Speaker 1: From the heart of where innovation, money and power collide
Speaker 1: in Silicon Valley and beyond. This is Bloomberg Technology with
Speaker 1: Caroline Hide and Ed Ludlow.
Speaker 2: Live from New York.
Speaker 3: I'm Caroline Hyde, and this is BlueBag Technology coming up
Speaker 3: tes the sales slump forty percent in Europe, having fallen
Speaker 3: in ten of the last twelve months. We get the analysis,
Speaker 3: plus foreign officials and tech execs push Trump's administration to
Speaker 3: rethink the US's global chip strategy and export limits.
Speaker 4: This is the debate.
Speaker 3: OURAI regulation heats up, and Ali Baba chairman Joe Side
Speaker 3: criticizes US tech giants for their massive spending on AI
Speaker 3: infrastructure and warns of a potential bubble in data center construction.
Speaker 3: We shine a light what's happening in the markets, bring
Speaker 3: you also breaking news as well as we understand that
Speaker 3: Russia is currently in the US saying that Russia agrees
Speaker 3: to ban on striking Ukraine energy assets. That was, of
Speaker 3: course something that had been discussed in the previous end
Speaker 3: of the show, but we are seeing of course the
Speaker 3: United States coming out there and saying indeed that Russia
Speaker 3: agrees to a ban on the striking of Ukrainian energy assets.
Speaker 3: Will bring you more on that story in a moment
Speaker 3: and the implications to the broader market. But right here,
Speaker 3: right now, we go back to what's happening in the
Speaker 3: tech space. I'm looking at US that currently off about
Speaker 3: five tens percent after yesterday's significant rally. I want to
Speaker 3: drill into some of the individual companies that have been
Speaker 3: on the move as well, and interestingly, after the phenomenal
Speaker 3: rally that we saw in Tesla yesterday, it's off by
Speaker 3: only about two tents of percent. That's in the light
Speaker 3: of that significant drop once again in European sales that
Speaker 3: are down forty percent from the month of February after
Speaker 3: performing a similar amount in the month of January, and
Speaker 3: we're now down forty three percent over the last two months.
Speaker 3: I'm shining like what happens to BYD as well. It's
Speaker 3: not by more than four percent, maybe even five percent
Speaker 3: after yesterday's rally, as it finally shows that it crescendoed
Speaker 3: further than Tesla in terms of its revenue for fiscal
Speaker 3: twenty twenty four. Let's drill into all of this, the
Speaker 3: pushes in the pools and pleased to welcome Craig.
Speaker 4: Trudell with us and Craig.
Speaker 3: Look, the moon music has been sour for Tesla in
Speaker 3: terms of sales when it comes to Asia, when it
Speaker 3: comes to Europe, and this is more of the same,
Speaker 3: but it's not dragging on the stock too much today.
Speaker 5: Yeah, I think it's really been something to watch the
Speaker 5: last few days now that we've seen this real rally
Speaker 5: in the shares. They were really getting beaten down and
Speaker 5: we saw, you know, the Trump administration sort of mount
Speaker 5: this push, you know, with the Commerce Secretary coming out,
Speaker 5: Howard Lutnik and saying, you know, go out and buy
Speaker 5: Tesla stock. It's never going to be this cheap again.
Speaker 5: We you know, didn't see an immediate sort of perking
Speaker 5: up of the shares as a result of that, but
Speaker 5: they really sort of furiously, you know, rallied to begin
Speaker 5: this week. And you know, even despite the fact that
Speaker 5: these numbers from the European Auto Manufacturers Association are really ugly,
Speaker 5: as you say, you know, this isn't just a last
Speaker 5: couple of months. It's ten of the last twelve that
Speaker 5: we've seen the red, as this chart shows.
Speaker 3: I think what's important is to shine a light on
Speaker 3: how much it's the opposite of the trend in you're
Speaker 3: more broadly though EV sales are actually are more than
Speaker 3: thirty percent.
Speaker 4: It really is an outlier.
Speaker 5: Yeah, absolutely, And we should of course note that this
Speaker 5: is not just a story about you know, Elon Musk
Speaker 5: and potential brand damage. There is a transition of the model.
Speaker 5: Why that's really important to keep in mind here where
Speaker 5: you know, when you change over a vehicle from one
Speaker 5: generation to the next, it means some disruption in your
Speaker 5: output that is having an effect on Tesla the beginning
Speaker 5: to begin the year. But you know, this is also
Speaker 5: the case that you know, the industry was preparing for
Speaker 5: twenty twenty five being a much tougher compliance year from
Speaker 5: and emissions perspective. So Tesla also is just going to
Speaker 5: have a lot more to deal with in terms of
Speaker 5: competition because other carmakers feel the need to bring their
Speaker 5: emissions down for those compliance reasons.
Speaker 3: If competition wasn't stiff enough coming from China's byd creature, Dell,
Speaker 3: we thank you so much. Meanwhile, let's get an investigate
Speaker 3: because Kathy would well maybe unsurprising me for many, is
Speaker 3: remaining bullish on Tesla but still calling for the stock
Speaker 3: to hit two than six hundred dollars in five years,
Speaker 3: almost ten times its current price, but a Megs daviding
Speaker 3: there sat down for an exclusive interview with the invest
Speaker 3: CEO that was over at HSBC Global Investment Summit in
Speaker 3: Hong Kong.
Speaker 6: Take listen, China is very important to Tesla, and I
Speaker 6: actually think that Elon Musk and May Musk his mother
Speaker 6: are are sort of ambassadors for the United States. Yes, yes, yes, yes,
Speaker 6: and rightly so so. But to answer your question directly,
Speaker 6: if China were to fail, that would be a short
Speaker 6: term hit to the stock. Would it take us away
Speaker 6: from twenty six hundred dollars? No, because the robotaxi story
Speaker 6: is much more a function of the Western world where
Speaker 6: ride hailing costs are so much higher than they are
Speaker 6: in China.
Speaker 3: That's going to take in Bailey Lipshitz, who's been delving
Speaker 3: into the resilient pollition coming from ARC invest. But really
Speaker 3: this isn't so much about warries and blips of European sales.
