Speaker 1: From Mahart.
Speaker 2: We're Innovation of Money and Power co line in Silicon Valley, NBN.
Speaker 2: This is Bloomberg Technology with Caroline Hyde and Ed Love Love.
Speaker 3: Live from New York and San Francisco. This is Bloomberg
Speaker 3: Technology coming up. China Tech stocks on a tear after
Speaker 3: Beijing's push to boost growth.
Speaker 4: And the CHIPSAC gets a boost too with a bill
Speaker 4: headed to Biden's desk that cuts red tape.
Speaker 3: And we discuss all things MNA, the City Group's head
Speaker 3: of Tech Deals. But first let's check in on these markets,
Speaker 3: and we start with the move of the day. Ed,
Speaker 3: it is China Stocks, it is China Tech Stocks, and
Speaker 3: we shine a light on the Golden Dragon Index. Here
Speaker 3: we are up more than six percent. What does that mean?
Speaker 3: It is the biggest move in more than a year,
Speaker 3: and we're up training at the highest level in more
Speaker 3: than three months. Stimulus to the Chinese economy. It helps
Speaker 3: some of the key names that you're watching.
Speaker 4: Yeah, and understandably those two key names at Ali BARBERANJD
Speaker 4: dot com e commerce focus names, but also multifaceted tech companies.
Speaker 4: Actually two of the names on the index in positive territory.
Speaker 4: Year to date, many of them are not. We will
Speaker 4: go to our reporter later in the hour to talk
Speaker 4: about the impact of stimulus on China tech. I'm also
Speaker 4: looking at chip stocks at the index level. The socks
Speaker 4: is up for a second day so far this week.
Speaker 4: Intel what might happen to it is dominating headlines. But
Speaker 4: there's also some newscare about progress i'd say about onshoring
Speaker 4: the industry here in the United States. Bring us that story.
Speaker 5: Yeah, let's dive in.
Speaker 3: Because the US House approved legislation that would exempt some
Speaker 3: chip manufacturing projects from federal permitting requirements. It's a bid
Speaker 3: to speed up the buildout of the US semiconductor industry
Speaker 3: from moos. Mackenzie Hawkins joins us. Now, so what they
Speaker 3: don't have to take certain environmental.
Speaker 6: Boxes, right, So, whenever our projects get money from the
Speaker 6: federal government in excess of two thousand dollars, which every
Speaker 6: chip company that's getting money from the Biden administration is
Speaker 6: getting well north of that, they have to go through
Speaker 6: the National Environmental Policy Act permitting process, which basically requires
Speaker 6: all federal agencies to review the environmental impact of their
Speaker 6: major actions and also opens up projects to significant litigation.
Speaker 6: There's been concern in the chip industry from companies like
Speaker 6: Intel and Samsung and Taiwan Sumi connecting manufacturing company, that
Speaker 6: this could produce months or even years of delays on
Speaker 6: projects that the companies and the Biden administration have said
Speaker 6: are critical to national security. So the bill that the
Speaker 6: House passed yesterday, it's passed the Senate last year, so
Speaker 6: it's going to Biden's desk, would exempt some of those
Speaker 6: projects from federal environmental review. They'd still have to go
Speaker 6: through state local permitting processes, which companies say can be
Speaker 6: a headache. Environmental groups say are bedrock climate law. But
Speaker 6: this is a significant red tape cuttake at the federal level.
Speaker 5: Mac.
Speaker 4: What you do so well for our audience around the
Speaker 4: world is that there's billions of dollars coming from the
Speaker 4: Chips Act, and lots of names on paper sound to benefit.
Speaker 4: But building a fab takes a long time and it
Speaker 4: takes all that money. Is there any evidence that actually
Speaker 4: something is started in America, that there's some infrastructure popping
Speaker 4: up around the place.
Speaker 6: So we've seen more money put into chip factory construction
Speaker 6: in the past four years, kind of leading up to
Speaker 6: the package of.
Speaker 2: The chip stack.
Speaker 6: When folks thought Hey, this subs package might be coming,
Speaker 6: and of course after its enactment and during its implementation
Speaker 6: then we saw in the two decades before that. So
Speaker 6: companies are absolutely committing real money to these construction projects,
Speaker 6: but they also need to wait and see market conditions
Speaker 6: before they decide when and how and at what level
Speaker 6: to fully build out their projects. You see, companies make
Speaker 6: commitments to one fab or two fabs, but they have
Speaker 6: sites that could accommodate eight and that of course depends
Speaker 6: on customer demand. But in terms of the construction process,
Speaker 6: that's where the permitting stuff really comes into play. And
Speaker 6: so for companies that have been waiting to secure environmental
Speaker 6: permits or have been going through that process alongside actually
Speaker 6: putting shovels in the ground, this could be a really
Speaker 6: big deal in giving them confidence of their construction timelines
Speaker 6: for projects of that in many cases are already well underway.
Speaker 4: Bloomberg's Mackenzie Hawkins with the latest and the flow of
Speaker 4: dollars from the CHIPSAC Thank you very much now, As
Speaker 4: misquite McKenzie discussed, Intel is one of the chip companies
Speaker 4: that's pledged to invest billions into US chip capacity. But
Speaker 4: the top story for this industry right now is reports
Speaker 4: that rival Qualcomm has approached Intel over a friendly takeover,
Speaker 4: and Bloomberg reporting that money manager Apollos offered billions of
Speaker 4: dollars to Intel in an equity like investment.
Speaker 7: The stage is set.
Speaker 5: What happens next?
