Speaker 1: Bloomberg Tech is alive from coast to coast with Carolline
Speaker 1: hide in New York and ever though in San Francisco.
Speaker 2: This is Bloomberg Tech coming up.
Speaker 1: Tens of thousands of organizations could be affected by a
Speaker 1: hack of Microsoft is a share Point software.
Speaker 2: Plus all eyes on Tesla, Alphabet IBM.
Speaker 1: This week is big tech earnings get underway and stop benchmarks,
Speaker 1: hit new records and how Tesla, SpaceX and Xai are
Speaker 1: struggling to deal with the fallout from must feud with
Speaker 1: Trump and his wild beast. But first, one key stop
Speaker 1: we're looking at, which is managing to shrug off initial
Speaker 1: anxiety that you saw at the Sardle trade around this
Speaker 1: global vulnerability.
Speaker 2: Share Point the software where you.
Speaker 1: Can be It's a data management application for Microsoft, and
Speaker 1: indeed it could be exposed two hackers. Tens of thousands
Speaker 1: of businesses could be affected.
Speaker 2: Let's get to it.
Speaker 1: Bloomberg's Brodie Ford and it's not a share impact, but
Speaker 1: it could be a real impact for users.
Speaker 3: That is absolutely right. If you have a coworker who
Speaker 3: sends you a file, there's a good chance it's on SharePoint.
Speaker 3: I mean, this is a very well used, pervasive program
Speaker 3: from Microsoft. And what is interesting about this situation is
Speaker 3: it is about one year after a very fateful day
Speaker 3: for Microsoft, which is when that issue with CrowdStrike caused
Speaker 3: all those flights to go down. And so Microsoft Cybersecurity
Speaker 3: Division has had a lot of heat lately. Today it
Speaker 3: just got a little hotter.
Speaker 2: It did over the course of the weekend.
Speaker 1: The US Cybersecurity and Infrastructure Security Agency CEESA put out
Speaker 1: this warning. And it's not the first time that the
Speaker 1: US government has called out Microsoft for these sorts of vulnerabilities.
Speaker 3: Absolutely, and you could say that this is a really
Speaker 3: small sub sect of customers likely, right, this is folks
Speaker 3: who are using SharePoint on premise. That's likely a small
Speaker 3: subsect of the larger group. And it's those who maybe
Speaker 3: should have updated to the cloud and this maybe wouldn't
Speaker 3: have happened. But it doesn't matter, right, If you're a
Speaker 3: customer and you got your SharePoint hacked and now you
Speaker 3: have hackers going between your files to your teams and
Speaker 3: pulling out emails and god knows what, you certainly might
Speaker 3: take a second look before staying with Microsoft or certain
Speaker 3: security products.
Speaker 1: Has Microsoft responded and how well they've sent out some
Speaker 1: instructions on Hey, here's how to patch your system, here's
Speaker 1: what to do if you think you may have been impacted.
Speaker 3: But this is a pretty quick moving thing.
Speaker 4: I mean.
Speaker 3: Also, Microsoft earnings are next week, and so I'm certainly
Speaker 3: expecting to hear some questions about, hey, is this impacting
Speaker 3: any kind of customer.
Speaker 1: Behavior yet Census Silas Cutler and your story saying it's
Speaker 1: a dream for ransomware operators.
Speaker 2: Yeah, yes, Brody.
Speaker 1: Ford, thank you, thanks for reporting on it for us. Meanwhile,
Speaker 1: let's just get a bit broader, because we were just
Speaker 1: hearing from Brody that big tech earnings are coming up. Indeed,
Speaker 1: Microsoft is one of them. Amazon that's happening later this
Speaker 1: month too. This week, we've got Tesla, Alphabet, IBM, to
Speaker 1: name but a few. Let's bring in Bloomberg's Denitza Takover Dinitza. Look,
Speaker 1: are we expecting red you to be improving for the
Speaker 1: likes of.
Speaker 2: Alphabet at least? I know that test a story. But
Speaker 2: let's talk on about Alphabet.
Speaker 5: We actually saw an upgrade on Alphabet from Morgan's family.
Speaker 5: They're very optimistic both on Alphabet and Meta, but they're
Speaker 5: up grading. The press saga at Alphabet just because the
Speaker 5: violations of META is pretty high. But what we're seeing now,
Speaker 5: we're obviously at record high SMP traits at twenty times
Speaker 5: twenty two times forward turnings, just incredible rally here, we're
Speaker 5: also seeing a very high bar. There is a big
Speaker 5: punishment for those who miss on learnings, the biggest in
Speaker 5: three years. And for those who actually overperform outperform, it's
Speaker 5: like the best in about a year, So the bar
Speaker 5: is higher, especially if you disappoint. Artificial intelligence spending has
Speaker 5: really made a big difference in the Magnificent seven. We
Speaker 5: see meta, we see Microsoft and Video leading the games,
Speaker 5: and obviously Apple were struggling.
Speaker 2: Amazon is another interesting story. They're up just about three
Speaker 2: percent year.
Speaker 5: To date, which compared to the incredible spending metadid and
Speaker 5: the reward investors have given to that companies up more
Speaker 5: than twenty percent.
Speaker 2: So we're seeing a big gap opening.
Speaker 5: And with this year earning season happening without too many
Speaker 5: economic reports, too much happening in the macro, it's all
Speaker 5: about the earnings right now.
Speaker 2: And I love that you bring up the spending.
Speaker 1: The metro is done because Boomberg Intelligence manly it's saying
Speaker 1: writing that Alphabet. We are anticipating maybe even increasing capex
Speaker 1: coming from then. We're also anticipating all the fact that
Speaker 1: they've boosted some of the prices of their ad targeting.
Speaker 1: Maybe that's going to be reaping dividend. You can go
Speaker 1: and read more about the preview that our colleagues over
Speaker 1: at Bloomberg Intelligence have. But he said, go back to
Speaker 1: maybe the other key proof point this week is Tesla.
