Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
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Speaker 2: This is Bloomberg Tech coming up. Intel crushes earnings, the
Speaker 2: stock blaster, its dot com erapeak, and a phone call
Speaker 2: with CEO lit Boutan. Plus tech layoffs ramp up, with
Speaker 2: Microsoft and Meta making thousands of job cuts, as AI
Speaker 2: spending surges and open Ai comes out with a new
Speaker 2: model better at helping scientists and carrying out more complex tasks.
Speaker 2: Intel Intel shares have blown through their dot com peak
Speaker 2: to a stunning new record high, strong earnings and outlook. Yes,
Speaker 2: but this has been an unstoppable train all year. Intel
Speaker 2: is up more than one hundred and twenty percent so
Speaker 2: far in twenty twenty six. That is the story. Intel
Speaker 2: guiding well ahead of the street thirteen point eight to
Speaker 2: fourteen point eight billion revenues for the current quarter consensus
Speaker 2: thirteen billion. Is this Intel back to its glory days?
Speaker 2: Has Lip Bhutan turned this company around? Bloombergsy and King
Speaker 2: has led semiconductor coverage here since nineteen ninety eight. It's
Speaker 2: all about the CPU They're in the right place at
Speaker 2: the right time in a world where AI servers need CPUs.
Speaker 2: Is that the story?
Speaker 3: Yeah, I mean, as we've said previously, the CPU is
Speaker 3: hot again. This general purpose product that was kind of
Speaker 3: the backup singer to the aaccelerators from Nvidia suddenly taking
Speaker 3: census stage again. And obviously Intel is the biggest producer
Speaker 3: of this. Do we know of Intel's back or not.
Speaker 3: We'll see once the market slows down and we'll see
Speaker 3: how competitive is. But right now everybody needs a CPU.
Speaker 2: So in you and I spoke to lit Bhutan on
Speaker 2: the phone, and to summarize the situation with CPU is
Speaker 2: that demand is greater than their ability to supply the
Speaker 2: street with say, that's a good problem to have. But
Speaker 2: why is there this severe reaction in the stock? Right?
Speaker 2: You know the history of this company inside and out.
Speaker 2: If you look at other metrics, we're nowhere near the
Speaker 2: heady days of sixty percent margin. Try and explain what
Speaker 2: the confidence is here?
Speaker 3: Yeah, I mean there are a couple of things. Obviously,
Speaker 3: the market tries to anticipate where a company will be
Speaker 3: in say, six months time, so there's an element of
Speaker 3: that going on. But part of this was that look
Speaker 3: you know, there was a lot of money put into
Speaker 3: until there was a lot of hope going in there,
Speaker 3: and we've seen that kind of fall short before. This
Speaker 3: time they delivered. This time the numbers were good as
Speaker 3: good as, if not better than expectations. So there's kind
Speaker 3: of a bit of a relief rally going on here
Speaker 3: that you know, let's take Intel seriously again. But as
Speaker 3: we heard from the CEO himself, you'll remember this, He's like, look,
Speaker 3: we're not all the way there yet, We've still got
Speaker 3: a lot of work to do, and that was what
Speaker 3: he said a lot.
Speaker 2: There was an element of modesty and caution that Litvoo
Speaker 2: certainly put across to us. Dave's the CFO was also
Speaker 2: on the call, and actually, if there's an area where
Speaker 2: they're cautioning, it's in that client category PC. Explain what
Speaker 2: Zinsner said, and also tuck in foundry there too.
Speaker 3: Yeah, I mean this is a general phenomenon right there's
Speaker 3: just not enough memory chips in the world. And guess
Speaker 3: what the memory is going to go. The Isabela is
Speaker 3: going to go to the most expensive, the most profitable systems,
Speaker 3: which right now as data center. So that's bad for
Speaker 3: the PC second half of the PC is not going
Speaker 3: to be as strong on the flip side of things.
Speaker 3: You know, Intel's foundry business, which is you know, the
Speaker 3: business of making chips, still losing a lot of money,
Speaker 3: Still got a lot of work to do to get
Speaker 3: to the level that it needs to be. And we
Speaker 3: need to see those big external customers get announced or
Speaker 3: start to appear in the second half of the year
Speaker 3: for that part of the business. And there's a very
Speaker 3: expensive part of the business to really have turned the corner.
Speaker 2: I wasn't doing this in the year two thousand, when
Speaker 2: Intel is its last peak. You were, and you've led
Speaker 2: the way uncovering this company ever since. Blobozi and King,
Speaker 2: thank you very much. Chip stocks overall are unstoppable. The
Speaker 2: Philadelphia Semiconductor in next or socks is up for a
Speaker 2: record eighteenth straight session. In the moment, this is all
Speaker 2: about Intel pushing the gauge of global chip names higher.
Speaker 2: Let's get more on Intel with Cody Acri, equity research
Speaker 2: analyst at Benchmark who's just blasted his price target from
Speaker 2: seventy six dollars a share to up to one hundred
Speaker 2: and five. Cody, why, what's the thesis?
Speaker 4: Well, I think they hit their stride with lib Boo's turnaround,
Speaker 4: Like Ian said, with CPUs now starting to come back
Speaker 4: in the mainstream AI and inferencing in agentic demand, with
Speaker 4: CPU's becoming a core focus in addition to what we've
Speaker 4: seen from in Video's GPUs, we're starting to see CPUs
Speaker 4: take center stage. And on top of that, you're starting
Speaker 4: to get some real traction out of eighteen A and
Speaker 4: Intel's foundry opportunity. So I think that a combination of
Speaker 4: both AI foundational CPU demand and Intel becoming a real
Speaker 4: alternative to TSMC for foundry options in the industry that
Speaker 4: is extremely supplied constrained from a foundry basis, I think
Speaker 4: all of that adds up to a brighter future for inter.
Speaker 2: So I want to get into how solid what we
Speaker 2: learned about the foundry businesses. When I spoke to lit
Speaker 2: Boutan on the phone, I tried to get him to
Speaker 2: be absolutely explicit about terrafab. So Elon Musk has said
Speaker 2: earlier in the week that Terrorfab will use the fourteen
Speaker 2: A process. What did they mean by that? And lit
Speaker 2: Boo was very cautious. You know, he won't talk about customers.
