WEBVTT - Tesla Under Pressure, Big Tech Bolsters S&P 500 0:00:00.840 --> 0:00:05.080 From the heart of where innovation, money and power collide 0:00:05.400 --> 0:00:10.680 in Silicon Valley and beyond. This is Bloomberg Technology with 0:00:10.800 --> 0:00:37.520 Caroline Hyde and Ed Ludlow. 0:00:27.240 --> 0:00:28.080 Live from New York. 0:00:28.160 --> 0:00:31.680 This is Bloomberg Technology coming up. Trade tensions they ramp 0:00:31.760 --> 0:00:34.960 higher as US and China accused one another of violating 0:00:35.000 --> 0:00:35.920 recent agreements. 0:00:36.040 --> 0:00:38.440 If we bring you the tech impact, that's. 0:00:38.280 --> 0:00:40.519 As big tech stocks have actually been back in the 0:00:40.600 --> 0:00:43.000 driver's seat, outperforming the S and P five hundred for. 0:00:43.000 --> 0:00:44.479 Eight consecutive weeks. 0:00:44.920 --> 0:00:48.360 But Tesla is under pressure with sales falling aggressively in 0:00:48.440 --> 0:00:50.240 France to a three year low. 0:00:50.600 --> 0:00:52.160 Can musks return from. 0:00:52.120 --> 0:00:55.600 Doge turning around for first, let's checking on these markets 0:00:55.720 --> 0:00:58.760 which websaw on the day. We were in risk aversion 0:00:58.840 --> 0:01:01.400 mode a little bit earlier, and now we tread backwater 0:01:01.800 --> 0:01:04.000 to flat. Remember May was a stellar month and the 0:01:04.080 --> 0:01:06.280 Nazarck Cup nine percent for the S and P five hundred, 0:01:06.360 --> 0:01:07.080 having one of its. 0:01:06.959 --> 0:01:08.720 Best Mays in years. 0:01:09.000 --> 0:01:10.639 But we are up just a tenth of a percent 0:01:10.640 --> 0:01:13.400 as we try and shake off what is anxiety around 0:01:13.560 --> 0:01:16.679 trade tensions and we get a dose of manufacturing reality. 0:01:16.800 --> 0:01:19.600 Is manufacturing numbers come in weak. Looking at the Golden 0:01:19.640 --> 0:01:21.800 Dragon Index. This is, of course the NASA Golden Dragon. 0:01:22.080 --> 0:01:25.680 Looking at some of the tech giants in China, that 0:01:25.720 --> 0:01:27.760 too recovers up a tenth of a percent. Move on 0:01:27.800 --> 0:01:30.319 to individual movers because there are some laggards out there, 0:01:30.400 --> 0:01:33.319 and notably Tesla has been off today. More broadly, and 0:01:33.360 --> 0:01:34.840 we are going to keep a keen eye on what's 0:01:34.840 --> 0:01:36.959 happening with two point seven percent to the lower as 0:01:36.959 --> 0:01:39.120 we worry about sales in France. We'll dig into that 0:01:39.200 --> 0:01:41.959 later in the show. Byd this is the Wrong Taker. 0:01:41.959 --> 0:01:44.480 We'll bring you what bid shares have been doing. Their 0:01:44.520 --> 0:01:47.200 depository receiats have been basically trading flat, but here we 0:01:47.240 --> 0:01:48.960 have it off by about two tenths of a percent. 0:01:49.360 --> 0:01:50.840 Was lower in Chinese trading. 0:01:51.000 --> 0:01:54.080 That as the competition fierce competition is getting some criticism 0:01:54.440 --> 0:01:58.920 from the government itself and government related entities. But focusing 0:01:58.920 --> 0:02:01.800 more broadly on China, not just the EV sector, We're 0:02:01.840 --> 0:02:03.400 going to look at what it has been happening with 0:02:03.440 --> 0:02:06.200 the Golden Dragon index. Look, as we say, just recovering, 0:02:06.200 --> 0:02:08.320 but after the last three days that has been having 0:02:08.600 --> 0:02:11.240 let's call it a plummet following remarks. Now we know 0:02:11.240 --> 0:02:14.600 of President Trump saying that Beijing is violated at trade talks. 0:02:14.880 --> 0:02:18.000 More pain could be install course, as China issues its 0:02:18.000 --> 0:02:21.560 own claims that the US has preached recent deal itself grimgs. 0:02:21.600 --> 0:02:22.919 Mike Shepard joins US. 0:02:22.840 --> 0:02:28.720 Look, the tensative agreements of Switzerland are unwinding themselves somewhat. 