Speaker 1: Now what's interesting is sometimes the fundamentals don't matter for
Speaker 1: this business. We expect revenue to full, profitability to full.
Speaker 1: There's more about what Elon says.
Speaker 5: It's really fascinating because he was very active this week
Speaker 5: and he was saying he was working twenty four to seven.
Speaker 5: He's even sleeping there.
Speaker 2: She did so big reaction today.
Speaker 5: In pre market there was some optimism, but today the
Speaker 5: stock is actually down. We also have news the tests,
Speaker 5: so it's set to fight California Department of Motor Vehicles
Speaker 5: over there claims that the company has exaggerated their capitabilities
Speaker 5: of sale driving. And no, we're not seeing a major move. Obviously,
Speaker 5: after that quarrel with President Trump, the stock was under
Speaker 5: roll of pressure. It has recovered some of that, but
Speaker 5: there is a whole universe of investments. Try to even
Speaker 5: musk that has been under pressure and hasn't received that
Speaker 5: big social social sentiment we saw after the election in
Speaker 5: the beginning of the year. So with that boost absence,
Speaker 5: the question is whether investors will really penalize a missing earnings.
Speaker 2: Particularly the retail funds.
Speaker 1: We're going to dig into Tesla much more in a
Speaker 1: moment with Max Traffick can but with the numbers was
Speaker 1: Denisa Teikova.
Speaker 2: We thank you very much now that.
Speaker 1: She's bringing a broader perspective as we think about earnings,
Speaker 1: we think about idias in crime news. Like Microsoft's Michael
Speaker 1: Reynolds is with US vice president Investment Strategy of at
Speaker 1: glen Mead. You've got a call forty five billion dollars
Speaker 1: in assets under management, and I go to you first
Speaker 1: about the optimism already baked in the market. We're at
Speaker 1: record highs again, How high is the bar for earnings
Speaker 1: this week?
Speaker 6: Thanks for having me on. The bar is pretty high.
Speaker 7: As we come into Q two, it seems like a
Speaker 7: lot of companies are really posting some or expected to
Speaker 7: post some results that are relatively resilient, especially compared to
Speaker 7: where people thought tariffs were going to be in early
Speaker 7: April that the thought that that was going to hit
Speaker 7: margins pretty materially.
Speaker 6: We're looking at Q two numbers.
Speaker 7: In the aggregate that are actually holding up pretty well.
Speaker 7: Sm P five hundred expected to post five percent earnings
Speaker 7: growth on a year over year basis. Tech is a
Speaker 7: pretty big contributor to that, and they may be relative
Speaker 7: beneficiaries from the tariffs that have been announced and have
Speaker 7: gone into effect so far. So overall, the story of
Speaker 7: earning season as the rubber sit in the road is
Speaker 7: resilient so far.
Speaker 1: More surprisingly, stop resilience for the large cap is of
Speaker 1: the AI trade in particular, I think of in video
Speaker 1: in particular, I think meta. But we have started to
Speaker 1: see this bifurcation in the MAG seven. For example, Tesla
Speaker 1: has not overperformed this year, and indeed is a key
Speaker 1: lagged so too is Apple. How are you seeing that
Speaker 1: being plaid out from an investor sentiment perspective?
Speaker 7: An excellent point. We're not just bucketing the MAG seven.
Speaker 7: We're looking at broader tech here, and there is this bifurcation.
Speaker 6: In large cap MAG seven.
Speaker 7: Overall, Again, some aren't contributing are a really big driver
Speaker 7: of the.
Speaker 6: Results for the S and P five hundred.
Speaker 7: But if you look over into small caps, actually some
Speaker 7: of the biggest contributors for pretty notable gains and earnings
Speaker 7: for Q two are so be financials and healthcare. So
Speaker 7: what that sort of tells you is it's really not
Speaker 7: just a broad tech play for earnings resilience this quarter.
Speaker 6: It's actually a little bit more company.
Speaker 7: Specific, which is a bit of a departure from what
Speaker 7: we saw last year, where in the aggregate mag seven
Speaker 7: just blistering earnings growth and you're starting.
Speaker 6: To see some of that falter a little bit deceleration.
Speaker 7: In the aggregate in some company is just having a
Speaker 7: little bit of a tougher go of it.
Speaker 1: In terms of a tougher go of it, just think
Speaker 1: Max last week in Netflix. I mean, they managed to
Speaker 1: post some really solid earnings, but they were punished largely
Speaker 1: because of just how well they've run up. Is there
Speaker 1: a risk that companies don't even underperform. They actually managed
Speaker 1: to beat but not well enough.
Speaker 7: Sure, that's an inherent risk when you have companies that
Speaker 7: are valued so to such a premium extent that they
Speaker 7: have such high let's call it price to earnings ratios
Speaker 7: that you bake in a growth rate to those earnings,
Speaker 7: and if you can't meet those hurdles, there's often a
Speaker 7: big punishment for failing to meet those results. There comes
Speaker 7: great expectations with great valuations, and so if you're showing
Speaker 7: signs that perhaps down the road we're not going to
Speaker 7: be able to meet some of those earnings growth expectations,
Speaker 7: there's a rerating that has to happen there, and it's
Speaker 7: an inherent risk investing with again, growth stocks or premium
Speaker 7: valuation equities.
Speaker 2: And regulatory risk overhangs a lot of these big names.
Speaker 1: I think of Alphabet in the line of fire when
Speaker 1: it comes to investigations as to whether it's a monopoly
Speaker 1: in certain areas of its business. You think about Tesla
Speaker 1: and the ongoing need for more regulation around robotaxis in
Speaker 1: the future. That affects way more too. How much do
Speaker 1: you have to factor in regulation right now?
Speaker 5: Am I?
Speaker 7: Regulatory risk is so important, especially when you have such
Speaker 7: a concentrated market as we have now. Right now, we
Speaker 7: have one stock in the S and P five hundred
Speaker 7: that's had an eight percent plus weight in a five
Speaker 7: hundred company index. We've seen this two other times in
Speaker 7: the sixties you had AT and T, and you had IBM.