Speaker 3: This is about long time focus on AI and robotaxis No.
Speaker 7: Exactly, And as Craig Treudale pointed out earlier, she's been
Speaker 7: predicting the dawn of robotaxies from Tesla since at least
Speaker 7: twenty seventeen, so long term bullish. It is their biggest
Speaker 7: holding in the rc ETF. But one thing I want
Speaker 7: to call out when you look at this company when
Speaker 7: it trades on it's multiple If you pull the pe
Speaker 7: on Tesla relative to the rest of the mag seven
Speaker 7: p is north of ninety.
Speaker 3: Are you saying that Tesla doesn't trade on fundamental They
Speaker 3: don't trade on fundamentals.
Speaker 7: And also, keep in.
Speaker 3: Mind, show us, Bailey, you show us if you bought.
Speaker 7: ARC five years ago, you're up twenty seven percent. You're
Speaker 7: lagging the S and P five hundred by one hundred
Speaker 7: and twenty five percent, okay, and the Nazak by one
Speaker 7: hundred and fifty percent. So been a losing bet in
Speaker 7: the long term. But nonetheless, Kathy would sticking to those guns.
Speaker 7: It kind of does sound like some of the retail
Speaker 7: investors I talked to and the idea that the cyber
Speaker 7: truck was only part of a thesis and now we're
Speaker 7: looking to driverless taxis as well as the humanoid robot.
Speaker 4: And she doesn't even facts.
Speaker 7: You're in the human eye on robots, right, Yeah, No,
Speaker 7: I mean again, if you do the math with a
Speaker 7: current share count, that's an eight and a half trillion
Speaker 7: dollar company with her forecasts, So they're going to be
Speaker 7: doing a lot with driverless technology. Even if you add
Speaker 7: up some of the bigger carmakers with the likes of
Speaker 7: an Uber, you're still not even close to what that
Speaker 7: would look like. She's obviously been bullish. She's pounded the
Speaker 7: table for bitcoin to hit a million dollars at some
Speaker 7: point in the not too distant future. So really talking
Speaker 7: her book, but definitely something.
Speaker 4: To take a bit with a grain.
Speaker 3: Of salt we put into perspective of Kathy would the
Speaker 3: bets that has won out and she was a long
Speaker 3: term bull on Nvidio but actually removed her options and
Speaker 3: ultimately exposure to the company just as it started to
Speaker 3: rally hard. With Tesla, she has main committee, but they
Speaker 3: have pulled some of their chips off the table.
Speaker 7: Right, Yeah, it's a lower percentage of the holding of
Speaker 7: when you look at the flagship ETF that Ark Innovation ETF,
Speaker 7: now about eleven twelve percent of the ETF is allocated
Speaker 7: to that. That was closer to like one fifth when
Speaker 7: you look in that looked towards the beginning of the
Speaker 7: year the end of last year, so pulling back, but
Speaker 7: as you mentioned, kind of as the stock was rallying. Yes,
Speaker 7: it's down about a third year to date, but nonetheless,
Speaker 7: taking that long term view is retail investors will say,
Speaker 7: you've been right about Tesla for five six years at
Speaker 7: this point, and you're sitting pretty strongly in the green.
Speaker 7: But if you look at the rest of some of
Speaker 7: the investments that ARC has been pitching and been leaning into,
Speaker 7: they haven't all really worked out, and that's why there's
Speaker 7: been such a lag between the flagship ETF and pretty
Speaker 7: much every other tech index.
Speaker 3: Any Lipshaw's bringing us one investor take when it comes
Speaker 3: to Tesla, Let's go broader in terms of the overall
Speaker 3: market analysis of these EV numbers and the.
Speaker 4: Future for the company.
Speaker 3: Seth Goalstea and please say welcomes from morning Star Equity Strategist.
Speaker 3: You're also the chair of the EV committee over there.
Speaker 3: You currently have a hold rating Tesla. You've got a
Speaker 3: price target of two fifty, so actually below where we
Speaker 3: currently are after yesterday's rally. Why are we not sinking
Speaker 3: more on these yet further dire sales news out of Europe?
Speaker 8: Well, I think there's a lot of enthusiasm with the
Speaker 8: full self driving technology. Yesterday's news that full self driving
Speaker 8: was approved in China bodes well for China sales is
Speaker 8: a far bigger market for Tesla than Europe. And so
Speaker 8: when you look at full self driving, we have the
Speaker 8: robo taxi testing that's going to be launched in Austin,
Speaker 8: the full self driving unsupervised launch in Austin, and we'll
Speaker 8: come to California later this year. And then with the
Speaker 8: positive news of being able to launch the supervised level
Speaker 8: two version of full self driving in China, that bodes
Speaker 8: well for Tesla delivery. So I think that's the momentum
Speaker 8: that's that's carrying heavier today versus the European deliveries being down.
Speaker 3: Okay, it has that optimism enough to vindicate the about
Speaker 3: one hundred times future earnings that we currently trade at
Speaker 3: for Tesla. As we were just hearing from Bailey, well.
Speaker 8: Tesla's a very high growth stock, has been for years,
Speaker 8: and with Tesla's still having strong growth prospects, whether that's
Speaker 8: the energy storage system, whether that's robotaxis, full self driving,
Speaker 8: subscription softwarees, there is still a lot of room for
Speaker 8: the Tesla growth story to play out. So I think
Speaker 8: the market is still valuing the Tesla does still have
Speaker 8: a lot of growth left. Even if the Mile three
Speaker 8: model y are approaching that limit of deliveries, they still
Speaker 8: have the new more formal suv coming out later this
Speaker 8: year that should then push deliveries back into growth.
Speaker 3: Seth get into the details here. Therefore, is it the
Speaker 3: fact that they haven't really had an overhaul of their
Speaker 3: current product that is limiting current sales and of course
Speaker 3: the mismatches they try and iron out a new form
Speaker 3: of production, or actually is it the politicking of La
Speaker 3: must taking an effect here.
