Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: This is Bloomberg Tech coming up.
Speaker 3: Anthropic gets a warning from the US Common Secretary saying
Speaker 3: it needs government permission to grant foreign nationals access to
Speaker 3: its most advanced AI models. Plus, after three days of soaring,
Speaker 3: SpaceX shares come back down to earth and drop for
Speaker 3: the first time in the company's fourth trading day, and
Speaker 3: Bloomberg reports Apple's upcoming camera equipped AirPods will launch in
Speaker 3: late twenty twenty seven as part of a flurry of
Speaker 3: new releases. There is a lot going on in the
Speaker 3: world of technology, and that's playing out inequity markets, and
Speaker 3: as that one hundred.
Speaker 2: Is seen a lot of churn and chop. We're up modestly,
Speaker 2: few tenths percent.
Speaker 3: Chip stocks are rebounding, but we had a really big
Speaker 3: drop in yesterday's session.
Speaker 2: But remember as an.
Speaker 3: Index, as a bucket, chip stocks are up like ninety
Speaker 3: percent year today and SpaceX that's a pretty reasonable pullback
Speaker 3: down to one hundred and ninety three dollars per share,
Speaker 3: down four percent, but had added nine hundred and thirty
Speaker 3: billion dollars of market cap in the first three days
Speaker 3: of its life as a public company.
Speaker 2: Let's get to the new stories and.
Speaker 3: An extraordinary escalation in Washington's conflict with Anthropic. Bloomberg's obtained
Speaker 3: a copy of the letter from Cover Secretary Howard Lutnik,
Speaker 3: dated last Friday, warning that Enenthropic faces severe civil and
Speaker 3: criminal penalties if it grants foreign nationals access to its
Speaker 3: most advanced AI models. Bloomberg's editor in DC, Mike Shephard,
Speaker 3: is with us for more. So, what do we learn
Speaker 3: from the letter that's start there?
Speaker 4: Well, one of the things we actually didn't learn ed
Speaker 4: was the rationale. What was the underlying security concer learn
Speaker 4: that drove Howard Lutneck and the US government to take
Speaker 4: such a drastic step as to order and impose export
Speaker 4: controls on shipments and sharing of this sensitive technology. But
Speaker 4: what we did learned was this that the government is
Speaker 4: using authorities that are typically reserved for dual use technology,
Speaker 4: that is, products that could be applied for both civilian
Speaker 4: and military purposes, and the government is invoking these authorities
Speaker 4: in a way to try to prevent foreign nationals, perhaps
Speaker 4: from leaking either intentionally or unintentionally, these whares, these products,
Speaker 4: the top two AI models from Anthropic to foreign adversaries
Speaker 4: of the US, and they are preparing to impose these
Speaker 4: export controls and have them in place until further notice,
Speaker 4: and they're warning it of criminal penalties and civil penalties
Speaker 4: if Anthropic fails to comply.
Speaker 3: Shep just very quickly. Let's re recap the reporting of
Speaker 3: the show. Yesterday, technical staff of Anthropic went to DC
Speaker 3: met with the administration.
Speaker 4: What do we know, Well, we haven't seen any further
Speaker 4: signs of progress in the negotiations between the two sides.
Speaker 4: We do, however, have today at the G seven Evion
Speaker 4: Dario Amidae, the Anthropic CEO, and President Donald Trump in
Speaker 4: the same room for an AI lunch hosted by French
Speaker 4: President Emmanuel Macron. Now, at the lunch, the two men
Speaker 4: did not sit anywhere near each other, and it's unclear
Speaker 4: whether they had any interactions or cydebars. But after his
Speaker 4: bilateral meeting with Indian Prime Minister and Arundromodi, President Donald
Speaker 4: Trump was asked well, how are things going with Anthropic,
Speaker 4: and all he could say was going fine. We may
Speaker 4: hear more from the President on this, but clearly it's
Speaker 4: something that's on the mind of G seven leaders, and
Speaker 4: Macron himself is pushing this idea of trusted partners for
Speaker 4: sensitive technologies like anthropics AI models in which these partners
Speaker 4: allied countries would be vetted by security authorities so that
Speaker 4: they too could perhaps re access to centretive tech like
Speaker 4: these two models.
Speaker 3: Bloomboks Mike Shepard, thank you very much. I want to
Speaker 3: go deeper on that story. The G seven is underway
Speaker 3: in vy On, France this week, and beyond geopolitical and
Speaker 3: economic debates, AI is in the spotlight. The chief executives
Speaker 3: of Open Ai, Anthropic and Google all on hand, joining
Speaker 3: world leaders to discuss the global.
Speaker 2: Future of AI.
Speaker 3: The conversation comes as the US government indicates its willingness
Speaker 3: to use emergency powers forcing private developers into compliance over
Speaker 3: national security threats. The President of the United States also
Speaker 3: in Evyon, and we expect to hear from him today.
Speaker 3: Bloombirs Kle lines co hosts of Balance of Powers with US,
Speaker 3: such an interesting dynamic, right power players, World leaders, AI
Speaker 3: leaders recap.
Speaker 5: Yeah, well and Mike spoke to some of this incredibly
Speaker 5: well ed. Basically, what we have here is countries who
Speaker 5: are all calling for a regulatory regime around AI. The
Speaker 5: German Chancellor Friedrich Marks talked about the need for and
Speaker 5: intensive discussion around that, also saying that all countries need
Speaker 5: to have access to this technology and admitting fridrim Mertz
Speaker 5: did that Europe needs to play catchup. And that's really
Speaker 5: what's that issue here is we consider anthropic and these
Speaker 5: export controls being slapped on in particular, is that Europe
Speaker 5: doesn't have its own AI juggernauts such as those in
Speaker 5: the United States. This is somewhere and we heard President
Speaker 5: Trump speak to this earlier as well, that the United
Speaker 5: States is leading in and Europe wants to be able
Speaker 5: to trust that it can access the technology. Thus the
Speaker 5: push to have Europe considered some of these trusted partners
Speaker 5: who would be able to access this technology versus adversaries
Speaker 5: like China for example, when we're considering things like Mythos
Speaker 5: and Fable five. So this is obviously an active discussion.
