Speaker 1: Bloomberg Audio Studios, podcasts, radio news from the heart of
Speaker 1: where innovation, money and power collide in Silicon Valley and beyond.
Speaker 1: This is Bloomberg Technology with Caroline Hide and Ed Ludlow.
Speaker 2: Live from New York Home. Caroline Hyde and.
Speaker 3: I'm Jackie Devalas in San Francisco. This is Bloomberg Technology
Speaker 3: coming up.
Speaker 2: Anxiety builds with China chip controls weighing on semi stocks
Speaker 2: all ahead of Nvidia's numbers tomorrow, plus Tesla sales in
Speaker 2: Europe plummet forty five percent last month to a two
Speaker 2: year low in the region, and Bitcoin it slides below
Speaker 2: ninety thousand, its lowest level since mid November, as a
Speaker 2: crypto selloff gathers steam. But first we check in on
Speaker 2: these markets that identify the anxiety, whether it's around consumer
Speaker 2: sentiment here in the United States, whether it's around chip
Speaker 2: curves into China, technology access to China once again under
Speaker 2: the focus. And that's that one hundred off by one
Speaker 2: and a half percent. That is the longest losing streak
Speaker 2: as well, four straight days that we've seen since the
Speaker 2: beginning of this year. We're looking at Bitcoin under pressure,
Speaker 2: down by more than seven percent. Is it the macro picture.
Speaker 2: Is it concerns around a hack? Is it all just
Speaker 2: dialing into the selling pressure that we see across one
Speaker 2: is of course an asset risk asset of choice for
Speaker 2: the show move over and have a look at the
Speaker 2: individual movers that we want to cast a light on.
Speaker 2: Because Tesla off by eight percent, it has lost a
Speaker 2: third of its market capitalization since it's high back in December,
Speaker 2: and we're looking at currently once again under pressure on
Speaker 2: the sales side of the equation. We'll dig into it
Speaker 2: in a moment. Biggest points drag on the Nastak swiftly
Speaker 2: followed by Nvidia off by more than three percent ahead
Speaker 2: of its numbers tomorrow. We worry about the limitations of
Speaker 2: its chips into China once again, Trump extending the focus
Speaker 2: of the Biden administration here and the Magnificent seven just
Speaker 2: a tidle in a bow is off by two point
Speaker 2: eight percent. We are now in correction territory. This total
Speaker 2: return indexes off by more than ten percent from its highs.
Speaker 2: We're going to dig into the key focus of the day,
Speaker 2: that is the chip controls that's bringing Brnenbergs, Mike Shepard,
Speaker 2: Mike just an extension of Biden's focus here, and once
Speaker 2: again it is going to be impacting European technology players
Speaker 2: and the key ones here in the US.
Speaker 4: Yeah, Cara, this is a rare moment where you see
Speaker 4: the Trump administration picking up where their Biden administration predecessors
Speaker 4: left off, and that is pressuring governments in Japan and
Speaker 4: the Netherlands to get two signature companies, Tokyo Electron and ASML,
Speaker 4: to stop servicing chip making equipment that they have sold
Speaker 4: in China. Now this matters because those photo lithography machines
Speaker 4: that make semiconductors are really finicky. They're sensitive. Think of
Speaker 4: a Formula racing car.
Speaker 3: They need a.
Speaker 4: Lot of upkeep and regular upkeep to continue working at
Speaker 4: that level. And if you cut that off, it under
Speaker 4: what China and China's chip makers may be able to
Speaker 4: do with those machines.
Speaker 3: Mike, what does this mean for Trump's approach to chip
Speaker 3: policy towards China broadly? Are there any other signs that
Speaker 3: we're seeing that might make it different from the approach
Speaker 3: as Biden took.
Speaker 4: Well, Jackie, I'm glad you asked that, because this really
Speaker 4: does signal a broader direction of travel from the Trump administration,
Speaker 4: and that was one of the big questions coming in
Speaker 4: as they took office. Might they actually pull back a
Speaker 4: little bit on some of these restrictions as Trump tries
Speaker 4: to negotiate something with trade. Remember he is someone who
Speaker 4: tries to think of himself as a deal maker on everything,
Speaker 4: and why not throw chips into the mix. But he
Speaker 4: has also declared that artificial intelligence is an area where
Speaker 4: the US must maintain dominance, and the way to keep
Speaker 4: China at bay really is to deny a lot of
Speaker 4: that technology. So we've talked about possible restrictions on Nvidia's
Speaker 4: China's access to Nvidia chips used in a This is
Speaker 4: after the deep Seek breakthrough. We're also looking at another
Speaker 4: area that Trump may pick up where Biden left off,
Speaker 4: and that is possible measures against Chinese chip makers SMLIC
Speaker 4: and CXMT that are really critical to the domestic production
Speaker 4: in that country. And then, finally, the Trump team is
Speaker 4: also wage whether to further tighten those AI diffusion rules.
Speaker 4: Remember that three tiered system that the Biden folks unveiled
Speaker 4: just a week before the president left office. This is
Speaker 4: a signal to the market and to China that the
Speaker 4: Trump team really is trying to get tough and companies
Speaker 4: will have to brace maybe for more, especially when you
Speaker 4: consider that there are already ten percent tariffsu on Chinese
Speaker 4: imports with more to come. We may hear from Jensen
Speaker 4: Wang about this too. He's expressed a lot of concern
Speaker 4: and misgivings about this direction of travel.
Speaker 2: What about hearing from China. We know that they're trying
Speaker 2: to speed up their own independence. We hear of the
Speaker 2: latest developments out of Huawei and their chips, for example.
Speaker 4: Mike, that's a great question, Carol, because we are seeing
Speaker 4: Ali Baba investing Chinese going on the offense with rhetoric
Speaker 4: of course decrying these kinds of measures from the Biden administration,
Speaker 4: and now rumbling is about the same possibly coming from Trump.
Speaker 4: We heard that when the ten percent tariffs on Chinese
Speaker 4: imports were announced. They are also trying to invest heavily
Speaker 4: in their area. We saw the heads of Deep Seek
Speaker 4: and Ali Baba meet with Chinese President Xi Jianping just
Speaker 4: a few weeks ago to talk about how to get
Speaker 4: China tech back not only on the map, but really
Speaker 4: in the vanguard of Chinese industry. And this is after
Speaker 4: a few years of estrangement, and we're also seeing Ali Baba,
Speaker 4: as I said, investing heavily in this area. But you
Speaker 4: know a way to counter what we're seeing from the
Speaker 4: likes of Microsoft and US based companies that are trying
Speaker 4: to really dominate in this technology.
