could affect their
Speaker 5: supply chains. We heard Anthony Nary, the CEO, if you'll
Speaker 5: look Packard Enterprises tell investors on a call last week, look,
Speaker 5: we don't know where this is going exactly. There may
Speaker 5: be some pricing changes. We're going to do the best
Speaker 5: we can through our supply chain to minimize the impact,
Speaker 5: but they really don't know where it's going. And that
Speaker 5: was also echo by the head of Broadcam Broadcom hoked
Speaker 5: in on a call with investors as well, suggesting that hey,
Speaker 5: this is really your we don't know where this is.
Speaker 7: Going, Mike.
Speaker 2: We appreciate all your time and all your analysis. That
Speaker 2: is Bloomberg's Mike Sheppard. Now I quickly want to check
Speaker 2: in on shares of Tesla as well, because as Mike
Speaker 2: was talking about a lot of malaise in the tech sector,
Speaker 2: but not today, and Tesla is the one that's really
Speaker 2: leading the Nasdaq one hundred higher. It is still up
Speaker 2: more than five percent, but remember it was down fifteen
Speaker 2: percent on Monday, So between Tuesday and Wednesday's gain, we
Speaker 2: have not recouped all of those losses yet it sure
Speaker 2: helps that it's up today for the broader Nasdaq one
Speaker 2: hundred and to zoom out. Now we're going to bring
Speaker 2: in Amanda Agatti. She is a CIO of P ANDC
Speaker 2: Asset Management Group. You know, you think about what's happening
Speaker 2: in the tech sector. Yes, today is a day of relief,
Speaker 2: but the MAG seven, the relative underperformance that you have seen.
Speaker 2: At what point do you see that overhang start to disappear? Really,
Speaker 2: the only member of the MAG seven that is up
Speaker 2: here to date is meta.
Speaker 8: That's right, it's great to be with you. Yeah, And
Speaker 8: I would say that overhang is going to stick around
Speaker 8: for a while here. The challenges that we're still very
Speaker 8: much in a purple haze of fiscal policy uncertainty, and
Speaker 8: it's namely a tariff and trade related policy, and so
Speaker 8: it's not so much of a direct hit to the
Speaker 8: underlying fundamentals of the MAG seven. In fact, I think
Speaker 8: for the most part their business models tend to be
Speaker 8: somewhat insulated from it. But the challenges that in this
Speaker 8: purple haze of uncertainty, there's pretty extreme valuation, multiple compression,
Speaker 8: and the MAG seven have been priced in your perfection.
Speaker 8: So we're not seeing fundamentals deteriorate, We're just seeing multiples
Speaker 8: come down materially until we start to get past some
Speaker 8: of this growth scare narrative that's been gripping markets. I
Speaker 8: think it's going to continue to be an overhang.
Speaker 3: Amanda.
Speaker 4: You mentioned fundamentals, they look strong. There was so much
Speaker 4: reassurance from companies and appeased investors that a lot of
Speaker 4: the capex going in isn't going to stop. That spig
Speaker 4: is going to keep going. But are we bracing for
Speaker 4: a more fragile tech sector. Now, what catalysts going forward
Speaker 4: do you see kind of providing more assurance to investors
Speaker 4: that they're not going to be that easy to break.
Speaker 8: It's it's a really great question, and it's a really
Speaker 8: hard one to answer, and I think that's why tech
Speaker 8: investors in particular are struggling in this environment, because we
Speaker 8: are craving more catalysts. We're in a little bit of
Speaker 8: a lull in terms of innovation, and so the focus
Speaker 8: these last few years has really been on chips one
Speaker 8: stock in particular. But where are all these use cases.
Speaker 8: We need to see broader based use cases, new business
Speaker 8: models really developing and broadening in terms of adoption across
Speaker 8: the market. I think that's really the critical catalyst or
Speaker 8: next step to this next wave of innovation and perhaps
Speaker 8: even getting the market rally catalyzed again. So I think
Speaker 8: it's going to take a little bit of time, given
Speaker 8: some of this policy uncertainty, but I think it apps
Speaker 8: Lily could become a tailwind in the second half of
Speaker 8: this year and into twenty twenty six.
Speaker 6: It's just we're in.
Speaker 8: A little bit of a void at the moment, which
Speaker 8: is very frustrating.
Speaker 6: Certainly you know, one.
Speaker 7: Interesting part of the tech trade as well.
Speaker 2: As just how much it has contributed to the weakness
Speaker 2: in the consumer discretionary sector for the S and P
Speaker 2: five hundred. You think about Amazon, you think about Tesla.
Speaker 2: In reality, how levered are some of those giant tech
Speaker 2: names to the US consumer and any potential further weakening.