Speaker 5: We could hear more from President Trump about this, but
Speaker 5: it also feeds into another issue that was raised at
Speaker 5: the G seven summit. At as we consider the technology
Speaker 5: questions that leaders are grappling with, it is also inputs
Speaker 5: into certain technologies like rare earth and permanent magnets, and
Speaker 5: we actually saw the G seven countries agreeing today to
Speaker 5: cap their imported supply from China to sixty percent of
Speaker 5: rares and permanent magnets by the year twenty thirty.
Speaker 2: The ultimate goal, as soon.
Speaker 5: As possible is to get those imports down to fifty percent,
Speaker 5: and they're going to by the end of this year
Speaker 5: have a separate discussion around other critical minerals, but the
Speaker 5: idea is reducing the dependence on China, which has shown
Speaker 5: a willingness to restrict exports of this market in which
Speaker 5: they are dominant, not just in terms of mining these
Speaker 5: rare earths, but also in the refining of them. This
Speaker 5: is going to be a really ambitious target for these
Speaker 5: countries to meet at is they have to work on
Speaker 5: their own supply chains. Even officials of the G seven
Speaker 5: are admitting that may mean imposing quotas on certain industries
Speaker 5: like defense, for example. But this is actually one of
Speaker 5: the big tangible items that is emerging from the G
Speaker 5: seven summit, the sixty percent cap on rare earths from
Speaker 5: China again by twenty thirty.
Speaker 3: The mss kaye lyones, thank you very much, and of
Speaker 3: course we expect to hear from the President about the
Speaker 3: status of an agreement with Iran other topic that has
Speaker 3: had direct impact on supply chains in tech, including semiconductors.
Speaker 3: Stick with AI and video founder and CEO Jensen Wog
Speaker 3: sat down with the AP to discuss the need to
Speaker 3: build AI in a safe and responsible way. But beyond that,
Speaker 3: he says, the US needs to harness the new technology
Speaker 3: to stay ahead of the curve globally.
Speaker 2: Listen to this, We.
Speaker 6: Have to be very careful that artificial intelligence, this new
Speaker 6: next generation of technology revolution, that we're also enthusiastic about
Speaker 6: the adopting it and make sure that we don't get left.
Speaker 2: Behind joining us now.
Speaker 3: Udecha Revu, a member of the portfolio management team for
Speaker 3: the International Equity Strategy Desk at Harding Lovner. You know
Speaker 3: something that's come up actually very recently yesterday's show was
Speaker 3: what is the kind of black swan for this market
Speaker 3: where we are right now?
Speaker 2: And it might just be regulatory risk.
Speaker 3: Listening to what Jensen Wong had to say there, extrapolate
Speaker 3: on that a little bit. You know, we're still unresolved
Speaker 3: with China. Supply chains are impacted by the war, and
Speaker 3: what's tep of mind for you right now?
Speaker 6: Top of mind for us is a productivity gain. So
Speaker 6: the return on equity that can be generated from AI
Speaker 6: and how much people are embracing it and what purposes
Speaker 6: are they using and what is the adoption curve and
Speaker 6: the return on that adoption curve is what's on top
Speaker 6: of our mind. And when we point out a less
Speaker 6: regulatory risk might be less of an issue. The bigger
Speaker 6: issue is going to be people have to take time
Speaker 6: to digest what they're included, what AI they've started using
Speaker 6: in their workplaces, and then understand the returns of it
Speaker 6: before they can generate additional demand. And to us, the
Speaker 6: timing of that is where the market might get moist,
Speaker 6: might get most confused about, And to us, that's that
Speaker 6: Blacks fundament. Short term risk might be extrapolated as long
Speaker 6: term risk, and that's where the market might overreact.
Speaker 3: Where do you look for the evidence of productivity's impact
Speaker 3: from AI? You know, very recently and I think you're
Speaker 3: talking about in team markets, right. We had a conversation
Speaker 3: ten days ago with San Francisco Fair president Mary Daily
Speaker 3: saying I don't see any evidence of productivity in this
Speaker 3: country being impacted by AI, for better or worse.
Speaker 6: Yeah, So from that, I think there's a number ways
Speaker 6: to look at it. The first thing we do is
Speaker 6: to talk to companies.
Speaker 7: At the individual levels how they're adopting AI and what
Speaker 7: impact that AI is having on either their cost management
Speaker 7: or the sales that they're generating, or the activity that
Speaker 7: they're doing.
Speaker 6: So one clear evidence that we find is people are
Speaker 6: able to do a lot more with a lot less
Speaker 6: human resources or keeping human resources versus the same. What
Speaker 6: we yet to see is that translate into profit growth
Speaker 6: for anyone either, And that's to us is what the
Speaker 6: next step is going to be and trying to understand
Speaker 6: where that profit growth is coming from. Most immediate is
Speaker 6: that some costs can come down, but that cost is
Speaker 6: being reinvested into AI, and to us, that's where that
Speaker 6: discript in a secret come from.
Speaker 3: We started the program saying there's been some choppy trading
Speaker 3: and churn inequities in this morning session, at least remind
Speaker 3: the audience that we have a FED decision and meeting today.
Speaker 2: The first of Kevin.
Speaker 3: WASH's chair is that a factor for technology investors right now?