Speaker 2: Mike Shepard, thank you so much. Let's get the investment
Speaker 2: analysis now. Angelo Cacafa is with us. He a senior
Speaker 2: investment strategist, and Edward Jones. Angelo, we look at basically
Speaker 2: the only mag seven company now in the green for
Speaker 2: this year is Matter. All the rest are in the red.
Speaker 2: Are you expecting this going into twenty twenty five.
Speaker 5: I think one of our themes has been that of
Speaker 5: rotation and broadening, and that's playing out at the sectorial level,
Speaker 5: investment style and also a regional geographic Many people probably
Speaker 5: are surprised by the market's resilience. If you told the
Speaker 5: investors six months ago that six of the seven Magnificent
Speaker 5: names would be lagging the market down the group five
Speaker 5: percent for the year, most people have thought the market
Speaker 5: would be lower, which is not and I think that
Speaker 5: speaks to the still supportive backdrop that we have.
Speaker 3: Angelou what does this tell us about how investors are
Speaker 3: feeling or perhaps some of the reasoning behind it is
Speaker 3: this because of the uncertainty that Trump has injected into
Speaker 3: tech markets, more so as of way or our investors
Speaker 3: growing more discerning about tech growth prospects.
Speaker 5: Yeah, the market has had to navigate a lot of news,
Speaker 5: thinking about deep sick thinking about all the tariff announcements
Speaker 5: and uncertainty and the last hatter than expected CPI print.
Speaker 5: All that has been weighing on sentiment, and right now
Speaker 5: we are navigating a growth scare. It's not the first,
Speaker 5: it will not be the last. But at the same time,
Speaker 5: looking at the last three years, it's been a pattern
Speaker 5: that we do see some seasonality, negative seasonality in the
Speaker 5: first quarter of the year. Part of that probably related
Speaker 5: to weather, some snowstorms that are dragging down consumer spending,
Speaker 5: but the broader trend remains that where corporate profits are accelerating,
Speaker 5: so they don't have a need for layoffs to protect
Speaker 5: profit margins, and we have a federal reserve that is
Speaker 5: not looking to go back into tightening mode. So all
Speaker 5: that to us remain supportive. But at the near term
Speaker 5: we're going to experience probably a type of soft patch
Speaker 5: for the economy in first world and I hate.
Speaker 2: To say this sort of healthy flush out or what
Speaker 2: people like to suk about it, but many are thinking, look,
Speaker 2: this is froth that needs to come out. There were
Speaker 2: so called tourist investors that have come in and not
Speaker 2: assessed really the geopolitical element of these names. Look and
Speaker 2: videos traded lower than this this year. But are we
Speaker 2: going to start seed deep baying do you think?
Speaker 6: Yeah?
Speaker 5: I think that's exactly right. We have seen some froth
Speaker 5: and we are seeing some froth come out of the market.
Speaker 5: And we all know that sentiment is a contrarian indicator.
Speaker 5: So that sets up well for the second potentially half
Speaker 5: of the year where for a long term investors standpoint,
Speaker 5: these pullbacks can be opportunities to really deploy capital first
Speaker 5: capital divers fire portfolios. We think that broadening in rotation
Speaker 5: theme has legs to it. And for those that worried
Speaker 5: about tariffs and the impact of policies, we have domestic
Speaker 5: cyclical companies and sectors that can benefit from the pro
Speaker 5: growth policies that are likely coming down the road. So far,
Speaker 5: we're getting the vegetables before the cake. In the first
Speaker 5: tip administry, we get the cake first with tax cats,
Speaker 5: and then the vegetable, so we have to navigate through
Speaker 5: this bumbierd path earlier in the year.
Speaker 2: But everyone ate the Tesla cake the minute that basically
Speaker 2: Trump was announced as the winner in Elod's relationship. But
Speaker 2: how idiosyncratic, how focused on individual names. You have to
Speaker 2: get and actually read through what are fundamental changes and
Speaker 2: the views on certain companies like European Sales testl which
Speaker 2: will dig into later in the show.
Speaker 5: Yeah, I think you know, certainly the concentration is an
Speaker 5: issue for investors and people that manage money. But at
Speaker 5: the same time, we know that the four ninety three
Speaker 5: earnings are accelerating and actually are the strongest in three years.
Speaker 5: So there is a lot more beyond these seven names. Yes,
Speaker 5: they are important, but they're becoming less important than the
Speaker 5: we're in the past, and I think the versification is
Speaker 5: going to be a key theme for investors to pay
Speaker 5: attention to.
Speaker 3: San Angelo krakoffa senior investment Strategies at Edward Jones. Thanks
Speaker 3: for joining us. Let's get a look at Tesla shares
Speaker 3: are down after sales plummeted by nearly fifty percent across
Speaker 3: Europe at the start of twenty twenty five. That drag
Speaker 3: Tesla markets cap now below a trillion dollars. Bloomberg's Craig
Speaker 3: Trudell joins us now for more. Craig, what's behind this
Speaker 3: disconnect because the UK's EV sales actually grew by forty percent,
Speaker 3: but you're seeing Tesla registrations fall.
Speaker 7: Yeah, they grew in the UK, they grew in Europe broadly.
Speaker 7: I think there's a couple of things going on here.
Speaker 7: Of course, there's a lot of questions about, you know,
Speaker 7: how much of this is a sort of backlash against
Speaker 7: Elon Musk and how much of it is you know,
Speaker 7: something's going on specific to Tesla, And I think, you know,
Speaker 7: it's probably a mix of both. I think we'll be
Speaker 7: able to untangle that a bit more as the year
Speaker 7: goes on. But we know that earlier this year the
Speaker 7: company is changing over its factories as part of a
Speaker 7: redesign of a model why that is a really important
Speaker 7: vehicle for them, and so that's definitely coming out into
Speaker 7: play here. But I think the fact that he inserted
Speaker 7: himself in politics in in Germany and in the UK
Speaker 7: so emphatically last month really raises a lot of questions.