Speaker 8: It's still unclear what the drivers are behind the first
Speaker 8: two months to client, especially in the European market, you
Speaker 8: could have a lot of consumers waiting for their new
Speaker 8: model Why, which just began deliveries in Europe in March,
Speaker 8: so consumers could have been holding off until they could
Speaker 8: secure a new model Why. You also have the more
Speaker 8: affordable vehicle being launched, and so some consumers may be
Speaker 8: waiting for a lower price point vehicle from Tesla. But
Speaker 8: in the European market especially you finally have long range
Speaker 8: ed competition at a comparable price for years, a Tesla
Speaker 8: Model three year model. Why was the only long range
Speaker 8: in this case, I'm defining it at at least four
Speaker 8: under kilometers or more of range at the same price
Speaker 8: that would be as the same as an IC after subsidies.
Speaker 8: So for key markets like Germany or the UK, a
Speaker 8: Tesla was the most affordable long range eed. Now you
Speaker 8: have other competitors who are offering long range evs at
Speaker 8: a similar or slightly cheaper price point, and so there's
Speaker 8: true competition for the first time in the European market,
Speaker 8: and that could be leading some consumers to choose a
Speaker 8: different vehicle besides the Tesla.
Speaker 3: Latin America Europe can access BYD and I was interested
Speaker 3: in Kathywood's take there that BWEY isn't a compation competive
Speaker 3: so when it comes to av but we've heard that
Speaker 3: they are focusing on autonomous vehicle technology, So could it
Speaker 3: start to ramp up and take on the robotaxi future
Speaker 3: of Tesla too?
Speaker 8: Well, they very well could. Bid has a level two
Speaker 8: product that they offer in China for free right now,
Speaker 8: whereas even if you buy a Tesla and China you
Speaker 8: still have to pay for full self driving.
Speaker 1: So that could lead.
Speaker 8: Some consumers to choose a bid, both will be level
Speaker 8: two products inside China, and China is a unique market
Speaker 8: because the data for ad testing has to stay within China.
Speaker 8: You can't send it back to Tesla's headquarters in the
Speaker 8: US for refinement, and so China maybe a different market
Speaker 8: altogether where BID is more comparable to a Tesla. But
Speaker 8: if you're looking at a market like the US or
Speaker 8: Europe right now, I think Tesla would be more comparable
Speaker 8: with Alphabet's Waymo product as a robo taxi competitor.
Speaker 3: So with the current price, we're trading app more than
Speaker 3: your two fifty dollars, call you hold and brace for
Speaker 3: further volatility. Are we ever going to just see a
Speaker 3: calmer up into the right trajectory for Tesla stock.
Speaker 8: Well, if there are months and quarters of good news
Speaker 8: that comes out, then we could see Tesla's stocks start
Speaker 8: to rally. But when it was trading in the high
Speaker 8: four hundreds, like it was in mid December, we had
Speaker 8: a one star rating, we thought Tesla was to sell
Speaker 8: because we thought a lot of the good news was
Speaker 8: priced in, a lot of it was priced for perfection.
Speaker 8: Even when you're looking at valuing the robotaxi business, we
Speaker 8: assigned maybe.
Speaker 7: A lower valuation of some of the more.
Speaker 8: Bullish forecasts, because when you think of robotaxi, it's going
Speaker 8: to be a cheaper price point, which means the lower
Speaker 8: total addressable market for consumers and for Tesla's profitability. And
Speaker 8: they can't just take a thirty percent take like an
Speaker 8: uber can. They also have to manage their expensive That's
Speaker 8: another whole set of additional overhead expenses. So I do
Speaker 8: think it's going to be a very profitable business for them,
Speaker 8: but maybe not as profitable as the market's implying.
Speaker 3: How warried have you been about key man risk with
Speaker 3: Tesla as well, concerns about access to the pay he'd
Speaker 3: been promised, and indeed the focus he has over at
Speaker 3: the White House right now.
Speaker 8: Well, Elon Musk has always had multiple positions, you know,
Speaker 8: whether that was buying Twitter, turning into X a couple
Speaker 8: of years ago, or helping to lead SpaceX. He wasn't
Speaker 8: the CEO, but he still does take a leadership position
Speaker 8: in that company. He also has boring company, Neurolinks, so
Speaker 8: I'd imagine that Elon is still focusing most of his
Speaker 8: time and energy at Tesla. I think last week's event
Speaker 8: highlighted that that he's still focused on Tesla, and he's
Speaker 8: probably taking a little bit of a step back at
Speaker 8: some of his other companies, letting the management teams at
Speaker 8: places like SpaceX and X do more of the projects,
Speaker 8: take more of a leadership role so he can spend
Speaker 8: more time at the White House. I'm not too concerned
Speaker 8: right now that Elon's going to leave Tesla. I think
Speaker 8: they'll work out a deal that'll be a very favorable
Speaker 8: compensation package because the shareholders did both for it. So
Speaker 8: there is a lot of shareholders report for Elon wants
Speaker 8: to get paid, and I think what we'll see is
Speaker 8: Elon will get a pay package, we'll stay at Tesla,
Speaker 8: and so I don't see a lot of keyper service
Speaker 8: for testing.
Speaker 3: Seth Golstein, it has been great catching up with you.
Speaker 3: Thank you, morning star Crity strategists on things Tesla. Meanwhile,
Speaker 3: coming up major tech companies and foreign officials. They are
Speaker 3: pushing the Trump administration to rethink the country's global semiconductor strategy.
Speaker 4: We'll have the details next.
Speaker 3: Meanwhile, let's talk about some of those key tech executives
Speaker 3: and companies in Vidia, Broadcom, also Intel. Interesting report coming
Speaker 3: out this time. From analysis over at UBS, it looks
Speaker 3: as though Intel is reportedly strategizing to rejuvenate its chip
Speaker 3: design and broaden its foundry business. Could this be about
Speaker 3: securing these clients in VideA broadcom that being written up
Speaker 3: by UBS analysts and within a chury this has been
Speaker 3: big technology. Our own officials, our major tech companies are
Speaker 3: lobbying the White House so loose some trade restrictions placed
Speaker 3: on AI chips. Of course, that was back in the
Speaker 3: final days of the Biden administration. REUMAGS Mike Sheppard joins
Speaker 3: us for more on this. Now. It's a so called
Speaker 3: AI diffusion rule here, and it feels as though Oracle
Speaker 3: Nvidia are the key companies that would like this not.