Speaker 2: Let the customers talk about themselves. What he did say
Speaker 2: is that they're going to work on process technology. They're
Speaker 2: going to bring manufacturing back to the United States. A
Speaker 2: you model in terrifab revenues into your model based on
Speaker 2: anything you heard last night.
Speaker 5: No or really not.
Speaker 4: All we see from Musk is a tacit endorsement that
Speaker 4: fourteen A, that eighteen A and fourteen A are making progress.
Speaker 5: We think that.
Speaker 4: Lip Bo's yield commentary yesterday was very encouraging, and the
Speaker 4: fact that they're seeing a six to seven times increase
Speaker 4: in eighteen A production expectations for Q two versus Q
Speaker 4: one on top of their yield commentary is very encouraging.
Speaker 4: And so I think that eighteen A sets the stage
Speaker 4: for fourteen A in fourteen AS where they'll start to
Speaker 4: attract more customers. I think we've got companies like Nvidia
Speaker 4: that makes sense to be joining that, and then that
Speaker 4: is all going to be led by their advanced packaging.
Speaker 4: And I think they're talking about that in billions of
Speaker 4: dollars of opportunity, and Zinzener was very explicit about that yesterday,
Speaker 4: where that was now expected to be previously hundreds of
Speaker 4: millions and now billions of dollars opportunity, leading their founder charge.
Speaker 2: Cody, this is a historic day. The stock has absolutely
Speaker 2: blown past that year two thousand or dot Com era record.
Speaker 2: We keep saying that, but the history of Intel is
Speaker 2: a company that has margins in the sixties, right, margins
Speaker 2: are nowhere near that. How are we gauging Intel's position
Speaker 2: in a turnaround plan and whether the turnaround is or
Speaker 2: is not complete.
Speaker 4: Well, I think we're very very early days, and I
Speaker 4: think that's the basis for our our one hundred and
Speaker 4: five dollars price target, is that we do have that
Speaker 4: kind of room in their margin profile going forward back
Speaker 4: toward their prior peaks. Now, I think we're years from
Speaker 4: getting there, but I think that's the kind of room
Speaker 4: that Intel's left to move toward as they start to
Speaker 4: see better utilization of their internal fout we're seeing demand
Speaker 4: for their CPUs likely to be extendable. We're still very
Speaker 4: early days and inferencing with agentic AI just really starting
Speaker 4: to get any kind of enterprise traction and the capit
Speaker 4: ex budgets the hyperscalers likely not seeing any signs of
Speaker 4: slowing down anytime soon, and so with enterprise influencing driving
Speaker 4: CPU activity and then foundery business hall in front of them.
Speaker 4: I think that there's a lot of opportunity for Intel
Speaker 4: yet to come.
Speaker 2: Before Intel's owning school. The President of the United States
Speaker 2: talked about the biggest story.
Speaker 6: Listen to this the capital of the world, and now
Speaker 6: you know Intel, and now they're coming back.
Speaker 3: All the chip companies are coming back.
Speaker 2: The United States is a shareholder of Intel. How much
Speaker 2: real support is the stock getting from the association and
Speaker 2: the positive relationship with this White House and the fact
Speaker 2: that the US did take a stake in the company.
Speaker 4: Well, I think that it's it's a tacit catalyst. I
Speaker 4: think at best it is it's showing that Intel is
Speaker 4: a strategic asset of the US. That but from an
Speaker 4: industry standpoint, the capacity constraints in Taiwan are are palpable.
Speaker 4: Uh TSMC is the really only safety valve. Samsung is
Speaker 4: is only a distant second, and it's really focused more
Speaker 4: on memory than it is on logic. And so Intel
Speaker 4: really is the only alternative to Taiwan semi and to
Speaker 4: bring that back into the US is a real strategic
Speaker 4: necessity for US manufacturing. And so I think that the
Speaker 4: US investment in Intel makes sense and strategically, it's it's
Speaker 4: the right thing to be doing.
Speaker 2: Cody Acri, equity research analyst at Benchmark, thank you for
Speaker 2: their historical perspective. And I'm talking what's happening right now
Speaker 2: coming up Meadow and Microsoft cut thousands of jobs as
Speaker 2: AI spending surges. What it means for the tech workforce,
Speaker 2: that's always the next question, and that is next. This
Speaker 2: is Bloomberg Tech. The Justice Department is ending a controversial
Speaker 2: investigation into building renovation cost overruns by the Federal Reserve,
Speaker 2: potentially clearing a path to confirmation for Kevin Walsh, President
Speaker 2: Donald Trump's pick to be the next FED leader. Bloomberg's
Speaker 2: Katie Lines and Joe Matthew, the Balance of Power team
Speaker 2: are standing by with more.
Speaker 7: And thank you so much.
Speaker 8: Here with us in our Washington, DC studio is the
Speaker 8: chair of the House Financial Services Committee, Congressman French Hill
Speaker 8: of Arkansas. Thank you so much for being here, mister Chairman.
Speaker 8: As we get this news that the probe, the criminal
Speaker 8: probe at least, has been dropped by the DOJ. The
Speaker 8: ig at the FED is now going to be taken
Speaker 8: this over. Is this the best possible outcome? And should
Speaker 8: we consider this now done and dust it well.
Speaker 5: I think it's a good outcome.
Speaker 9: It's something that I felt should be done for a
Speaker 9: number of weeks. I said back on January twelfth. I
Speaker 9: felt like the accusation that Chairman pal Was had committed
Speaker 9: some sort of crime connected with the building instruction or
Speaker 9: his testimony about it, was a distraction and that it
Speaker 9: would delay President Trump in the selection of a high
Speaker 9: quality new chair for the FED and the important economic
Speaker 9: policy that should be coordinated between the FED, the US Treasury,
Speaker 9: the legislative branch.
Speaker 5: So it's a step in the right direction. I applaud it.
Speaker 9: I hope it comes to pass, and I hope that
Speaker 9: then facilitates the prompt confirmation of Kevin Warsh Mister Chairman.
Speaker 6: J pollmade clear that he was going to hang around
Speaker 6: as long as this investigation was underway. Now that it
Speaker 6: appears to be ending, do you expect that he will
Speaker 6: plan to leave the FED.