Speaker 6: I don't think it's a factor for technology investors from
Speaker 6: a fundamental perspective. We still are focused on what's happening
Speaker 6: in the fundamental markets, and the market is reacting to
Speaker 6: a lot of the fundamental news that's coming out. So
Speaker 6: the investors, in my mind, have become more and more
Speaker 6: sensitive to profit and what impact by AI is having
Speaker 6: on profit versus revenue. Over the last two years, revenues, backlogs,
Speaker 6: bookings was what the market's reacted to. It started to
Speaker 6: turn in the last two quarters where revenue growth is
Speaker 6: being given less of interest and more interesting into profit growth.
Speaker 6: So I don't think we're there the point where the
Speaker 6: interest rate changes itself will have a big impact on
Speaker 6: it a longer run. It will because that's it's a
Speaker 6: discount rated which you mpv the future edge.
Speaker 3: Yes, it's been it's been a long time since I've
Speaker 3: said this out loud on Bloomberg Tech. But higher rates
Speaker 3: discount the present value of future cash flows and continue
Speaker 3: to remind ourselves at that point. Look, I won't ask
Speaker 3: you about SpaceX specifically, but there's this idea that that
Speaker 3: presages a big i PO window, but more sophisticated than that.
Speaker 3: After a long era of buybacks and other shareholder friendly policies,
Speaker 3: lots of new equity will hit the market maybe this year.
Speaker 2: How does that go for you? Sorry?
Speaker 6: Go ahead, So that's that creates a technical risk in
Speaker 6: terms of where if anthropic and open AI come to
Speaker 6: the market, the equity that's raised for that, and the
Speaker 6: funding that's which that, where is that going to come from,
Speaker 6: Which which sick does the market? Which part of the market.
Speaker 6: And we've seen some of the some of the reason
Speaker 6: why the semi conductors have done so well is softly
Speaker 6: it has underperformed. So what are the segments of the
Speaker 6: markets are going to underform? So they are going to
Speaker 6: be technical factors and they'll become even more important in
Speaker 6: the market in the next six months.
Speaker 3: Just very quickly, French President Makran saying in his own
Speaker 3: presser in Avon, it's good that the US realizes the
Speaker 3: dangers of frontier AI models. We're showing live pictures of
Speaker 3: him speaking at the G seven. This idea of government
Speaker 3: intervention and dictation on how technology can or can't be used.
Speaker 3: How is that playing out in the market mood right now?
Speaker 6: I think it's not as important to the market at
Speaker 6: this point in time because we're still trying to understand
Speaker 6: what are the capabilities of AI, and there's so much
Speaker 6: latent demand in even the previous generational models that we're
Speaker 6: less concerned about is there going to be the next
Speaker 6: generation going to be restricted? Well, we're still having used
Speaker 6: the full capacity or the previous generations, So let's do
Speaker 6: that and understand what the teram of that is before
Speaker 6: we're worried about the next generation.
Speaker 3: Like I said, there is a lot going on in
Speaker 3: the world of technology this morning, Harding Love and a
Speaker 3: portfolio manager who they threw a great to have you
Speaker 3: back on show, Thank you very much. Coming up, we're
Speaker 3: going to hear from HPECO Antonio Neeri story about let's
Speaker 3: make networking great again in the world of AI.
Speaker 2: That's next. This is Prittberg Tech.
Speaker 3: As AI infrastructure scales attention shifting beyond the chips to networking.
Speaker 3: HPE is betting the demand and its Juniper acquisition will
Speaker 3: be a major growth driver. I sat down with HPE
Speaker 3: President and CEO Antonio and Ery listen to this.
Speaker 8: We believe and has been for now three years plus,
Speaker 8: that networking is the core foundation to deliver AI across
Speaker 8: many aspects of the market, not just the enterprise, but
Speaker 8: obviously to train these models because networking is also the
Speaker 8: bottleneck to get the best productivities for all the GPUs
Speaker 8: of the point all over the world, and so Juniper
Speaker 8: has been a key thesis of that. We understood in
Speaker 8: twenty twenty three when we start thinking about the acquisition
Speaker 8: of Juniper with Rami, which was the CEO of Juniper
Speaker 8: and now leading our combined networking business, that this is
Speaker 8: a massive opportunity and the combination of Juniper and HPE
Speaker 8: and particularly with compute storage general green Lake platform will
Speaker 8: allows us to differentiate the market. So clearly is going
Speaker 8: to be the driving force as we go forward, because
Speaker 8: enterprises need to put that foundation in place and then
Speaker 8: the cloud experience around it. Because AI is the definition
Speaker 8: of a hybrid world load and tarry.
Speaker 3: That's pretend for a moment that the Bloomberg Tech audience
Speaker 3: is not familiar with networking. They know all about the GPUs,
Speaker 3: they know all about the high bandwidth memory, But what
Speaker 3: is it that we're talking about materially here.
Speaker 8: Yeah, when we think about AI and we think about
Speaker 8: the amount of accelerating computing through the GPUs we are
Speaker 8: plowing today, you have to connect all of them together
Speaker 8: in a parallel process. And that connectivity is the networking fabric,
Speaker 8: and there are three.
Speaker 9: Aspects of that.
Speaker 8: One is in a raq think about the cabinet you
Speaker 8: bring together seventy two or one hundred and forty four,
Speaker 8: that requires a lot of networking connectivity. That's what we
Speaker 8: call scale up. That's where Juniper is going to play
Speaker 8: a bigger role with the introduction of AMD helios in
Speaker 8: the fall, where Juniper will be the de facto networking
Speaker 8: fabric inside that architecture. And then when you start putting
Speaker 8: cabinets together in large data centers, you need to connect
Speaker 8: these cabinets all together, and that's what we'll scale out
Speaker 8: and that's also Juniper. And then finally, as we build
Speaker 8: these amazing data centers all over the world, you have
Speaker 8: to connect them with each other, and that's what we
Speaker 8: call scale across. And that's where our Juniper routing business
Speaker 8: excel because we have one of the best platforms in
Speaker 8: the world. So that's why networking so relevant to train
Speaker 8: models and to influence models.