Speaker 4: To go into act.
Speaker 9: Well, that's right, Caro, they have the most at stake here.
Speaker 9: And to back up a little bit to reminder audience
Speaker 9: of what this AI diffusion rule does to help understand
Speaker 9: where the companies are. Look, this rule divides the world
Speaker 9: into three tiers. It sets up a first tier of
Speaker 9: countries the closest US allies maybe about twenty of them
Speaker 9: that get unlimited access. And then there's another tier of
Speaker 9: countries the adversaries of the Usa, China, and Russia that
Speaker 9: are really cut off from access to the most advanced
Speaker 9: AI chips. But then there's this big fat middle of
Speaker 9: nations and that includes Israel, the United Arab Emirates, and
Speaker 9: even India, which all have their own ambitions and are
Speaker 9: all markets where Nvidia and Oracle are looking to do
Speaker 9: a lot of business. And the prospect of having to
Speaker 9: face restrictions on how much computing power they can sell
Speaker 9: to anyone nation, or having to deal with guardrails that
Speaker 9: could prove to be regulatory hurdles that might steer business elsewhere,
Speaker 9: is what is prompting this lobbying push by Nvidia and
Speaker 9: also by foreign leaders.
Speaker 3: I mean, just think if you're not able to house
Speaker 3: more than seven percent of your overall compute capacity in
Speaker 3: certain countries, that's really going to impact Oracle exactly its
Speaker 3: plants at the moment, plans over Malaysia, for example. So
Speaker 3: would they want a complete repeal? Are we likely to
Speaker 3: see a complete repeal?
Speaker 9: Well, the reporting from our colleagues Jenny Leonard and Mackenzie Hawkins,
Speaker 9: and a shout out to them for the great work
Speaker 9: that they did with this report. What they turned up
Speaker 9: was that Nvidian Oracle are most steadfastly against this role.
Speaker 9: They are the ones who really want to see it
Speaker 9: next all together and then started again from scratch. Everyone
Speaker 9: recognizes that there is a need for some sort of
Speaker 9: governance about where AI chips go. They do provide a
Speaker 9: security advantage or risk if they spread to widely, and
Speaker 9: the US is already subjected in video to restrictions on
Speaker 9: exports of chips also used in AI to China. We've
Speaker 9: seen that come up, for instance with deep Seek. But
Speaker 9: now what they want to do is they want this
Speaker 9: started from scratcher. Are there companies though, like Google and
Speaker 9: Anthropic that are willing to work with the rule but
Speaker 9: would like to see it recast in ways that are
Speaker 9: a little bit more favorable in bugs.
Speaker 3: Mike Shefford, thank you so much on the AI diffusion rule.
Speaker 4: It's time now for talking tech.
Speaker 3: First up, another TikTok executive steps down.
Speaker 4: Rick Channeley, who.
Speaker 3: Oversaw ad sales and global marketing, will step into an
Speaker 3: advisory role as part of a reorganization. Now it's the
Speaker 3: leadst management change by the social media company as it
Speaker 3: faces an April fifth deadline to reach a US sale deal. Now,
Speaker 3: according to the information at least eight other executives of
Speaker 3: Left TikTok since twenty twenty five plus Deep Seek unveiled
Speaker 3: its latest V three model, promising better programming capabilities. Chinese
Speaker 3: ai startup dropped the update without actually a formal announcement
Speaker 3: as it looks to remain competitive against its rivals. Deep
Speaker 3: Seak claims the V three model could address real world
Speaker 3: challenges while remaining accurate and efficient, and Ali Baba chairman
Speaker 3: Joe Sai says AI data centers maybe at the beginning
Speaker 3: of a bubble. Who's speaking over the HSBC Global Investment
Speaker 3: Summit in Hong Kong, and Sai said a lot of
Speaker 3: US data center announcements were duplicative and overlap with each other.
Speaker 3: So let's get more on that exact story of Bloomberg's
Speaker 3: Peter Elstrom and finding talk trying to push against these
Speaker 3: US giants that met the Amazons about their commitment to
Speaker 3: AI infrastructure.
Speaker 10: Yeah, it's interesting comments from Joe Sai. As you mentioned,
Speaker 10: he's chairman of Ali Baba. He's been through this for many,
Speaker 10: many years. He got a start in the dot com bubbles,
Speaker 10: so he's seen some of these bubbles in the past,
Speaker 10: and he's calling it out. He was at this conference
Speaker 10: in Hong Kong talking with investors and tech executives at
Speaker 10: that point, and he said he's concerned about this AI
Speaker 10: bubble forming, particularly around data centers. We have seen incredible
Speaker 10: amounts of money getting poured into these data centers, especially
Speaker 10: from the US tech companies Amazon and Microsoft and Google
Speaker 10: all are pouring tens of billions of dollars into these
Speaker 10: data centers. Of course, you'll re call that open Ai
Speaker 10: and SoftBank talked about spending five hundred billion dollars on
Speaker 10: data centers in the US, so they're really kind of
Speaker 10: crazy numbers. Alibab has not been shy about making these investments.
Speaker 10: In fact, they plan to spend more than fifty billion dollars.
Speaker 10: But the numbers are starting to add up, and the
Speaker 10: question is whether those are going to pay off with
Speaker 10: some profitable services down the line.
Speaker 3: And it speaks to investor anxiety over the last few
Speaker 3: months that we're just putting too much money in not
Speaker 3: getting enough reward out. In fact, Mizuho analysis coming out today,
Speaker 3: I always love the notes coming out from Jordan client
Speaker 3: and he pointed, perhaps these are sort of these pot
Speaker 3: shots being fired over in video and US giants buy
Speaker 3: China tech internet leaders, and he said, it's kind of
Speaker 3: funny that just straight after GtC, we're getting these negative
Speaker 3: shots against in video and the entire AI investment narrative
Speaker 3: that generally centers around one hundred percent on US suppliers.
Speaker 4: Is there a theme that.
Speaker 3: This is almost geopolitical, that this is China fighting back
Speaker 3: against US, and how US has basically ridden the wave
Speaker 3: of AI more than them so far.