0:02:29.600 --> 0:02:32.399 Well, they really are, Cara. We are seeing this datent 0:02:32.520 --> 0:02:35.120 that have been achieved in Geneva just a few weeks 0:02:35.160 --> 0:02:39.519 ago rapidly fade away. On Friday, we saw President Donald 0:02:39.600 --> 0:02:44.200 Trump accuse Beijing of violating the spirit of that understanding 0:02:44.560 --> 0:02:48.200 without offering too many specifics, but his trade advisor Jamison 0:02:48.240 --> 0:02:50.920 Greer helped fill in the blanks, and the US concerns 0:02:51.000 --> 0:02:54.520 seemed to center on what they see as Beijing's failure 0:02:54.600 --> 0:02:58.200 to lift barriers on exports of rare earth minerals to 0:02:58.320 --> 0:03:02.840 the US quickly enough whatever was discussed in Switzerland. On 0:03:02.880 --> 0:03:05.120 the flip side, though, we are seeing China come back 0:03:05.320 --> 0:03:10.280 very strong today accusing the US of violating its promises 0:03:10.440 --> 0:03:13.480 under that agreement with some recent steps, and we saw 0:03:13.480 --> 0:03:17.320 those with the American move to unveil new guidelines that 0:03:17.360 --> 0:03:22.160 are coming on AI chip export controls, and that included 0:03:22.280 --> 0:03:26.440 a warning to US allies against using Huawei's Ascend chip, 0:03:26.480 --> 0:03:29.160 which is a challenge of course to Nvidia. The US 0:03:29.200 --> 0:03:32.360 has also moved to restrict exports and sales of chip 0:03:32.400 --> 0:03:35.200 design software to China, which is a big deal for 0:03:35.360 --> 0:03:39.480 China's own AI and tech ambitions. And then finally the 0:03:39.680 --> 0:03:42.400 icing on the cake of course, the revocation of Chinese 0:03:42.400 --> 0:03:45.760 student visas. All of those things in China's bill of 0:03:45.760 --> 0:03:49.200 goods against the US this morning, and this raises questions 0:03:49.200 --> 0:03:52.760 about whether hjion Paying and Donald Trump will actually speak 0:03:52.800 --> 0:03:54.680 by phone as Donald Trump has said he would like 0:03:54.760 --> 0:03:55.640 to and mind. 0:03:55.520 --> 0:03:58.320 What's so notable is that two of those moves of 0:03:58.400 --> 0:04:02.120 the three that you outline completely tech focused. Is it 0:04:02.160 --> 0:04:04.040 going to be technology that remains the eye of the 0:04:04.080 --> 0:04:05.680 storm when this attack. 0:04:06.680 --> 0:04:08.800 Well, it's either the eye of the storm, Caro, or 0:04:08.880 --> 0:04:11.480 the thing that is driving the direction of the storm. 0:04:11.560 --> 0:04:15.560 Because remember this comes on top of years of escalating 0:04:15.640 --> 0:04:20.240 restrictions on exports to China imposed by the US and 0:04:20.400 --> 0:04:24.159 really also twisting allies arms to take part in those 0:04:24.240 --> 0:04:27.400 as well. Remember this is not just semiconductor exports, it's 0:04:27.440 --> 0:04:30.880 also sales of chip making machinery to Beijing. All of 0:04:30.920 --> 0:04:34.960 this is designed to curb China's ambitions in areas like 0:04:35.080 --> 0:04:38.720 artificial intelligence, and this is really starting to take a 0:04:38.839 --> 0:04:42.960 toll in a way politically between Washington and Beijing, and 0:04:43.000 --> 0:04:46.680 we're seeing tech emerge as this flashpoint and could be 0:04:46.760 --> 0:04:51.400 what unravels whatever understanding may have emerged engine Even now, 0:04:51.680 --> 0:04:55.240 there is a lot of time before the ninety day 0:04:55.320 --> 0:04:58.400 pause expires, and the two sides still could find a 0:04:58.480 --> 0:05:02.599 way back to the bargaining table and to maybe have 0:05:02.720 --> 0:05:05.400 that call between the two leaders. But right now the 0:05:05.480 --> 0:05:08.159 direction of travel is not heading in that way, at 0:05:08.240 --> 0:05:09.400 least from what we are seeing. 