Speaker 8: Well, I always say that the US consumers and the
Speaker 8: driver's seed, right, seventy percent of GDP or you know,
Speaker 8: spending in this consumption is tied is tied to the
Speaker 8: consumer in some way, shape or form, and so the
Speaker 8: path for the consumer and the health of the US
Speaker 8: consumer is critical for all of us in terms of
Speaker 8: both the market and the economic cycle. But I think
Speaker 8: you're right to make a little bit of a distinction
Speaker 8: here in terms of how much influence directly hits some
Speaker 8: of those business models. I think the story and the
Speaker 8: concern is much more around consumers start to get a
Speaker 8: bit more paralyzed by this policy uncertainty, and so they
Speaker 8: slow down or even stop spending, which sort of cascades
Speaker 8: into a more material slowdown than what we're seeing. The
Speaker 8: earnings growth backdrop is continuing to be strong. It's not
Speaker 8: so much about one quarter. The full year expectation still
Speaker 8: looks very strong. The economic cycle looks pretty strong, consumer
Speaker 8: spending related data looks solid. So again, it's all about
Speaker 8: the sort of narrative and this sentiment concern. It's not
Speaker 8: so much translating into the underlying fundamentals breaking down yet.
Speaker 2: Now when you think about the consumer. Also, we're thinking
Speaker 2: about the US consumer so much, and you have to
Speaker 2: wonder whether Europe China is a bigger headwind or tailwind
Speaker 2: for this group.
Speaker 7: Do you see any risk there?
Speaker 8: I'm most concerned. I think about developed international exposure, and
Speaker 8: so Europe in p particular, just given some of the
Speaker 8: continued geopolitical tensions and conflict. You know, are we going
Speaker 8: to get a resolution out of Russia and Ukraine or not.
Speaker 8: That's a really critical thing that I think needs to happen.
Speaker 8: To see signs of life improve in a more material
Speaker 8: way across the Eurozone. I think it is possible to
Speaker 8: see a bit of a relief rally. We started to
Speaker 8: get it at the beginning of the year, and then
Speaker 8: we've seemingly seen it falter a bit here. So you know,
Speaker 8: I am most concerned about that area. I think in
Speaker 8: terms of emerging markets. More broadly, there's a really attractive
Speaker 8: valuation opportunity there, so for investors who can be patient,
Speaker 8: I think this is a very attractive entry point, even
Speaker 8: in the midst of you know, additional tariff policy aims
Speaker 8: specifically at China. I think there is a real opportunity
Speaker 8: set there for investors to be focused on in terms
Speaker 8: of allocating capital early this.
Speaker 4: Year, Amanda on that emerging market storage is a huge
Speaker 4: competitor here in the tech space, Are you seeing any
Speaker 4: interesting opportunities with some of those up and coming companies
Speaker 4: unveiling new features and AI models every week, I could
Speaker 4: give investors perhaps another choice outside of the traditional US
Speaker 4: based tech players.
Speaker 8: Well, I'm never going to bet against our US tech
Speaker 8: industry just as a general rule, I have a very
Speaker 8: home country bias here. But of course, I mean, I
Speaker 8: think innovation shows up in all different shapes and forms,
Speaker 8: and so you know, even just what seemingly is old
Speaker 8: news now, but the deep Seek story that sort of
Speaker 8: came out of nowhere recently, I think is fascinating in
Speaker 8: terms of this innovation story being born out of anywhere
Speaker 8: and sort of this natural comparative or competitive advantage that
Speaker 8: we have as it relates to AI, automation, robotics, et cetera.
Speaker 8: The story continues, and so I think it's really healthy.
Speaker 8: I think it's important for investors to think much bigger
Speaker 8: and more holistically than just one or two names. This
Speaker 8: cycle is very early innings. We have a long, long
Speaker 8: runway here, and so we are absolutely believers in the
Speaker 8: secular tailwinds here. And so from a multi asset investor perspective,
Speaker 8: I think you really do have to look beyond US
Speaker 8: equities in this environment, even in private markets. I think
Speaker 8: there's a tremendous amount of opportunity in vcland we'll.
Speaker 4: Have you down as not betting against the US. Amanda
Speaker 4: Agati from PNC Asset Management, thank you so much for
Speaker 4: joining us. Coming up, Google deep Mind launches a new
Speaker 4: branch of its AI model to help robots navigate the
Speaker 4: physical world.
Speaker 3: We'll get the details after the break. This is Bloomberg.
Speaker 4: Google deep Mind has unveiled a new Gemini model that
Speaker 4: it says helps robots understand the physical world around them.
Speaker 3: Bloomberg's Mark German joined us. Now. Mark, It seems like every.
Speaker 4: Big tech company has been unveiling some kind of new
Speaker 4: robotics venture as of like, how does Google stack up?
Speaker 9: Yeah, I've been trying to tell everyone on here. Robotics.
Speaker 9: Consumer robotics is the next big thing in the industry. Right,
Speaker 9: we had autonomous cars, we had mixed reality AR glasses,
Speaker 9: we have voice right, but artificial intelligence is going to
Speaker 9: be at the core of everything. And really the ultimate
Speaker 9: hardware expression of AI is robotics right, being able to
Speaker 9: understand how a human acts right, artificially learn from data right,
Speaker 9: and mimic a human, and that is what a robot is. Right.
Speaker 9: And so you've seen Tesla play in this space. Now
Speaker 9: you're seeing Meta make a big investment in that space.
Speaker 9: And now today Google is announcing new Gemini models in
Speaker 9: infrastructure specific to powering robots. So all of these companies
Speaker 9: want to play in this space. Meta announced versions of
Speaker 9: Lama right in a big investment to build consumer robots
Speaker 9: and to be at the center of everything. Meta wants
Speaker 9: to be the future operating system to power these robots.