Speaker 7: What happens is when you get to such a scale,
Speaker 7: you have a target on your back, and that can
Speaker 7: be a regulatory target, and that could also be a
Speaker 7: competitive target. So these are things that you have to
Speaker 7: think through. When you're looking at a company that dominates
Speaker 7: an index, they have a target on their back and
Speaker 7: you have to sort of think through the implications of
Speaker 7: what that can have to future earnings, growth and future
Speaker 7: dominance of the company.
Speaker 1: Thus far, in video stays higher, up about a quarter
Speaker 1: of percent. In fact, Apple getting a little bit of
Speaker 1: wind beneath its wings for this particular week. But might
Speaker 1: go back to what you said about small caps, so
Speaker 1: that we're a tech focus show here, but the fact
Speaker 1: that healthcare and the fact that financials outperform how much
Speaker 1: that's starting to be, the fact that.
Speaker 2: AI will be beneficial and that will help.
Speaker 1: Revenue growth and maybe profitability as well.
Speaker 7: It's an excellent point because we've seen some of the
Speaker 7: initial beneficiaries of AI than those that are developing the
Speaker 7: technology and providing the hardware for that technology. But ultimately
Speaker 7: that's going to be something like the Internet that permeates
Speaker 7: through every company and there's got to be this thought
Speaker 7: process across the spectrum that AI is going to be
Speaker 7: a beneficiary for these companies and it's going to penetrate
Speaker 7: through throughout C suites, throughout the economy.
Speaker 6: So is it a little early to perhaps.
Speaker 7: Being able to see some of that penetration happen in
Speaker 7: real time for some of these companies perhaps, but some
Speaker 7: of these early movers could start to see some benefits
Speaker 7: onto their bottom line loop.
Speaker 1: We're a global network as well, and we talk so
Speaker 1: much about the US winners, but I think about what
Speaker 1: TSMC is doing with its valuation hitting more than a
Speaker 1: trillion over in South Korea, when you're thinking about European bets, Mike,
Speaker 1: how much you're seeing investors want to get global with
Speaker 1: their tech exposure.
Speaker 7: We're seeing quite a bit of that, especially around the
Speaker 7: dollar in particular, where we're looking at portfolios in some
Speaker 7: cases that you know, if they're very US focused. We're arguing,
Speaker 7: if you don't have a single investment in your portfolio
Speaker 7: that's not dollar denominated, you're not properly invested. And so
Speaker 7: when we're going to look for these opportunities abroad, it's
Speaker 7: not just what are the company specific opportunities, but more
Speaker 7: on a macro basis, if we do find ourselves in
Speaker 7: a declining dollar environment, you're going to really wish you
Speaker 7: have non dollar denominated assets in your portfolio.
Speaker 6: May some of that be AI plays, perhaps, but.
Speaker 7: More broadly, it's just more important that you're looking abroad
Speaker 7: for a global opportunity set within your equity portfolio.
Speaker 1: Michael Reynolds, vice president of investment Strategy at glenmade great
Speaker 1: to catch up with you.
Speaker 2: Thank you.
Speaker 1: Now coming up how Tesna SpaceX xai. They are struggling
Speaker 1: to deal with the fallout from musks feud with try
Speaker 1: that's next.
Speaker 2: It's the Business Week front cover. This is bloom Beg Tech.
Speaker 2: You know Musk's feuds and wild bets.
Speaker 1: Well, they're having an impact on the billionaires businesses, including.
Speaker 2: Tessa SpaceX XAI.
Speaker 1: And that is the focus on the Bloomberg Big take,
Speaker 1: and it's bloom Begg's Max Chafkin and our own End
Speaker 1: Ludlow that co author and Max joins us right now.
Speaker 2: It's a great story.
Speaker 1: It's the lead of the Business Week cover as well,
Speaker 1: and you go into the case studies of just how
Speaker 1: what has been a very public spat has fallen out
Speaker 1: into some key well future crises for these companies.
Speaker 8: Yeah.
Speaker 9: Absolutely, So you do have this feud with Donald Trump,
Speaker 9: which is a big deal.
Speaker 6: I mean, I think you look at like, why.
Speaker 9: Has Tesla's stark fallen over the past six months or so.
Speaker 6: A big reason of that is.
Speaker 9: It's kind of like it hit a high just after
Speaker 9: the election, and we've had kind of a reverse Trump train.
Speaker 9: But once you back away from the Trump of it all,
Speaker 9: you start to see three key companies, SpaceX, Tesla X,
Speaker 9: all of which are attempting these huge, kind of monumental
Speaker 9: things with huge amounts of risk. I think it's a
Speaker 9: thing that Elon Musk has never tried to do before.
Speaker 6: Really, we've never seen.
Speaker 9: This in his career, as much as he's a guy
Speaker 9: who makes big bets. We have Tesla attempting to do
Speaker 9: a really like a hard pivot away from car manufacturing
Speaker 9: to robotaxis, a competitive field where they're not necessarily in
Speaker 9: the lead. We have Starship, this giant rocket which has
Speaker 9: yet to fly yet, we've had three successive explosions during
Speaker 9: test flights. And then we have x which looks very
Speaker 9: promising XAI, but I think is clearly a little bit
Speaker 9: behind some of its competitors, Open AI and anthropic and
Speaker 9: is losing huge sums of money. And you take all
Speaker 9: those three things, and then you take a poor relationship
Speaker 9: with the guy who is in power in the United States.
Speaker 9: And that is a dangerous recipe.
Speaker 1: Say, and it's a dangerous recipe that investors now stead
Speaker 1: down the barrel of his earnings come up this week
Speaker 1: on Wednesday, he's already declaring he's sleeping at the office
Speaker 1: largely to fix is it Tesla?
Speaker 2: And at the moment is X How do we know
Speaker 2: where he's spending his time?
Speaker 6: Well, that is the thing.