Speaker 10: Well, I think it's important to look at the China
Speaker 10: tech industry, China business for broadly, not as a monolith.
Speaker 10: These are individual companies making individual choices, but when you
Speaker 10: look at how they add up. There have been more
Speaker 10: than ten AI models introduced just over the past two weeks.
Speaker 10: They're coming out fast and furious after Deep Seek, and
Speaker 10: you're exactly right. They are positioning themselves as quite different
Speaker 10: from the US models. They're lower costs, they're much more
Speaker 10: efficient in a lot of ways, and they're not spending
Speaker 10: the same amount of money. Part of that is because
Speaker 10: of US restrictions. The US has stopped them from buying
Speaker 10: the highest end in video chips in particular, so rather
Speaker 10: than spend tens of billions of dollars on some of
Speaker 10: these efforts. They're spending much more and they're using a
Speaker 10: lot of engineering expertise to be able to come out
Speaker 10: with models that are very competent. They are competitive globally,
Speaker 10: and they're innovative in a lot of ways. So they're
Speaker 10: going at a different part of the market, and they
Speaker 10: could be bringing down profits overall for the whole market.
Speaker 4: Just good to remind use of that.
Speaker 3: Ali Baba's CEO, though tod say that AI is one
Speaker 3: in a generation opportunities. So kind of speaking from two
Speaker 3: sides of the mouth here, Peter Elstrom is so good
Speaker 3: to have you. Thank you, Welcome back to blumel Technology
Speaker 3: and Caroline hid in New York. Let's get a quick
Speaker 3: check on these markets, because we remain tentatively higher after
Speaker 3: yesterday's big rally on the NASSACK. Across all benchmarks, we're
Speaker 3: up another five ten percent on the Nasdaq one hundred.
Speaker 4: You dig into the detail who leads.
Speaker 3: Us on a points perspective on the downside's video, We've
Speaker 3: still got some anxiety around geopolitics on restraints from exporting
Speaker 3: for that name.
Speaker 4: But go into the.
Speaker 3: Companies that lead us on the higher side, and it's
Speaker 3: Apple from a points perspective, we're off well currently up
Speaker 3: by one and a quarter percent. We're seeing once again
Speaker 3: maybe some feel good factors coming from the EU for
Speaker 3: once for this particular name, but it really is your
Speaker 3: biggest points contributor. We're now back on the last like
Speaker 3: one hundred to where we're training at the beginning of March.
Speaker 3: But in video, as I say, is still the worst
Speaker 3: on the points downside, We're off by eight tenths of
Speaker 3: percent as we're still trying to understand how much they
Speaker 3: are going to be able to get their incredibly sophisticated
Speaker 3: chips in More broadly around the world. I'm looking at
Speaker 3: Tesla though, flitting between gains and losses. Today we have
Speaker 3: negative news when it comes to EU sales down forty
Speaker 3: percent again from the month of February. However, we saw
Speaker 3: a significant rally yesterday up almost eleven percent, so maybe
Speaker 3: we just pull back a little bit and a little
Speaker 3: bit of profit taking. We're down three tenths toer percent,
Speaker 3: but there is so much volatility in this market. Let's
Speaker 3: get a broader context for you amid tariff threats and
Speaker 3: so much else for big tech. Denise Chisholm is with
Speaker 3: US fidelity investments, quantitive marks strategy direct to and you
Speaker 3: put such a historical lens, which we need at this
Speaker 3: moment because often it feels unprecedented. Take us back to
Speaker 3: a sentiment right now and how it makes ultimately the
Speaker 3: context of what it was like back in what the
Speaker 3: Gulf War. You say, we've never had as much pessimism.
Speaker 11: Yeah, I mean, in some ways we've had a very
Speaker 11: cluster of anomalous signals in this tempercent correction. I mean,
Speaker 11: obviously this correction has been one of the fastest on record,
Speaker 11: but I think the unique part of it was the
Speaker 11: decline and sentiment from you know, you can look at
Speaker 11: the AAII measure from you know, bullish to bearish. You
Speaker 11: can look at the Google trends in terms of recession sentiment.
Speaker 11: You can look at a lot of the sentiment indicators,
Speaker 11: the defense of rotation we've seen, just the rotation in
Speaker 11: international stocks. All of these signals happen less than three
Speaker 11: and one percent of the time, and in some ways
Speaker 11: much of it has been during war crises or prior recession.
Speaker 11: So without a recessionary event, this is incredibly unique. I
Speaker 11: think when you look at the signaling perspective and you're
Speaker 11: willing to take a media term time horizon of six
Speaker 11: to twelve months. All of these extreme signals are usually
Speaker 11: contrarian buy signals for the overall market. But the extreme
Speaker 11: anomaly this time is that the market isn't really down
Speaker 11: a lot as much as we've seen a ten percent correction,
Speaker 11: and even over the last six months you can say
Speaker 11: it's flat. So to the extent that investors are uniquely
Speaker 11: concerned about the fact that, hey, we're seeing google recessionary
Speaker 11: trends spiking to recessionary levels to the extent that that
Speaker 11: has been the case in history. Should stocks go down
Speaker 11: to meet that recessionary sentiment, you actually find the opposite correlation,
Speaker 11: meaning the less stocks are down when you are at
Speaker 11: these peak recession sentiment levels, usually that's better signals in
Speaker 11: terms of a stock market advance in the future. It's
Speaker 11: almost like the lack of correction in stocks gets it right,
Speaker 11: or that stocks are potentially looked throughing something, looking through something.
Speaker 11: So I think that those unique signals in the data
Speaker 11: that actually do suggest that opity.
Speaker 3: Okay, so if you are willing to take on the
Speaker 3: abrupt fall or two coming going forward, are we nearing
Speaker 3: a bottle is bottom. Is that sort of the signal
Speaker 3: that you're getting from historical context right now?