Speaker 4: Let's discuss with Phil Dury, head of Technology and Communications
Speaker 4: Investment Banking at City Group. When I woke up on
Speaker 4: Monday morning, I was still recovering from the weekend where
Speaker 4: I was recovering from Friday. In a headline where one
Speaker 4: of the biggest chip makers, Qualcomm, it's reported we're going
Speaker 4: for Intel. Well, in this environment, does that deal happen? Well,
Speaker 4: you probably won't be surprised that. I'm not going to
Speaker 4: comment specifically on the deal. What I would say Intel
Speaker 4: has a storied history dating back to nineteen sixty eight.
Speaker 7: They've got a.
Speaker 8: Collection of phenomenal assets. The company is clearly going through
Speaker 8: a transformation. Pat and his team have been pretty clear
Speaker 8: in the plans that they have outlined, including some significant
Speaker 8: CAPEX reduction. Well I would say is I'm not surprised
Speaker 8: that there's speculation around a number of interested parties, whether
Speaker 8: that be strategic or whether that be private equity who
Speaker 8: is looking to invest quite meaningfully across a whole artificial
Speaker 8: intelligence ecosystem, which we've already seen, and we've already seen
Speaker 8: Apollo obviously work with Intel.
Speaker 2: As well.
Speaker 4: Island that neither Intel nor qualcom commented on that reporting.
Speaker 4: And the other piece of reporting was Apollo, which has
Speaker 4: an existing relationship with Intel and against Strategic in the
Speaker 4: sense that they had co invested in a specific project.
Speaker 4: Why is an Intel attractive to a name like Apollo.
Speaker 4: It is a duration bet. It's infrastructure, you know, in
Speaker 4: the world of AI, it's building something physical and waiting
Speaker 4: for the payoff later.
Speaker 2: Yeah.
Speaker 8: Look, I think this is long term generational investment. Funds
Speaker 8: like Apollo take and extremely long term view beyond the frankly,
Speaker 8: the more of a short term nature of the public market.
Speaker 8: And when we look at M and A and the
Speaker 8: trends that we've seen over the last year, and MNA
Speaker 8: activity is up quite meaningfully off two very low years
Speaker 8: in twenty twenty two and twenty twenty three, and we're
Speaker 8: seeing strategics much more active. Right City advised on AMD
Speaker 8: and ZT Systems. We advised on IBM and Hashi Corp.
Speaker 8: So not as transformational necessarily as intel as we're talking about,
Speaker 8: but we're definitely seeing strategic be more proactive as it
Speaker 8: relates to growth vertical adjacencies. Where we've seen public equity,
Speaker 8: most private equity, most activia today is on dislocated public
Speaker 8: market valuations. What we haven't seen so far is the
Speaker 8: huge number of private companies with high watermark valuations in
Speaker 8: twenty twenty one starting to come to market. But time
Speaker 8: results in valuation compounding, and that's where we do have
Speaker 8: high expectations for twenty twenty five and twenty twenty six,
Speaker 8: and it's already happening.
Speaker 3: Phil Today news of one of the biggest take privates
Speaker 3: in the software area.
Speaker 5: We've got Blackstone.
Speaker 3: Vista Equity making an eight billion dollar take private offer
Speaker 3: to a company called Smartsheet. Is that the sort of
Speaker 3: software long term revenue that they want to be digging into.
Speaker 3: Where do you see other opportunities in the take private field?
Speaker 8: I think, Caroin, that's exactly spot on. We anticipate that
Speaker 8: we'll see more of this, you know, I think that
Speaker 8: artificial intelligence embedded on two years of data points in
Speaker 8: enterprise software is going to start to become really, really interesting.
Speaker 8: When we think about the first quarter of this year,
Speaker 8: the AI investment boom, if you will, focused on hardware,
Speaker 8: focused on chips where and actually we saw weakness in software.
Speaker 8: That weakness driven by a diversion of enterprise funds towards AI.
Speaker 8: But now we're starting to look forward. We've got more
Speaker 8: data points and we're starting to see a pickup an
Speaker 8: activity for enterprise software with embedded AI and how that
Speaker 8: can really be a catalyst for enterprise. So I think
Speaker 8: you're spot on. I think we'll see a lot more
Speaker 8: of this in twenty twenty five and twenty six, and
Speaker 8: we'll start to see that private supply come to market
Speaker 8: as well, which is held off for now because companies
Speaker 8: were very well capitalized. Private equity hasn't had to do anything.
Speaker 8: But now there is some pressure around DPI, and I
Speaker 8: think we'll see a more vibrant cell side as well
Speaker 8: as an active byside that.
Speaker 3: Sort of pigeonholes the positive side of making deals and
Speaker 3: taking private there's the negative side of stressed assets.
Speaker 5: I mean almost Intel might be that story.
Speaker 3: But we're looking today at Liberty Broadband. Of course, key
Speaker 3: Billion m Malone trying to place together some of his
Speaker 3: stressed streaming and cable assets.
Speaker 5: I'm looking at Liberty Broadband.
Speaker 3: And Charter Communications seemingly getting towards some sort of merger deal.
Speaker 2: Here.
Speaker 3: I'm going to see more of that mergers because they
Speaker 3: have to to survive because of industry pressure.
Speaker 8: I think you'll see combinations for sure. I also think
Speaker 8: you'll see you'll see companies looking to carve and split
Speaker 8: and break out very valuable assets as well.
Speaker 5: There's no doubt we're in.