Speaker 9: But they're going to have a big competitor here with
Speaker 9: Google right, who has experience building operating systems for first
Speaker 9: party and third party hardware. And obviously Gemini is right
Speaker 9: up there with Lama and CHADGBT and the other AI systems.
Speaker 9: So this is a big deal not only for Google
Speaker 9: but the industry at large.
Speaker 2: So mark how convincing is this push Because we have
Speaker 2: seen Google try or Alphabet try to get into the
Speaker 2: robot world before. I understand is that they shut down
Speaker 2: a spinoff company that was associated with this. So this
Speaker 2: time around, what's the difference and how big is the push?
Speaker 9: I think the difference this time is Gemini, Right. The
Speaker 9: underlying AI technology is much different, It's much more advanced,
Speaker 9: it's more reputable, right, and now appears to be the
Speaker 9: time where companies are willing to put in the proper investment,
Speaker 9: the necessary infrastructure to make robotics happen. Right. Waimo is
Speaker 9: being has been pretty successful comparatively in the industry, and
Speaker 9: so what you're seeing is a lot of data collection.
Speaker 9: There a lot of experience in autonomy and cameras, and
Speaker 9: that's technology that Google could ultimately use if it wanted
Speaker 9: to build its own humanoid. But don't count out Apple.
Speaker 9: Apple has Skunkworks teams. We're in humanoid robots as well.
Speaker 9: The big difference is they're not going to publicly release
Speaker 9: an underlying robotic model, right, in order to support third
Speaker 9: party robots and other consumer hardware. They're going to go
Speaker 9: all in house. They're going to follow the Tesla method
Speaker 9: that you've seen from the Tesla bot over the past
Speaker 9: couple of years. So at some point in the next
Speaker 9: five to ten years, you're going to see real competition
Speaker 9: between Google, Meta, Apple, Tesla, and Chinese companies and others
Speaker 9: in consumer robots. So this is this is going to
Speaker 9: be a really big deal. And some of those movies
Speaker 9: we've seen over the last several decades, they're starting to
Speaker 9: come to reality.
Speaker 2: Mark, We thank you so much for your time today
Speaker 2: breaking it all down for us. That is Bloomberg's Mark German,
Speaker 2: And as you know, I'm excited about having a robot
Speaker 2: at home, and we're going to talk more about robots here.
Speaker 2: Not as pleasant as a story shares of consumer robotics
Speaker 2: company I Robot. They're sliding today after it warned of
Speaker 2: quote substantial doubt over.
Speaker 7: Its ability to continue to operate.
Speaker 2: You might remember that the company was once sought after
Speaker 2: by Amazon for more than a billion dollars and it
Speaker 2: has begun a foremost strategic of you to evaluate options
Speaker 2: for more Bloomberg's Vanagasia Perez joins us now on set.
Speaker 2: Was this warning a surprise, especially given the kind of
Speaker 2: unicorn standing that it once had, and not totally.
Speaker 10: The company has been losing money and burning cash for
Speaker 10: the you know, the past at least three years, and
Speaker 10: then when the Amazon deal fail basically last year, the
Speaker 10: company lost a big option. It started a strategic review
Speaker 10: last year. It has cut losses, but it's still loss making,
Speaker 10: and it has cut expenses, but it's still struggling.
Speaker 4: What does this tell us about the state of consumer
Speaker 4: demand in this space? As we were hearing it seems
Speaker 4: like the time horizon for some of these technologies to
Speaker 4: really get in the hands of consumers takes time, especially
Speaker 4: for those to get used to them.
Speaker 3: What does this tell us?
Speaker 10: So in the case of this company, I guess it's
Speaker 10: another example of consumers cutting on discretionary spending. We've seen
Speaker 10: it in other names like casual lining companies like Hooters
Speaker 10: considering bankruptcy filing. We've seen it in a broad range
Speaker 10: of retailers also struggling. So this is another example. And
Speaker 10: the company mentioned in the going concern warning that consumer
Speaker 10: spending could be one of the reasons why. Like weaker
Speaker 10: consumer spending could be one of the reasons why it
Speaker 10: doesn't manage to survive, and tariffs was another one that
Speaker 10: they mentioned as a potential threat to the company's viability.
Speaker 4: Tariff's winging in here as well. Bloomberg'sidna Garcia Perez, thank
Speaker 4: you so much for joining us.
Speaker 2: Now, some long term Tesla investors are backing away from
Speaker 2: the stock after falling as much as forty two percent
Speaker 2: so far this year, and this is as questions arise
Speaker 2: about the company's future. For more of Bloomberg's Max Chaffin
Speaker 2: joins us today.
Speaker 7: Now I want to point.
Speaker 2: Out also, of course today people are buying the dips,
Speaker 2: people are believing the story. Today you have the president
Speaker 2: himself looking to defend Musk in many ways.
Speaker 7: What is the trouble in Paradise?
Speaker 11: I mean more than defend, you know, wholding a sales
Speaker 11: event on the White House lawn. The trouble is that
Speaker 11: Tesla's customer base is not especially trumpy, and that's probably
Speaker 11: an understatement. You think of a typical Tesla owner, this
Speaker 11: is like an upper middle class, suburban progressive, or at
Speaker 11: least a centrist, somebody who cares about the environment.
Speaker 6: You know, these are not Trump voters. These are very.