0:05:09.440 --> 0:05:11.719 Caro make Shepherd breaking it down, We thank you, and 0:05:11.960 --> 0:05:15.279 let's stick with how markets are reacting, but more broadly, 0:05:15.360 --> 0:05:18.120 how they should be thinking about this trade uncertainty. An 0:05:18.120 --> 0:05:21.599 expert is Eliza Toovin, managing director at Gano Global. We 0:05:21.920 --> 0:05:25.080 turn to your years of advising government, the CIA, and 0:05:25.120 --> 0:05:29.160 of course, more broadly the field of enterprise. How bad 0:05:29.200 --> 0:05:32.039 is this looking? How much we were turning to escalation now? 0:05:33.680 --> 0:05:35.680 Hi, Caroline, great to be on with you, and I 0:05:35.720 --> 0:05:39.240 agree with Michael Shepherd that the honeymoon. 0:05:38.680 --> 0:05:40.599 We saw coming out of Geneva. 0:05:40.160 --> 0:05:43.479 A few weeks ago is now shattered and we're back 0:05:43.520 --> 0:05:46.400 in this cycle of escalation between the US and China, 0:05:46.480 --> 0:05:48.720 and I agree with you that at the center of 0:05:48.760 --> 0:05:53.600 this is technology. What's interesting about China's very strenuous reaction 0:05:54.120 --> 0:05:57.160 to the US export controls on the Huawei assnship is 0:05:57.560 --> 0:06:00.960 their propaganda apparatus has long been arguing that the US 0:06:01.040 --> 0:06:05.200 export controls are ineffective and that China can work around them. 0:06:05.520 --> 0:06:08.800 But I think the level of emphasis they're putting on this, 0:06:08.960 --> 0:06:11.960 you know, the volume at which they're really screaming for 0:06:12.000 --> 0:06:15.839 these things to be removed, indicates just how effective and 0:06:15.880 --> 0:06:18.080 how painful they are on China. 0:06:18.240 --> 0:06:19.440 So we're going to be. 0:06:19.520 --> 0:06:23.440 Seeing to see, watch to see how the US reacts 0:06:23.480 --> 0:06:27.400 going forward. China is trying to press the US very 0:06:27.440 --> 0:06:31.440 hard to make more concessions. After Geneva, the tariffs came 0:06:31.480 --> 0:06:36.440 down significantly, but really at the heart of those tensions 0:06:36.560 --> 0:06:40.240 were China's export control on rare earth and then the 0:06:40.360 --> 0:06:44.520 US export controls on AI chips and related tooling. 0:06:44.960 --> 0:06:45.480 Let's go to. 0:06:45.440 --> 0:06:48.440 AI chips first before we get to rares, because there's 0:06:48.440 --> 0:06:51.760 not only the criticism coming from China but some US companies. 0:06:51.800 --> 0:06:53.320 I just think of what Jensen Wong was telling our 0:06:53.360 --> 0:06:56.599 own ed Ludlow last week how much basically we're forcing 0:06:56.680 --> 0:06:59.200 China to innovate, and how he longs to be able 0:06:59.240 --> 0:06:59.960 to access that much. 0:07:00.680 --> 0:07:01.720 Do you ever see that happening. 0:07:03.720 --> 0:07:07.080 I think it's all about this scale of compute that's needed. 0:07:07.440 --> 0:07:11.360 China can always find workarounds through smuggling, through making some 0:07:11.480 --> 0:07:14.240 of their own chips, but it's really all about scaling, 0:07:14.360 --> 0:07:16.840 and as you talk about on your show a lot, 0:07:17.280 --> 0:07:20.880 really being able to make enough chips to supply the 0:07:21.040 --> 0:07:25.280 rapidly escalating demands of compute in this age of AI 0:07:25.440 --> 0:07:27.920 is at issue, and that's where the US still has 0:07:27.960 --> 0:07:29.840 this very large. 0:07:29.560 --> 0:07:31.360 Lead just being able to scale up. 0:07:31.640 --> 0:07:35.160 So if China is able to extract any additional concessions 0:07:35.200 --> 0:07:38.200 from the US so that they can get more chips legally, 0:07:38.280 --> 0:07:39.720 that's going to help them kind. 0:07:39.520 --> 0:07:41.640 Of shrink the gap faster. 0:07:42.080 --> 0:07:45.560 However, if the US keeps these export controls in place 0:07:45.920 --> 0:07:49.240 and enforces them strictly and gets allies and partners on 0:07:49.320 --> 0:07:52.120 board on some of the tooling, some of the aspects 0:07:52.160 --> 0:07:55.920 where countries like Japan and the Netherlands and Germany are strong, 0:07:56.360 --> 0:08:01.120 then this gap between the US and China compute stance 0:08:01.200 --> 0:08:03.680 to lengthen over the coming months and years. 