Speaker 9: Well, that's a decision Jay has to make. But I
Speaker 9: think it was clear that upon confirmation to a chair
Speaker 9: and if there was not a continuing criminal probe, which
Speaker 9: Japause certainly doesn't think was justified, and many share that view,
Speaker 9: that he would leave the board at the end of
Speaker 9: his term, so let's see how this plays out. But
Speaker 9: the main thing I think is important is that treasure
Speaker 9: Secretary Bessett has a good FED chair that has the
Speaker 9: confidence of the President and who can continue to lead
Speaker 9: economic policy. And for those of us in Congress, Chairman
Speaker 9: Scott in the Senate, our Financial Service Committee, the House,
Speaker 9: we want ability to conduct oversight of the FED, and
Speaker 9: it's very hard to do that when you don't have
Speaker 9: a permanent Senate confirmed chair.
Speaker 8: Well, but on that oversight idea, do you think it's
Speaker 8: right that the FEDIG is the one taking this over
Speaker 8: rather than having the Banking Committee or the Financial Services
Speaker 8: Committee and that oversight capacity taking this on such.
Speaker 9: A good point of view, the FEDIG is a very
Speaker 9: competent person who I think fully has the capacity to
Speaker 9: do it and the staff and the resources.
Speaker 5: I know, speaking for.
Speaker 9: Myself, I was very happy to help lead an independent
Speaker 9: view by the Congress. And I can't speak for Chairman Scott,
Speaker 9: but I think he would share that view that we're
Speaker 9: happy to conduct oversight as needed on the expense and
Speaker 9: the construction parameters around the fed's renovations.
Speaker 6: What's your view about what's happening with the Ecchos building.
Speaker 6: We've all had work done on our homes that went
Speaker 6: way over cost and beyond the timelines. This is frequently
Speaker 6: the essence of doing really major renovations which are happening
Speaker 6: in that case to a very old building. Do you
Speaker 6: think that there's been irresponsible behavior or this is the
Speaker 6: cost of doing business?
Speaker 9: I wouldn't be able to answer that question. Yeah, which
Speaker 9: is the President's a builder. He's got strong feelings about that,
Speaker 9: and he went over and took a look at himself.
Speaker 9: And the issue is that when you are doing construction
Speaker 9: in the district Columbia, I can only imagine how expensive
Speaker 9: that is on parent emitting, required union labor, and historic
Speaker 9: renovations and archaeological remains and all those costs and the
Speaker 9: inflation that was unleashed by the Fed's own policy in
Speaker 9: twenty twenty and twenty twenty one, along with the rapid
Speaker 9: spending by the previous administration. So everyone, you're right, is facing,
Speaker 9: whether it's in your home or in a commercial contact.
Speaker 9: But the President raised the issue of this seems disproportionately large,
Speaker 9: you know, compared to other renovation plans that he's seen
Speaker 9: personally here in Washington, d C in his own experience,
Speaker 9: so it you know, it deserves explanation.
Speaker 5: The question is that Jay Pal do something.
Speaker 9: Criminal about it, and I just reject that point of.
Speaker 8: View, I think well, aside from the building itself, obviously,
Speaker 8: this now leaves major monetary policy trajectory questions if Kevin
Speaker 8: worsh is going to be taken the helm given what
Speaker 8: we have heard from him publicly, A person who used
Speaker 8: to be quite hawkish now seems decidedly less.
Speaker 3: So.
Speaker 8: He also suggested in his confirmation hearing that he would
Speaker 8: like to do away with the amount of flay guidance
Speaker 8: given by the Federal Reserve. And I wonder if you
Speaker 8: think that would be a mistake to, for example, not
Speaker 8: put out the summary of economic projections.
Speaker 9: Well, the Fed has fine tuned how it conducts public
Speaker 9: between post meeting press conferences, forward guidance, the dot plots
Speaker 9: of the approved speeches that individual governors make, how many
Speaker 9: meetings a year they take, And I think it's up
Speaker 9: to the Board of Governors about that. There's no statute
Speaker 9: that says that they have.
Speaker 8: Do you think we hear from them too much? Does
Speaker 8: it tie their hands? Because that's what Kevin worsh argues, right.
Speaker 9: You know, I think that's his opinion. He's the chairman.
Speaker 9: Is see what consensucy has. I don't know that how
Speaker 9: much I hear from the FED determines what my opinion
Speaker 9: is about how the Feds are doing. You know, they
Speaker 9: have seven hundred pH d economists. Sometimes I think the
Speaker 9: market tells them where they ought to be a lot
Speaker 9: better than some of their economic forecasts.
Speaker 5: Haven't been so great.
Speaker 9: But let's see how the new chair, once he's confirmed,
Speaker 9: works with his colleagues to outline what the public position
Speaker 9: will be.
Speaker 5: Yeah, I don't know.
Speaker 6: Sometimes it's good to ask a community banker about his
Speaker 6: insights on these things. But the idea of a new regime,
Speaker 6: a new framework, a new approach to making interest rate decisions,
Speaker 6: makes you nervous or optimistic? Is that needed?
Speaker 1: No?
Speaker 5: I think it doesn't make me nervous at all.
Speaker 9: In fact, I asked Frank Lucas of Oklahoma to chair
Speaker 9: a special task force in this Congress to look at
Speaker 9: the past decisions by the Fed's monetary policy and the
Speaker 9: treasury market structure. These are critical issues that we face
Speaker 9: right now, and so Frank has conducted oversight the size
Speaker 9: of the balance sheet, the focus on the dual mandate
Speaker 9: or should it be mostly focused on price stability? How
Speaker 9: does it interact with the banking community on liquidity. So
Speaker 9: we've actually been investigating these questions ourselves, how the district
Speaker 9: banks participate. So the fact that Kevin comes in as
Speaker 9: a former governor, having worked through the financial crisis, and
Speaker 9: has his viewpoints on how the FED should operate, I
Speaker 9: think that's healthy. I think we need rejuvenation in our
Speaker 9: institutions from time to time, and that's why we have
Speaker 9: the advice and can confirmation process in the Senate, and
Speaker 9: why these FED chairs have a five year term. Not
Speaker 9: everybody can serve four presidents, like Alan Greenspan can.
Speaker 5: Well.
Speaker 8: Of course, we're having this conversation and this potential turnover
Speaker 8: at the top of the FED at a time where
Speaker 8: the global economy, at least a portion of it is
Speaker 8: being held in a choke hold via the Straight of
Speaker 8: four News, as the US is maintaining a naval blockade
Speaker 8: Iran is still making it unsafe for commercial vessels to
Speaker 8: transit so long as that status quo remains. The President
Speaker 8: said yesterday he is in no rush to solve this.