Speaker 3: That was Hpe CEO, Antnio and Ery. There is a
Speaker 3: lot going on the world of technology, so many news stories.
Speaker 3: Let's get out to New York and Bloombergs. You hire
Speaker 3: and and you hire a HI I.
Speaker 10: Ed it's time out for talking tech. First up AI
Speaker 10: creditors are taking over software company Medalia. It's an effort
Speaker 10: led by Blackstone after owner Toma Bravo said it would
Speaker 10: not inject fresh cash into the struggling SaaS company creditors
Speaker 10: will invest one hundred and fifty million dollars into the
Speaker 10: company to curb it's debt and accelerate AI efforts. Plus
Speaker 10: SoftBank says it's becoming harder to find Latin American startups
Speaker 10: that are ready for major investments.
Speaker 9: The company says fewer.
Speaker 10: Firms in the region are meeting the requirements for its
Speaker 10: preferred investments of fifty million.
Speaker 9: Dollars or more.
Speaker 10: It's a big shift from just a few years ago
Speaker 10: when Latin American startups were attracting record amounts of venture
Speaker 10: capital and we end on Lenovo it is the latest
Speaker 10: company tapping the debt market look to raise two billion
Speaker 10: dollars through a convertible bond sale. The Beijing base, maker
Speaker 10: of PCs and AI servers, is returning to the market
Speaker 10: just two years after securing a similar size investment from
Speaker 10: Saudi Arabia's sovereign Wealth Fund. It says the money will
Speaker 10: be used to refinance debts and buy back shares.
Speaker 3: Ed thank you, Hira as we discussed earlier, the US
Speaker 3: is total anthropic not to give foreign nationals access to
Speaker 3: its most powerful models, but CEO Dario Amiday says the
Speaker 3: best defense against those risks is getting the technology to
Speaker 3: cyber defenders. He spoke with Billiomberg's Emily Chang for the circuit.
Speaker 11: If this helps defenders, it also helps attackers.
Speaker 12: Can we defend anything anymore?
Speaker 13: What I would say is that the reason that we're
Speaker 13: giving Mythos to defenders before we give it to attackers
Speaker 13: is to patch all the bugs. I don't know, as
Speaker 13: the models get better, there may be more and more
Speaker 13: bugs to be found, but there's only so many. They're finite, right.
Speaker 13: It's like you have this surface and there's only so
Speaker 13: many holes in it.
Speaker 2: You patch all the holes.
Speaker 13: And then the surface becomes very hard to attack as
Speaker 13: well as the code itself is written with the powerful models,
Speaker 13: so it's it's then becomes very hard to find flaws
Speaker 13: in or break into. So I think on the other
Speaker 13: side of this, hopefully six months or a year from now,
Speaker 13: we have a much more secure Internet ecosystem than we
Speaker 13: had in the past. We're trying to get to that
Speaker 13: world and we're doing the best we can to open
Speaker 13: up Mythos to new cyber defenders. We've been talking to
Speaker 13: the government. We're very respectful of their recommendations. They're slowing
Speaker 13: the pace at which we open it up because they're
Speaker 13: worried about counterintelligence risk. I think that's sensible. I think
Speaker 13: all serious people here understand that there's real trade offs here.
Speaker 2: We see a lot of.
Speaker 13: Sniping from people on Twitter and from you know, from
Speaker 13: other AI companies. You look at what they're saying and
Speaker 13: the inconsistency with.
Speaker 2: What they're doing.
Speaker 9: It's not they're not serious people.
Speaker 13: They're not seriously engaging with the the serious trade offs
Speaker 13: that that that that we have here. Look, I have
Speaker 13: customers calling me up every day saying I want access
Speaker 13: to Mythos. I have countries calling me up scene I
Speaker 13: want access to Mythos. And I have the US government
Speaker 13: and my security team saying no, wait a minute, there's
Speaker 13: risk to it. You know, I'm not saying one side
Speaker 13: or the other is right. I think it's somewhere in between.
Speaker 13: Both sides have valid points, but there's a real challenge
Speaker 13: here and we need to face it together as a society.
Speaker 3: That was Anthropics CEO Dario ami Day, speaking with Bloomberg's
Speaker 3: Emily Chang.
Speaker 2: You can catch that full.
Speaker 3: Episode of the circuit later today on Bloomberg TV and
Speaker 3: on Bloomberg dot com. SpaceX shares come back down to
Speaker 3: earth dropping for the first time. It's only the company's
Speaker 3: fourth trading day since that blockbuster ipo, puts the stock
Speaker 3: on track to snap three days of gains, where the
Speaker 3: shares had pushed nearly fifty percent above the IPO price
Speaker 3: and added almost to trillion dollars of market cap. Bloomberg
Speaker 3: Actacies reporter common Rhyanikey is trying to keep track of
Speaker 3: numbers that in real time keep changing. I mean, what
Speaker 3: is the what is happening right now? Right there is scarcity.
Speaker 3: There is only four percent of this company available for
Speaker 3: trade on the float.
Speaker 2: What's the big thing here?
Speaker 12: Yeah, So I think we're seeing some of the keynote,
Speaker 12: you know, volatility that can be associated with new IPOs
Speaker 12: in their earliest days of trading right here today, I mean,
Speaker 12: shares are down six percent right now, We're a little
Speaker 12: bit off the lows of the day for SpaceX, but
Speaker 12: this is a pretty extreme drop. It was up about
Speaker 12: six percent earlier in the session. Has paired all of
Speaker 12: that to decline here, we know that there's a low
Speaker 12: flow that can make swings in the stock price look
Speaker 12: extra large or bigger than maybe than they usually would,
Speaker 12: and that can also then have an impact on market caps.
Speaker 12: So yesterday we reported that SpaceX had jumped over Amazon
Speaker 12: in market value and that's a little bit up in
Speaker 12: the air today. We'll see where it ends at today's close.