0:08:03.920 --> 0:08:06.840 But both sides have chips on the table here that 0:08:06.880 --> 0:08:08.560 they can play, and play hard. I was just at 0:08:08.600 --> 0:08:11.560 the Reagan National Economic Forum on Friday where there was 0:08:11.560 --> 0:08:15.160 a lot of anxiety just how confident Chinese leadership is 0:08:15.200 --> 0:08:17.200 at the moment that they too can fight back. Liza, 0:08:17.640 --> 0:08:21.040 what about the rare earth's signals? How much pain could 0:08:21.040 --> 0:08:23.520 that levee on US industry itself as well? 0:08:24.800 --> 0:08:28.960 We know that the auto manufacturers and the defense manufacturers 0:08:29.000 --> 0:08:32.680 were they came crying to the US government before the 0:08:32.720 --> 0:08:35.679 Geneva talks and said that these things are starting to 0:08:36.520 --> 0:08:41.160 impose pain and in starting to impose work stoppages, and 0:08:41.920 --> 0:08:42.880 that's something. 0:08:42.559 --> 0:08:44.520 That it's a gray rhino. 0:08:44.640 --> 0:08:48.160 I mean, the US national security establishment has known about 0:08:48.160 --> 0:08:52.040 this dependency on China for rare earth processing for years, 0:08:52.400 --> 0:08:53.520 but they haven't come up. 0:08:53.480 --> 0:08:56.760 With a solution at scale. But I think what was. 0:08:56.760 --> 0:08:59.840 Interesting over the last month is that China has broken 0:08:59.840 --> 0:09:04.080 the glass on actually using this coercive instrument. It's actually 0:09:04.920 --> 0:09:10.079 now ratcheting up pressure it. Shei Jinping has an appetite 0:09:10.400 --> 0:09:12.920 for leverage, and now that he knows he has this 0:09:13.000 --> 0:09:15.079 leverage over the US you're going to see him pushing 0:09:15.480 --> 0:09:17.920 again and again to kind of recycle this leverage and 0:09:17.960 --> 0:09:23.240 try to extract more concessions from the US. But rather 0:09:23.280 --> 0:09:26.319 than bending over and giving China more concessions, over the 0:09:26.400 --> 0:09:28.800 last couple of weeks, you've seen them doubling down with 0:09:28.880 --> 0:09:34.920 this empowered Commerce department, strengthening and broadening the export controls. 0:09:35.600 --> 0:09:38.960 So you don't expect the US to blink in this moment. 0:09:39.240 --> 0:09:42.600 What advice do you give to the private sect right 0:09:42.600 --> 0:09:45.040 now as to how tough this could get for access 0:09:45.080 --> 0:09:47.280 to RAS and indeed, in the flip side of you're 0:09:47.280 --> 0:09:49.679 a Chinese company access to US chips. 0:09:51.040 --> 0:09:54.120 Well, I think that the private sector needs to remember 0:09:54.200 --> 0:09:58.280 that this isn't just a competition about tech and trade, 0:09:58.520 --> 0:10:01.320 I mean tariffs and technolog The export controls, of course, 0:10:01.360 --> 0:10:05.200 are incredibly important to markets, but perhaps even more important 0:10:05.240 --> 0:10:09.520 is to watch the geopolitical tensions that are unfolding in 0:10:09.559 --> 0:10:12.960 the Indo Pacific around Taiwan in the South China Sea. 0:10:13.160 --> 0:10:16.560 Secretary of Defense Pete Hegseth, just on Saturday at the 0:10:16.600 --> 0:10:20.680 Shangri Law Forum was warning that a Taiwan crisis could 0:10:20.679 --> 0:10:25.239 be imminent, and we know that China frequently has military 0:10:25.400 --> 0:10:29.480 drills kind of these practice exercises around Taiwan and in 0:10:29.520 --> 0:10:32.800 the South China Sea, and it's had the habit lately 0:10:32.880 --> 0:10:35.600 of not announcing these in advance, so it's not giving 0:10:35.679 --> 0:10:38.240 markets heads up that these are going to happen. 