Speaker 2: Has that been much data drawn from whether This is
Speaker 2: a consumer reaction, knee jerk reaction to Elon Musk's own behavior,
Speaker 2: because one month doesn't an entire trend make as you
Speaker 2: point out, yeah.
Speaker 7: No, that's it's very fair, and I mean we we
Speaker 7: don't unfortunately, have you know, sort of the equivalent of
Speaker 7: exit polls at dealerships right where people tell us, you know,
Speaker 7: well I bought this Renault or this Volkswagen because I
Speaker 7: didn't like Elon Musk. But what we do know is that,
Speaker 7: you know, some poles were taken in some of the
Speaker 7: biggest ev markets in Europe in January and they did
Speaker 7: not look very good for Elon Musk. And so you know,
Speaker 7: for him to be increasingly unpopular in some of these places,
Speaker 7: and you know, for him to take these sans stances
Speaker 7: that you know are are unpopular, you know, whether it's
Speaker 7: it's uh, you know, kind of taking these reporting far
Speaker 7: right parties or taking this hardline stance against Ukraine, these
Speaker 7: sorts of things, you know, potentially, you know, put the
Speaker 7: Tesla brand at risk more so than even in the US.
Speaker 3: Craig, who's gaining from this? What Tesla rivals are benefiting
Speaker 3: from from this lag?
Speaker 7: I think it's it's really honestly kind of diffuse in
Speaker 7: terms of who's benefiting. It's it's pretty consistent that, you know,
Speaker 7: other manufacturers are seeing increases in their EV sales and
Speaker 7: that's probably no coincidence. We do know that, you know,
Speaker 7: in Europe in twenty twenty five, everyone's going to have
Speaker 7: to meet a tougher CO two regulations and so everyone
Speaker 7: really has to sort of put the pedal to the
Speaker 7: metal and sell more electric vehicles. That means more competition
Speaker 7: for Tesla this year in Europe, and that's also likely
Speaker 7: coming into play and going to be a sort of
Speaker 7: lasting thing that Tesla's going to have to face the
Speaker 7: rest of the year.
Speaker 2: All eyes on BYD in the UK, for example, Craig
Speaker 2: Drudell is a great story. Meanwhile, Elo Musk SpaceX is
Speaker 2: seeking to deploy Starling satellite Internet terminals to help upgrade
Speaker 2: the IT networks that support the Federal Aviation Administration's National
Speaker 2: Air Base System that's here in the US as all.
Speaker 2: According to sources who say this latest effort really raises
Speaker 2: questions about conflicts of interest for Musk's business empire. New
Speaker 2: Meg's Allison Firstville is here with us for more. What
Speaker 2: exactly is the FAA going to do with these Starling terminals, so.
Speaker 8: Right now they're really in a testing phase. We know
Speaker 8: that they're starting to test them out in Atlantic City,
Speaker 8: which is kind of the air traffic control lab, if
Speaker 8: you will, where they do a lot of R and D.
Speaker 8: There also testing them out in Alaska. And the FA
Speaker 8: statement that came out last night confirming this reporting, they
Speaker 8: essentially said, you know, we're looking to fix telecommunications connections
Speaker 8: and remote areas to provide more reliable information such as
Speaker 8: weather information, which has been a problem in places like Alaska.
Speaker 8: At this point, we're still, you know, waiting to see
Speaker 8: how expansive the use of starlink might get, but we
Speaker 8: do know that, you know from talking to our sources
Speaker 8: that Elon Musk has approved the shipment of four thousand
Speaker 8: terminals in total to the FAA.
Speaker 9: So, you know, it seems like Morris to.
Speaker 3: Come, Allison, what does this mean for Verizon, who has
Speaker 3: an existing contract with the agency?
Speaker 8: That's right, So Verizon has this existing two billion dollar
Speaker 8: contract to provide all of these types of telecommunications services,
Speaker 8: and you know, in kind of dueling statements last night,
Speaker 8: Elon Musk said on social media platform x that you know,
Speaker 8: the Verizon system isn't working. Verizon said, you know, the
Speaker 8: enhancements that it is doing are critical to air safety.
Speaker 8: So we're still waiting to see exactly what happens with
Speaker 8: the Verizon contract. That's something that we're continuing to talk
Speaker 8: to people about. And the folks that we talked to
Speaker 8: already said they weren't sure exactly where that was going
Speaker 8: to go.
Speaker 2: And there is indeed the statement that you don't put
Speaker 2: out on X a little bit earlier reaction to your reporting.
Speaker 2: The next steps are going to be about conflicts of
Speaker 2: interest here. I'm sure that's something that everyone is considering.
Speaker 2: Is it something that Verizon considers, the government considers, so.
Speaker 8: I mean, it's certainly something that lawmakers on Capitol Hill
Speaker 8: are considering. We already saw when Transportation Secretary Sean Duffy
Speaker 8: first announced that SpaceX would be involved in modernizing the
Speaker 8: US aviation systems in air traffic control. You know, you
Speaker 8: saw lawmakers like Senator Maria Cantwell, who's the top Democrat
Speaker 8: on the Senate Commerce Committee, saying, you know, Elon mus
Speaker 8: shouldn't be involved in this effort. He has a company
Speaker 8: with SpaceX that's regulated by the FAA, and he has
Speaker 8: had penalties proposed against him from that same agency. And
Speaker 8: then you have others like Senator Tammy Duckworth, who have
Speaker 8: you know, questioned, can we afford to move this quickly
Speaker 8: like Elon Musk likes to do with some of his companies,
Speaker 8: because this is something you really don't want to break.
Speaker 3: That's Bloomberg's Allison Versuspaile, Thanks so much for joining us.
Speaker 3: Elon Musk is doubling down and said federal workers will
Speaker 3: be given a second opportunity to respond to a government
Speaker 3: wide email detailing what they did last week and threatened
Speaker 3: to fire any employee who doesn't need as demands. But
Speaker 3: the federal agency sent that email said that Monday. It's
Speaker 3: up to agency leadership, not Musk. What happens to those
Speaker 3: who ignore the message? Caroline coming up, Jackie super Micro.
Speaker 3: We're keeping an eye on the stock as it's a
Speaker 3: crucial day the AI server maker.
Speaker 2: Why the company is facing a deadline to file it's
Speaker 2: already delayed financials. We are off twelve percent on the day.