Speaker 3: There's also like the listed options right the options market
Speaker 3: came into play over the last time for hours. Is
Speaker 3: that a factor in the volatility?
Speaker 12: It definitely can be. I mean, you know, traders are
Speaker 12: obviously now making bets on where SpaceX shares go next.
Speaker 12: You know, they're buying puts and calls. They're trying to
Speaker 12: additionally sort of game this system or see if they
Speaker 12: there's extra you know alpha here. One thing that we
Speaker 12: have heard or seen that is that options contracts are
Speaker 12: that are pretty expensive. You know, investor Michael Burry wrote
Speaker 12: in a sub stack note yesterday that he was looking
Speaker 12: at puts and they were just too expensive to buy
Speaker 12: right now. So I think we have a lot of
Speaker 12: traders looking there. We have more options trading actually coming
Speaker 12: online in the next few weeks from other pens.
Speaker 3: That's a that's a volatility premium, just really really quick.
Speaker 2: And I know this is unfair.
Speaker 3: Do we even look at price to sales ratio for SpaceX?
Speaker 2: What's the point?
Speaker 12: That's a great question. I mean, I think the point
Speaker 12: is just in comparing it to some of these other
Speaker 12: large companies where it now has a similar market value, right.
Speaker 12: I mean, it brought in about nineteen billion dollars in
Speaker 12: revenue last and if you compare that to Microsoft, that is,
Speaker 12: you know, it's fifteen times hire. So it's good to
Speaker 12: keep that in mind sort of as we look at
Speaker 12: the value of this company.
Speaker 3: We hope to talk a lot more about the company
Speaker 3: a little later in the program. Bloomber's corm Ryanikey, thank
Speaker 3: you very much. Indeed, there's a lot of news from
Speaker 3: Bloomberg as well. Apple's investors are frustrated the iPhone maker
Speaker 3: has been slow to deliver on AI promises, even with
Speaker 3: its latest Serie AI features, and after a disappointing performance
Speaker 3: at its annual Worldwide Developers Conference last week, investors are
Speaker 3: becoming a little bit impatient. Bloomber's Michael Reagan leads the
Speaker 3: team that's been writing about this. It's interesting, right, Actually,
Speaker 3: I was staring at the chart and being like, what
Speaker 3: are the shares telling me? In the days since I
Speaker 3: was in Coopertino. But that's still the same story. Everyone
Speaker 3: wants to see a little bit more from Apple.
Speaker 14: Yeah, I think that's pretty much it. You know, as
Speaker 14: you're familiar with, it's not uncommon for there to be
Speaker 14: a lot of optimism ahead of the Developers conference from
Speaker 14: Apple and then a little bit of a letdown and
Speaker 14: there's not really a big bang product announcement. So yeah,
Speaker 14: the investors we've talked to are basically saying we're just
Speaker 14: hoping for a little bit more oomph from their AI offerings,
Speaker 14: their Apple Intelligence offerings. So there's a little bit of
Speaker 14: disappointment that Siri will only be in beta mode in September,
Speaker 14: only available in English, not available in Europe or Asia.
Speaker 14: So a bit of a disappointment there. But I would say,
Speaker 14: you know, Apple stock is still it's up ten percent
Speaker 14: this year, It's right in line with S and P
Speaker 14: five hundred.
Speaker 2: But I think it.
Speaker 14: Goes back to those chip makers. You're just talking to people,
Speaker 14: are you know, turning their head over there and seeing
Speaker 14: these triple digit gains. You know, there's something like a
Speaker 14: dozen chip makers in the Nasdaq one hundred with triple
Speaker 14: digit gains this year and just saying, you know what,
Speaker 14: we wish Apple had been a little bit more ahead
Speaker 14: of the curve, a little bit more aggressive with AI.
Speaker 14: Now that said, we do have these days in the
Speaker 14: market where everybody starts second guessing all the capex involved it,
Speaker 14: and that's when Apple sort of becomes almost your defensive
Speaker 14: tech stock play. So there is a little bit disappointment,
Speaker 14: But you know, at the end of the day, this
Speaker 14: is Apple with this fortress balance sheet, still looking at
Speaker 14: fifteen percent revenue growth for this physical year. So you know,
Speaker 14: I don't think we can make too much out of
Speaker 14: the disappointment from the from the developers conference.
Speaker 3: Just very quick, Mike, there was there was a part
Speaker 3: of our report on this that basically seems to indicate
Speaker 3: the market's more focused on the next hardware upgrade cycle.
Speaker 3: Just real quick, what are they talking about?
Speaker 2: Yeah, exactly.
Speaker 14: I mean when you're looking at the iPhone that's coming
Speaker 14: out in September, you know what is sort of baked
Speaker 14: into the assumptions about, you know, how much growth we
Speaker 14: can we can see because of people refreshing buying new iPhones.
Speaker 14: Just because they're excited about the new one. So far,
Speaker 14: the you know, the the revenue estimates are pretty much
Speaker 14: staying where they are, so it doesn't seem like they've
Speaker 14: really adding onto the estimates.
Speaker 3: Following the conference, Michael Reagan with the Apple Stock story,
Speaker 3: Thank you very much. Meanwhile, the company holds steady with
Speaker 3: its AI ambitions, planning camera equipped AirPods, smart glasses, and
Speaker 3: new foldable iPhones as part of this major product push,
Speaker 3: which will span the next two years. Bloomberg to Apple
Speaker 3: and Consumer Tech editor Mark German is with us with
Speaker 3: the latest reporting. I just I read it a few times.
Speaker 3: AirPods with camera and the new bit I think is
Speaker 3: the kind of timeline for launch. Go with that, Like,
Speaker 3: what was the important bit of what you reported, Mark?
Speaker 15: So these new camera AirPods are going to launch at
Speaker 15: the end of twenty twenty seven. It's going to be
Speaker 15: a pretty blockbuster Fall of next year, that's the twentieth
Speaker 15: anniversary of the iPhone.