Speaker 11: Much the constituency that backed Barack Obama, Joe Biden, and
Speaker 11: to a large extent, Kamala Harris, and those people, which
Speaker 11: include a lot of Tesla customers, are very mad at
Speaker 11: Elon Musk right now. We've seen protests all across the
Speaker 11: country and the world, including some you know, acts of vandalism,
Speaker 11: and just this kind of tone of mockery of you know,
Speaker 11: seeing Elon Musk as kind of a lightning rod for
Speaker 11: the worst for what these people, these Tesla customers see
Speaker 11: as the worst excesses of the Trump administration so far.
Speaker 3: Max.
Speaker 4: And it's not just about the political leanings of who's
Speaker 4: buying some of those cars, but they've recently gotten some
Speaker 4: pretty good support, especially under the Abiden administration, for ev credits.
Speaker 4: And I'm having trouble reconciling how Elon Musk can really
Speaker 4: back Trump in some ways, but his company is somewhat
Speaker 4: dependent on the government also supporting the transition to electric vehicles.
Speaker 3: How is that working out?
Speaker 11: Yeah, you know, Trump kind of ran to some extent
Speaker 11: as an opponent of electric vehicles, talking constantly about ending
Speaker 11: the quote unquote electric vehicle mandate, you know, and in
Speaker 11: fact sign an executive order early on stating an attention
Speaker 11: to pull back some of these regulations. Even brought this
Speaker 11: up during the event yesterday, showing offering it as an
Speaker 11: example of how selfless Musk is.
Speaker 6: I think from the kind.
Speaker 11: Of bull perspective, like why Tesla investors could be potentially
Speaker 11: okay with this is the fact that Tesla has a
Speaker 11: leading market position. So if you remove these subsidies subsidies
Speaker 11: from electric cars, it arguably hurts GM and Ford and Tesla's.
Speaker 7: Other copetitors more than it hurts Tesla.
Speaker 11: Tesla has wider margins on evs, it's able to better
Speaker 11: absorb this. Now that said, those companies are bringing out
Speaker 11: new models and they're stealing customers away from Tesla.
Speaker 7: Right.
Speaker 3: That's Bloomberg'smax Taffkin, Thanks so much for joining.
Speaker 2: Us, and welcome back to Bloomberg Technology.
Speaker 7: I'm Shanalie Bask in New York.
Speaker 3: And I'm Jackie Devalis in Washington.
Speaker 2: It's got to check on these markets because you do
Speaker 2: have a NAZAQ one hundred that has been fluctuating. We
Speaker 2: are well off of session lows for the morning, but
Speaker 2: only up now about six tenths of one percent, and
Speaker 2: it's trying to fight for dominance. You have the NAZAQ
Speaker 2: one hundred with only roughly half of its component parts
Speaker 2: up on the day, the other half of course down
Speaker 2: the Philadelphia A Semicconductor Index maintaining its lead after a
Speaker 2: brutal stretch the last couple of weeks. It is now
Speaker 2: up about two point three percent heading into midday, and
Speaker 2: on other movers. This morning, we're going to bring in
Speaker 2: Bloomberg's Isabelle Lee who joins us now on set Haitianali.
Speaker 12: So there's really a ton of uncertainty in the markets
Speaker 12: right now. A gauged by city shifted from risk off
Speaker 12: to risk on, risk on to risk off rather in
Speaker 12: just six weeks, and really just as liew of headlines
Speaker 12: crossing the wire this morning from Canada firing back on
Speaker 12: TIFFs to inflation is really causing some more acts. So
Speaker 12: back to inflation, that's a big data today. It showed
Speaker 12: some signs of easing, but even so economists are anticipating
Speaker 12: that the escalating trade war will really just drive up prices,
Speaker 12: and you see waves of selling even in tech high flyers,
Speaker 12: so Tesla, super Micro and Palan there for instance, have
Speaker 12: wiped out more than a quarter of their value in
Speaker 12: the last fourteen trading sessions since they peak, so their
Speaker 12: losses are more than triple the decline of the S ANDP.
Speaker 12: So really a tough market right now, and of course
Speaker 12: an ass like one hundred tumbled into correction territory last week.
Speaker 4: Isabelle talk to us about what we're seeing in some
Speaker 4: of those MAGS seven names you mentioned Tesla seeing some relief.
Speaker 4: What else are we seeing when it comes to the
Speaker 4: big tech giants that absolutely got battered.
Speaker 12: Earlier this week, they're still really better. Tesla is leading
Speaker 12: the Lasses and the Magnificent seven index, and you see
Speaker 12: the rally broadening out, and there are the losers right now.
Speaker 12: In fact, a note earlier this morning says maleficent seven,
Speaker 12: and you see that people are now questioning whether the
Speaker 12: US exceptionalism has cracks. We have Citygroup and HSBC downgrading
Speaker 12: their views on US equities this week. I talked to
Speaker 12: a bank yesterday and they said that they're underweight Magnificent seven,
Speaker 12: which is really a star contrast to when everyone was
Speaker 12: just piling in, because if you don't pile in, then
Speaker 12: you underperform the benchmark. But we have JP Morgan David Lebowitz,
Speaker 12: which I talked to yesterday, said that, you know, risk
Speaker 12: premiums have jump, credit market has yet to crack. Economic
Speaker 12: data at least for now, points to expansion, so bullish
Speaker 12: overall in the long term.