Speaker 8: A moment of time driven by AI, which is causing
Speaker 8: corporations to look and reflect about how they're going to
Speaker 8: crystallize and maximize the valuation for their companies. That can
Speaker 8: result in adjacent combinations, but it can also result in
Speaker 8: illumination of value through carve outs through split offs. You know,
Speaker 8: we've not talked about activism, but you know, we think
Speaker 8: this will be a theme that activists will focus on
Speaker 8: over the next couple of years as well. We're definitely
Speaker 8: going to go through change, and we're going to go
Speaker 8: through change through a greater sense of certainty. On the
Speaker 8: geopolitical this year has been a year of transition, more
Speaker 8: elections than we've ever seen in the past. Obviously, we've
Speaker 8: got a big one coming up. We will have a
Speaker 8: lot greater certainty on both the macro and the geopolitical
Speaker 8: when we get into twenty five and twenty six. So yeah,
Speaker 8: I believe we're going to see more activity for a
Speaker 8: host of reasons.
Speaker 4: You mentioned AMD and ZT. What was the other one
Speaker 4: that you mentioned that you advised on.
Speaker 5: IBM and Hashiko?
Speaker 4: What is unique to both of those as they got done?
Speaker 4: And so I know you won't comment on Intel and
Speaker 4: Quilcom the idea of but in the context of what
Speaker 4: happens in November antitrust, you know, in this environment, do
Speaker 4: deals of that scale on paper, Intel ONQUO proceed.
Speaker 8: Well, the data is going to show a mixed bag
Speaker 8: of results, right. We also advised on the Broadcom VMware
Speaker 8: deal which went through. Obviously Microsoft Activision went through, but
Speaker 8: there are examples of deals that haven't gone through. What
Speaker 8: it means is just look, there's a lot of focus,
Speaker 8: a lot of preparedness that's going on early on with
Speaker 8: advisors and corporations in terms of how certain can we
Speaker 8: be with regard to global antitrust decisions, cities role positioned there,
Speaker 8: we're operating one hundred and sixty countries.
Speaker 5: It gives us a good.
Speaker 8: Global spotlight on how regulatory bodies are going to react.
Speaker 2: But you're right.
Speaker 8: All you can do is building contingencies early on in
Speaker 8: case deals break. But it can be a distraction when
Speaker 8: you know MNA is announced and it takes twelve, eighteen,
Speaker 8: twenty four months to complete.
Speaker 3: Sometimes the lawyers for is when Phil Drury, thank you
Speaker 3: had a Technologogy Communications investment banking City Group coming up.
Speaker 3: Roku remains loyal to the hardware that put the company
Speaker 3: on the map when the company's streaming ambitions then, and.
Speaker 4: I actually want to go back to Liberty Broadband. We
Speaker 4: mentioned it in that conversation, but the specifics are that
Speaker 4: Liberty went back to Charter with a counter offer, and
Speaker 4: that's kind of what's pushing up the shares twenty seven percent.
Speaker 5: I'd also point out.
Speaker 4: Like it's a big move, but Liberty is a company
Speaker 4: the carry that you also pointed out has been under
Speaker 4: a brid of pressure, the stockdown significantly over a period
Speaker 4: of time. This deal pretty dry one actually in truth,
Speaker 4: but it's one the market's paying attention this morning. This
Speaker 4: is Bloomberg Technology. Roku says the company remains quote very
Speaker 4: committed to its set top boxes as it veils a
Speaker 4: new faster version of Roku Ultra streaming box. This even
Speaker 4: is the electronics industry shifts to smart TVs with built
Speaker 4: in streaming tech For more Bloomberg Smart German joins us. Now,
Speaker 4: I find this story so interesting for two reasons. I
Speaker 4: have a Roku TV still believe it or not, alongside
Speaker 4: the Samsung Smart TV. But that sort of set top
Speaker 4: box is such a small part of their business, like
Speaker 4: they're keeping it going.
Speaker 9: Why, Yeah, the set top box is a very interesting
Speaker 9: thing for Roku. Right, that is their namesake, that is
Speaker 9: how they made their money, that is how they developed
Speaker 9: into a brand. Now for them, it's two things. One,
Speaker 9: it's all about content, that's their platform business. Two it's
Speaker 9: all about integration of the Roku operating system into TVs
Speaker 9: you buy off the shelf at Target, at best Spy,
Speaker 9: at Amazon, you name it.
Speaker 7: But the set top box is still interesting for them, right.
Speaker 9: They don't make a ton of money off these things.
Speaker 9: They cap out at one hundred dollars per piece and
Speaker 9: their money losers, but they believe it brings content which
Speaker 9: they're making a lot of money off of, including from advertising,
Speaker 9: into more people's homes. And it's a lot cheaper for
Speaker 9: consumers to get into the Roku experience, to get into
Speaker 9: the smart TV experience if they have an older TV
Speaker 9: by buying one of these hunred dollar boxes versus going
Speaker 9: out and buying a new several hundred dollars TV. Right,
Speaker 9: there's a lot of overlap between the experience you get
Speaker 9: from a set top box and a smart TV. One
Speaker 9: just requires you to buy the whole TV, the other
Speaker 9: requires you to just plug a box into your hdmiport.
Speaker 3: We're looking at one year chart of Roku. We now
Speaker 3: moved to an interday, but it has been under pressure.
Speaker 3: The earnings haven't been pleasing investors.
Speaker 5: Is this part of drumming up support from the investor.
Speaker 7: Base they've been suffering.
Speaker 9: I don't think the investor base is entirely happy or
Speaker 9: fixated on the set top box business. I think if
Speaker 9: you're investing in Roku at this point, it's because of
Speaker 9: the content business, the advertising, the platform, the integration into
Speaker 9: smart TVs and other products. This is a bit of
Speaker 9: moving away from that focus that I think investors are
Speaker 9: wanting to see. But at the same time, this is
Speaker 9: a cheap way to bring more people into the ecosystem
Speaker 9: and gather more support for its platform and more users there. Right,
Speaker 9: the majority of sales at this point are via first
Speaker 9: party and third partiesmar our TVs. But adding more people
Speaker 9: to the user base, more people that can be exposed
Speaker 9: to Roku content, is not necessarily a bad thing. Just
Speaker 9: to hope for investors is this doesn't take away from
Speaker 9: the core competency that is the thing actually making the
Speaker 9: company money.