Speaker 9: So they're planning a lot of stuff to go hand
Speaker 9: in hand with that.
Speaker 15: In addition to these AirPods with cameras, And just to
Speaker 15: give you some context, these are not for facial recognition.
Speaker 15: These are not for taking pictures and video. These are
Speaker 15: for being able to see the world around you and
Speaker 15: feed that information into Siri, so you can see things
Speaker 15: sort of like what can I make with the food
Speaker 15: on this table right?
Speaker 9: What recipes? Can you can talk for me?
Speaker 15: Tell me more information about that object or that plant
Speaker 15: or what have you, or things for visual reminders or
Speaker 15: more specific turn by turn directions. And in addition to that,
Speaker 15: you're going to see the second generation of the foldable
Speaker 15: iPhone as well as the twentieth anniversary iPhone something I'm
Speaker 15: calling the iPhone twenty or the iPhone twenty Pro coming.
Speaker 9: Out at the end of next year. So it's going
Speaker 9: to be pretty jam packed.
Speaker 15: And if you look at the more near term, this
Speaker 15: year is going to be pretty extensive as well. You
Speaker 15: have several new iPads, you have several new Macs, new
Speaker 15: Apple Watches, and of course you have the first foldable
Speaker 15: iPhone as well as the iPhone eighteen Pro eighteen Promax
Speaker 15: and if you recall, Apple made that big design change
Speaker 15: with the seventeen Pro and Promax last year. Typically when
Speaker 15: Apple does a new design change, the first two years
Speaker 15: of that design are extremely successful in terms of upgraders.
Speaker 15: Some people don't do it in year one. They like
Speaker 15: to wait for year two, and so I think the
Speaker 15: eighteen pro prom are going to be pretty hot sellers
Speaker 15: this fall as well.
Speaker 3: Another big story that played out in markets, it played
Speaker 3: out on social media in a huge way in the
Speaker 3: last twenty four hours is Snap and Snap specs augmented
Speaker 3: reality glasses.
Speaker 2: You know what the stock reaction was. You spoke to.
Speaker 3: The CEO yourself, summarize everything we need to know about this, please.
Speaker 15: I think the stock reaction is more in response to
Speaker 15: how much we're spent on this product and investors in
Speaker 15: Wall Street knowing that this is not going to be
Speaker 15: a hit out the gate. This is a conceptual product
Speaker 15: right now. This is something like when the Vision pro
Speaker 15: launched a couple of years ago. This is going to
Speaker 15: be for developers, for the biggest tech fans, for the
Speaker 15: earliest of early adopters. This is not something that's going
Speaker 15: to like the world on fire from the get go.
Speaker 15: But this is the future of computing, I believe as well,
Speaker 15: and this is what Evan Spiegel has been saying. These
Speaker 15: are augmented reality glasses that allow you to overlay applications,
Speaker 15: your work notifications on top of the real world. Eventually,
Speaker 15: this is a product category that is going to click,
Speaker 15: but it needs to get a little bit later, and
Speaker 15: it needs to get a lot less expensive. These are
Speaker 15: about twenty two hundred dollars right now, certainly not the
Speaker 15: priciest device in the category. The vision pro obviously being
Speaker 15: over one thousand dollars more expensive than that, but there
Speaker 15: is some work to be done. But this is another
Speaker 15: stepping stone towards that vision that Snap and several other
Speaker 15: companies have. So maybe I'm not optimistic about this first
Speaker 15: generation of the product from Snap, but in terms of
Speaker 15: the category, this is going to be the future, and
Speaker 15: Snap clearly is placing a foothold there.
Speaker 3: The most Mark German, who leads all of our coverage
Speaker 3: of consumer technology, thank you very much.
Speaker 2: Did you see this one?
Speaker 3: All Birds is now smart Bird, completing its pivot from
Speaker 3: footwear to AI infrastructure after selling off its shoe business
Speaker 3: and the brand's assets. The company tapped former DCAIICEO Nadia
Speaker 3: Carlston to lead the next chapter.
Speaker 2: Smart Bird also doubled its convertible.
Speaker 3: Financing facility to one hundred million dollars and says it's
Speaker 3: ready already talking with potential customers as it builds out
Speaker 3: its first AI computing clusters.
Speaker 2: Wow, okay, coming up, we're going to.
Speaker 3: Talk about the challenges facing space based data centers, including
Speaker 3: satellite to satellite communication, the deep dive. Next, this is
Speaker 3: Bloomberg Tech. The US is the clear winner in the
Speaker 3: AI race. That's according to ASML CEO Christophe Fouque. He
Speaker 3: sat down with Bloomberg Tech Europe's Tom McKenzie earlier today
Speaker 3: on the sidelines of the Viva Tech conference in Paris.
Speaker 3: Here's what he had to say about his thoughts on
Speaker 3: the global AI race.
Speaker 16: If we compare all we do on the entire chrisystem
Speaker 16: versus the US and China, I think today the US
Speaker 16: is a clear winners in DR looking at champion across
Speaker 16: the entire AI so my ECO system. I think the
Speaker 16: one place they were missing a bit out was manufacturing,
Speaker 16: and I think they have been extremely aggressive in bringing
Speaker 16: some key company to manufacturing in the US. They can
Speaker 16: do that because they buy chips.
Speaker 3: ASMLCO Christophe Fouquet. Back to SpaceX. Despite today's decline, SpaceX
Speaker 3: has sowed since its IPO four days ago. A big
Speaker 3: part of investor enthusiasm stems from Elon Musk goal to
Speaker 3: put data centers in space starting in twenty twenty eight.
Speaker 3: We've heard from those bullish on the prospect, including SpaceX
Speaker 3: investor Sean Maguire, who said this about orbital compute.
Speaker 6: Every individual component here is kind of fully fully proven
Speaker 6: by SpaceX, except.