0:10:38.480 --> 0:10:39.480 Why does it do that. 0:10:39.600 --> 0:10:44.320 It wants to preserve ambiguity if outside observers aren't sure 0:10:44.480 --> 0:10:47.800 if this is just a drill or if it's something 0:10:47.880 --> 0:10:51.959 more an actual rehearsal for something like a blockade. That's 0:10:52.080 --> 0:10:55.400 very worrisome because it shrinks the window of warning. And 0:10:55.440 --> 0:10:59.480 that's something that we're watching very closely at Garno Global 0:10:59.559 --> 0:11:03.480 kind of the links between these technology export controls terrors 0:11:03.480 --> 0:11:07.080 and the potential for some kind of supply chain disrupting 0:11:07.160 --> 0:11:11.120 crisis around Taiwan that could prevent the chips from getting 0:11:11.120 --> 0:11:14.160 out of Taiwan, perhaps for a couple of weeks or longer. 0:11:14.440 --> 0:11:16.640 Well, that's crucial to our audience, So thanks for making 0:11:16.640 --> 0:11:19.920 that link. Visitobin of course, managing director at Garno Global. 0:11:20.240 --> 0:11:22.760 Great to have some time with you. Coming up, let's 0:11:22.760 --> 0:11:25.520 talk about chips more. But Broadcomm's results this week, they're 0:11:25.600 --> 0:11:27.920 likely to actually show ai demand is still booming. We 0:11:28.000 --> 0:11:30.200 can talk about what's expected, how it could impact the 0:11:30.200 --> 0:11:43.840 wider market. This is bloombag technology. Let's talk about how 0:11:43.920 --> 0:11:46.880 the same tech giants that contributed to the S and 0:11:46.880 --> 0:11:49.319 P five pounders decline in April, they are now driving 0:11:49.360 --> 0:11:52.480 the recovery in US equities. Just taking video and put 0:11:52.480 --> 0:11:54.719 a bow on a better than expected earning season for 0:11:54.760 --> 0:11:57.560 big tech last week by delivering a strong outlook for 0:11:57.640 --> 0:12:00.679 revenue despite US restrictions on sales of its to China. 0:12:01.120 --> 0:12:02.200 This is as we expect. 0:12:02.280 --> 0:12:04.880 Earning some Braolcom this week, you see the shares are 0:12:04.920 --> 0:12:05.760 also trading higher. 0:12:05.920 --> 0:12:06.559 Lue Meg's run. 0:12:06.600 --> 0:12:09.800 Bastantaker has been writing about how the Magnificent Seven in 0:12:09.840 --> 0:12:13.679 particular have helped bounce back of our lows some phenomenal 0:12:13.720 --> 0:12:14.560 recovery numbers. 0:12:16.360 --> 0:12:18.880 Hey, thanks for having me. So this earning season was 0:12:18.920 --> 0:12:22.040 a real test for big tech, especially given just how 0:12:22.160 --> 0:12:25.840 uncertain the backdrop has become, given tariffs, given all sorts 0:12:25.840 --> 0:12:28.960 of geopolitical tensions, given concerns about AI spending in the 0:12:29.080 --> 0:12:31.920 ROI from AI, and I would say that broadly speaking, 0:12:31.960 --> 0:12:34.959 this group passed with flying colors. I'd say the notable 0:12:35.000 --> 0:12:37.040 exception was Apple, which is dealing with a number of 0:12:37.040 --> 0:12:40.520 its own sort of idiosyncratic issues. But the major companies 0:12:40.600 --> 0:12:45.600 like Microsoft, Nvidia, Meta Alphabet quite strong across the board, 0:12:45.640 --> 0:12:47.319 showing pretty positive trends. 0:12:47.320 --> 0:12:48.960 And these are all companies. 0:12:48.480 --> 0:12:51.280 That have allowed the market to really recover off the 0:12:51.320 --> 0:12:53.360 low that we saw early in April. 0:12:53.800 --> 0:12:56.000 It's interesting that we're not back to our record highs. 0:12:56.040 --> 0:12:57.400 We're actually inching in on them. 0:12:57.480 --> 0:12:57.720 Ryan. 0:12:57.840 --> 0:12:59.839 Meanwhile, looking at the S and P five hundred, the 0:13:00.240 --> 0:13:03.480 valuation story, that's starting to get a little dicey, right 0:13:03.520 --> 0:13:05.400 when you're looking at magnificent seven names. 