Speaker 5: Marc German, We thank you. That's about Google now.
Speaker 3: It says it has seen faster progress in artificial intelligence
Speaker 3: as a result of a closer collaboration between its cloud
Speaker 3: computing unit and its AI research lab. Google Cloud struct
Speaker 3: deals to weave its latest AI models into popular consumer products,
Speaker 3: sharing more than seventy five customer stories, one of which
Speaker 3: was the social app Snapchat, which we'll start using Google's
Speaker 3: generative AI model to help power Snapchat's AI chat Thot
Speaker 3: New Mags Asia accounts joins us for more to deal
Speaker 3: with open AI, but they started leaning more into Gemini.
Speaker 10: It seems like yeah, so snap originally released their chatbot
Speaker 10: just last year and it started off using models from
Speaker 10: open Ai. As you mentioned, the reason they also started
Speaker 10: testing and using Gemini is because when you go on Snapchat,
Speaker 10: a lot of the time you're communicating through videos or images,
Speaker 10: and they felt like Gemini's models were really good at
Speaker 10: doing that and being able to do images, videos and
Speaker 10: texts or at the same time.
Speaker 7: So that's why they started using Gemini as well.
Speaker 5: Heicha.
Speaker 4: I think I'm right and saying, you were at Snap
Speaker 4: the other day and you've kind of seen the latest
Speaker 4: gen of hardware from them, and this is heating up,
Speaker 4: Like meta, it was a surprise story that at least
Speaker 4: the ray bands and your interaction using a voice based
Speaker 4: AI assistant would take off. You know, I've had experience
Speaker 4: with it.
Speaker 5: How real is this for Snap?
Speaker 4: Like, do they really think this is going to be
Speaker 4: the future for them?
Speaker 7: I think they do.
Speaker 10: I mean they're spending a lot of money, right They
Speaker 10: are supposed to spend up to one point five billion
Speaker 10: dollars I believe this year, which is about half of
Speaker 10: their expenses on things like infrastructure.
Speaker 7: To support all of these new tools.
Speaker 10: If we're thinking about artificial intelligence, augmented reality through glasses,
Speaker 10: machine learning, all those sorts.
Speaker 7: Of things, they're really doubling down on this.
Speaker 10: So if you think about AI, it's not just a chatbot,
Speaker 10: but it's AI and the glasses as you mentioned, and
Speaker 10: it's AI obviously to rank and recommend content to create
Speaker 10: new experiences.
Speaker 7: So they're really betting.
Speaker 10: On this is a key part of the company and
Speaker 10: a key part of their future.
Speaker 4: Bloombergsats accounts all across the Snap story.
Speaker 5: Thank you very much, time now for talking tech.
Speaker 3: First, up writing assistant software maker Grammarly is announced it's
Speaker 3: adding a new CFO and CTO bolstering the AI startups
Speaker 3: management now. According to Grammarly, both new executives actually assisted
Speaker 3: their previous.
Speaker 5: Companies in the igo process.
Speaker 3: Family is currently valued at thirteen billion dollars plus. Boeing
Speaker 3: when it bumps up its pay proposal to striking workers
Speaker 3: to thirty percent now that's sweetened from the twenty five
Speaker 3: percent rejected earlier this month, still less than the forty
Speaker 3: percent sought by the workers' union. Boeing said the terms
Speaker 3: of the pay proposal are final and valid till the
Speaker 3: end of the day of September the twenty seventh, and
Speaker 3: TikTok will be shuttering its music service in November, ending
Speaker 3: an experiment to compete with Spotify and Apple that started
Speaker 3: back in twenty nineteen in a statement released TikTok Music
Speaker 3: will be shutting down on November the twenty eighth, and
Speaker 3: customer data will be deleted.
Speaker 5: And what have you got?
Speaker 4: Another news story, Elon Musk and his social platform X
Speaker 4: lost a legal fight over unpaid severance to a former
Speaker 4: Twitter employee who was laid off when Musk took over
Speaker 4: in twenty twenty two. Now remember back in July, X
Speaker 4: defeated a lawsuit alleging that at least five hundred million
Speaker 4: dollars in severance pay was owed to about six thousand
Speaker 4: laid off employees. Let's discuss with Bloomberg's multi Nayak In
Speaker 4: long story short about two thousand employees said that they
Speaker 4: were short changed when they were let go. We spoke
Speaker 4: to some of them, like over the last couple of years.
Speaker 4: What are the specifics of this case.
Speaker 11: So this is happening separate from the court proceeding, in
Speaker 11: that this is happening in arbitration behind closed doors. So
Speaker 11: this was a private arbitration proceeding. And as you said,
Speaker 11: there are more than two thousand employees who have brought
Speaker 11: complaints against the company, but they have proceeded in arbitration
Speaker 11: and are fighting against the company. So now we received
Speaker 11: actually last week, the first ruling in one of these
Speaker 11: arputuation proceedings and looks like it was a win for
Speaker 11: the worker. And there are you know, thousands more of
Speaker 11: these complaints that will still be arbituated. But fifteen cases
Speaker 11: we know so far have been arbituated, and we're waiting
Speaker 11: for rulings in other cases as well.
Speaker 3: How seismic is this one off ruling? Will it forceultimately
Speaker 3: for X to settle in a broader number?