Speaker 2: This is Blue Meg Technology. The crypto sell off is
Speaker 2: gaining traction, Bitcoin tumbling to the lowest level since November tenth,
Speaker 2: that worst day since August. As we stand, the Trump
Speaker 2: victory rally reversing under the pressure of industry setbacks and
Speaker 2: of course tariff policy and macro perspective in Emily, Nicole,
Speaker 2: is it macro? Is it idiosyncratic? Can we worried about
Speaker 2: the hats example?
Speaker 3: I think it's a mix of everything.
Speaker 10: To be honest, with crypto, you can never rule out
Speaker 10: the macro impact that's going on around it. It's definitely
Speaker 10: still an asset that does move in tandem with traditional markets,
Speaker 10: and so the pain that we're seeing in treasury is
Speaker 10: the pain that we're seeing in stocks that is also
Speaker 10: spilling into crypto. But with the market having overcome a
Speaker 10: one point five billion dollar hack on Friday, you can't
Speaker 10: ignore that either, and so we're definitely seeing a tandem
Speaker 10: effect happening and Bitcoin is really suffering because of that.
Speaker 3: Nicole, Emily, I'm sorry. What catalyst are we waiting for here?
Speaker 3: What are crypto markets looking for over the next couple
Speaker 3: months that could turn the tides? Is it going to
Speaker 3: be another Trump? Mean coin?
Speaker 2: There are a few things that might be on the horizon.
Speaker 10: So for example, in Solana, one of the smaller tokens,
Speaker 10: a lot of people pay attention to these days. We
Speaker 10: have a big unlocked coming next month about a one
Speaker 10: point seven billion dollars worth in tokens that could hit
Speaker 10: the market, So that's something that might weigh on price
Speaker 10: and for bitcoin as well. You know, with Trump, every
Speaker 10: day there's something new that's coming out of Washington.
Speaker 3: There could be.
Speaker 10: Signs of things coming on the possible US Strategic Reserve
Speaker 10: for bitcoin that he floated last summer. There could be
Speaker 10: things coming in terms of bills on stable coins. So
Speaker 10: all of that will be weighing on sentiment, but none
Speaker 10: of it is really big enough that you know, could
Speaker 10: push it really back above that one hundred thousand dollar mark,
Speaker 10: and that's what crypti traders really want to see at
Speaker 10: the minute.
Speaker 2: No, we just saw eth that was indeed more the
Speaker 2: focus of that by bit hack. There are issues that
Speaker 2: you see globally, Javier Mille over in Argentina getting embroiled
Speaker 2: in mean coin fiasco as well. This is a global
Speaker 2: sentiment indicator. But how much are you seeing people pull
Speaker 2: away from some of the more sordid sides of crypto
Speaker 2: more broadly.
Speaker 10: Well, I mean crypto as a whole is an asset
Speaker 10: cast that really does run that gammut. You know, you've
Speaker 10: got bitcoin now being considered firmly a bit of an
Speaker 10: institutional bet because of the debut of US spot ets
Speaker 10: tied to it last January. It's definitely one that is
Speaker 10: kind of ingratiated itself there, at least.
Speaker 9: On Wall Street.
Speaker 10: But then if we look at something like Solana. The
Speaker 10: last year for that folk chain has been a lot
Speaker 10: about pump un dump schemes, meme coins assets that like
Speaker 10: the one supported by Malai can go to four billion
Speaker 10: and then down to almost nothing in the same day.
Speaker 10: So there's definitely a bit of a wait and see
Speaker 10: it the minute as to how these tokens really kind
Speaker 10: of go forward this year, whether or not institutions might
Speaker 10: look more favorably on coins in future. A lot of
Speaker 10: that will depend on how the regulatory landscape pans out.
Speaker 3: That's Bloomberg's eminente look, Nicole, thanks so much for joining us.
Speaker 3: Super Micro is set to submit outstanding financial reports today
Speaker 3: to remain listed on the Nasdaq. The stock, which recently
Speaker 3: rallied is hinging on the company's ability to trade on
Speaker 3: the exchange. Bloomberg's Brody Ford joins US now for more Brody,
Speaker 3: Why are they taking this down to the wire. Has
Speaker 3: the company said anything about its plans to actually meet
Speaker 3: this deadline?
Speaker 11: They've said a couple of times, and backing up a bit,
Speaker 11: I mean, super Micro's had a rough couple of months.
Speaker 11: They weren't able to file some financials back in August.
Speaker 11: Their auditor dropped them with some pretty colorful language, some
Speaker 11: things you never want your audit or to say privately,
Speaker 11: let alone publicly. But you know what, they picked up
Speaker 11: a new auditor and they said, we're going to be
Speaker 11: able to get it in time. We believe we'll be
Speaker 11: able to do it. They were saying this as recently
Speaker 11: as a week or two ago, and so the consensus
Speaker 11: at least until today was that they were going to
Speaker 11: be able to make it. The stock right now suggests
Speaker 11: there's some anxiety creeping in, certainly, but we don't have
Speaker 11: any reason to believe that, you know, their plans have
Speaker 11: changed or they're not going to be able to make it.
Speaker 2: Yeah, the CEO but a week or so ago sounding
Speaker 2: pretty confident. There are five by ratings on this stock.
Speaker 2: There are two cells where are general fundamental analysis on
Speaker 2: the company, even headed Brody Well.
Speaker 11: They are for sure in the AI story they're making money.
Speaker 11: I mean, if you look at their revenue chart over time,
Speaker 11: I think their revenue annually is going to be up
Speaker 11: like you know, four times where it was a couple
Speaker 11: of years ago. When you need to buy these Nvidia chips,
Speaker 11: you need to buy them in a server, and super
Speaker 11: Micro is done a really good job selling into the
Speaker 11: major customers. The margins are pretty bad because chips are expensive,
Speaker 11: and you know it's a competitive market, but they have
Speaker 11: been a clear beneficiary. They have picked up a lot
Speaker 11: of investor interest, including the retail side, and there's a
Speaker 11: lot of you know, forums given a lot of theories
Speaker 11: on the current situation, and so you know, the stock
Speaker 11: movements we are seeing can be a bit unpredictable.
Speaker 2: I mean, look, a twelve percent decline is actually the
Speaker 2: only worst sell off since January the twenty seventh. We're
Speaker 2: used to this volatility. But how has the investor base changed.
Speaker 2: Is it more largely retail now or is it predominant institution.