Speaker 8: He is all the time in the world. Does the
Speaker 8: economy actually have all the time in the world the situation, I.
Speaker 9: Think it's I think we're all clear that the longer
Speaker 9: the oil fuel markets are disrupted by the transit and
Speaker 9: the Gulf, we have price concerns, volatility concerns, and the
Speaker 9: I'm watching that forward market in oil prices to see
Speaker 9: if they fully reflect that concern.
Speaker 5: And I do think that, you.
Speaker 9: Know, if the war can take use, it could be
Speaker 9: underestimated in the market. So the question would be I
Speaker 9: think the president, though, is right to do something that
Speaker 9: we've wanted to do for four decades, which is in
Speaker 9: the malfeasans murder mayhem at the hands of the Iranians,
Speaker 9: and stop their ability to have a nuclear weapon and
Speaker 9: stop their ability to harass their neighbors all the way
Speaker 9: to Paris, France through threats of a ballistic missile and
Speaker 9: their export of terror through their proxies.
Speaker 5: These are important goals. They're shared goals.
Speaker 9: Whether people are out in the press saying their shared
Speaker 9: goals or not, they have been long term shared goals,
Speaker 9: and so I do the command the president for taking
Speaker 9: that action, But we do have economic risks associated with
Speaker 9: how long it's maintained.
Speaker 5: There's no doubt about that.
Speaker 6: Mister Chairman. We really appreciate your being with us in
Speaker 6: our Washington bureau today. Thank you for your insights on
Speaker 6: this important story. The Jay dropping, the Powell probe and
Speaker 6: instant reaction from the chairman of the House Financial Services Committee,
Speaker 6: Congressman Frendshill of Arkansas, will send it back to Ed Ludlow.
Speaker 2: The bos Katie Lines, and Joe Matthew. Thank you. Meta
Speaker 2: and Microsoft are making deep cuts as the cost of
Speaker 2: AI ramps up. The two tech beheem of supplanning layoffs
Speaker 2: all buyouts that combined may cut as many as twenty
Speaker 2: three thousand jobs. Meta there's already signal plans to trim
Speaker 2: roughly ten percent of its workforce and leave thousands of
Speaker 2: rolls unfilled, while Microsoft is rolling out voluntary buyouts across
Speaker 2: its US operations that could reduce its workforce as much
Speaker 2: as seven percent. Here to discuss Bloomberg's Brody Ford covering Microsoft,
Speaker 2: Bloomberg's Riley Griffin covering Meta. Rightley, let's start with Meta.
Speaker 2: What do we need to know? The size and scope
Speaker 2: and then the rationale to cut back on headcount?
Speaker 10: Well, let's start with the rationale because this year Meta
Speaker 10: is going to spend as much as one hundred and
Speaker 10: thirty five billion in capital express.
Speaker 2: That's a wow.
Speaker 10: That's a wow. And this is before earnings. Next week
Speaker 10: we could see that push even higher. So there's a
Speaker 10: lot of money being spent on AI and they are
Speaker 10: citing efficiency and investment as reason for cutting costs. With personnel,
Speaker 10: that's eight thousand potential employees facing layoffs and six thousand
Speaker 10: open roles. And Brody, the question I want to ask
Speaker 10: you is ever core Issi had put out an analyst
Speaker 10: note saying they estimate that's about three billion in savings
Speaker 10: for Meta.
Speaker 7: Are these layoffs.
Speaker 10: At Meta, the buyouts at Microsoft, are they really going
Speaker 10: to push the needle amid AI spend.
Speaker 11: I think that they're probably just going to keep margins
Speaker 11: kind of flat, right, I think that's really the goal.
Speaker 11: I mean, Microsoft didn't stated in their buyout letter, but
Speaker 11: as you said, data centers cost a whole lot of money,
Speaker 11: and then the kind of traditional way to offset that
Speaker 11: spending has been cost cuts everywhere else. And you know,
Speaker 11: one of the most obvious places companies have been going
Speaker 11: is their workforce.
Speaker 2: Right Berdie With Microsoft, this is voluntary it's what we
Speaker 2: would call voluntary redundancy over in Europe or the UK.
Speaker 2: A buyout here is that what Microsoft typically does. Why
Speaker 2: they going that route this time?
Speaker 11: They've never done that before. I mean, they've done their
Speaker 11: share a big layoffs, right, so they're certainly not afraid
Speaker 11: to do that. But I think Microsoft often, you know,
Speaker 11: it tries to be seen as a bit maybe more
Speaker 11: of a compassionate big tech company. You see that in
Speaker 11: the way they communicate their environmental goals, for example.
Speaker 2: But I think it's all part.
Speaker 11: Of the same trend, right that companies are feeling like
Speaker 11: in this moment that their employees should be able to do.
Speaker 5: More with less.
Speaker 11: I don't think that it's straight up hey, AI is
Speaker 11: replacing people quite yet, but I do think companies are saying, well,
Speaker 11: I think we could probably get by with fewer folks
Speaker 11: these days.
Speaker 2: With meta the story around which parts of the company
Speaker 2: get trims has been more important, right, Reality Labs refocus
Speaker 2: on AI cut back on the metaverse. When I was
Speaker 2: reading the reporting, I was trying to understand, like, where
Speaker 2: specifically in this very big company are these cuts taking place.
Speaker 10: Yeah, that's a billion dollar question, ed. I am looking
Speaker 10: to see that too next week.
Speaker 2: Right, if you are a better employee and you're part
Speaker 2: of these cuts and you're hearing this, please reach out
Speaker 2: to Riley and try and explain it to us.
Speaker 10: I mean, it's a high anxiety moment at Meta, and
Speaker 10: we are hearing from a number of employees who are
Speaker 10: really anxious.
Speaker 7: In this time. Reality Labs has.
Speaker 10: Already faced cuts that's been separate from the ten percent
Speaker 10: that is coming in May, and there are questions as
Speaker 10: to whether or not this is just the beginning of broader.
Speaker 7: Cuts throughout the year.
Speaker 10: With something like ten percent, you've got to believe that
Speaker 10: this is pretty widespread. But we know that they continue
Speaker 10: to invest in Meta Superintelligence Labs, that unit that is
Speaker 10: driving forward the new models under Alexander Wang. I'd be
Speaker 10: reluctant to say we're going to see major cuts.