Speaker 11: Of course, it definitely is a good sign for the
Speaker 11: employees because you know, one win could lead to more wins,
Speaker 11: and that potentially allows their attorneys to you know, sit
Speaker 11: across the table with Twitter and Mask and say, hey, listen,
Speaker 11: we're winning all these cases. Maybe it's just easier if
Speaker 11: we just settle this and you know, get done with
Speaker 11: this dispute once and for all. So it's definitely a
Speaker 11: good positive sign. And you know, this is the first
Speaker 11: of many cases. And now that you know we are
Speaker 11: seeing the first ruling being a positive one, it is
Speaker 11: possible that this sort of trend will continue for the
Speaker 11: other arbituation proceedings as well.
Speaker 4: Multi if it's the first of many, would you take
Speaker 4: us into the sort of mystery world of technology severance disputes.
Speaker 4: There are many people interested in this, right the lawyers
Speaker 4: are incentivized to get their clients some pay. You know,
Speaker 4: I remember the early days. It must take over in
Speaker 4: just the chaos in some of the chat forums of
Speaker 4: what was happening.
Speaker 7: What's it like covering these Well.
Speaker 11: Yeah, so you know, this particular arbitation proceeding is happening
Speaker 11: closed doors. So unfortunately, I wish I could be a
Speaker 11: fly on the wall, but I can't. I'm not allowed to,
Speaker 11: you know, enter. But but just in talking to attorneys,
Speaker 11: these are very very sort of different from port proceedings
Speaker 11: in that, you know, the rules together, evidence, all of
Speaker 11: that tends to be a little different. But you know,
Speaker 11: it's just very very private. We don't get to and
Speaker 11: even this memo that we got, you know, Kurt Wagner,
Speaker 11: our tech reporter who reported this story with me our sources,
Speaker 11: sheared memo and that's how we got to know about
Speaker 11: this ruling. So we were no unless the attorney sort
Speaker 11: of went to port to enforce the ruling. So yeah,
Speaker 11: so all of this happens closed doors. But in court,
Speaker 11: you know, when we do have these disants. Of course,
Speaker 11: there's a lot of drama, and you know, if they
Speaker 11: go to trial, you get to see a lot of
Speaker 11: you know, inside information about what happened behind the scenes
Speaker 11: in terms of, you know, the chaos that happens behind
Speaker 11: the scenes at these companies and all the different players
Speaker 11: that sort of maybe need decisions that potentially you have
Speaker 11: heard the employees names the employees, could you know all
Speaker 11: to share how they feel about how they were.
Speaker 4: Shortchy Multi, gotta go, Bloomberg's Multi, Nayak, Thank you. This
Speaker 4: is Bloomberg.
Speaker 3: Welcome back to Bloomberg Technology. I'm Caroline Hyde in New.
Speaker 4: York and I'm Ed Ludlow in San Francisco. If you're
Speaker 4: just joining us. One of the big stories in technology
Speaker 4: today is the US listed shares of Chinese technology companies.
Speaker 4: The news is the Chinese government coming with a big
Speaker 4: stimulus package to kickstart the economy. So you see e
Speaker 4: commerce names like JD dot Com, Ali Barber doing really well,
Speaker 4: but at the index level, then aw's that Golden Dragon
Speaker 4: index now on track for its best day since January
Speaker 4: of twenty twenty three. Let's set out to Bloomberg News
Speaker 4: reporter Henry Wren, who's in London and covers China tech stocks,
Speaker 4: and some of these names have underperformed year to day. Recently, Henry,
Speaker 4: they've rebounded. But a big stimulus package that helps the
Speaker 4: Chinese economy will help some of China's tech sector as well.
Speaker 8: Yeah.
Speaker 12: Indeed, what we see today is Chinese authorities really made
Speaker 12: a concerted push to help boost the economy as well
Speaker 12: as stock markets. These stimulus measures can be seen in
Speaker 12: three buckets. One is providing more liquidity to the economy
Speaker 12: in terms of cutting rates, lowering banks reserve requirement racials.
Speaker 12: Second is about helping the housing market, including lowering the
Speaker 12: mortgage rates for existing mortgages. And the third part, which
Speaker 12: is probably the most eye catching part, is about providing
Speaker 12: direct to liquidity support to the stock market. The Central
Speaker 12: Bank has pledged eight hundred billion remen bee of initial
Speaker 12: liquidity and it has said that it's con letering in
Speaker 12: terms of providing a stock stabilization fund. So all those
Speaker 12: measures putting together really help boost investor sentiment in terms
Speaker 12: of Chinese internet stocks that we've been seeing today.
Speaker 4: Yes, Ed, why e commerce? Why those names j D
Speaker 4: and Ali Barba doing so well?
Speaker 12: Henry, Yeah, because as we as we know that all
Speaker 12: those Chinese internet companies as well as those e commerce
Speaker 12: companies have been highly related to Chinese consumer spending, and
Speaker 12: we've been seeing them under quite heavy pressure recently given
Speaker 12: the Chinese economic slowdown.
Speaker 5: We've been hearing.
Speaker 12: Those companies executive talking about China's necro pressure being PDD,
Speaker 12: being JD, being Ali Baba for example. Ali Baba's e
Speaker 12: commerce business just screwed by single digit in the past quarter,
Speaker 12: as well as the Value Champion PDD for example, it
Speaker 12: was a stock market Darling, but in August it's issued
Speaker 12: a warning and said that growth has been slowing and
Speaker 12: need to be investing more. Competition has become more intense,
Speaker 12: so we see the stocks really under pressure, and those
Speaker 12: Miles's pressure measures could be seen as the first step
Speaker 12: if the authority is getting more serious in terms of
Speaker 12: boosting the economy.