Speaker 11: Yeah, I think when you look at it historically, it
Speaker 11: doesn't really nail the bottom. In terms of picking bottoms,
Speaker 11: I think that the signals that I look at from
Speaker 11: a probability perspective or longer term in nature. So when
Speaker 11: I look and say you want to look out six
Speaker 11: to twelve months and absorb the volatility, I think that
Speaker 11: there's opportunities in that. That's less to say that the
Speaker 11: bottom was yesterday or today, or maybe even in two
Speaker 11: months from now, but it is to say that after
Speaker 11: the correction, I think that it might be too late
Speaker 11: to be bearished to the extent that you have that
Speaker 11: year long time horizon.
Speaker 3: And Denny's what we've seen is a real flip around
Speaker 3: in terms of who's outperformed, healthcare dominating even a bit
Speaker 3: of financials, but technology has lagged. Is it now that
Speaker 3: we start to see people recommit, have fundamentals changed at
Speaker 3: the same time as human anxieties and any pessimism across
Speaker 3: the border markets.
Speaker 11: Yeah, So back to that defensive rotation. The defensive sectors
Speaker 11: in the market, consumer staples, healthcare, the old telecommunications services,
Speaker 11: and utilities have outperformed by about eleven hundred basis points.
Speaker 11: That again has only happened less than three percent of
Speaker 11: the time in history, and you usually see a cyclical
Speaker 11: rotation after that, despite the fact that fundamentals may in
Speaker 11: fact deteriorate, which is to say that, look, a lot
Speaker 11: of that concern around numbers or around the economy has
Speaker 11: been somewhat priced in. So I do think that there
Speaker 11: are opportunities in technology. I think the intriguing part about
Speaker 11: technology is that we've seen really more multiple compression than
Speaker 11: we have seen a decline in earning estimates. So once
Speaker 11: you're out of that top quartile, when I look back
Speaker 11: in history and say, okay, you're out of the top
Speaker 11: quartile of relative forward PE or even relative trailing PE,
Speaker 11: and you're now into that muddy middle, you usually have
Speaker 11: a positive risk reward to the extent that fundamentals continue
Speaker 11: to improve.
Speaker 3: And the positive risk reward dominates in any of a
Speaker 3: part of technology. Are we still thinking hardware the pix
Speaker 3: and shovels where we reallocate or do software, which hasn't
Speaker 3: had so much whiplash continue to support too.
Speaker 11: Yeah, So I think software looks the most intriguing in
Speaker 11: my data set. So again we have the data going
Speaker 11: back to nineteen sixty two, and once you're into that
Speaker 11: bottom half of the distribution on any valuation measure, and
Speaker 11: software is there. So you're getting in again cheap relative
Speaker 11: to usually wear software trades. You usually have a positive
Speaker 11: risk reward. Again, you don't have to necessarily be right
Speaker 11: on fundamentals because you have above fifty to fifty ydds
Speaker 11: of outperformance even if fundamentals tend to deteriorate. This isn't
Speaker 11: to say that software is set up to outperform right
Speaker 11: this second, but it is to say that it looks
Speaker 11: like from a historical context your downside is limited and
Speaker 11: to the extent that you have a call option for
Speaker 11: future growth, your upside is actually shifting the positive risk reward.
Speaker 11: So I think that of the three major subsectors, hardware
Speaker 11: software and semiconductor software looks the most intriguing to me.
Speaker 3: A glasshow full kind of a feeling coming from Denise,
Speaker 3: We thank you so much, enjoying the show. As always,
Speaker 3: dnis Chism of Fidelity Investments, Now I'll invest. Kathy would
Speaker 3: actually spoke exclusively with Bloomberg over at the HSBC Global
Speaker 3: investors someone in Hong Kong to discuss the global economic outlook.
Speaker 3: Let's give the context of how AI can help in
Speaker 3: the long term.
Speaker 2: Just take a listen.
Speaker 6: We think the economy is getting hit by a lot
Speaker 6: of uncertainty, and I think a lot of people are
Speaker 6: scared for their jobs. In the US, anyone involved with
Speaker 6: the government, so federal, state, and local or quasi government
Speaker 6: in the healthcare and education space. You know, there could
Speaker 6: be as much as thirty percent of the labor force
Speaker 6: in the United States. And then we've got AI as
Speaker 6: another layer of uncertainty. We're seeing middle management teams actually
Speaker 6: being let go because of the productivity gains associated with AI.
Speaker 6: You know, their bosses can handle more and more and
Speaker 6: more over time. So that's another source of uncertainty, but
Speaker 6: we think that is going to play out positively longer term.
Speaker 6: Technology and breakthroughs in technologies are always associated with new
Speaker 6: jobs that we can't even imagine. We're very impressed by
Speaker 6: what is going on in China, and of course there
Speaker 6: was the Deep Seek moment, which for China, or it
Speaker 6: was the equivalent in China for the and the rest
Speaker 6: of the world. That chat GPT was in late twenty two.
Speaker 6: I think so that was a big wake up call.
Speaker 6: And one of the things we learned so interesting is
Speaker 6: that yes, they may have done it less expensively, maybe
Speaker 6: much less expensively. We're not quite sure about that, but
Speaker 6: the algorithm very creative. It had not been created in
Speaker 6: the West. This is from China. It is open source.
Speaker 6: So now everyone is starting to use it. They say,
Speaker 6: we love that idea and we're it. So what we've
Speaker 6: also learned and did not know until we started studying
Speaker 6: this open source movement here in China is that it
Speaker 6: really started a decade ago because a lot of software
Speaker 6: providers from the Western world we're not providing their software
Speaker 6: to China out of fear of IP theft. So China said, okay,
Speaker 6: let's do it ourselves and move open source. I love
Speaker 6: open source and I think it's going to create a
Speaker 6: lot of competition out there, which when it comes to innovation,
Speaker 6: is a very good thing, especially for the end consumer.
Speaker 3: I'll convess Kathy with there. Let's keep talking about competition.
Speaker 3: Stick with chatchibt in the impact. For decades, Google dominated
Speaker 3: online search, and now Generator AI and the competitiveness coming
Speaker 3: from open AI are forcing the company to rethink it's
Speaker 3: most well known product. Blue Meg's Julia Love joins us
Speaker 3: now today Bloomg's big take, and Elizabeth Read is a
Speaker 3: Google veteran that you really shine a light on in
Speaker 3: your Bloomberg BusinessWeek story because she's now got some big
Speaker 3: overhauls to do and she's doing them.