Speaker 2: There, Okay, team, The way that we thinking about this
Speaker 2: is just two companies and we're trying to compare the
Speaker 2: level of cuts to capital expenditures. But Brody, like earlier
Speaker 2: in the year, software names were pretty impactive. Right, You've
Speaker 2: been coming on the show periodically with a very large
Speaker 2: range of companies. I'm thinking Oracle as an example. Is
Speaker 2: there a sort of broader theme here, industry wide of
Speaker 2: cut back, people cutting back and the rationale for doing so.
Speaker 11: Yeah, absolutely, I think. I mean, we saw big layoffs
Speaker 11: across tech starting around early twenty twenty three, but this
Speaker 11: more recent wave in the last call it year, year
Speaker 11: and a half, I think is more tied to that
Speaker 11: GPU build out. I mean, the margin profile of these
Speaker 11: companies has really changed. You went from selling software packages,
Speaker 11: which were among the highest margin product you know humankind
Speaker 11: has ever made, to selling GPU infrastructure that's notably less so,
Speaker 11: and so they've really had to offset this one way
Speaker 11: or another. You know, as you mentioned, Oracle last month
Speaker 11: laid off thousands of people, and largely it really hit
Speaker 11: those cash cow businesses. They felt, hey, let's milk these
Speaker 11: for margins while we build out our big data centers
Speaker 11: for open AI.
Speaker 10: Brody, A question for you that I have is we've
Speaker 10: talked a lot about entry level jobs and how they're
Speaker 10: going away. Now we're thinking about bigger picture, higher up jobs.
Speaker 10: What is it going to mean for layoffs for more
Speaker 10: senior executives across tech companies?
Speaker 7: Where could they possibly go?
Speaker 2: Just quick, Brady, We've got to get gun it, guys.
Speaker 5: A tough market.
Speaker 11: You know what I hear every single day that it's
Speaker 11: taking a long time to find jobs. So it's yeah,
Speaker 11: it is a tough time in the tech industry.
Speaker 2: Bloomberg's Brody Forward Bloombo's Ridy Griffin, two big stories about
Speaker 2: two of the biggest tech companies cutting back, Thank you
Speaker 2: very much. Intel's results confirm strong data center demand, but
Speaker 2: they also showed that Intel's foundry narrative is firming up.
Speaker 2: That's according to Bloomberg Intelligence. Let's bring in Bloomberg Intelligence
Speaker 2: senior analyst can Jensbani with the BI react. Was so
Speaker 2: interested to see you right about this the foundry business
Speaker 2: to start there, because we could have just focused on
Speaker 2: CPU all day long. Just explain the thesis. What is
Speaker 2: so in that foundry business.
Speaker 12: Well, to start with, we should be focusing on the
Speaker 12: CPU business because it's finally turning the corner. But yeah,
Speaker 12: on the foundry business, we are seeing like the correct
Speaker 12: milestones and the correct checkmarks where Intel eighteen A yields
Speaker 12: are improving. We saw that help with the big gross
Speaker 12: margin beat even better than the revenue beats that we
Speaker 12: saw in the quarter. The fourteen A based on the
Speaker 12: company is running much better in time where eighteen A
Speaker 12: was in the past and we are. We have of
Speaker 12: course seen a lot of engagements and announcements from external
Speaker 12: customers like Elon et cetera. Right, so we're seeing them
Speaker 12: go in the right path. However, you know, there's a
Speaker 12: lot more wood chop left to chop here. We need
Speaker 12: them to continue showing execution because at the end of
Speaker 12: the day, you need to still come to the competitive
Speaker 12: cost optimized process. Otherwise these customers that are announcing might
Speaker 12: not deliver you products.
Speaker 2: I spoke so let B Fan let B Tan on
Speaker 2: the phone congent. I tried so hard to get him
Speaker 2: to be specific about the details of the terror Fab agreement.
Speaker 2: And in your own research you basically say fourteen a
Speaker 2: terror Fab confirmed. How can you have so much conviction
Speaker 2: that that's the case.
Speaker 12: Well, it's based on again what we have been having
Speaker 12: the discussions. But we do want to carry out even
Speaker 12: though the projects are confirmed. What the hanging part here
Speaker 12: is the magnitude of revenues we don't know right.
Speaker 2: The timing of products.
Speaker 12: So, like I mentioned, if you don't deliver on your
Speaker 12: execution very well, most of the revenue and products could
Speaker 12: not land winter and go to someone else.
Speaker 2: This is an AI story at the end of the day,
Speaker 2: and we've done it in great detail. Now the CPU
Speaker 2: going into the AI server. Conjenserbanni from Blueberg Intelligence. His
Speaker 2: react is research is on the terminal. You've got to
Speaker 2: read it. Let's turn to a new entry in the
Speaker 2: public markets. Nuclear energy firm X Energy has raised over
Speaker 2: a billion dollars in an upsized IPO shares of the company,
Speaker 2: which counts Amazon among its bigg as backs. They were
Speaker 2: priced in the IPO at around twenty three dollars a share.
Speaker 2: The indication is that they will trade way above that
Speaker 2: when they get going. Ex Energy CEO Play Sales joins
Speaker 2: us from the Nazdak. It's been about a year since
Speaker 2: I last saw you and sat down, and here we are,
Speaker 2: big IPO, Big IPO. Just reflect on it.
Speaker 13: You know, it's really been It was great senior year
Speaker 13: ago at south By Southwest, but we've really had a
Speaker 13: good three year run at x Energy in terms of
Speaker 13: customer acquisition with now Amazon CENTRICA Energy Northwest. In terms
Speaker 13: of our regulatory achievements. We got our fuel facility license.
Speaker 13: It's under construction in oak Ridge, Tennessee. We proceeded with
Speaker 13: our first license for our fuel plant in Texas. We
Speaker 13: expect to get that around the end of this year.
Speaker 13: So it's been a year of great progress and a
Speaker 13: great time for us to enter the public markets.
Speaker 2: What are the status of those of those customer relationships,
Speaker 2: you know, one of the things that you and I
Speaker 2: went through is the reality of this technology, right and
Speaker 2: how quickly it gets built into the real world. What
Speaker 2: is the reality of it right now?
Speaker 13: Well, our first project comes online in the twenty thirties,
Speaker 13: but it'll be the first of many, many, many to come.