Speaker 11: I can't say the exact split, but certainly if I
Speaker 11: write a story about super Micro, I'm getting a call
Speaker 11: from a retail trader, right, I mean, that doesn't happen
Speaker 11: if I write about Bellar HPE. So they are a
Speaker 11: sizeable presence here and yeah, there will be a lot
Speaker 11: of They are watched often as the kind of bell
Speaker 11: Weather for a video because as if super Micro says, hey,
Speaker 11: we'll be able to ship a lot more servers and
Speaker 11: the second half of twenty five, like they said, people
Speaker 11: understand that is okay, invading a supply gets better in
Speaker 11: twenty twenty five. The two companies are pretty interestingly linked.
Speaker 2: Most Brodie Ford, thanks so much, Welcome back to bloomg Technology.
Speaker 2: I'm Caroline hid in New.
Speaker 3: York and I'm Jackie Devalas and San Francisco.
Speaker 2: We've got to check in on these markets, Jackie, because
Speaker 2: it is a turbulent day. The NASDAG will broadly under
Speaker 2: pressure as we see consumer sentiment take a hit. From
Speaker 2: a macro perspective, we're also worrying about the Magnificent seven
Speaker 2: in particular, we are currently off more than ten percent
Speaker 2: now in complete correction territory. When it comes to the
Speaker 2: more mag seven index that we focus here on Bloomberg,
Speaker 2: there are total return index under pressure from its peak
Speaker 2: that we saw back in December. We're questioning valuations We're questioning,
Speaker 2: of course, the run into Nvidia's numbers that come after
Speaker 2: the Bell. We're questioning ultimately about some of the crackdown
Speaker 2: on going into China and what that means for local players.
Speaker 2: Move on and have a look at what we're seeing
Speaker 2: under duress. Look, we've seen Alphabet off by more than
Speaker 2: fourteen percent from the beginning of the year. You've also
Speaker 2: seen other key names will Meta in the red, but
Speaker 2: in video is now off by more than three percent.
Speaker 2: It's of fifteen percent from its highs. And this is
Speaker 2: on the back of worrying about valuations, about the curtailment
Speaker 2: of geopolitics. But there is good news out there. They're
Speaker 2: deepening their relationship with the likes of Cisco Networking player
Speaker 2: here to make the rollout of AI easier more broadly, Jackie,
Speaker 2: that's right.
Speaker 3: Now, let's dive into the AI race between the US
Speaker 3: and China following the latest restrictions on chip sales from
Speaker 3: the Trump administration. Let's bring in Jennifer Huddleston, Senior Tech
Speaker 3: policy fellow at the Cato Institute. Jennifer, We've been talking
Speaker 3: a lot about how the Trump administration is going about
Speaker 3: AI policy, chip policy, but A key component of this
Speaker 3: is also competition and the agency that oversees it, the
Speaker 3: Federal Trade Commission. I think a lot of people were
Speaker 3: expecting Lina Khan's departure to mean perhaps a friendlier FTC
Speaker 3: towards tech deals. But what are you expecting in this administration?
Speaker 12: Well, thank you for having me today, And I think
Speaker 12: when it comes to anti trust in this administration, it
Speaker 12: is important to remember that many of the anti trust
Speaker 12: cases against the leading tech companies actually began.
Speaker 9: In the prior Trump administration.
Speaker 12: And what we've seen so far, particularly in the tech space,
Speaker 12: is that it seems like this administration is going to
Speaker 12: continue an aggressive approach to anti trust, whether it was
Speaker 12: recent statements from the FTC that they planned to continue
Speaker 12: the merger guidelines that were passed under Chair CON's FTC,
Speaker 12: or whether it's things like last week's requests for information
Speaker 12: on tech censorship that brought up questions of competition and
Speaker 12: content moderation, indicating that we could again see the Trump
Speaker 12: administration FTC seeking to perhaps use anti trust enforcement as
Speaker 12: a way to try and get changes it perceives to
Speaker 12: content moderation, which could raise a lot of concerns both
Speaker 12: for tech companies for online speech, as well as for
Speaker 12: the overall approach to antitrust in general.
Speaker 3: We've seen some creative deals, specifically in the AI space,
Speaker 3: with some of the big hyper scalers taking stakes and
Speaker 3: smaller startups. Do you expect those to come under additional
Speaker 3: scrutiny in this administration as well?
Speaker 12: The AI space is still really early in its infancy
Speaker 12: and it's a very broad ecosystem. One of the reasons
Speaker 12: that mergers are important is not only to large companies,
Speaker 12: but to small players as well. Small players are going
Speaker 12: to need a variety of exit strategies, particularly in the
Speaker 12: AI space, and particularly when we look at the global
Speaker 12: nature of this competition. For some small players, they may
Speaker 12: be the next real innovative product that forever changes our market,
Speaker 12: and they may be seeking to IPO and go public.
Speaker 12: For others, they may be seeking to improve an existing
Speaker 12: product or operate further down the stack and a merger
Speaker 12: might make sense. And in some cases they may be
Speaker 12: great innovators or serial entrepreneurs who just don't want to
Speaker 12: take the time to full run a company. As a result,
Speaker 12: we need to ensure that they have a variety of
Speaker 12: exits strategies and that we don't wrongly demonize mergers just
Speaker 12: because of beliefs in certain amounts of concentration rather than
Speaker 12: looking at the actual impact they could have on consumers,
Speaker 12: because in many cases mergers can benefit both small players
Speaker 12: and consumers.
Speaker 2: I just want to go a bit broader here, Jennifer,
Speaker 2: because we are in this context of US China and
Speaker 2: what seems to be this competitive race, whether it's a
Speaker 2: straw man or real. Ultimately, when you think about how
Speaker 2: the administration is overseeing E merging technology, as I know
Speaker 2: you focus on how are we seeing the US able
Speaker 2: to propel itself forward versus China when we are also
Speaker 2: seeing restrictions on sales of key technology into other countries.
Speaker 12: One of the ways we've heard a lot of this
Speaker 12: discussion is in the approach to AI policy. The Trump
Speaker 12: administration very early on revoked the Biden administration's AI Executive Order,
Speaker 12: something that was seen as having a much more regulatory approach.
Speaker 9: You also recently saw Vice.