Speaker 12: Yes, so Liz Read is a fascinating rising star within
Speaker 12: doodle She is now in the top job leading doodle Search.
Speaker 12: And she came to this role from the Maps division.
Speaker 12: That's where she spent most of her career. And so
Speaker 12: while she knew searched very well, she was a little
Speaker 12: bit less wedded to some of the traditional ways of
Speaker 12: doing things, and she brought a more experimental spirit that
Speaker 12: has been really crucial in this new age when so
Speaker 12: many of the basics about search are being challenged.
Speaker 3: And here comes AI overviews for example. Now, just go
Speaker 3: back in history a little bit and talk about why
Speaker 3: there was a lack of well real innovation on the
Speaker 3: product side of things. Why were people curtailed from upending
Speaker 3: what we all knew and understood in terms of the
Speaker 3: blue links.
Speaker 12: Yes, with our reporting, we actually unearthed some new examples
Speaker 12: of how doodle search employees were pushing to roll out
Speaker 12: generative AI and search well before the launch of chat GPT,
Speaker 12: but they faced a lot of resistance. I think there
Speaker 12: was a lot of self regulation happening that Doodlers just
Speaker 12: weren't inclined to challenge the company's fundamental business model. Executives
Speaker 12: were also concerned about whether the technology could deliver the
Speaker 12: necessary level of accuracy because people just hold Doodle to
Speaker 12: such a high bar, a much higher bar than a
Speaker 12: startup would be held too.
Speaker 3: And there's the frustration that actually their transformers innovation is
Speaker 3: then used by someone else. But the question is monetization.
Speaker 3: Have they really got to the bottom of that, because
Speaker 3: many a warrant. What about the ads that you can
Speaker 3: put into an AI overview?
Speaker 12: Yes, I think that remains the big question. Doodle has
Speaker 12: incorporated ads into AI over views and so far their
Speaker 12: search market share is pretty much unchanged, but there are
Speaker 12: some concerns among analysts that growth in search will begin
Speaker 12: to level off, and in the meantime, Goodle's embrace of
Speaker 12: generative artificial intelligence is raising huge concerns for all of
Speaker 12: the publishers who depend on Doodle for traffic.
Speaker 3: It's a fascinating story. Deep read go take it on
Speaker 3: with Julia Love.
Speaker 4: We thank you.
Speaker 3: Coming up, US drone makers are battling for a biggest
Speaker 3: share with the domestic market. I'll speak with Scudio CEO
Speaker 3: about the growth.
Speaker 4: And Chinese competition. That's next. This is Blue Meg Technology.
Speaker 3: The global drone market is dominated by Chinese makers, but
Speaker 3: there were growing efforts by US rulemakers, defense strands, and
Speaker 3: startups to gain a bigger foothold in markets.
Speaker 4: Including the US domestic.
Speaker 3: One showing US now is Adam Murrie, the CEO of
Speaker 3: drone maker Skuydio, and I love a quote that you've
Speaker 3: been making saying that basically drones are revolving from toys
Speaker 3: to tools to infrastructure. Well, how do you break down
Speaker 3: your growth right now in those three contexts.
Speaker 13: So I think we're at a really exciting moment for
Speaker 13: the industry where historically drones have been manually flown. You know,
Speaker 13: if you're using it for work, you send an operator
Speaker 13: out in the field to fly the drone, and people
Speaker 13: have done all kinds of amazing things and that kind
Speaker 13: of operating paradigm. But the big shift that we're seeing
Speaker 13: now is you can put the drone in a docking station.
Speaker 13: It can be flown remotely and autonomously. It basically becomes
Speaker 13: a fully autonomous robotic system. And the impact and the
Speaker 13: use cases that you unlock when you do that are
Speaker 13: just incredible. So one of the areas where we're seeing
Speaker 13: this accelerate the most is in public safety, where you
Speaker 13: could put drones in docking stations and they can autonomously
Speaker 13: fly out in response to nine one one calls and
Speaker 13: just fundamentally change the outcome because they can get there
Speaker 13: in a few seconds. They give the responding officers better
Speaker 13: situational awareness. And you know, I think we're at the
Speaker 13: beginning of this just entirely new chapter drones is infrastructure.
Speaker 3: Talk to us about the chapter of US versus Chinese
Speaker 3: main drones in this police and fire department demand. How
Speaker 3: much are you now able to fulfill it?
Speaker 13: So there's interesting historical context here. So if you think
Speaker 13: about what a drone is, at its core, it's basically
Speaker 13: consumer electronics combined with a radio control airplane a radio
Speaker 13: control helicopter. That's the origin of the industry, and historically
Speaker 13: both those things have been made in China, and so
Speaker 13: the Chinese companies really got out to a substantial early lead,
Speaker 13: especially in the kind of toy market and then the
Speaker 13: tools market. You know, we believe very strongly it's critical
Speaker 13: that there are strong US companies, strong Western companies that
Speaker 13: can provide this technology. I think we're it's still early
Speaker 13: days to the industry. It's going to become more and
Speaker 13: more important over time.
Speaker 4: You know, we're.
Speaker 13: Installing these things across our cities, across critical infrastructure, and
Speaker 13: the risks from a data perspective, from a national security perspective,
Speaker 13: from a cybersecurity perspective, are substantial. Our goal is to
Speaker 13: build the best products in the world for this new
Speaker 13: chapter of drones right here in the US. We made
Speaker 13: very big early bets on AI and autonomy when we
Speaker 13: started the company ten years ago, and we're now at
Speaker 13: the moment where we're starting those to see those payoff.
Speaker 3: Yeah, and talk about the payoff though, because when we
Speaker 3: think about what China has done so well, it is
Speaker 3: about efficiency. It is about the scale at which they've
Speaker 3: been able to streamline production. How are you now managing
Speaker 3: to replicate that here in the US.