Speaker 9: And as Ed and I talk about in this story,
Speaker 9: I think if you talk to different people at different companies,
Speaker 9: they'll say different things. I think Tesla employees, a lot
Speaker 9: of them feel that Tesla's is Elon Musk's main priority.
Speaker 9: XAI employees kind of would say the same thing. I
Speaker 9: think SpaceX is in a slightly different position because you
Speaker 9: do have sort of a strong executive more or less
Speaker 9: in charge. That's Gwen shot Well, the president and COO.
Speaker 9: But there is that tension and we saw that come up.
Speaker 9: You know, in the last couple of weeks, we've seen
Speaker 9: investors suggest that maybe Tesla needs to give Elon Musk
Speaker 9: even more equity to sort of persuade him to spend
Speaker 9: more time at Tesla.
Speaker 6: Which is a strange thing when you're.
Speaker 9: Talking about a stock that's gone down, when you're talking
Speaker 9: about all of the challenges this company faces in terms
Speaker 9: of the core business, the car business, which has not
Speaker 9: been performing well over the last year.
Speaker 1: Or so, And you really articulate how much just general
Speaker 1: sentiment towards Musk as what had been the most adored
Speaker 1: entrepreneur has completely depleted, but he still has such a
Speaker 1: big base of retail supporters.
Speaker 2: Is that fading in this current moment? How much does
Speaker 2: that have to be an anxiety?
Speaker 9: I mean, you look at Tesla stock and it's still
Speaker 9: not doing that poorly considering all of these kind of
Speaker 9: challenges that I've brought up. So the stock is still
Speaker 9: very very expensive compared to other car companies. It hasn't
Speaker 9: you know, done especially badly over the last month or so.
Speaker 9: So there is this base of support, But I think
Speaker 9: you hit the nail on the head, Caroline. The big
Speaker 9: change here for Elon Musk is he went from being
Speaker 9: a very popular, admired guy.
Speaker 2: To being unpopular when you.
Speaker 9: Look at his approval rantings, they are poor, and you
Speaker 9: know it's possible. You don't necessarily need to be popular
Speaker 9: to succeed in business. But it doesn't hurt, especially when
Speaker 9: you've made your own personal brand so important to your companies,
Speaker 9: says Yon musk Has.
Speaker 1: And when your biggest found from an analyst perspective, and
Speaker 1: we know, give a short shrift to Wall Street.
Speaker 2: But when Dan I says, pay the guy more, and
Speaker 2: he says, shut up.
Speaker 1: Dan Ulmberg's MaTx Chaffkin, it's great piece.
Speaker 2: I urge you to go read it in his time.
Speaker 1: Now for Talking tech and first up app design software
Speaker 1: maker Figma and some of its investors are looking to
Speaker 1: raise one million dollars in its USIPO and what could
Speaker 1: be one.
Speaker 2: Of the biggest listings of the year.
Speaker 1: It can value the company up to thirteen point six
Speaker 1: billion dollars based on filings. The move comes after the
Speaker 1: plans sale to Adobe and remember fell through in twenty
Speaker 1: twenty three.
Speaker 2: Plus Uber well, it's doing a group of lawyers and medical.
Speaker 1: Providers in LA alleging they made fraudulent insurance claims that
Speaker 1: cost the company.
Speaker 2: Millions and legal fees.
Speaker 1: Now Uber accused the defendants of directing passengers to pre
Speaker 1: selected medical providers who submitted inflated bills to treat negligible
Speaker 1: or non existing injuries from minor collisions between twenty nineteen
Speaker 1: and twenty twenty four, and the Crypto Exchange back by
Speaker 1: Peter Teel That's Bullish, has filed for an IPO too.
Speaker 2: The offering is being led by JP Morgan Jefferson.
Speaker 1: Citigroup is the latest company in the growing crypto market
Speaker 1: pursuing a public listing this year. Look, there's another company
Speaker 1: set to access crypto by public markets, the Ether Machine.
Speaker 1: The firm is a combination of dynamics and the Ether reserve,
Speaker 1: creating an Ether treasury with over four hundred thousand Ether tokens.
Speaker 1: Who in more is Andrew Keyes Ether Machine chairman co
Speaker 1: founder Andrew There are a fair few companies doing this
Speaker 1: digital asset treasury play.
Speaker 2: Why are you the one to go with?
Speaker 10: So?
Speaker 11: We are not a buy and hold treasury. We are
Speaker 11: an institutional vehicle that is generating risk adjusted returns actively
Speaker 11: managing ether. Okay, Ether is a productive asset onlike bitcoin,
Speaker 11: and in doing and having Ether on our balance sheet,
Speaker 11: we have to stake it and use it to participate
Speaker 11: in the decentralized financial economy where we're able to actively
Speaker 11: generate yield.
Speaker 1: Okay, you'll also know not the only one that's looking
Speaker 1: to bring yield.
Speaker 2: I think what bit mine and others are doing out there.
Speaker 2: So how do you.
Speaker 1: Distinguish yourselves as the experience with which to allocate the
Speaker 1: experience with which to drive yield. I know that you're
Speaker 1: age old in the ETH space and a co founder
Speaker 1: of Consensus, but well, the CEO of Consensus and the
Speaker 1: guy co founded eth is backing another one.
Speaker 11: Yeah, so we have amassed the avengers of Ethereum. Our
Speaker 11: technology team is unparalleled in experience and the creation of
Speaker 11: proprietary technology to generate this yield. And basically we're able
Speaker 11: to outperform the exchange traded funds that don't have yield
Speaker 11: and the ETPs that are only able to participate fifty
Speaker 11: percent capacity in staking. And we are able to steak
Speaker 11: which is the only thing that the ETFs would be
Speaker 11: able to do, restake, which is using Ethereum's proof of
Speaker 11: steak mechanism to secure other middlewars and then use ether
Speaker 11: as a pristine collateral in the DeFi economy to further
Speaker 11: generate additional yield.