Speaker 4: That's Bloomberg's Isabelle, thank you so much for joining us.
Speaker 4: Two astronauts stranded at the International Space Station since arriving
Speaker 4: aboard Boeing Starliner in June could finally be heading home.
Speaker 4: That's part of the goal for the SpaceX crew. Ten
Speaker 4: missions scheduled to launch later today. Joining us to talk
Speaker 4: about this is Clayton Swoke. He's Deputy director of the
Speaker 4: Aerospace Security Project and a senior fellow at the Center
Speaker 4: for Strategic and International Studies.
Speaker 3: Clayton, this is a really big moment.
Speaker 4: Everyone has really become so endeared to Sunny and Butch.
Speaker 3: What did this tell us about what went wrong? And
Speaker 3: will this ever happen again?
Speaker 6: Well, Jackie, it's funny.
Speaker 3: I was thinking too.
Speaker 13: The one thing that I have as a takeaway is
Speaker 13: just it's about Sunny and Butch and just their endurance
Speaker 13: and their patients and their grace, and.
Speaker 3: It's something that I think back on.
Speaker 6: I think I admire that.
Speaker 13: I'm sure a lot of Americans admire that, and people
Speaker 13: around the world and probably you like me, I get
Speaker 13: up to that when I'm three hours late at the
Speaker 13: airport and they've been there since June, so it's a
Speaker 13: very different thing to think how long that they've been
Speaker 13: up there and everything that they've been through, But they've
Speaker 13: had that poise throughout. I think what we've learned too
Speaker 13: is that space really can still throw us curveballs, but
Speaker 13: that we have gotten to the point where we have
Speaker 13: flexibility and adaptability that we can still do human space
Speaker 13: fight safely and do that at scale. And that's a
Speaker 13: lot of credit to NASA on the approach that they've
Speaker 13: taken to get us here, and then also to SpaceX
Speaker 13: on whose technology we really relied on to make this happen.
Speaker 2: How do you think about the next apps moving forward
Speaker 2: when it comes to the star Liner? What do you
Speaker 2: think is the future from here?
Speaker 13: Well, there's still a lot of things that we don't know.
Speaker 13: We do know that Boeing has said they want to
Speaker 13: stay in the space game. It's less clear on what
Speaker 13: happens next for Starliner specifically. That will depend a lot
Speaker 13: on what NASA decides with Boeing about certifying that capsule
Speaker 13: to fly astronauts again into space.
Speaker 3: So we don't really know how long that would take.
Speaker 13: But if we look to the horizon, just with the
Speaker 13: International Space Station, we're planning for it to deorbit in
Speaker 13: twenty thirty, so that's less than five years away. So
Speaker 13: there's really only a few more opportunities really in the
Speaker 13: grand scheme to bring astronauts to that station, and that
Speaker 13: window is quickly closing.
Speaker 3: There's been a lot.
Speaker 4: Going on in this space field as of late, and
Speaker 4: I think it has many people wondering are we in
Speaker 4: a new space race of some kind? How does the
Speaker 4: US stack up with what we're doing in the field
Speaker 4: versus other countries.
Speaker 13: It's really hard to not think about China and all
Speaker 13: their achievements in space. Right now, there's seven astronauts and
Speaker 13: cosmonauts on the International Space Station.
Speaker 2: All that thought for a moment here, because we want
Speaker 2: to bring our audience some live images of President Trump
Speaker 2: who is greeting the Prime Minister of Ireland.
Speaker 7: The two men are about to take part in.
Speaker 2: A bilateral meeting at the Oval Office. Now we will
Speaker 2: bring you those headlines as they come in. You could
Speaker 2: also check for updates on live go on your Bloomberg terminal. Now, Jackie,
Speaker 2: back to you.
Speaker 4: Talk to us more about how China is really getting
Speaker 4: to the space race.
Speaker 13: Yeah, there's three Chinese astronauts on their space station Tiangong
Speaker 13: THII right now as we speak. So they've really made
Speaker 13: space look routine in a lot of ways that has
Speaker 13: also been able to do. They're also eyeing the Moon.
Speaker 13: They want to land Chinese astronauts on the Moon by
Speaker 13: twenty thirty, so is NASA. I think it's hard to
Speaker 13: avoid the notion that this is a space race, maybe
Speaker 13: a moon race.
Speaker 6: Two point zero.
Speaker 13: The United States is still the undeniable space power, lead
Speaker 13: space power in the world, but China is definitely nipping
Speaker 13: at our heels.
Speaker 4: Let's talk about who's making us the space power. We
Speaker 4: hear a lot about SpaceX, but over in Silicon Valley
Speaker 4: there's a lot of contenders really coming into the four
Speaker 4: as well. What are you seeing in terms of concentration
Speaker 4: of who's taking us to the next level.
Speaker 13: SpaceX is the main player right now when it comes
Speaker 13: to launch, when it comes to broadband from lower thorbit,
Speaker 13: when it comes to a lot of the things that
Speaker 13: we rely on to get people and cargo to.
Speaker 6: The space station.