Speaker 13: And the key with our technology, you'll remember, is it
Speaker 13: allows us to reinvent the way we build nuclear power plants,
Speaker 13: to completely change the way we build them. We start
Speaker 13: with a remarkably safe plant, the safest technology that's available.
Speaker 13: It's a meltdown proof fuel. The plant is elegant, it's
Speaker 13: relatively simple, less concrete, less, steal less parts, and it's
Speaker 13: easier to build. And we have a backlog of over
Speaker 13: one hundred and forty units between just our first three customers,
Speaker 13: and so that gives us a pathway to build and
Speaker 13: build and replicate. And we all know I mean replication
Speaker 13: is the key to mass replication. Building the same plan
Speaker 13: over and over again is the key to making nuclear
Speaker 13: incredibly economic, incredibly boring, and incredibly financible. And that's what
Speaker 13: we're about at Accident Energy.
Speaker 2: You're about to start trading in a big IPO. Don't
Speaker 2: make this boring clay. Just to update our audience, the
Speaker 2: IPO price at twenty three dollars dollars a share. What
Speaker 2: I'm seeing on the Bloomberg terminal is indications you're opening
Speaker 2: around twenty eight dollars a share. We'll see how that goes.
Speaker 2: The chronology is important. I think the Dow project happens
Speaker 2: first and then Amazon. Is that correct?
Speaker 13: Yeah, the down project will come first and immediately followed
Speaker 13: by the Amazon project.
Speaker 2: How real is the regulatory's approval of this? The foundation
Speaker 2: you and I have talked about the need to codify
Speaker 2: a lot of this. You have the support from the
Speaker 2: federal side of the government to get moving in the
Speaker 2: way that you want to.
Speaker 13: The policy support from the federal government has been key
Speaker 13: to launching this new era of nuclear and to key
Speaker 13: part of that was the reform of the Nuclear Regulatory Commission. Historically,
Speaker 13: you know, the NRC had a very bad reputation of
Speaker 13: being slow cumbersome, a lot of red tape making it
Speaker 13: very difficult to build new plants. But on a bipartisan basis,
Speaker 13: legislation has been passed to reform the NRC. Then President
Speaker 13: Trump came in and he put an amazing leader as
Speaker 13: the new chairman of the NRC, someone who has both
Speaker 13: the will and now the authority to move appropriately projects
Speaker 13: through the regulatory space.
Speaker 5: Well, so again, real quick.
Speaker 13: We got our fuel Yeah, we got our fuel plant license,
Speaker 13: and then we get then we'll get our first power
Speaker 13: plant license. You know, by the end of this year,
Speaker 13: in record time.
Speaker 5: On both the.
Speaker 2: Company does or does not yet have the license from
Speaker 2: the NRC for its design.
Speaker 13: We have the license to operate our fuel plant. We
Speaker 13: will receive the license to begin construction on our first
Speaker 13: power plant around the end of this year.
Speaker 2: As well. Play Cell, CEO of x Energy, price this
Speaker 2: ip at twenty three dollars a share, indicated to open
Speaker 2: twenty eight dollars a share, Thank you very much. The
Speaker 2: wars in Ukraine and now Iran have underscored the growing
Speaker 2: importance of autonomous aircraft and undersea vehicles, and Treason Horowitz
Speaker 2: is backing Ulysses, a startup building autonomous underwater vehicles, pointing
Speaker 2: to a new frontier in ocean and defense tech. Aaron
Speaker 2: price Wright is general partner in Jason Horowitz just did
Speaker 2: that round in the last week or so and joins
Speaker 2: us on the show. Find this so interesting. I think
Speaker 2: over the course of the war in Iran, we focused
Speaker 2: a lot on drone technology and other missile technology, but
Speaker 2: with the strait of horr moves in particular, now that
Speaker 2: domain is becoming increasingly important. I think, just explain your
Speaker 2: conviction and thesis with Ulysses is a case study.
Speaker 7: Yeah, first, thank you so much for having me. It's
Speaker 7: really wonderful to be here.
Speaker 14: The ocean is a largely unexplored and unconcour unconquered territory,
Speaker 14: and it's kind of remarkable how little innovation there has
Speaker 14: been in maritime over the last you know, half century,
Speaker 14: despite how much it's grown in its strategic importance for
Speaker 14: the United States and globally. I mean, if you think
Speaker 14: about the beginning of the conflict in Ukraine, the first
Speaker 14: thing that Russia did was cut Ukraine's under sea fiber
Speaker 14: so that they didn't have any Internet access. You know,
Speaker 14: you just mentioned we're seeing this again in Iran with
Speaker 14: the with the Strait and how much global tension and
Speaker 14: conflict that's caused, and expect something similar if that we
Speaker 14: were ever to be in conflict in the Pacific theater
Speaker 14: with the South China Sea. So you know, really this
Speaker 14: was a market in an area very much hungry for innovation.
Speaker 14: If you look at our submarine capabilities, they haven't really
Speaker 14: advanced in half a century, acostibility, submarine vest and man summary,
Speaker 14: we're talking about one hundred and thirty people on a
Speaker 14: crew of a you know, multi billion dollar complicated machine
Speaker 14: that takes it decade to build. And these are people
Speaker 14: who are putting their lives at risk. And many of
Speaker 14: the things that we need to worry about in the
Speaker 14: ocean today, whether it's on the commercial side, from inspecting
Speaker 14: oil and gas or deep sea mining or offshore wind
Speaker 14: or other assets, through to the defense space, like a
Speaker 14: lot of those use cases actually don't need manned crews
Speaker 14: to be able to accomplish really important missions.
Speaker 2: I just want to point out, Aaron, if you bear
Speaker 2: with me that right now, the story in public markets
Speaker 2: is stocks are higher technology stocks, in particular on hope
Speaker 2: and optimism that over this weekend there will be peace
Speaker 2: talks between the United States in Iran, and we're here
Speaker 2: principally to talk about private markets, but I think there's
Speaker 2: been a bit of a disconnect right in understanding something
Speaker 2: that's happening live in real time, a conflict like the
Speaker 2: one in Iran, and how that's given momentum to the
Speaker 2: industries and areas that you want to invest in. Has
Speaker 2: it got people moving?
Speaker 14: Yes, it's a really really good question, and it has.