Speaker 3: Henry, we know these companies so well here in the
Speaker 3: United States too. They have global pushes taming for example,
Speaker 3: how much are their revenues still so focused on China
Speaker 3: or how global is it becoming?
Speaker 12: Yeah, it really depends on companies, right, So when we
Speaker 12: are talking about PDD for example, like it has a
Speaker 12: big global push in terms of expanding to US market
Speaker 12: European markets for its team will brand. However, for that
Speaker 12: international business, it's under pressure as well because the US
Speaker 12: government is having its new rules in terms of curbing
Speaker 12: those cross borders small packaged shipping as well. So the
Speaker 12: domestic market, the local market is really key for those companies.
Speaker 12: Even though Ali Baba has its you know, international push
Speaker 12: as well, the local market is still key because the
Speaker 12: timo and talbail business for Alibaba for example, is still
Speaker 12: about two thirds of its revenue generation. So the local
Speaker 12: really matters. And what we've been seeing today in terms
Speaker 12: of the stimulus pressure, stimulus measures really helps the investor sentiment.
Speaker 3: What's the next catalyst then, Henry, how much are people
Speaker 3: saying you can continue to buy?
Speaker 12: On the fiscal side, I would say so, we've been
Speaker 12: seeing lots of measures on monetary side, for example, in
Speaker 12: terms of cutting rates, in terms of you know, lowering
Speaker 12: down payment ratios or cutting rates for existing mortgages.
Speaker 5: But on the fiscal.
Speaker 12: Side, it's people what really cares about because the problem
Speaker 12: with China's economy is not just about lack of liquidity
Speaker 12: in the economy. It's about you know, lack of consumer
Speaker 12: demand it's about a weak consumption among Chinese consumers. We
Speaker 12: have the national holidays coming up, and it's really about,
Speaker 12: you know, how to help Chinese consumers to buy more,
Speaker 12: to shop more. So the focus for investor in next
Speaker 12: it's really about on the fiscal side, whether the fiscal
Speaker 12: more fiscal policies for or will come through us.
Speaker 5: Well, Henry Wren, thank you very much. Indeed. Meanwhile, in the.
Speaker 3: Political sphere, former President Donald Trump has been.
Speaker 5: Discussing China, accusing the nation.
Speaker 3: Of failing to honor a deal to buy fifty billion
Speaker 3: dollars worth in.
Speaker 5: US agricultural experts.
Speaker 3: Trump vowed to raise the matter with the Chinese president's Usinping.
Speaker 3: If the Republican nominee returns to the White House. Both
Speaker 3: Trump and Kamala harris A vowed to take a tough
Speaker 3: stance against.
Speaker 4: Beijing ed Meanwhile, the UN General Assembly is in full
Speaker 4: swing in Manhattan, and China a key discussion for President
Speaker 4: Biden in his address that's going to read on where
Speaker 4: things stand with Bloomberg's National security reporter Nick Waddens and Nick.
Speaker 4: President Biden was speaking just ahead of this program starting.
Speaker 4: What did he say, particularly in the context of the
Speaker 4: things that we care about here, technology, AI and anything
Speaker 4: relating to national security.
Speaker 13: Well, I mean, what you saw really was this sort
Speaker 13: of a valedictory address for President and Biden. A big
Speaker 13: thing he said was listen, don't cling to power. Sometimes
Speaker 13: you have to do what's right for your country, and
Speaker 13: remember that you serve the people, not yourself. So a
Speaker 13: bit of a shot across the bow there. It was interesting.
Speaker 13: He did feature AI pretty prominently in his speech. It
Speaker 13: was mostly a look back, but really one of the
Speaker 13: few places where he actually looked forward was saying AI
Speaker 13: has a lot of promise, but they're in inherent dangers
Speaker 13: to it and essentially seeking a cautious approach. But you know,
Speaker 13: the big thing here, the message that he may not
Speaker 13: want to send but that is sort of inescapable, is
Speaker 13: the fact that he's going to be off the stage
Speaker 13: literally and metaphorically in just a couple months. So there's
Speaker 13: not a lot he can say to look forward given
Speaker 13: the uncertainty around who's going to succeed him as president.
Speaker 5: Let's talk about what therefore.
Speaker 3: Kamala Harris has been saying in recent days it fundraises
Speaker 3: here in Manhattan as well about AI, I wanting to
Speaker 3: foster it around crypto And it's interesting it's not just
Speaker 3: world leaders in town. You know, Musk is in town,
Speaker 3: he says, getting an award from the Italians. There's also
Speaker 3: Sam Altman at an event with him last night, and
Speaker 3: he's speaking with Sextrey Blinkn about regulating AI.
Speaker 5: So while are we hearing much more about.
Speaker 3: The discourse of governance of artificial intelligence?
Speaker 13: That's a really big theme this week, in part because
Speaker 13: what you've seen is Secretary General Guterris is basically saying, listen.
Speaker 5: We are not able to make any progress.
Speaker 13: And any of the issues that the UN was founded
Speaker 13: to help with, so peace and security. So what we're
Speaker 13: going to do is try to stake a claim on
Speaker 13: issues that matter for the future, AI and climate. But
Speaker 13: of course the big challenge there is the UN can
Speaker 13: say what it wants. It has no enforcement mechanisms. This
Speaker 13: will all have to come through national laws. In fact,
Speaker 13: it was one of the big things he did last
Speaker 13: week Guterres said, listen, we got to not use AI
Speaker 13: in military targeting.
Speaker 2: This is just crucial.