Speaker 13: But there are a lot of other companies that are
Speaker 13: innovating in Silicon Valley and around the country. You have
Speaker 13: companies in Pittsburgh and Texas and Florida. They're trying to
Speaker 13: catch up and come up with new ways to do space,
Speaker 13: to do it cheaper, to do it more efficiently, to
Speaker 13: mine asteroids. Even so, there are a lot of up
Speaker 13: and comers that really will challenge SpaceX's dominance, and it
Speaker 13: will be their game to lose the overtime because there's
Speaker 13: a lot of smart people though right behind them.
Speaker 4: Let's talk a little bit about who's behind SpaceX because
Speaker 4: Elon Musk has been making waves here in Washington for
Speaker 4: other reasons, but one of the areas that he's poised
Speaker 4: to potentially benefit from are his relationships in Washington SpaceX
Speaker 4: potentially getting more contracts. Does his politics detract in any
Speaker 4: way from the progress that SpaceX can make or does
Speaker 4: it really operate independently of that.
Speaker 13: SpaceX has led the way for what we call commercial
Speaker 13: space today, and it has taken a number of years
Speaker 13: for them to get to where they are. This isn't
Speaker 13: something that just happened with President Trump's inauguration in January.
Speaker 13: This has been a long trend where NASA, the Department
Speaker 13: of Defense, and other customers both commercially and internationally have
Speaker 13: really grown to depend on SpaceX for launch and then
Speaker 13: now for broadband from space. So these are areas that
Speaker 13: have been trending to that direction for a long time.
Speaker 13: Those business opportunities that exist in space SpaceX built over
Speaker 13: the last few years, probably around twenty two thousand and eight,
Speaker 13: so it's not something new, and they're just really taking
Speaker 13: advantage of all of that time and effort that they
Speaker 13: put into this for almost seven to eight years at
Speaker 13: this point.
Speaker 7: Clayton, we thank you for joining us.
Speaker 2: Of course, fascinating establishments in that space race. That is
Speaker 2: Clayton Swope from the Center for Strategic and International Studies.
Speaker 4: Startup Celestial AI has raised two hundred and fifty million
Speaker 4: dollars in its latest Series C round, valuing the company
Speaker 4: at two point five billion dollars. It's photonic fabric technology
Speaker 4: aims to improve speed and efficiency in AI computing. For
Speaker 4: more on this, Dave Lozowski joins us. Now, Dave, help
Speaker 4: our views understand how your technology is actually making this
Speaker 4: part of AI computing that much more efficient.
Speaker 6: Thanks so much for having me.
Speaker 14: Yeah, Celestilia is the creators of the photonic fabric, as
Speaker 14: you'd mentioned, which is the optical interconnectivity technology platform for
Speaker 14: accelerated computing. So set another way, we're interconnecting AI processors
Speaker 14: with light. What's happening in AI right now is that
Speaker 14: artificial intelligence workloads are growing exponentially. They're now so large
Speaker 14: trillions of parameters that they need to be partitioned over
Speaker 14: hundreds of processors, which puts more and more demands on
Speaker 14: the network as the processor doing the work needs to
Speaker 14: move across the network to fetch information from another processor's memory,
Speaker 14: moving back to where the work gets done, and there's
Speaker 14: no more efficient way to move information than photonically.
Speaker 4: Dave, you managed to snag two hundred and fifty million
Speaker 4: dollars from some institutional investors by the likes of Fidelity, Tiger, Blackrock,
Speaker 4: Maverick Capital.
Speaker 3: How do you plan to put this money to use?
Speaker 6: Yeah, we're focused right now on scaling.
Speaker 14: So we have multiple deep collaborative development engagements with the
Speaker 14: largest hyperscale data center companies on Earth. Right now, we're
Speaker 14: collaborating with them to integrate our photonic fabric technology into
Speaker 14: their next generation AI accelerators. These are programs that are
Speaker 14: on the order of eighteen months, so through the balance
Speaker 14: of twenty twenty five and into the first half of
Speaker 14: next year, we're working together to get this technology scaled
Speaker 14: and qualified.
Speaker 6: So right now the focus is.
Speaker 14: On our volume manufacturing supply chain because our customers are
Speaker 14: immense scale. They require hundreds of thousands of units to
Speaker 14: serve their demand.
Speaker 7: You know, Dave back to the fundraising question as well.
Speaker 2: Not only do you have kind of like the blue
Speaker 2: chip of finance involved in this round, Fidelity, black Rock,
Speaker 2: but the Mavericks and Tiger part of this. It's interesting
Speaker 2: when you have those traditional hedge funds getting in.
Speaker 7: They have been cautious in the.
Speaker 2: World of startups, especially with a dearth of public market exits.
Speaker 2: So bring us behind a conversation what is it about you?
Speaker 2: And then that served as a good match.
Speaker 14: Yeah, So we took a hard look at the types
Speaker 14: of investors that we wanted to have involved at this
Speaker 14: stage in the company's life cycle. So just as you
Speaker 14: develop a technology for successful qualification and implementation in a
Speaker 14: large market like artificial intelligence, we are developing and optimizing
Speaker 14: our cap table for having the rights investors involved, not
Speaker 14: just at this phase in the company's life cycle.
Speaker 6: But through an IPO.
Speaker 14: Should we make the decision to take the company public
Speaker 14: over the course the next few years and to have
Speaker 14: the right investors that can invest with us over the
Speaker 14: course of the next decade or more so on their ends.