Speaker 14: I think it's been a real forcing function. It's put
Speaker 14: a magnifying gloves us up to our defense base and
Speaker 14: how ill prepared we would be for a major conflict.
Speaker 14: And it's helped speed up a lot of the procurement
Speaker 14: processes and conversations with the Department of War. So we're
Speaker 14: seeing the Department of War come to our early stage
Speaker 14: companies and say how fast can you deliver one hundred,
Speaker 14: how fast can you deliver a thousand, how fast can
Speaker 14: you deliver ten thousand, and really start to change their
Speaker 14: thinking around what the requirements are, what matters, and how
Speaker 14: do we make sure that we have the production scale
Speaker 14: capacity to be able.
Speaker 7: To fight into in a future conflict.
Speaker 14: So I'm very hopeful for peace in the Middle East,
Speaker 14: and also you know, this has been a real wake
Speaker 14: up call for a defense department for we really have
Speaker 14: to do and how we have to support the defense
Speaker 14: industrial base in order to be prepared for a future conflict.
Speaker 2: You know, even in the domain of the ocean and
Speaker 2: derail is an interesting case study as well, right that.
Speaker 2: You know, they have focused a lot not just on
Speaker 2: the technology autonomous vehicles in the water, but where they're
Speaker 2: placed around the world. But one data set our Bloomberg
Speaker 2: Tech producers Oie Thomas always sort of tracks the declassified
Speaker 2: spends and where that dollar goes goes to Lockey Martin
Speaker 2: still in the in the aquatic context, is that the
Speaker 2: same story that even if Ulysses and Anderill do move fast,
Speaker 2: the legacy primes are getting all of the government spending.
Speaker 14: Well, let's take Ulysses as the example. So this they
Speaker 14: didn't start the company as a defense prime. They started
Speaker 14: the company the first use cases of the company were
Speaker 14: seagrass planting, seafloor restoration, energy inspection, port inspection, and you know,
Speaker 14: essentially they were working on use cases that had very
Speaker 14: strong cost curves that where you know, their customers couldn't
Speaker 14: pay more than forty fifty sixty thousand dollars for a
Speaker 14: unit to make the economics work. So they had to
Speaker 14: really focus on high quality engineering to build a very
Speaker 14: low cost and highly manufacturable, scalable product for their commercial customers.
Speaker 14: And you know, they have lots of operational experience in
Speaker 14: the field fielding these units for real.
Speaker 7: Use cases in the ocean.
Speaker 14: And you know, we're talking forty fifty sixty thousand dollars
Speaker 14: a pop for their for their uvs. And so the
Speaker 14: Defense Department comes and sees that, and they're like, you've
Speaker 14: got to be kidding me. We're you know, we're paying
Speaker 14: for the exact same thing. We're paying two three four
Speaker 14: five million dollars a pop. Are you're telling me I
Speaker 14: can buy this for forty thousand dollars? So they have
Speaker 14: they you know, they have work to do to catch
Speaker 14: up in terms of you know, proving out their tech
Speaker 14: and real missions. But when you're talking about two or
Speaker 14: three orders of magnitude cost difference for virtually the same thing,
Speaker 14: I think it's just a matter of time before we
Speaker 14: see these defense tech startups start to catch.
Speaker 2: Up to the primes erin It's been really interesting reading
Speaker 2: about you you know, not just you know, what you
Speaker 2: were focused on an index before andries, but you are
Speaker 2: a pallanteerion as well. I think just spend the last
Speaker 2: couple of minutes that we have talking about the American
Speaker 2: Dynamism team, but also your experience and industry and how
Speaker 2: that carries over in how you act as an investor.
Speaker 14: Yeah, I think, you know, my time at Palenteer really shut.
Speaker 2: Well.
Speaker 14: It used to be hobbits, but I prefer volunteer is.
Speaker 14: You know, it really really shaped the way I think
Speaker 14: about not just technology, but technology's role in the world.
Speaker 14: Like Palanteer, the thing that I'm so grateful for really
Speaker 14: ran towards the fire and was like, we want to
Speaker 14: work on the hardest problems. They might be controversial, they
Speaker 14: might be really hard, they're not sexy.
Speaker 7: And we want to go.
Speaker 14: We want to go where the important conversations are happening
Speaker 14: and where the important things are being solved, and we
Speaker 14: want to be close to the problem on the ground,
Speaker 14: with our users, with our customers. So that's really shaped
Speaker 14: how I think about investing in technology today. First of all,
Speaker 14: you know the critical industries that power our economy. We're
Speaker 14: talking about manufacturing, energy supply chain, critical minerals, and mining, defense, aerospace.
Speaker 14: You know, this is what the US economy has historically
Speaker 14: been based on, and yet largely these sectors have largely
Speaker 14: been not disrupted by technology for decades and decades.
Speaker 7: So there's so much room for innovation to happen.
Speaker 14: But to solve these problems, you really have to get
Speaker 14: into the meat of them. You can't solve mining, you know,
Speaker 14: from an office building in San Francisco. You can't solve
Speaker 14: energy unless you're really putting boots on the ground and
Speaker 14: understanding how our grid works.
Speaker 7: So that's what we're very excited about.
Speaker 2: Erin Press right of bend Reis and Horror. It's great
Speaker 2: to have you on the program. Thank you. Now coming up,
Speaker 2: tech earnings are underway and next week is a big one.
Speaker 2: We're going to discuss what to expect. This is Bloomberg Tech.
Speaker 2: Some breaking news crossing the terminal. Google will invest ten
Speaker 2: billion dollars in Anthropic, according to the startup, with another
Speaker 2: thirty billion potentially to follow and Fropic said Google's committing
Speaker 2: to invest ten billion dollars now in cash at a
Speaker 2: three hundred and fifty billion dollar valuation, the same value
Speaker 2: it was at in a funding round in February, but
Speaker 2: not including the money raise. Bloomberg's AI report to sharing
Speaker 2: Gafari has the story and is with us now not
Speaker 2: straightforward but potentially big numbers. What do we need to know?
Speaker 2: How is this structured?
Speaker 15: That's right, So this is part of a bigger trend
Speaker 15: we're seeing where the big tech companies are investing some
Speaker 15: you know, eye popping numbers into the main AI labs,
Speaker 15: and Anthropic being one that especially is in a moment
Speaker 15: when it needs more compute as it's seeing its demand
Speaker 15: sore for products like clod code.