Speaker 13: But all the evidence we're getting is that countries with
Speaker 13: the ability to use AI in that way are doing
Speaker 13: so already. You're seeing a situation where the US and
Speaker 13: other countries is you, for example, are essentially disregarding these
Speaker 13: UN warnings and it is still just very early days.
Speaker 4: Nick, you've been at this a long time, respectfully in
Speaker 4: China first and then DC. In your experience, what tangibly
Speaker 4: comes out of these weeks? I know a lot of
Speaker 4: tech CEOs, the meeting with world leaders, So what explains
Speaker 4: our audience the substance of it?
Speaker 13: Right, So, I mean, the big thing on ANGA is
Speaker 13: you really should not focus on what's actually happening at
Speaker 13: the UN. There are speeches, you can get a sense
Speaker 13: of the mood, prevailing trends, things like that, But where
Speaker 13: you really see the action is on the sidelines, the
Speaker 13: bilateral meetings, the backroom deals, the hotel conversations. As Caroline mentioned,
Speaker 13: Musk is here, Sam Altman is here. World leaders are
Speaker 13: going to swing states in the US after they're at
Speaker 13: the UN trying to sort of figure out get a
Speaker 13: sense for the horse race of what's going to happen
Speaker 13: in the future. So you may see some backroom conversation
Speaker 13: around a potential Ukraine peace plan that Zelenski's putting forward,
Speaker 13: conversations with Iran, stuff like that, But it's really not
Speaker 13: focusing on the un but looking at the networks that
Speaker 13: these leaders are trying to build out with tech titans
Speaker 13: like Elon Musk and Sam Moltman. That's really where the
Speaker 13: action is.
Speaker 5: Remax's National Security bringing us tech. We thank you. It's
Speaker 5: Nick Wadams coming up.
Speaker 3: We dive into the world of AI investments with Kafaao
Speaker 3: Safar Adventures partner And what are you looking at?
Speaker 4: So kind of break well, what you share is at
Speaker 4: Bank of New York Melon moving close. It's rolling out
Speaker 4: custody services for the bitcoin ether held by ETF clients.
Speaker 4: This after a review enabled the company to avoid treating
Speaker 4: the assets as a balance sheet liability.
Speaker 2: This has been by technology.
Speaker 3: Fractal Analytics is said to be considering filing for an
Speaker 3: IPO and as soon as November to raise five hundred
Speaker 3: million dollars. That's, according to sources. Known as India's first
Speaker 3: AI unicorn, The company is seeking evaluation with some three
Speaker 3: and a half billion dollars in a share sale. Discussions
Speaker 3: are going on at the moment and the size of
Speaker 3: the IPO and it's timing could change.
Speaker 4: With ed there's certainly one to track. Okay, it's time
Speaker 4: for VC Spotlight and we will talk about investing in AI.
Speaker 4: Sapphire Adventures announced last summer their commitment to AI by
Speaker 4: investing more than one billion dollars in AI focused enterprise startups.
Speaker 4: Kathy Gaoer Safire Adventures joins US. Now one billion is
Speaker 4: a commitment. I guess the easiest place to start is
Speaker 4: how did that go and how did you go about
Speaker 4: deploying the capitol?
Speaker 2: Yeah? Absolutely, First of all, great to be here.
Speaker 4: Ed.
Speaker 1: Sapphire Adventurers were focused on investing in B to B
Speaker 1: companies at the mid to late stage, so we're really
Speaker 1: looking for companies product market fit, are generating revenue and
Speaker 1: that are proven businesses with AI. There has been so
Speaker 1: much innovation and there's been waves of adoption.
Speaker 2: So what we saw.
Speaker 1: Really was in twenty twenty three it was a year
Speaker 1: of experimentation. This year twenty twenty four was a year
Speaker 1: of ROI validation and people actually starting to play with
Speaker 1: these tools and getting use out of it. And we
Speaker 1: believe that next year twenty twenty five will be the
Speaker 1: year of widespread enterprise adoption. Now that being said, we've
Speaker 1: been very active in twenty twenty four and have made
Speaker 1: several AI investments already.
Speaker 4: I sent some sort of tension out there maybe between
Speaker 4: the bench capitalist and large tech companies that are making
Speaker 4: very similar investments or they're developing technology themselves. And one
Speaker 4: of your historic portfolio companies is MuleSoft. Bear with me,
Speaker 4: but I picked that casely because ultimately Salesforce went on
Speaker 4: to acquire mule Soft. It was an interesting exit, right,
Speaker 4: how do you find that next kind of mule Soft
Speaker 4: type company?
Speaker 2: But in the AI context, I think.
Speaker 1: This conversation is so interesting when we're talking about GENAI companies. Right,
Speaker 1: In many ways, the incumbents, whether Salesforce, Microsoft, Amazon, you
Speaker 1: name it, they are all actively investing in young AI
Speaker 1: startups because you're trying to ensure that their future will
Speaker 1: have AI in it. As an investor, what we look
Speaker 1: for closely are companies stand alone that we think are
Speaker 1: amazing businesses and can go all the way to IPO.
Speaker 1: But we also consider other exit paths, including to M
Speaker 1: and A. So we pay a lot of attention to
Speaker 1: companies that we believe hold strategic real estate.
Speaker 2: For many of the large tech players.
Speaker 3: Kathy, what are the valuations like in this space that
Speaker 3: you're trying to put money to what you say, You've
Speaker 3: done a company of deals in twenty twenty four already,
Speaker 3: they hih.
Speaker 1: That's a great question, Caroline. The short answer is yes.