Speaker 12: President Vance really pushing back against the European approach to
Speaker 12: AI that he felt would strongly impact American companies and
Speaker 12: American leadership in AI. At the same time, while there
Speaker 12: seems to be a lot of indications, particularly in the
Speaker 12: AI space, that the Trump administration plans to.
Speaker 9: Take a very light touch approach.
Speaker 12: There also have been some indications that we could still
Speaker 12: see regulation, particularly around issues as it might relate to
Speaker 12: labor and again to the kind of impact that some
Speaker 12: of these anti trust cases could have on the development
Speaker 12: of AI technology, particularly by some of our larger leading
Speaker 12: tech companies.
Speaker 2: Okay, the larger leading tech companies, Are they at the
Speaker 2: moment getting enough transparency on the future direction of policy makings?
Speaker 3: Do you think?
Speaker 12: I think it's still early in the administration. We've certainly
Speaker 12: seen a lot of statements already made, and so it
Speaker 12: remains to be seen fully what the trajectory will be
Speaker 12: when it comes to various issues around particularly AI policy.
Speaker 12: As mentioned, the Biden executive Order was revoked, but we
Speaker 12: haven't fully seen what the Trump administration might plan to
Speaker 12: replace that with. On anti trust, there do seem to
Speaker 12: be clear signals that it's unlikely to have a significant change,
Speaker 12: particularly around.
Speaker 9: The cases that are already filed.
Speaker 12: What remains to be seen is kind of some of
Speaker 12: the questions around We had to start to hear rumblings
Speaker 12: around potential competition investigations in for example, the AI space,
Speaker 12: and given some of the other comments, is that the
Speaker 12: type of thing where we will see anti trust enforcement
Speaker 12: really directed at kind of the concerns related to content moderation,
Speaker 12: or at concerns related to quote unquote big tech companies
Speaker 12: which could have significant impacts on the future of anti
Speaker 12: trust policy as well as on consumers, or what we
Speaker 12: see something that's much broader the way that we saw,
Speaker 12: for example, in the Biden administration under Lena khns FTC.
Speaker 3: Jennifer, as you mentioned, you spent a lot of time
Speaker 3: thinking about content moderation. Where do you see that going
Speaker 3: in an administration that has really decried woke social media
Speaker 3: and AI models.
Speaker 12: It will be interesting to see, particularly how the changes
Speaker 12: from the prior Trump administration in the social media marketplace
Speaker 12: might impact the positioning that we see towards content moderation.
Speaker 9: Elon Musk, of course has bought.
Speaker 12: X and made significant changes to content moderation policy there.
Speaker 12: We've also recently seen Mark Zuckerberg saying that he's making
Speaker 12: significant changes to Meta and Facebook's content moderation policy, and
Speaker 12: of course President Trump himself now has True Social which
Speaker 12: has a very different content moderation policy. We continue to
Speaker 12: see a great amount of competition in the content moderation
Speaker 12: policy space. However, we did recently see this request for
Speaker 12: information from the FTC around tech censorship, which could raise
Speaker 12: concerns that we could see the administration or the government
Speaker 12: via the FTC seeking to intervene into the speech rights
Speaker 12: of Americans and into the rights of private actors to
Speaker 12: make decisions around the content that they host.
Speaker 2: Jennifer Steenwolshing. But take it out to the States for
Speaker 2: a minute, because we had a key guest yesterday, Victoria
Speaker 2: Espinancies over at the Business Software Alliance yesterday, We're be
Speaker 2: talking about how important the states are at regulating AI
Speaker 2: at the moment.
Speaker 12: What is there a disconnect that there certainly has been
Speaker 12: a lot of state level activity around AI. Several hundreds
Speaker 12: of bills have already been introduced or considered at a
Speaker 12: state level, and this is something to certainly watch because
Speaker 12: a state AI patchwork could impact the overall development of
Speaker 12: this industry, particularly when we're looking at bills like we
Speaker 12: saw last term in California or Colorado that could really
Speaker 12: impact the development side.
Speaker 9: As well as any potential deployment.
Speaker 12: This is important not only for large players who may
Speaker 12: be operating across state lines, but of course will certainly
Speaker 12: impact small players and in their ability to even launch
Speaker 12: their products in various states.
Speaker 2: Tennifa Huddleston. Great to have you from the Cato Institute. Now,
Speaker 2: let's talk about AI more because Deep Seek has reopened
Speaker 2: access to its core programming interface after a three week pause. Now,
Speaker 2: the Chinese startup stopped allowing customers to top up credits
Speaker 2: for use on its application due to capacity shortages. Team
Speaker 2: Sek's AI chatbought reinvigorated the Chinese tech scene and stunned
Speaker 2: Silicon Valley when it was revealed last month.
Speaker 3: Jackie Anthropic is nearing a deal to raise three point
Speaker 3: five billion dollars at a sixty one point five billion
Speaker 3: dollar valuation. It comes as the company releases a new
Speaker 3: artificial intelligence model that allows users to decide the complexity
Speaker 3: of the response that they want. Bloomberg Seth Figureman joins
Speaker 3: us now for more on this, Seth, let's talk about
Speaker 3: the fundraise first, who participated in the deal and how
Speaker 3: does it stack up to some of the other players
Speaker 3: that have raised in recent months.
Speaker 13: Yeah, I mean it's a smaller amount that we're seeing
Speaker 13: open thee and reportedly XAYI go after open the I
Speaker 13: is seeking you know, forty billion dollars of staggering some
Speaker 13: this one is three point five billion order magnitudeless, but
Speaker 13: still large by any other standard in tech history. Light
Speaker 13: Speed Capital seems to be the one that's really leading
Speaker 13: the way here as we understand that they kind of
Speaker 13: introduced the idea of doing a funding round and now
Speaker 13: it's oversubscribed. The most interesting one to me is that MGX,
Speaker 13: the Middle East Abu Dhabi Fund is now also way
Speaker 13: an investment here on MGX is kind of sprinkling its
Speaker 13: money across the AI sector as we speak.
Speaker 2: So and when it comes to wanting to get in
Speaker 2: on these names, many have worried about the commoditization of
Speaker 2: these large language models more broadly set. But it's interesting
Speaker 2: that here I TOP it's trying to set itself apart, trying,
Speaker 2: for example, turn off and on the reasoning in Sonnet
Speaker 2: three point seven.