Speaker 2: So up to forty billion dollars, we're just showing shares
Speaker 2: of Alphabet, Prayer and Google. They shut up when the
Speaker 2: headline hit that's not a surprise. How do we get
Speaker 2: up to forty billion dollars? How's it structured?
Speaker 15: So there are certain milestones in place they have not
Speaker 15: disclosed what that is. Similar to what we've seen with
Speaker 15: some past deals between Nvideo and open Ai, and you know,
Speaker 15: it's always a potential in the future. Right when we're
Speaker 15: talking about beyond that initial ten billion. However, that ten
Speaker 15: billion alone is not to be discounted. Again, these are
Speaker 15: sort of unprecedented amounts that we're seeing these labs raised
Speaker 15: on the strength of the demand that they're seeing. However,
Speaker 15: at the same time seeing high cost and high need
Speaker 15: for compute.
Speaker 2: I find on propic to be and it's strategy to
Speaker 2: be so interesting. So if open AI's strategy was to
Speaker 2: spend a lot on its own infrastructure, to me, Anthropics
Speaker 2: seems to think, Okay, I need to do deals that
Speaker 2: get me capacity, but in a way that they don't
Speaker 2: need to spend that much money. Is that the right
Speaker 2: read on how they go about it.
Speaker 15: I think that Anthropic has not been as flashy in
Speaker 15: the past, and some of its announcements. We saw Stargate
Speaker 15: and you know open Ai announce it in the Oval
Speaker 15: Office with President Trump. We've also seen you know, open
Speaker 15: Ai maybe talk about some of these projects a little
Speaker 15: earlier than Anthropic. That being said, Anthropics also its products
Speaker 15: have really fully taken off a little later than open AIQ,
Speaker 15: so they maybe at different moments and their kind of
Speaker 15: curve of trying to get this compute. But as I've
Speaker 15: reported the past, open Ai has said that you know,
Speaker 15: they've been early to this and that they feel confident
Speaker 15: that they have secured this compute well in advance.
Speaker 7: Of this current moment.
Speaker 2: Okay, to recap, Google plans to invest up to forty
Speaker 2: billion dollars into Anthropic. It starts with ten billion dollars
Speaker 2: in cash now at a three hundred and fifty billion
Speaker 2: dollar valuation. Bloomberg Sherine Gafari with a big breaking story.
Speaker 2: Thank you. Let's look ahead to next week because there
Speaker 2: are a lot of big tech names reporting their earnings.
Speaker 2: Bloomberg's equity reporter Ryan Blastelica here to discuss from a
Speaker 2: market cap perspective. That is also a scary calendar, Ryan,
Speaker 2: I mean where do you want to start? April twenty ninth. Wow?
Speaker 16: Yeah, absolutely So on Wednesday, we are getting results from Microsoft, Alphabet, Amazon,
Speaker 16: and Meta that is basically the major four spenders on
Speaker 16: AI infrastructure. So that is going to be a critical
Speaker 16: day for US and the market overall, as we get
Speaker 16: new reads on how much these companies are expecting to
Speaker 16: spend on AI the coming year, as we get further
Speaker 16: insight into how much they're able to monetize their AI services,
Speaker 16: It's going to be a pretty pivotal day and week
Speaker 16: for the market.
Speaker 2: Wait, I'm putting you on the spot a little bit here,
Speaker 2: But as anyone's done the math on the total market
Speaker 2: cap that's reporting on the twenty.
Speaker 16: Ninth, I think it's on fifteen trillion.
Speaker 2: Fifteen trillion of market cap in a single session. MG,
Speaker 2: let's get that as the big number on that day, Okay,
Speaker 2: because that is astonishing. What's this theme? Right? We've spent
Speaker 2: so many quarters Ryan talking about CAPEX. Is there any
Speaker 2: indication that will change that or are we just going
Speaker 2: to be zeroed in on that spending?
Speaker 16: I think CAPEX is going to continue to be the
Speaker 16: main focus for investors. I think there's a little bit
Speaker 16: more optimism surrounding the ROI that we're seeing. We have
Speaker 16: seen big tech in general comeback in recent weeks. It
Speaker 16: seems like there is more optimism out there. But the
Speaker 16: spending question remains paramount because we've seen so much gains,
Speaker 16: in particular in semiconductor stocks over the past couple of weeks,
Speaker 16: with the record setting a rally for the group. If
Speaker 16: where there is any indication that companies are going to
Speaker 16: slow or pause or otherwise you know, not keep boosting
Speaker 16: up their campbex, there could be some pretty broad ramifications.
Speaker 2: Then April thirtieth, Apple, you know, I suppose the story
Speaker 2: is pretty simple. It's the first earnings report since the
Speaker 2: bombshell story that Tim Cook's stepping down as CEO in
Speaker 2: John Turnas is the air apparent effective September first. Is
Speaker 2: there any more to it than that?
Speaker 16: No, I think it's going to be pretty interesting to
Speaker 16: see whether he indicates any kind of change in strategy. Obviously, Apple,
Speaker 16: compared to the other names in big tech, has not
Speaker 16: been nearly as aggressive with AI.
Speaker 2: It's not doing the big spending.
Speaker 16: But things have been going pretty smoothly there as far
Speaker 16: as getting pretty strong demand for the iPhone for high
Speaker 16: end phones in particular. So it does seem like steady
Speaker 16: as she goes. And if there's any change as far
Speaker 16: as the strategy goes, I think that's going to be
Speaker 16: something that people are going to be looking out for
Speaker 16: first and foremost the.
Speaker 2: Most Ryan for Seeca with the earnings come and death
Speaker 2: and next week, thank you, let's get back to that
Speaker 2: breaking new Anthropic is going to receive an investment of
Speaker 2: up to forty billion dollars from Google. Initially, Google put
Speaker 2: ten billion dollars cash in. The stock rose to a
Speaker 2: session high. It's come off it as the news broke,
Speaker 2: but also hit a record at one point, will continue
Speaker 2: to track it as well as how the markets react
Speaker 2: generally to that this is a hot property, but there
Speaker 2: are lots of players involved. What a show it's been.
Speaker 2: Recap on the podcast. You know exactly where to find
Speaker 2: it on the Bloomberg Terminal, online and Apple, Spotify and
Speaker 2: iHeart Happy Friday. Have a great weekend. This is Bloomberg
Speaker 2: Tech