0:13:05.840 --> 0:13:07.679 Yeah, so I'd say these names got pretty cheap by 0:13:07.720 --> 0:13:10.040 a lot of metrics in the whole tear off cell 0:13:10.080 --> 0:13:12.720 off in early April. They have come back quite dramatically, 0:13:12.760 --> 0:13:15.040 I think in videos up something like forty five percent 0:13:15.160 --> 0:13:17.880 or so since that low. So these are pretty remarkable 0:13:17.920 --> 0:13:20.600 gains and it has come back in the valuation. But 0:13:20.640 --> 0:13:23.000 I would say sort of the countering argument to this 0:13:23.280 --> 0:13:25.800 is growth is expected to remain pretty strong for a 0:13:25.800 --> 0:13:27.400 lot of these companies, and if you look at something 0:13:27.440 --> 0:13:30.120 like the PEG ratio, they are all treating at fairly 0:13:30.280 --> 0:13:34.520 modest ratios on that metric. So the valuations have come 0:13:34.600 --> 0:13:36.800 back some but the growth that was just affirmed in 0:13:36.840 --> 0:13:39.199 these most recent reports also pretty positive. 0:13:39.720 --> 0:13:43.120 We're looking at the moment of how pricey perhaps they 0:13:43.160 --> 0:13:46.520 are from a price to forward looking earnings perspective at 0:13:46.600 --> 0:13:48.160 least Umeg's ran for Selca. 0:13:48.240 --> 0:13:49.640 It's great to have you on as always. 0:13:49.840 --> 0:13:51.920 Let's get you even more of a take here and 0:13:51.920 --> 0:13:54.360 particularly on AI demand what it means for certain companies 0:13:54.400 --> 0:13:56.400 about to give us their numbers. Angelo Zeno's with us 0:13:56.480 --> 0:13:59.960 VPN senior equity analyst over at CFRA Research. We think, 0:14:00.000 --> 0:14:02.840 think about how in Nvidia helped the market recover. We 0:14:02.880 --> 0:14:05.520 saw the numbers looking good. What about Broadcom as well? 0:14:05.559 --> 0:14:07.480 We're still going to get AI optimism there. 0:14:08.960 --> 0:14:11.640 Yeah, so thanks for having me, Caroline, and I think, yeah, 0:14:11.920 --> 0:14:14.000 to your point, I think it's going to be very strong. 0:14:14.160 --> 0:14:16.360 We're looking for top line growth of about twenty percent 0:14:16.400 --> 0:14:20.600 here for the for the April quarter. And listen, I 0:14:20.960 --> 0:14:23.600 think when you kind of look overall the trends that 0:14:23.640 --> 0:14:26.440 we've seen here over the last couple couple of weeks 0:14:26.520 --> 0:14:28.680 or you know, since Q one earning season really starting 0:14:28.720 --> 0:14:30.800 with you know, Alphabet and Microsoft at the start of 0:14:30.880 --> 0:14:35.440 earning season up until in video last week, the trend 0:14:35.520 --> 0:14:37.560 on the compute side of things is I think much 0:14:37.560 --> 0:14:41.480 stronger than anybody had anticipated, and really something that Gentsen 0:14:41.560 --> 0:14:45.360 Wong last year, really last week really pounded the table on. 0:14:45.480 --> 0:14:47.640 So when you kind of think about the drivers here 0:14:47.840 --> 0:14:51.600 specifically for you know, the AI semi names here, over 0:14:51.640 --> 0:14:53.880 the next couple of years, it really is going to 0:14:53.880 --> 0:14:56.600 be tied to compute and the higher demand for computer 0:14:56.640 --> 0:14:59.120 is going to drive higher capital spending plans, right, which 0:14:59.160 --> 0:15:01.800 is what we saw Q one earning season. So we 0:15:01.840 --> 0:15:06.120 think those trends remain intact here. For broadcams specifically, they've 0:15:06.120 --> 0:15:09.760 got to buy a sixty forty split in semis versus software, 0:15:10.320 --> 0:15:12.760 So the semi side will continue to drive that demand. 0:15:12.880 --> 0:15:16.440 But software shouldn't be ignored because the profitability there and 0:15:16.480 --> 0:15:17.920 growth continues to be very good. 0:15:18.360 --> 0:15:21.520 I mean, we're expecting strong things from broad Comm you too. 0:15:21.600 --> 0:15:25.360 Look your top semi conductive names are in Video and Broadcom, AMD, Marvell. 0:15:25.720 --> 0:15:27.280 I'm looking at how much some of those names have 0:15:27.400 --> 0:15:29.800 already driven the S and P five hundred recovery. A 0:15:29.840 --> 0:15:32.400 great chart from Ryan's story is that in Vidio makes 0:15:32.480 --> 0:15:35.120 up twelve percent. Basically, the S and P five hundred 0:15:35.160 --> 0:15:38.280 is rebound since April, but swiftly after them was Microsoft 0:15:38.280 --> 0:15:41.160 that you named as being a winner of late broadcom 0:15:41.320 --> 0:15:42.280 some five percent. 