Speaker 14: The decision, I think was made based on the fact
Speaker 14: that we are the only company in existence that has
Speaker 14: the ability to provide optically interconnectivity that meets the requirements
Speaker 14: of what are called scale up networks. This is a
Speaker 14: processor to processor interconnect The gold standard today is in
Speaker 14: Vidia with Envy Link and in v Switch.
Speaker 6: All of that is run over copper.
Speaker 14: So data communication today between processors at in Nvidia and
Speaker 14: elsewhere throughout the industry today is entirely electronically over copper.
Speaker 6: With the photonic fabric, we are.
Speaker 14: Changing that, right, We're moving information optically at a fraction
Speaker 14: of the energy and at much higher bandwidth and lower latency.
Speaker 7: You know.
Speaker 2: An interesting part of your cap table also that I've noticed,
Speaker 2: and this is an existing.
Speaker 7: Investor, is Porsche.
Speaker 2: And with all that's going on in the world, worries
Speaker 2: about the consumer, worries about international trade, auto parts also
Speaker 2: facing risks of tariffs. I'm wondering what role you play
Speaker 2: in the automobile story. Have they led to meaningful work
Speaker 2: with you as an investor?
Speaker 14: Two different branches of Porsche. There's Porchia AG, which is
Speaker 14: the automotive group, which we all know and love. That's
Speaker 14: my favorite at brand, by the way. And there's Porsche ESI,
Speaker 14: which is the mothership that it's the holding company for
Speaker 14: all of the Porsche's family money as well as they
Speaker 14: control about fifty.
Speaker 6: Percent of the assets of the Volkswaking Group. So this
Speaker 6: is the.
Speaker 14: Financial arm of Porsche. Now Portia can and certainly we
Speaker 14: anticipate will be a strategic partner for us as well
Speaker 14: on the automotive group side, as their requirements for artificial
Speaker 14: intelligence training and inference will be similar to that of Tesla,
Speaker 14: who has played kind of a leading role early on
Speaker 14: in building out AI infrastructure and support of autonomous vehicles.
Speaker 4: Dave, how do you think about kind of diversifying your
Speaker 4: customer base. You noted that your target clientele those effectively
Speaker 4: control more than ninety percent of the trillion dollar end market.
Speaker 4: Do you get to spand past that as the company
Speaker 4: grows or are you more dependent on those select few.
Speaker 14: Well, like you just said that those select few represent
Speaker 14: you know, there's eight companies that represent roughly ninety percent
Speaker 14: of this trillion dollar market, and we'd be fine with
Speaker 14: just those, right, So, if you think about it, that's
Speaker 14: a good problem for us to have. And you've got
Speaker 14: four major hyperscalers, you know, I think the world knows
Speaker 14: who they are that represent roughly seventy percent of.
Speaker 6: The addressable in market.
Speaker 14: And then you have the ecosystem around them, right, the
Speaker 14: GPU manufacturers which include Nvidia and AMD, AIMD by the way,
Speaker 14: being one of our strategic investors as well. And then
Speaker 14: there are a couple of design services companies which include Broadcomics. Right,
Speaker 14: so Broadcom is playing a larger role. I think you've
Speaker 14: heard from their earnings announcement over the last week and
Speaker 14: a half that they're gaining traction and building custom silicon
Speaker 14: for the hyperscalers.
Speaker 2: Dave, we thank you so much for your time today.
Speaker 2: Congratulations on that fundraise. We are looking forward to seeing where.
Speaker 7: It all goes.
Speaker 2: That is Dave Lozowski of Celestial Ai. Now, another AI
Speaker 2: story that we're watching, Ali Baba is accelerating its efforts
Speaker 2: to lead in the AI space and they're pushing out
Speaker 2: an AI model that.
Speaker 7: Can read emotions for more.
Speaker 2: Bloomberg's Peter Elstrom joins us now and I think just
Speaker 2: back to a couple of days ago, I tried so
Speaker 2: hard to read this story that Sam Altman posted online
Speaker 2: about the creative writing exercise that you saw through Open AI,
Speaker 2: and that does go down to the ability to read
Speaker 2: beyond the objective and then to be subjective. Right, And
Speaker 2: so when you think about Ali Baba, how successful are
Speaker 2: they in emotional intelligence.
Speaker 15: We're seeing this very rapid innovation of AI models really
Speaker 15: around the world, but China now particularly has gained a
Speaker 15: lot of attention because of the breakthrough of deep Seek
Speaker 15: a few weeks ago. Ali Baba is, course of course,
Speaker 15: best known for its e commerce business. It competes with
Speaker 15: Amazon in that market. But of late the past couple
Speaker 15: of months, they've come out with an number of AI
Speaker 15: models that are quite innovative. They have one called Gwen
Speaker 15: that it compared with deep Seek and said that it
Speaker 15: was ahead on certain metrics. They're also striking an alliance
Speaker 15: with Apple to be able to provide some of the
Speaker 15: AI features for the iPhones within China.
Speaker 3: And now we see this.
Speaker 15: The model is called R one omni. They're saying it's
Speaker 15: able to detect emotions within the people were asking questions
Speaker 15: and give better answers. Because of that, they can customize
Speaker 15: in certain ways. Now this fair follows very rapidly on
Speaker 15: the heels of open Ai, which has tried something like
Speaker 15: this with their GPT four point five. Now open Ai
Speaker 15: is charging two hundred dollars a month for that service,
Speaker 15: and here Alibab is putting this out there for free.