Speaker 1: What's interesting is this is almost about a little bit
Speaker 1: of pr for the Ethereum ecosystem. More broadly, you talk
Speaker 1: about it catalyzing the ecosystem, and you've got some big
Speaker 1: institutional strategic players who come on board with this particular
Speaker 1: initial announcement. I think in Pantera thinking crack and how
Speaker 1: long do they hold? How long do they stay with
Speaker 1: you after this back is completed and you continue to trade.
Speaker 11: So all of our capital partners, we believe our long
Speaker 11: term money. We had no fast money in this vehicle.
Speaker 11: And these are other people that believe that Ethereum is
Speaker 11: essentially the next generation of the Internet. With Bitcoin, you
Speaker 11: have one asset that is moving on that ledger, the
Speaker 11: bit coin. With Etherium, you can have and tokenize infinite
Speaker 11: assets such as stable coins, real world assets like parcels
Speaker 11: of lands, stocks, bonds, derivatives, and with those tokenized assets
Speaker 11: you can deploy them into what are called smart contracts,
Speaker 11: so arbitrarily complex legal agreements. And we believe that Ethereum
Speaker 11: is in the earliest innings of the next generation.
Speaker 6: Of the Internet.
Speaker 1: It's interesting that if has so lagged Bitcoin as an
Speaker 1: institutional play though, and we just think in the recent
Speaker 1: years we have has seen it just not perform in
Speaker 1: the way that bitcoin has as an institutional asset. But
Speaker 1: now you get the Genius Act potentially going to give
Speaker 1: more regulatory calater clarity.
Speaker 2: Now you get the bet on DeFi. How do you.
Speaker 1: Think though it can perform against Solana or other rival protocols.
Speaker 11: Briefly, so, Etherium is the largest beneficiary of these regulatory
Speaker 11: tailwinds because Ethereum is where these assets reside. Ninety percent
Speaker 11: of stable coins and high quality liquid assets reside on Ethereum,
Speaker 11: whereas only ten percent are displayed between the other blockchains.
Speaker 11: And furthermore, we believe that Ethereum is poised to have
Speaker 11: essentially what we call a gravitational pull, where more of
Speaker 11: these assets are going to be settled on top of Etheria.
Speaker 1: Andrew Keys, ether Machine, chairman of it, thanks for joining today. Meanwhile,
Speaker 1: talk about Polymarket, crypto betting platform that was kicked off
Speaker 1: shore by federal regulators.
Speaker 2: It's just stuck a deal to return to the United
Speaker 2: States markets.
Speaker 1: Just weeks after prosecutors shut down a probe of the company.
Speaker 1: How is it doing it? So to say it will
Speaker 1: buy a little known derivatives exchange called QCX, which will
Speaker 1: allow polymarket to legally re.
Speaker 2: Enter the country.
Speaker 1: Welcome back to Bloomberg Tech and let's get a check
Speaker 1: on these markets. So I'm going to take you to
Speaker 1: Verizon because shares are higher. After the company posted second
Speaker 1: quarter of revenue the beat analyst expectations WEPC four and
Speaker 1: a half percent. The mobile phone company also raised the
Speaker 1: profit outlook and excited whiles price increases as well as
Speaker 1: US taps with the price and CEO Hans Westburg spoke
Speaker 1: with Blomberg Alia.
Speaker 2: Take listen.
Speaker 4: Now, if you look at the quarter and actually the
Speaker 4: last four quarters, our strategy is working. We have a
Speaker 4: lot of vectors of growth all the way from our
Speaker 4: broadband fixed wires access, our step ups, prepaid is growing,
Speaker 4: and then we have our adjacent services with perks and
Speaker 4: all of that, so all of them are actually contributing.
Speaker 4: And then the last i would say three four quarters
Speaker 4: were also been very good and discipline our cost levels,
Speaker 4: so we get the leverage. Our ABITA was twelve point
Speaker 4: eight billion dollars of growth of four so we'll raised
Speaker 4: the guidance both for ABTA EPs and free cash flow,
Speaker 4: all of them sort of coming from the generation of financials,
Speaker 4: but it's based on the customer offerings where built over
Speaker 4: the last year, and there is really resonating with the
Speaker 4: market either on broadband or wireless, and for all customers.
Speaker 4: We're serving all customers the United States, all the way
Speaker 4: from the governmental or federal customers to large enterprise SMBs
Speaker 4: and consumers. So that's what you see right now, resonating
Speaker 4: with the financials. But ultimately it's about having the right
Speaker 4: offerings for our customers.
Speaker 2: All about earnings. This week, that was Verizon CEO Hans Fezberg.
Speaker 1: Now let's talk about how private equity firm Blackstone has
Speaker 1: just pulled out of a group of investors seeking to
Speaker 1: take a minority stake in TikTok's US based business.
Speaker 2: And this is all according to a source who.
Speaker 1: Says the firm has ceded its potential state to other
Speaker 1: investors in the consortium, which includes Oracle and recent Horowitz.
Speaker 2: And General Atlantic are coming up.
Speaker 1: Excel partner Ben Fletcher joins us to talk about one
Speaker 1: of Europe's latest uniforms.
Speaker 2: It says bring back tech.
Speaker 1: Interest in AI coding tools remains high among users and
Speaker 1: mention capital alike ACEL has led a recent two orred
Speaker 1: million dollar Series A route into Swedish vibe coding startup
Speaker 1: Lovable and startup has become Europe's latest unicorn with evaluation
Speaker 1: of one point eight billion. For more, let's bring an
Speaker 1: Excel partner Ben Fletcher, So, Ben, what stood out for Lovable?
Speaker 1: Why back it with such a significant sized Series A
Speaker 1: for European standards?
Speaker 12: Yeah, I think it's a couple of things. First off,
Speaker 12: thanks for having me on. It's really great to be
Speaker 12: here and to chat a little bit more about Lovable.