0:15:42.640 --> 0:15:44.680 But is the valuation getting a little too. 0:15:44.600 --> 0:15:47.440 Rich now given the amount of geopolitical anxiety we're just 0:15:47.440 --> 0:15:49.080 talking about with Eliza Tobin. 0:15:50.080 --> 0:15:52.160 Yeah, I mean, I think as far as the valuation 0:15:52.360 --> 0:15:55.720 is concerned, you know, it's it's not as attractive as 0:15:55.720 --> 0:15:57.320 it was four to six weeks ago. But I will 0:15:57.320 --> 0:15:59.560 tell you that the valuations has just got you know, 0:16:00.160 --> 0:16:03.240 just hit you know, basement level values. I mean, you 0:16:03.240 --> 0:16:06.320 were talking about Nvidia at one point trading about seventeen 0:16:06.400 --> 0:16:08.680 eighteen times on our twenty twenty six estimate. 0:16:08.880 --> 0:16:10.480 They're now try closer. 0:16:10.120 --> 0:16:13.240 To about twenty four to twenty five times on twenty 0:16:13.280 --> 0:16:15.440 twenty six expectations. And I will tell you this, the 0:16:15.520 --> 0:16:18.280 visibility again is improving here has improved of the last 0:16:18.320 --> 0:16:20.960 couple of weeks, whether it be on the trade side 0:16:20.960 --> 0:16:24.240 of things, improving commentary on trade, or whether it be 0:16:24.480 --> 0:16:27.640 you know, just from the reiteration in terms of capex 0:16:27.640 --> 0:16:32.040 spens plans for some of these hyperscalers. Now, I will say, 0:16:32.720 --> 0:16:34.760 as far as you know what to look out for 0:16:34.920 --> 0:16:37.320 here on the geopolitical side of things, A lot is 0:16:37.360 --> 0:16:39.200 going There are a lot of moving parts here. Over 0:16:39.240 --> 0:16:41.240 the next couple of weeks, obviously we want to hear 0:16:41.280 --> 0:16:45.160 about the US China discussions. But as far as semis 0:16:45.160 --> 0:16:48.120 are pincerned, there's a two thirty two semiconductor investigation that 0:16:48.240 --> 0:16:51.360 is ongoing right now. We expect to get more clarity 0:16:51.640 --> 0:16:53.600 in terms of what is what that's going to look 0:16:53.680 --> 0:16:56.360 like as far as tariffs are concerned here over the 0:16:56.400 --> 0:16:59.360 next two months or so. So it's waiting simo. But 0:16:59.400 --> 0:17:02.000 our view you're going to see a permanent tariff on 0:17:02.040 --> 0:17:05.680 the semiconductor industry when that gets unveiled. Our base case 0:17:05.760 --> 0:17:08.240 right now is about a twenty five percent tariff. 0:17:08.520 --> 0:17:12.480 What about the smartphone industry, because actually Apple has contributed 0:17:12.560 --> 0:17:14.760 to the reprieve and the S and P five hundred, 0:17:14.840 --> 0:17:17.359 it's one of your top names for hardware. But boy, 0:17:17.400 --> 0:17:20.000 we're wondering whether it's going to get individual tariffs of 0:17:20.040 --> 0:17:22.240 twenty five percent landed on it, not to mention maybe 0:17:22.320 --> 0:17:23.480 Samsung gets the same though. 0:17:24.359 --> 0:17:26.560 Yeah, so you know, we're not looking for an individual 0:17:26.600 --> 0:17:28.919 tariff on that side of things. But our view here 0:17:29.119 --> 0:17:32.000 is they you know, they fall under the national security 0:17:32.080 --> 0:17:35.600 umbre umbrella of the two thirty two semiconductor investigation, similar 0:17:35.600 --> 0:17:39.919 to many other hardware names that are right now exempt from. 0:17:39.800 --> 0:17:41.119 A lot of the tariffs. 