Speaker 13: So you know, this is not the kind of thing
Speaker 13: that's going to happen overnight. The strength of China and
Speaker 13: the Chinese companies that we compete with is definitely in
Speaker 13: their hardware scale, their cost leverage, you know, the hardware
Speaker 13: ecosystem that they're taking advantage of in China. We've been
Speaker 13: manufacturing our drones in the US from the beginning. You know,
Speaker 13: we didn't start doing this honestly because we thought it
Speaker 13: was going to be critical from a national security perspective.
Speaker 13: We started doing it because we felt like it was
Speaker 13: the best way to build the best product. And we've
Speaker 13: gotten to the point now where we ship close to
Speaker 13: fifty thousand drones, which is still small relative to our
Speaker 13: Chinese competitors, but our market share in the enterprise segments
Speaker 13: that we focus on, you know, public safety, critical infrastructure
Speaker 13: like energy utilities is substantial, and the more scale we
Speaker 13: get up to, the more cost advantages that we get,
Speaker 13: I think from a capability standpoint now, just on the hardware,
Speaker 13: you know, we've we've gotten to be very competitive with
Speaker 13: the Chinese companies, and we have more advance capabilities in
Speaker 13: AI and autonomy, so you know, it's it's it's tough
Speaker 13: competition for sure. You know, we have the exciting position
Speaker 13: of being the US underdog against big Chinese incumbents. But
Speaker 13: I feel very good about our position. And I think
Speaker 13: especially as these things become more air driven, more autonomous,
Speaker 13: more and more the capabilities to find through software that
Speaker 13: really plays to our strengths as a country and as
Speaker 13: a company.
Speaker 3: Are they becoming ever more supported by the administration. What's
Speaker 3: on your wish list?
Speaker 13: Well, look, we're you know, we're a product and technology company.
Speaker 13: We're really focused on, you know, on making our products
Speaker 13: as useful as they can be. I think that, you know,
Speaker 13: looking back now, I think the first Trump administration deserves
Speaker 13: a lot of credit for recognizing the nature of competition
Speaker 13: with China, the kind of unfair trade practices that they
Speaker 13: had been partaking in, and that has now become kind
Speaker 13: of mainstream consensus view. I will say with the new administration,
Speaker 13: we're very optimistic about seeing a lot of people from
Speaker 13: the tech world in there that I think really understand
Speaker 13: that technology at a deep level. And you know, it's
Speaker 13: still early days, but we're optimistic.
Speaker 3: Skydio CEO Adam Ray, thanks for the optimism and for
Speaker 3: joining us. Levittown It's a new six part podcast series
Speaker 3: from Bloomberg investigating the rise of deep fake pornography online.
Speaker 4: It tells a story of a group.
Speaker 3: Of young women in a New York City suburb, horrified
Speaker 3: to learn that their photographs have been manipulated and posted online,
Speaker 3: and how they took matters into their own handsmerg's Margie
Speaker 3: Murphy joins us. Now for more, you go back to
Speaker 3: twenty twenty. You discuss how female called Kayla in particular,
Speaker 3: finds a manipulated photo of herself online.
Speaker 4: But this is a global.
Speaker 3: Story of issues of deep fake pornography.
Speaker 4: But start here in Levittown.
Speaker 2: Absolutely, I mean, we start with Kayla and just to
Speaker 2: it's not even Kayla who discovers a seemingly pornographic image
Speaker 2: of herself, it's her father.
Speaker 4: And we take you.
Speaker 2: Back into her bedroom when her father comes in, hands
Speaker 2: her a phone and says, what is this? And then
Speaker 2: we unravel what kind of becomes this horror story that
Speaker 2: engofs dozens of women in Leavittown, but they later realize
Speaker 2: they're part of this small network, kind of global clearing
Speaker 2: house of deep fake pornography, non consensual deep fake pornography,
Speaker 2: revenge porn harassment, all connected to one website, which Olivia
Speaker 2: and I try to find out more about and meet
Speaker 2: lots of investigators, prosecutors, victims all around the world.
Speaker 3: Of course, you've been doing your work with Olivia Carvill
Speaker 3: here at Bloomberg and the Story podcast of course based
Speaker 3: in twenty twenty and then you wrote up a key
Speaker 3: piece in twenty twenty three. But is this all still
Speaker 3: an issue that we're currently seeing right?
Speaker 2: So the story that we're covering began in twenty twenty,
Speaker 2: we reported on it twenty twenty three, and now twenty
Speaker 2: twenty five we've got this podcast coming out. A lot
Speaker 2: has changed. The problem has not gone away. We've seen
Speaker 2: dozens of school cases where there's been children deep faking
Speaker 2: their classmates. We're hearing obviously more about celebrity nonconsensual deep
Speaker 2: fake pornography. And this is amidst the kind of rise
Speaker 2: of generative AI improvements in technology. And we got a
Speaker 2: figure recently from a traffic analysis company that showed that
Speaker 2: there was a six hundred percent increase from last year
Speaker 2: for newdifying apps. And those apps are the kind of
Speaker 2: their like phone apps, that are very easily accessible, and
Speaker 2: what they do is you can just screenshot a photo
Speaker 2: from someone's social media account, run it through the app,
Speaker 2: and minutes you've removed the person in the photos clothes.
Speaker 2: So a lot of those apps are involved in these
Speaker 2: school cases and those are just completely soaring in popularity,
Speaker 2: very cheap and easy to use.
Speaker 3: Briefly, law enforcement is targeting it, the government targeting it.
Speaker 2: It's been a challenge and we've spoken to law enforces, cops, prosecutors,
Speaker 2: law makers. Internationally, it's challenging because there are patchwork laws
Speaker 2: in different countries, in different states. In the US, they
Speaker 2: have different laws. Right now, there is hope that an
Speaker 2: actual federal law will be brought into force. It passed
Speaker 2: a bill passed through the Senate last month and it
Speaker 2: will go through the House this month, hopefully to take
Speaker 2: it Down Act, which would put pressure on the platforms
Speaker 2: where these images are being shared to take the images
Speaker 2: down as quickly as possible and also penalize the piece
Speaker 2: for the people posting them.
Speaker 3: The right time to catch your full Big Take podcast
Speaker 3: series therefore on Spotify and iHeart, We thank you.
Speaker 4: This is remote technology.