Speaker 12: But when we spent time with Anton and Fabia and
Speaker 12: the two co founders, it was really really impressive to
Speaker 12: see that they were a really, really technical crew. So
Speaker 12: they had worked in research, they had worked in applied
Speaker 12: AI research, but they were building a tool that was
Speaker 12: applicable to the masses. So only one percent of the
Speaker 12: world's population can code, and then the ninety nine percent
Speaker 12: don't have that ability to code or to be able
Speaker 12: to create things for the web. And so when they
Speaker 12: looked at their experience of building applied AI systems, they
Speaker 12: were to be able to take that and put it
Speaker 12: to a platform that they built called Lovable that allows
Speaker 12: them to offer to their users the ability to chat
Speaker 12: or text based prompt to be able to create.
Speaker 13: Fully fledged applications.
Speaker 12: So that's a front end with a back end and
Speaker 12: a fully working application.
Speaker 13: This is pretty incredible. If you talk with users, they say.
Speaker 12: It's magic, and so all those things got us really
Speaker 12: excited to invest in Lovable.
Speaker 1: I mean, attraction has been phenomenal. I'm interested as to
Speaker 1: who attraction then really ends up being with, because often
Speaker 1: it's the non technical founder who just wants to sort
Speaker 1: of put together initial idea of what the website where
Speaker 1: they looks like and then they actually get a developer involved.
Speaker 1: How long until that developer is no longer needed.
Speaker 12: The nice thing is is it's been non technical folks.
Speaker 13: It's been semi technical.
Speaker 12: Folks and technical folks that are using Lovable about the
Speaker 12: technical folks that are using it on the weekends, making
Speaker 12: it easier for them to get applications up and running.
Speaker 12: And then you see semi technical folks, maybe the product
Speaker 12: manager or the person that has had experience in the
Speaker 12: past but wants to build something or they want to
Speaker 12: be able to spin up a prototype and then pass
Speaker 12: it on to their technical or their developer team.
Speaker 13: And then as folks that have.
Speaker 12: Never had any experience, or don't understand frameworks, or don't
Speaker 12: understand different coding languages and their ability to actually get
Speaker 12: something spun up and to be able to build a
Speaker 12: fully functioning application.
Speaker 13: So all those folks are now are using it.
Speaker 12: We see this as a way to give the power
Speaker 12: to the masses to be able to create. So now
Speaker 12: if you have an idea, you can now build and
Speaker 12: you can have full software to be able to have
Speaker 12: a working prototype or also a working application.
Speaker 1: And I don't want to be sensationists, but I'm interested therefore,
Speaker 1: push us forward ten years, twenty years. Developers still a
Speaker 1: role one needs engineering, Still something that someone's going into
Speaker 1: for engineering, I.
Speaker 13: Would say absolutely.
Speaker 12: I would say absolutely, Like you think about the engineers
Speaker 12: that are building a lot, and it's always been how
Speaker 12: do we abstract more and more things over time? And
Speaker 12: so it started with cloud and with hosting with AWS,
Speaker 12: and now you have it with applications. You always need maintenance,
Speaker 12: You'll always need the ability to what are the right systems,
Speaker 12: how do you make sure that everything works together?
Speaker 13: And it will go more into.
Speaker 12: The critical thinking and the critical aspects around engineering.
Speaker 1: Oh, go ahead, Well, no, I'm interested in talent writ
Speaker 1: large a little bit at this moment, Ben, and you'll
Speaker 1: see why within my question that you're saying how you've
Speaker 1: batted them because of just the sheer, agility and expertise
Speaker 1: that Anton and team bring. Now I'm thinking of another
Speaker 1: coding application company like a Windsurf for example, which also
Speaker 1: helps developers right code. And the fact that that very
Speaker 1: elite part of the team basically got siphoned off to
Speaker 1: Google this licensing deal. Qull it what you will, whether
Speaker 1: it's an aquaha or not. Then how are you thinking
Speaker 1: about structuring these deals going forward to protect all talent
Speaker 1: and your own bet on lovable.
Speaker 12: Well, the nice thing is that where we sit and
Speaker 12: where we partner, we're constantly partnering with entrepreneurs and our
Speaker 12: idea is to make sure that we can align our
Speaker 12: interest with them to build the biggest companies as possible
Speaker 12: and companies that are really going to matter. Now you're
Speaker 12: talking more around you know, M and A and acquihirres
Speaker 12: and deals that are being structured from an enterprise perspective.
Speaker 12: For us, it's always about one how do we make
Speaker 12: sure that we can align our incentives with partners, so
Speaker 12: with the companies that we're going to partner with and
Speaker 12: then how do we make sure that we can support
Speaker 12: them and we can support them to the best outcome
Speaker 12: and what they ultimately want.
Speaker 13: If they want to go and they want to work
Speaker 13: at these larger companies, that's that's great.
Speaker 12: We want to make sure that we can support them
Speaker 12: and make sure that they have the ability to do that.
Speaker 12: We'll also make sure that we protect URLPS and our
Speaker 12: investors and make sure that we can return capital to them.
Speaker 12: And so very similarly with Scale AI and with Meta,
Speaker 12: Alex had an incredible opportunity. And the amazing thing is
Speaker 12: that we still own as investors fifty percent of the
Speaker 12: entity going forward, and so we saw it as an
Speaker 12: awesome opportunity where a great company like Scale AI gets
Speaker 12: to go and reshape AI in the future as well
Speaker 12: as there's a lot of value that will continue to
Speaker 12: being created and accrued over time to the investors and
Speaker 12: to URLPS.
Speaker 10: Well.
Speaker 1: Certainly Cognition thought that about Windsorf, so all can win
Speaker 1: in certain situations. Ben Fletcher, Axcel Partner, it's great to
Speaker 1: have some time with you. Thank you very much, Indean.
Speaker 1: Now let's talk about larger trends in venture investing two
Speaker 1: and Pitchbook to release its funding data for the first
Speaker 1: half of twenty twenty five. Senior Venture Capital Research Anasov
Speaker 1: at Pitchbook, Emily Sung joins us.
Speaker 2: Now and Emily Look.