Speaker 13: Yeah, it's a really novel hybrid approach. If we talked
Speaker 13: a year ago, they're really worrying any of these reasoning models.
Speaker 13: Now we're seeing Deep seek, Open AI, Anthropic XAI all
Speaker 13: push in this direction. But the reality is for the
Speaker 13: average consumer, You may not always need some advanced reasoning
Speaker 13: engine to answer your question. You may just want to
Speaker 13: ask for a quick recipe or synonym for a word.
Speaker 13: And in that scenario, maybe you don't need the computer
Speaker 13: or the system to take a long time to show
Speaker 13: you every chin of thought step Degga takes along the way.
Speaker 13: On the other hands, some people are trying to use
Speaker 13: it for advanced coding, mathematical questions and the like, and
Speaker 13: so I think for Anthropic that gives them a chance
Speaker 13: to kind of control a little bit of experience, simplify it,
Speaker 13: and perhaps also limit the amount of computing resources that
Speaker 13: needs to devote to all the queries.
Speaker 3: On a whole. We're going to be hearing from Salesforce
Speaker 3: later this week when they report results, and it's widely
Speaker 3: seen as a gauge for how the market, for how
Speaker 3: the company's really navigating agents. This is kind of the
Speaker 3: next big thing. How is Nthropic going about it?
Speaker 13: It were really early here this idea of a computer
Speaker 13: use program that could basically take your computer and start
Speaker 13: clicking around the web on your behalf. But I don't
Speaker 13: think we've seen it quite make a dent in the workspace.
Speaker 13: It's being deployed gradually, but most people we speak with
Speaker 13: I've not seen it fundamentally change their jobs. That's Open
Speaker 13: Eyes moving in distrection, Salesforce, Microsoft, the whole slew other startups.
Speaker 13: This is supposed to be the year of AI agents,
Speaker 13: but it's early in that.
Speaker 2: Year, sefta human. Great to have you, Thanks so much.
Speaker 2: Now coming up, we're going to dig into gaming. Josh
Speaker 2: Chapman from Convoy joining us on the landscape and how
Speaker 2: AI could change that industry to the subrume BG technology.
Speaker 3: Let's get to VC Spotlight. China just approved over one
Speaker 3: hundred domestic video game titles this month, underscoring the country
Speaker 3: support for the game industry after an earlier crackdown. Josh Chapman,
Speaker 3: managing partner and co founder of Convoy, joined us now,
Speaker 3: Josh Geopolitical tensions between the US and China play a.
Speaker 14: Huge role in big tech, but it's also kind of
Speaker 14: veering its way into the gaming sector with Tencent, one
Speaker 14: of China's largest vcs is also has staken some of
Speaker 14: the largest games Fortnite, League of Legends and those makers.
Speaker 3: How are you seeing this play out in the gaming sector?
Speaker 6: Absolutely, and thanks for having me.
Speaker 15: This is certainly a very tense moment for not only
Speaker 15: the world geopolitically, but certainly within gaming, giving that so
Speaker 15: much of the Chinese companies have such large ownership state
Speaker 15: into gaming companies around the world. A notable one is
Speaker 15: that ten Cent owns Riot Games that has legal legends
Speaker 15: right over one hundred million monthly active players and based
Speaker 15: out of Los Angeles. If geopolitical tensions continue, you could
Speaker 15: see things like the TikTok thing play out into the
Speaker 15: gaming space, which would lead to divestments or you know,
Speaker 15: a forced sale due to government tensions. So yes, it
Speaker 15: has a huge impact on the future of gaming as
Speaker 15: an industry and broadly globally.
Speaker 2: I mean, many were shocked to see Tencent placed on
Speaker 2: a sort of watch list, a military watch list. So
Speaker 2: how much do you think that we could see an
Speaker 2: unfolding of what's happened with TikTok across the gaming space.
Speaker 15: So I think, you know, high level, we are very
Speaker 15: excited that the United States is taking a firm stance
Speaker 15: and against what is you know, a you know, categorically
Speaker 15: a foreign adversary of the United States, which is the
Speaker 15: Chinese Communist Party. I think when you see that, you
Speaker 15: know what companies come under that WAT. Unfortunately, there are
Speaker 15: lots of great people that work at ten cents, and
Speaker 15: there's lots of great people that work at place like
Speaker 15: Riode Games and other companies that will be subject to
Speaker 15: whatever happens to you politically. So I think this is
Speaker 15: absolutely going to impact the space. And I think to
Speaker 15: your question, we're going to see the gaming industry kind
Speaker 15: of rally around finding a solution to keep these games
Speaker 15: going regardless of the ownership.
Speaker 6: And I think there are solutions in.
Speaker 15: The private markets but also the public markets to find
Speaker 15: potential new homes for these assets if we get there right,
Speaker 15: and I think there is a big if, but if
Speaker 15: that plays out, that's probably where it's going to land.
Speaker 2: And much of this is in the context of the
Speaker 2: feeling of a race in terms of AI and China
Speaker 2: and US who's winning. It's interesting that we just saw
Speaker 2: Microsoft really show the future of AI within a gaming
Speaker 2: context last week with news AI tell us where we
Speaker 2: land in terms of US use of AI in gaming
Speaker 2: versus China, for example.
Speaker 15: So there's basically two ways that I would highlight how
Speaker 15: AI is impacting gaming. First and foremost, it's impacting the
Speaker 15: creating content by making the content game developers more efficient.
Speaker 15: Now it's not necessarily making them eight times more efficient,
Speaker 15: but we're seeing anywhere from twenty to fifty percent improvement
Speaker 15: on costs at the content creation level. The second way
Speaker 15: that you're seeing this even in the public markets is
Speaker 15: groups like app love and or even Unity that are
Speaker 15: using AI to improve their ad monetization strategies, and this
Speaker 15: has led to huge gains for both stocks app Love
Speaker 15: and most notably even though just recently they kind of
Speaker 15: gave back a lot of those gains in the past week,
Speaker 15: but Unity just popped because they're also using AI.
Speaker 6: To improve their own ad monetization platform.
Speaker 15: So I think you're seeing this absolutely play out in gaming,
Speaker 15: and it's leading to a lot of enterprise value creation
Speaker 15: for enterprises in the private markets and in the public markets.