Speaker 2: For the compute sign but that is not It's just
Speaker 2: not that hart.
Speaker 3: But space does present specific challenges for compute, including communication
Speaker 3: between satellites and with the ground. That's an issue Den Rocker,
Speaker 3: former head of software engineering at SpaceX, set out to
Speaker 3: address when he co founded Observable Space, and Dan joins
Speaker 3: us now and really grateful for you to come in
Speaker 3: with your expertise. Right when you read the SpaceX prospectus,
Speaker 3: it's like, okay, the big picture, get it space data
Speaker 3: center in space as early as twenty twenty eight.
Speaker 2: One of the things we.
Speaker 3: Focus on the show is the ability for communication RF
Speaker 3: but also laser Try and summarize the challenge for us.
Speaker 17: Yeah, you know, like everyone's known for a long time
Speaker 17: that laser communication is the next generation of communication for space.
Speaker 17: You saw that really as Starlink was getting built with
Speaker 17: the isl links between satellites that are in orbit.
Speaker 9: It's you know, because it's in space.
Speaker 17: There's no like atmosphere conditions or challenges really establishing optical links.
Speaker 17: One of the big challenges you kind of have though
Speaker 17: going from space to ground and ground to space is
Speaker 17: obviously the atmosphere. But everyone kind of knows that solving
Speaker 17: those technical challenges or what's going to provide they're really
Speaker 17: like ten to one hundred times the bandwidth throughput that
Speaker 17: you're going to want and continue to like low latency
Speaker 17: that we need for kind of expanding the space.
Speaker 9: That's what what are they doing here?
Speaker 2: Yeah? Good, no, no, no, no, I'm sorry to interrupt you.
Speaker 3: I guess that the easy way to help themIn with
Speaker 3: tech audience on the side is like what are the
Speaker 3: current limitations of existing generations of hardware and software in
Speaker 3: that environment in space?
Speaker 17: Yeah, so, you know, I think from being able to
Speaker 17: deploy these ground stations for laser communications at scale on
Speaker 17: Earth to communicate is definitely one of the challenges. There's
Speaker 17: a lot of technical challenges as well around being more
Speaker 17: to correct like the kind of waveform and wayfront for
Speaker 17: laser communication, and around like adaptive optics as you're basically
Speaker 17: receiving the light on our ground stations. These are all
Speaker 17: like very active challenges, but we've actually made as a
Speaker 17: as a is an industry, a lot of like advancements
Speaker 17: to make this feasible at this point. The data centers
Speaker 17: in space now is really going to require laser com
Speaker 17: to be the primary mechanism of communication moving forward.
Speaker 9: So the timing works out really well.
Speaker 17: They're still challenges ahead, but it is i'd say, like
Speaker 17: commercially viable at this point, and so that's why we're
Speaker 17: really excited about being able to get these deployed at
Speaker 17: scale over the next six to twelve months.
Speaker 3: Observable Space the world's largest vertically integrated hardware and software
Speaker 3: company for space observation. But you are working on the
Speaker 3: laser component. That's why is laser the best technology.
Speaker 17: There's a few different things that make it clearly the
Speaker 17: winner over RF. First, just pure speed, it's ten to
Speaker 17: one hundred times faster. The second is there's no spectrum management.
Speaker 17: You know a lot of times with the RF bans
Speaker 17: you have to work with different countries to be able
Speaker 17: to manage who owns the spectrum and how that's kind
Speaker 17: of being used and service from space. And then the
Speaker 17: other one that is really important, especially for kind of
Speaker 17: military defense purposes is the privacy of it. It's a
Speaker 17: very point to point communication, so it's extremely hard to
Speaker 17: ease drop on and be able to collect that communication.
Speaker 17: You have to be in a very specific area where
Speaker 17: the ground station is located at in order to collect
Speaker 17: any signals. So from a military perspective, this is like
Speaker 17: a clear winner, and most future constellations for defense purposes
Speaker 17: are going to be optical first and to do forward.
Speaker 3: The basic idea of SpaceX going public is also that
Speaker 3: it will shine a light on commercial space. You know,
Speaker 3: SpaceX likes to do a lot of stuff itself, but
Speaker 3: do you see a kind of ripple effect or even
Speaker 3: an opportunity to work with SpaceX on those technologies.
Speaker 17: Yeah, totally, Like you know SpaceX, like we're we love SpaceX.
Speaker 17: It's really the company that's defining the future of space,
Speaker 17: so you know, partnerships with them, like we we work
Speaker 17: with them and we will continue to like would love
Speaker 17: to expand our relationship with SpaceX moving forward. I do
Speaker 17: think you're going to see over this next phase of
Speaker 17: space technology development. You know, people starting to unstack kind
Speaker 17: of pull out the different stacks in the space technology spectrum.
Speaker 17: It's kind of similar to like how this happened in
Speaker 17: the early days of the Internet, when if you were
Speaker 17: going to be an Internet company, you had to do
Speaker 17: all the things. You know, you were a data center,
Speaker 17: you were like a website, you were doing networking.
Speaker 9: You know.
Speaker 17: As the space economy and kind of space technology matures,
Speaker 17: you're going to see these different layers being pulled out.
Speaker 17: We're that communication optical communication infrastructure layer that is now
Speaker 17: pulled out and people can just buy our products off
Speaker 17: the shelf, turn key solutions to establish optical cons from
Speaker 17: Earth to space and space.
Speaker 3: Serve lasers in space no longer special see of space,
Speaker 3: Thank you so much. Blue Origin is rebuilding the launch
Speaker 3: site where it's New Glen rocket exploded last month, aiming
Speaker 3: to fly again later this year. New Glen is a
Speaker 3: key part of Blue Origin's plans for space exploration, but
Speaker 3: also NASA's Artemis program, but it's years behind schedule, and
Speaker 3: as Blue Origin founder Jeff Bezos said earlier today, this
Speaker 3: is not a sector where it is easy to move fast.