Speaker 15: It doesn't have all the bells and whistles that you
Speaker 15: would see in some other models, but it's a pretty
Speaker 15: aggressive move into this space, and the China market is
Speaker 15: not one where you're going to see the American companies play.
Speaker 15: So it's a pretty far step ahead for Ali Baba.
Speaker 4: Peter, we have about thirty seconds left, but talk to
Speaker 4: us about how this now stacks Ali Baba up again
Speaker 4: to some of the players here in the US. Is
Speaker 4: it really going to depend on things like emotional intelligence?
Speaker 15: Well, it's important to understand how bifurcated these markets are.
Speaker 15: The Western companies can't get into China. These Chinese companies
Speaker 15: are largely not competing outside of their own market at
Speaker 15: this point. So they're pretty separate at this point. But
Speaker 15: I think what's been surprising to a lot of observers
Speaker 15: is how quickly some of these Chinese companies have been
Speaker 15: able to evolve their AI models, especially because they're cut
Speaker 15: off from the most advanced chips. You're talking before about
Speaker 15: the Nvidia chips that are used to train these AI models.
Speaker 15: Most of the Chinese companies can no longer buy those
Speaker 15: from the Western world, so they're doing this with some
Speaker 15: pretty hardcore engineering. Deep Seak in particular show that they
Speaker 15: could make some advances that would be very difficult in
Speaker 15: the Western world. That's partly because of the constraints they
Speaker 15: have on the chip side.
Speaker 2: Peter, we thank you so much for all of your reporting.
Speaker 2: That is Bloomberg's Peter Alstrom and Jackie. Something I've been
Speaker 2: thinking about that is interesting about this emotional intelligence aspect
Speaker 2: of things is if you believe that leadership needs EQ,
Speaker 2: maybe AI can be your next boss.
Speaker 3: Yeah, let's hope not.
Speaker 4: I don't know about you, but I wouldn't want a
Speaker 4: giving me my evel if you know what I mean,
Speaker 4: right or raise?
Speaker 7: Anyways, is coming up next?
Speaker 2: Remember, speaking of big companies, we are coming out with
Speaker 2: Adobe earnings after the closing bell.
Speaker 7: It is held up.
Speaker 2: Relatively well in the tech malaise we've seen through the
Speaker 2: broader market.
Speaker 7: We're gonna take a look at what to expect next.
Speaker 7: This is Bloomberg.
Speaker 2: Adobe earnings are out after the closing bell, and we're
Speaker 2: going to bring in now Anu Ragrana of Bloomberg Intelligence
Speaker 2: for a look at what to expect. It's interesting because
Speaker 2: Adobe has held up relatively well relative to a lot
Speaker 2: of those magneticuden Officient seven names, relative to what you've
Speaker 2: seen in a lot of the Philadelphia Semiconductor Index. Is
Speaker 2: there a story something to buy right now or are
Speaker 2: there real risks after the market today?
Speaker 6: So sure, Naaliban, you look at it.
Speaker 16: Adobe's probably the cheapest large cap software stock right now,
Speaker 16: much cheaper than any of its peers, and there is
Speaker 16: a reason behind it because it is also the most
Speaker 16: controversial one right now. They have a huge segment, one
Speaker 16: of the most profitable businesses in the world, their photoshop
Speaker 16: creative business, which is under threat or perceived threat by
Speaker 16: a lot of open source models out there now. The
Speaker 16: company has guided to their annual recurring revenue for their
Speaker 16: digital media segment to go up by eleven percent. That's
Speaker 16: the only number we are looking for when they report,
Speaker 16: because any kind of disturbance and that number on the
Speaker 16: downside really is not going to be good for the stock.
Speaker 16: But meanwhile, if they are able to hold onto it
Speaker 16: or even raise it, I think that's going to be
Speaker 16: perceived very well. So that is really something different that's
Speaker 16: happening from a macroside right now.
Speaker 2: ANURRAD thank you so very much for your time. That
Speaker 2: is ANURAG run of Bloomberg Intelligence. We are looking forward.
Speaker 7: To your readout after they report.
Speaker 2: To your point, very controversial at the moment, and we
Speaker 2: are hitting that tail end of earning season, and of
Speaker 2: course as we hit that tail end, we are also
Speaker 2: keeping an eye on these markets for you as before
Speaker 2: we let you go, because we are looking at that
Speaker 2: Nasdaq one hundred trying to maintain those gains for the day.
Speaker 2: It has been a volatile morning, but we are back
Speaker 2: up to one percent worth of gains on that Nasdaq
Speaker 2: one hundred. Really the leaderboard here, the Russell two thousand
Speaker 2: losing its gains though on the day, and the S
Speaker 2: and P five hundred up but less than you're seeing.
Speaker 7: In big tech.
Speaker 2: The semiconductor is getting some relief, a nearly three percent
Speaker 2: rise now at two point eight percent, and you're looking at.
Speaker 7: That big come back into the market.
Speaker 2: The dip buyers are on the sidelines and hopping back in.
Speaker 2: That does it for Bloomberg Technology though today. Don't forget
Speaker 2: to check out our podcast. You could find it on
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