Speaker 3: Josh, last year we saw Roadblocks attract a lot of
Speaker 3: scrutiny over child safety on its platform. Do you think
Speaker 3: this scrutiny is going to continue into this year because
Speaker 3: it seems like one of the spots where it really
Speaker 3: gained by part is in support.
Speaker 15: Yes, So the scrutiny around child safety within gaming is
Speaker 15: absolutely going to be a trend. This is something that
Speaker 15: we at Convoy are actively investing around is child safety
Speaker 15: of whether it's the experiences that they're having, whether it's
Speaker 15: the data around them, whether it's what you can advertise
Speaker 15: to them or not advertise to them.
Speaker 6: And so this is a huge topic that's.
Speaker 15: Affecting families worldwide and also in our country here in
Speaker 15: the United States, and so absolutely this is going to
Speaker 15: remain a huge issue. And then most recently, just a
Speaker 15: couple of weeks ago, the SEC opened up investigation into Roadblocks,
Speaker 15: but this under Exemption seven A, which means that they
Speaker 15: don't have to disclose what they are investigating exactly. To
Speaker 15: make a delineation here, though, the FTC went after Fortnite
Speaker 15: and gave them a huge fine.
Speaker 6: I believe it was about four hundred million dollars.
Speaker 15: Around the misuse of child data, and Fortnite had to
Speaker 15: pay that huge fine.
Speaker 6: This investigation, though, is not from the FTC.
Speaker 15: It's actually from the SEC, and so this has something
Speaker 15: to do with reporting requirements. Back in the fall, we
Speaker 15: as a firm put out a piece talking about how
Speaker 15: we believe that Roadblocks may not be aging up exactly
Speaker 15: as they know are reporting and we think.
Speaker 6: That that's not that the fact that they.
Speaker 15: Are misreporting is the fact that users are likely misrepresenting
Speaker 15: how old they are.
Speaker 6: So an eight year old is saying that they're over
Speaker 6: the age of eighteen.
Speaker 15: So the data is accurate, but the input of that
Speaker 15: data is inaccurate. And this is something we challenged back
Speaker 15: in the fall, and I think that's probably what's going
Speaker 15: to play out this year.
Speaker 3: It's an important issue. We'll be following. Josh Chapman, Managing
Speaker 3: partner of Convoy, Thanks for joining us, Caroline.
Speaker 2: Time now for talking to Jackie. First out, Quantum Machines
Speaker 2: raised one hundred and seventy million dollars in a Series
Speaker 2: C round following advances in the technology, and that's of
Speaker 2: course by Google and Microsoft that have sparked renewed interest
Speaker 2: in quantum computing. The raise, led by PSD Equity brings
Speaker 2: it is really start ups. Total funding to two hundred
Speaker 2: and eighty million to date plus twenty three and meters.
Speaker 2: CEO and Rijiki has raised her take private offers for
Speaker 2: the Genetic testing company. Now Jiski has secured backing from
Speaker 2: private equity firm New Mountain Capital. Together they are offering
Speaker 2: two way five three dollars a share according to a
Speaker 2: letter to a special committee A twenty three and me's board,
Speaker 2: and according to reports telecom provider Altes France, it's close
Speaker 2: to finalizing a deal to cut the company's debt by
Speaker 2: nine billion dollars in exchange, creditors will get a non
Speaker 2: controlling equity state in governance changes. Remember this is billionaire
Speaker 2: Patrick Draghi, who retains control. Apple currently holding its annual
Speaker 2: meeting of shareholders as we speak, which includes a vote
Speaker 2: on shareholders proposal to abolish its corporate diversity, Equity and
Speaker 2: Inclusion program. The board currently recommending, of course that it
Speaker 2: votes against the proposal, and indeed they did a vote
Speaker 2: against that proposal. Mark German is here. This is very
Speaker 2: much a live event, and we just had the latest
Speaker 2: indeed that investors have rejected the outsider shareholder proposal. Where
Speaker 2: else do we think this day will lead?
Speaker 16: Yeah, so Apple got a clean sweep, at least some
Speaker 16: preliminary talities.
Speaker 9: Right, So the entire boardy people.
Speaker 16: Including Tim Cook elected, They ratified Ernst and Young as
Speaker 16: their outside accounting firm. They approved executive pay right twenty
Speaker 16: twenty four pay for Tim Cook and the other named officers.
Speaker 16: Rejected an outside proposal on artificial intelligence policies. They rejected
Speaker 16: an outside proposal that asked Apple to seese its DEI efforts.
Speaker 16: They rejected an outside proposal related to CESAM or child
Speaker 16: sex abuse material efforts at Apple, and they rejected another
Speaker 16: proposal related to charitable giving. So that's a lot clean sweep.
Speaker 16: Apple got what it wanted across the board, both its
Speaker 16: internal proposals and its external proposals from shareholders. The AI
Speaker 16: one and the DEI ones are obviously the hottest topics
Speaker 16: right now. The AI one was related to what open
Speaker 16: ai is doing with consumer data. Some shareholders were concerned
Speaker 16: about Apple's partnership with open ai. Apple's response was to
Speaker 16: reject that given that open AI's integration is separate from
Speaker 16: their core on device LMS Apple Intelligence, and that Apple
Speaker 16: already publishes its privacy policies related to that, so that
Speaker 16: is sort of a moot issue DEI. It's interesting projected,
Speaker 16: but Tim Cook said, as the legal landscape continues to evolve,
Speaker 16: Apple may need to make changes in the future, but
Speaker 16: they're still going to offer employees a collaborative environment.
Speaker 3: Mark, how what do we know about how Apple has
Speaker 3: handled these sorts of DEI issues? In the past, we
Speaker 3: saw discent come from companies like Google who had employees
Speaker 3: that were disputing certain contracts that were taking in defense.
Speaker 3: Have we ever seen something similar play out with Apple
Speaker 3: thirty minut seconds.
Speaker 16: Yeah, at a large scale, we have not seen descent
Speaker 16: at Apple related to DEI. I mean, Apple has a
Speaker 16: very inclusive culture. I don't get the sense that anything
Speaker 16: is going to happen at Apple related to its DEI
Speaker 16: efforts unless there is some sort of legal mandate to
Speaker 16: do so.
Speaker 2: Mark German, with the very latest out of the shareholder meeting,
Speaker 2: we so appreciate it.
Speaker 10: Now.
Speaker 2: That does it for this edition of but Like Technology,
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