Speaker 1: One of the focuses has been an exit how much
Speaker 1: of these aquahys bringing numbers in terms for you on
Speaker 1: what is happening in Pitchmook data.
Speaker 10: Emina activity has been really interesting because a lot of
Speaker 10: startups are really leading this trend. Because of the FTC
Speaker 10: leadership hasn't really changed much in the EMMA landscape. This
Speaker 10: has really led a lot of large startups to be
Speaker 10: the forefront of acquires. But I think what's really interesting
Speaker 10: and what the biggest topic in Q two was was IPOs.
Speaker 10: IPOs did come back modestly, but I would say it's
Speaker 10: more of a reset rather than a rebound.
Speaker 1: Okay, so we're now thinking, well, Figma is the one
Speaker 1: to watch. They're already on their road show Eminy, So
Speaker 1: is that going to be yet another one that helps
Speaker 1: push open the door or really we're going to have
Speaker 1: a tricular effect when it comes to IPOs.
Speaker 10: Currently, there hasn't been a really rush towards new filings,
Speaker 10: mainly because of the August one and tariff deadline that
Speaker 10: hasn't addressed a lot of key policy questions that still
Speaker 10: need to be answered. For a FIGMA specifically, what's interesting
Speaker 10: is that it's an order company, it's about thirteen years old,
Speaker 10: and it also has a really.
Speaker 13: Large crypto balance.
Speaker 10: And a trend we've been seeing recently with the new
Speaker 10: Trump administration is sectors that are focused on key policy
Speaker 10: parties like crypto, AI, national security, defense and fintech has
Speaker 10: really propelled recent exit activity.
Speaker 1: We're just hearing about Bullish looking to IPO as well.
Speaker 1: So another one that adds to that crypto vibe eminy.
Speaker 2: What about just more.
Speaker 1: Generally liquidity needs so it takes people to the market
Speaker 1: is because often it's your employees, your the VCS that are.
Speaker 6: Back to you.
Speaker 2: They want this moment.
Speaker 1: Are you seeing liquidity needs though, be satiated in the
Speaker 1: secondary market a lot more?
Speaker 10: The secondary market is really interesting. It has been growing rapidly.
Speaker 10: I publish a quarterly report on I pitchbook and the
Speaker 10: market currently is about sixty billion dollars and that's significant,
Speaker 10: and that's the annual value as of Q one, But
Speaker 10: sixty billion, for context, is about two percent of primary
Speaker 10: Unicorn valuations and about a quarter's worth of primary VC
Speaker 10: exit value, So it's notable, but it's also not big
Speaker 10: enough to be the new IPO for example. And with
Speaker 10: the secondary market, it's important to realize that the concentration
Speaker 10: is super high in the top twenty to fifty unicorns,
Speaker 10: So unless you're an investor in one of these top startups,
Speaker 10: you're not necessarily benefiting much from the secondary's market right now.
Speaker 10: But there is a lot of growth in the space.
Speaker 10: The number of funds that have invested in VC secondaries,
Speaker 10: the total fund value has doubled since twenty twenty two,
Speaker 10: which really shows investor interest in the secondary space. And
Speaker 10: I do for you continuing to grow.
Speaker 1: I mean, you talk about that concentration when it's looking
Speaker 1: at those that are able to tap the secondary market,
Speaker 1: what about concentration and those that can ultimately come for
Speaker 1: an IPO as well. I mean, there's no surprise that
Speaker 1: Figma is probably going to be leaning in on its
Speaker 1: AI advantages. Is it still all about gen ai and
Speaker 1: that trend.
Speaker 10: Ai is really dominating VC right now. It's captured about
Speaker 10: two thirds of the deal value in twenty twenty five,
Speaker 10: but only about a third of the deal count, which
Speaker 10: really shows the concentration in AI, and I think AI
Speaker 10: will continue to be a really big theme. Of course,
Speaker 10: foundational models have captured a lot of VC dollars in interest,
Speaker 10: but what's also really interesting is that AI is fundamentally
Speaker 10: changing how businesses are operating and their fundamental models throughout
Speaker 10: a variety of sectors. So it is really transformative and
Speaker 10: that's why I Venture is funneling a lot of dollars
Speaker 10: into the space.
Speaker 2: And lastly, were talking very much.
Speaker 1: I know you focus on the US in terms of
Speaker 1: the data, but what does.
Speaker 2: It look like globally.
Speaker 1: It's still the US the nexus when it comes to
Speaker 1: at least coming and tapping the IPO market and more
Speaker 1: companies coming internationally to tap that market.
Speaker 10: The US is currently still dominating the IPO market and
Speaker 10: in general, across the world, deal making exit activity has
Speaker 10: remained muted. Venture really doesn't like volatility, and there has
Speaker 10: been a lot of volatility recently, and until some key
Speaker 10: questions are answered like the third for instance, the tariffs,
Speaker 10: trade wars, geopolitical tensions, there probably won't be muted deal
Speaker 10: making exit activity until those questions are answered.
Speaker 2: Emmani Sung, we thank you so much.
Speaker 1: Inventure capital research anaist over at pitchbook great to get
Speaker 1: the breakdown. Chicago, it is host to the Global Quantum Forum,
Speaker 1: happening this week, is where top industry leaders are set
Speaker 1: to discuss the future of the sometimes hoped technology. Let's
Speaker 1: join Jeremy O'Brien over in Chicago. It's High Quantum co
Speaker 1: founder and CEO Sside Quantum. It's currently building out the
Speaker 1: Quantum Computer campus in Chicago. And Jeremy, before I ask
Speaker 1: exactly what you're going to be doing in the force
Speaker 1: of quantum, but first, why was Chicago the place to
Speaker 1: be spending I think at least a billion is what
Speaker 1: you're committing in capital.
Speaker 8: Yeah, so Chicago, we figured it was the best place
Speaker 8: in the world to do what we're doing here, which
Speaker 8: is building the country's first utility scale quantum computer. And
Speaker 8: that's really about an understanding that that folk here have
Speaker 8: of just how big and hard it is to build
Speaker 8: a system of that scale.