0:17:41.480 --> 0:17:44.200 But that said, if we're assuming something along the lines 0:17:44.240 --> 0:17:47.159 of a twenty five percent, you know, based tariff or 0:17:47.960 --> 0:17:51.240 two thirty two, that would imply that Apple probably has 0:17:51.280 --> 0:17:54.040 to increase the price of its iPhone seventeen this fall. 0:17:54.160 --> 0:17:56.360 Our view is probably along the lines of at least 0:17:56.400 --> 0:18:00.000 fifty dollars or so. So again, we have to wait 0:18:00.160 --> 0:18:02.280 see to see how all this stuff really plays itself 0:18:02.320 --> 0:18:04.720 out on the geopolitical side of things, But our view 0:18:04.840 --> 0:18:06.959 is there's going to be some sort of permanent tariff 0:18:07.000 --> 0:18:11.639 that goes into effect for the hardware companies and specifically Apple, 0:18:11.760 --> 0:18:15.359 and Apple we think is best positioned to offset some 0:18:15.400 --> 0:18:18.359 of those higher tariffs because of their brand recognition and 0:18:18.359 --> 0:18:19.440 because of their pricing power. 0:18:19.880 --> 0:18:23.359 So angelo, if an investor doesn't have the exposure they'd 0:18:23.480 --> 0:18:25.520 like in these names, should they buy at this point? 0:18:27.040 --> 0:18:28.879 I mean, I think that's a good question. You know, 0:18:29.000 --> 0:18:30.719 we look at it right now in the sense that 0:18:31.040 --> 0:18:35.359 we're looking more for a near term, you know, digestion period. 0:18:35.359 --> 0:18:37.840 The dangerous thing with that is you just don't know 0:18:38.200 --> 0:18:39.800 what you're going to get in a day in, day 0:18:39.800 --> 0:18:43.199 out basis because of the geopolitical environment right now. So 0:18:43.240 --> 0:18:45.639 if you don't own any of these names right now, 0:18:45.880 --> 0:18:47.720 our view is you do want to buy some of 0:18:47.760 --> 0:18:50.320 these AI semi oriented names because they. 0:18:50.160 --> 0:18:52.600 Are going to really drive the. 0:18:52.600 --> 0:18:55.760 Earnings potential for the tech sector here over the next 0:18:55.800 --> 0:18:59.320 two to three years, specifically Nvidia and Broadcom, as well 0:18:59.320 --> 0:19:01.840 as some of the others smaller names, but Nvidia and 0:19:01.880 --> 0:19:03.760 Broadcom would kind of be two of the top names 0:19:03.800 --> 0:19:06.240 with the best visibility out there. And even if you 0:19:06.280 --> 0:19:08.119 see some of these negative headwinds will whether it be 0:19:08.200 --> 0:19:11.320 tied to the two thirty two semi conductor investigation or 0:19:11.359 --> 0:19:14.160 something on the trade side of things. Ultimately we think 0:19:14.160 --> 0:19:16.480 this stuff works itself out and the earnings potential is 0:19:16.520 --> 0:19:18.880 so great that you know, two to three years down 0:19:18.880 --> 0:19:21.640 the road, these stocks should be significantly higher than where. 0:19:21.440 --> 0:19:21.960 They are now. 0:19:22.160 --> 0:19:23.400 We get those earnings for Broadcom. 0:19:23.440 --> 0:19:26.040 On Thursday after the bell, Angelo Zino a busy week 0:19:26.040 --> 0:19:27.479 ahead cfr A Research. 0:19:27.520 --> 0:19:28.120 We thank you. 0:19:35.760 --> 0:19:38.879 Samsung well, it's nearing a wide ranging deal to invest 0:19:38.920 --> 0:19:41.920 in Perplexity AI and put search technology from the AI 0:19:42.000 --> 0:19:45.160 startup at the very forefront of the South Korean company's devices. 0:19:45.320 --> 0:19:47.960 It's according to people familiar, the two companies are already 0:19:47.960 --> 0:19:50.879 in talks to pre load Perplexities app and Assistant on 0:19:51.000 --> 0:19:54.800 upcoming Samsung devices who like Seth Figeman joins us for 0:19:54.880 --> 0:19:57.440 more on the story, and we knew that they struck 0:19:57.480 --> 0:20:01.840 the still with Motorola Samsung ongoing conversation. How deeply into 0:20:01.880 --> 0:20:02.720 twine will they become? 0:20:02.920 --> 0:20:05.600 Yeah, I think this is even more expensive than Mogo Motorola. 0:20:05.600 --> 0:20:08.280 It's about them being preloaded on devices, which matters a lot, 0:20:08.359 --> 0:20:11.719 But with Samsung, it's also integrating into its assystem, product, 0:20:11.800 --> 0:20:15.760 into its browser, and of course just preloading on Samsung devices. Generally, 0:20:15.800 --> 0:20:18.040 if you're Google right now, I think if they're setting 0:20:18.080 --> 0:20:20.120