Speaker 18: Traditional aerospace, I think often suffers from slow decision making speed,
Speaker 18: and it's and I know how aerospace gets there, but
Speaker 18: I mean, you know, you're building things that often have
Speaker 18: you know, hazardous operations, life safety critical missions, and so
Speaker 18: again not every decision is like that though, so you
Speaker 18: end up making every decision as if it's life safety critical.
Speaker 3: Let's talk more about the challenges space presents, the things
Speaker 3: we send up into it. Mackenzie Listrop joins us a
Speaker 3: former director for the godd Space Flight Center, which is
Speaker 3: NASA's primary hub for building up lating scientific satellites, now
Speaker 3: principal consultant Paradise Services and just an absolute expert in
Speaker 3: space systems. So there are different degrees of orbital compute, right,
Speaker 3: different variations of a space based data center. But at
Speaker 3: the extreme SpaceX is presenting, it is at hyperscale. It
Speaker 3: is running massive AI workloads inference. Explain the distinction between
Speaker 3: those three grades of compute and why it's hard.
Speaker 11: Absolutely. So the first is really on orbit edge computing.
Speaker 11: So this is about taking you know, imagery data, radar, weather, maritime,
Speaker 11: climate or defense data that's collected in space and then
Speaker 11: using AI edge computing, some kind of inference, some kind
Speaker 11: of processing in the space system itself before sending it
Speaker 11: down to Earth. So this is real, this is near term.
Speaker 11: So satellite sends raw data to an orbital compute node.
Speaker 11: The node perform filtering or aiml inference and then only
Speaker 11: the higher value or smaller data products get sent to Earth.
Speaker 11: So this is a process that the company Axiom, says
Speaker 11: that it deployed as a prototype unit on the International
Speaker 11: Space Station and has an orbital data center node as well. Now,
Speaker 11: the second is really resilient or sovereign storage and computing,
Speaker 11: so infrastructure that is physically separated from terrestrial threats so disasters,
Speaker 11: political borders, or ground based attacks. That also has some
Speaker 11: real defense, continuity of government, and critical infrastructure use cases,
Speaker 11: but still not entirely explored. Now, the third is hyper
Speaker 11: scale AI work in orbit, and this is really the moonshot.
Speaker 11: It's potentially enormous, but it is not merely about the
Speaker 11: launch cost or even the orbital downlink nodes. It really
Speaker 11: requires some challenges to be met in power in heat, rejection,
Speaker 11: in radiation, tolerant computing, high band with optical networking, orbital reliability,
Speaker 11: and other issues. So it's a real challenge.
Speaker 2: So let's zero in on some of the challenges. Right.
Speaker 3: Your job was to get systems ready to be in
Speaker 3: the environment of space. The Sci Fi nerd in methinks
Speaker 3: about the vast coldness of space. But in thermal it's
Speaker 3: a very different challenge, right.
Speaker 11: It is, So you know, space is not cold sometimes
Speaker 11: in the way that people think. And I would say
Speaker 11: that in orbit, a data center is a heat engine
Speaker 11: first and foremost, and a compute platform second. So a
Speaker 11: terrestrial data center rejects heat through chillers, through air water
Speaker 11: or liquid cooling through evaporative systems as well. Now in
Speaker 11: orbit there is no convective air heat sinc. So heat
Speaker 11: has to be moved through the spacecraft and then radiated away.
Speaker 11: So this means that radiator area, radiator emissivity, the attitude
Speaker 11: control of the spacecraft, can tampa degradation. These are all
Speaker 11: effects that have now become first order economic variables.
Speaker 3: And then there is the power challenge. There's the belief
Speaker 3: that the sun is always on infinite solar panel as
Speaker 3: long as there's nothing blocking the path. But again it's
Speaker 3: not as simple about that as that when it comes
Speaker 3: to access to.
Speaker 9: That power correct.
Speaker 11: So you know, the pitch for orbital data centers is
Speaker 11: often that, hey, sunlight is stronger and more continuous in
Speaker 11: the right orbit. Google's Project Suncatcher argues that solar panels
Speaker 11: in the right orbit can be up to eight times
Speaker 11: more productive than on Earth. So that is true. But
Speaker 11: just because you have space energy access doesn't mean that
Speaker 11: you have space energy infrastructure. So you're going to have
Speaker 11: to deal with some real constraints, and that means the
Speaker 11: close formation, orbital dynamics, the radiation effects, the thermal management,
Speaker 11: the ground communications. All of this depends on a reliable
Speaker 11: access to power in power generation, but also power storage distribution.
Speaker 11: Again that thermal issue of rejection and also redundancy. Now
Speaker 11: this has to be flight qualified. It also has to
Speaker 11: be able to be reliably operated in space and maintained,
Speaker 11: and maintenance is one of these hidden costs.
Speaker 9: Right now that we're not talking a lot.
Speaker 3: About McKenzie, we have literally ten seconds. Do you think
Speaker 3: SpaceX can do it well.
Speaker 11: They're a vertically integrated company that has demonstrated many technical
Speaker 11: challenges before, so I wouldn't count them out.
Speaker 2: Mackenzie.
Speaker 3: Listrap principal consultant, a paradoct services, former director to NASA's
Speaker 3: god and Space Flight Center, and a top expert in
Speaker 3: space based systems, and get used to that. We're going
Speaker 3: to be talking about it a lot. That does it
Speaker 3: for this edition of Bloomberg Tech. Really interesting mix of
Speaker 3: market news, political news, but the technology sector has a
Speaker 3: lot going on right now. Recap on the podcast, Apple, Spotify, iHeart,
Speaker 3: and all of the Bloomberg platforms from San Francisco.
Speaker 2: This is Bloomberg Tech. M hm
Speaker 17: Hm