Speaker 1: Let's talk about, therefore, the application, because I maybe loosely
Speaker 1: say that quantum is often hyped. The hype is around
Speaker 1: when it can be purposeful. When it is going to
Speaker 1: be really truly useful, we have breakthrough after breakthrough, Jeremy,
Speaker 1: how are you going to be offering something really useful
Speaker 1: for commercial purpose?
Speaker 8: Yeah, you're right there. There has been a ah, a
Speaker 8: lot of hype and a lot of talk of breakthroughs,
Speaker 8: and fundamentally, I I my my view is that breakthroughs
Speaker 8: UH precipitate a decade or more of of hard work,
Speaker 8: you know, r real hard technological development. It's not breakthrough
Speaker 8: and then suddenly you have a new technology. And that's
Speaker 8: certainly true UH with quantum computing. And so our breakthrough
Speaker 8: UH was a decade ago UH when we were university
Speaker 8: professors and we figured out a path whereby we could
Speaker 8: leverage the uh, the semiconductor industry and the trillions of
Speaker 8: dollars that have gone into that and adjacent industries to
Speaker 8: build uh the real thing, UH, which is a million
Speaker 8: cubic scale UH fault tolerant, utility scale quantum computer. And
Speaker 8: so that's what we're d that's what we're doing right
Speaker 8: here in Chicago.
Speaker 1: Your professor over at Stamford at Bristol Universities as well, Jeremy,
Speaker 1: and I'm thinking about how tonics has become the area
Speaker 1: of real focus for you.
Speaker 2: How does that differentiate you from what others are doing.
Speaker 8: Yeah, so you're absolutely right. It's the silicon photonics platform,
Speaker 8: uh that we spent uh twenty years figuring out what's
Speaker 8: the platform that enables us to leverage that semiconductor industry
Speaker 8: because it's been my conviction since I don't know, the
Speaker 8: mid mid to late nineties that unless we figure that out,
Speaker 8: it's not gonna happen in my lifetime. And uh, when
Speaker 8: we figured that out, uh, we established uh Psychonum, and
Speaker 8: we spent you know, many years and uh much blood,
Speaker 8: sweat and tears grinding away at the really hard uh
Speaker 8: semiconductor engineering problems to to make that work. And now
Speaker 8: we're at this point where we're we're poised to you know,
Speaker 8: to break ground and build that facility here.
Speaker 1: Can you hate to say put yourself against the competition,
Speaker 1: but when you've got IBU.
Speaker 2: Am out there saying here in Upstate.
Speaker 1: You're not New York, we're going to be getting there
Speaker 1: by twenty twenty nine, a real use case quantum computer. Jeremy,
Speaker 1: you've got the race on with well companies we've helped
Speaker 1: advise before. When I'm thinking about Microsoft up to AWS
Speaker 1: and Google, where are you in comparison to that race,
Speaker 1: as we like to put it.
Speaker 8: Yeah, firstly, I'm not sure that it's a race when
Speaker 8: it comes to hard technologies. It's in some sense it's
Speaker 8: a filter, right. But you know, I can't speak for
Speaker 8: all the other different folks that are out there are
Speaker 8: pursuing this, but I can say that, you know, our
Speaker 8: approach has been very different from the beginning, which is
Speaker 8: to really focus on the scale that's required for really
Speaker 8: valuable commercial applications. And it's been the case for twenty
Speaker 8: five plus years that that's a million cubic scale system,
Speaker 8: and so we have uh had nothing to do with
Speaker 8: doing small UH demonstrations proofs of principle of quantum computing.
Speaker 8: And that's been a a very deliberate approach because it's
Speaker 8: a bit my You know, if you if you're trying
Speaker 8: to get to the top of the Sears Tower here
Speaker 8: in UH in Chicago, UH, then you know, ladders are
Speaker 8: a good way to to try and get to the
Speaker 8: to the top. But if you wanna get to the moon, UH,
Speaker 8: ladders are not really the way to get you there.
Speaker 8: And so we've taken a pretty antithetical approach, I would say,
Speaker 8: from from the beginning, which is to really focus on scale.
Speaker 8: And so when you're talking about a million qubet scale system,
Speaker 8: as I said, it's been you know clear to me
Speaker 8: uh for a very long time, right. The only way
Speaker 8: to be able to do that is to leverage the
Speaker 8: you know trillion dollars uh and you know better part
Speaker 8: of a century that went into the semiconductor industry and leveraged.
Speaker 1: So that's what and a billion that you're going to
Speaker 1: be investing in that project. And you take us to
Speaker 1: the Sears Tower, I go back to Chicago.
Speaker 2: What has the workings been like with the governor?
Speaker 1: Why have you managed to think that that is going
Speaker 1: to be where the talent pool is basically for you
Speaker 1: going forward?
Speaker 8: Yeah, I think from the governor to the aldermen and
Speaker 8: the entire ecosystem, we've really enjoyed great partnerships here and
Speaker 8: it's been driven by, as I said earlier, the understanding
Speaker 8: of just how big, complex and hard this project is.
Speaker 8: To build a utility scale on a computer that's a
Speaker 8: that's a very big, hard project. And I'll give you
Speaker 8: just one example of that. Early in our interactions with
Speaker 8: the city and the state, a big delegation came to
Speaker 8: us in Silicon Valley led by the Deputy Governor and
Speaker 8: the head of Commed. The power utility came to that
Speaker 8: very first meeting, and I think that's a big different
Speaker 8: intiator for us as an organization and for the ecosystem
Speaker 8: here is to understand that, yeah, we need to get
Speaker 8: you know, we need to get power to the side,
Speaker 8: et cetera, et cetera. So that's that's a really big
Speaker 8: part of our decision.
Speaker 1: Well, Jeremy, have a great time at the Chicago Quantum event.
Speaker 1: You are, of course Jeremy O'Brien of Side Quantum. Now
Speaker 1: that does it for this edition of bluemg Tech, quick
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