Speaker 1: The reality is that AI is so consensus right now,
Speaker 1: which arguably means it's a really difficult time to invest
Speaker 1: because evaluations are so high. So if a perfect deal
Speaker 1: that means a perfect valuation. I think our approach and
Speaker 1: my approach at Sapphire is you have to take a
Speaker 1: differentiate approach to investing. And because AI it's still in
Speaker 1: the early stages of manifestation into different types of companies,
Speaker 1: you have to take a leap of faith on some dimension.
Speaker 1: So for me, for example, the leap of faith that
Speaker 1: I'm taking, which is based again on data and research,
Speaker 1: is that industries that have historically been technology laggards in
Speaker 1: terms of adoption are now going to adopt technology in mass.
Speaker 1: So two examples are a lot of different verticals right
Speaker 1: so manufacturing, construction, healthcare, legal. These are companies and industries
Speaker 1: that are still operating on pen and paper and on
Speaker 1: mainframe computers. And the second one is really small businesses,
Speaker 1: the backbone of the US. Over eighty percent of US
Speaker 1: businesses are companies under ten people that have historically not
Speaker 1: been able to research the latest and greatest when it
Speaker 1: comes to technology.
Speaker 3: I love what you said before about the validation with
Speaker 3: Carney at the point where you have to validate the
Speaker 3: return on investment. I don't feel like we've had that yet,
Speaker 3: and I'm wondering whether you're seeing it in the startups
Speaker 3: you've backed and how you're measuring it.
Speaker 1: Kathy, that's such an on point question, Caroline, I think
Speaker 1: we've already started that phase. I'll give you an example.
Speaker 1: Sapphire recently backed a lease AI. I know Mino was
Speaker 1: on the show a couple of weeks ago. That was
Speaker 1: a Series D company. What elise AI does is owns
Speaker 1: the entire conversation, end to end between a prospective tenant
Speaker 1: or tenant and a residential building. A lot of their
Speaker 1: customers are sophisticated residential real estate companies. They do a
Speaker 1: lot of internal benchmarking. They don't just trust the lease
Speaker 1: to show their own benchmarks, They actually do it in house,
Speaker 1: and the data shows significant improvements in accuracy, significant improvements
Speaker 1: and actual results, including customer satisfaction.
Speaker 4: Some of the news of late has been open AI's
Speaker 4: big primary at a very high valuation. Then reports about
Speaker 4: and fropic getting itself organized, and one report I spotted
Speaker 4: was that the minimum check for the open AI round
Speaker 4: is an examples, two hundred and fifty million dollars. What's
Speaker 4: the trickle down effect of that for you?
Speaker 2: Can you explain that question a little bit?
Speaker 4: Yeah, so everyone's clamoring to get into very small concentration
Speaker 4: of names, including through SPVs. Does that kind of open
Speaker 4: up the field for you to sort of have access
Speaker 4: to more startups where people aren't paying attention or is
Speaker 4: it just that you kind of have to say, oh,
Speaker 4: do I need to be involved in this round even
Speaker 4: if it's a stretch for me at growth stage?
Speaker 1: Great question, And look, at the end of the day,
Speaker 1: as investors, it's our jobs to allocate capital in our
Speaker 1: fund construction, and that means thematically what we invest in.
Speaker 1: There's always going to be great deals out there, but
Speaker 1: we have to find the best use of our capital
Speaker 1: based on our strategy. So I think it's a great
Speaker 1: thing for companies like Sapphire right other investors are busy
Speaker 1: chasing these mega deals in these ultra late stage companies,
Speaker 1: or they're going super super early HIGHPAI companies that may
Speaker 1: not have a lot of revenue. That leaves more greenfield
Speaker 1: for companies like Sapphire that again are focused on that
Speaker 1: mid to late stage company proven.
Speaker 2: And by the way, it's not just Ai.
Speaker 1: There's plenty of amazing companies out there that aren't Genai
Speaker 1: native companies.
Speaker 2: And if more investors are looking only at Ai, I say,
Speaker 2: that's great for us.
Speaker 5: Okay, name one that isn't to do.
Speaker 3: With generat ai that has been exciting to be able
Speaker 3: to get into at least analyze, you know.
Speaker 1: I think one interesting way to play the broader Genai
Speaker 1: strategy is to think about companies that are leveraging Genai
Speaker 1: for themselves.
Speaker 2: So I'll give you an example.
Speaker 1: Metabol which is a Sapphire portfolio company, is a software
Speaker 1: platform that allows clinical trials to be performed in a
Speaker 1: decentralized manner. It's not a gen ai native company, but
Speaker 1: they're actually actively using genai technology to vastly improve implementation time.
Speaker 1: So Medical is working with the largest life sciences companies
Speaker 1: in the world, and implementations can take a long time
Speaker 1: because of the complexity. But now converting a thousand page
Speaker 1: trial document in a way that is automated and someone
Speaker 1: without technical expertise can set it up.
Speaker 2: Is a game changer.
Speaker 3: Kathy go aefave Inches, thanks so much for joining so much. Meanwhile,
Speaker 3: that AI is here to say, we know that and
Speaker 3: it can't happen without nuclear Apparently it's according to the
Speaker 3: Constellation Energy Ceoes Dominguez, these comments coming off to the
Speaker 3: company decided to reopen that nuclear reactor in Pennsylvania, with
Speaker 3: Microsoft agreeing to purchase the energy for two decades in
Speaker 3: order to.
Speaker 5: Power the AI boom.
Speaker 3: The Constellation CEO sat down living no Miskati Greefel yesterday's
Speaker 3: talk about the deal.
Speaker 5: Just take a listen.
Speaker 14: Earlier this year we started talking to Microsoft about it.
Speaker 14: We had partnered with Microsoft on different products before, so
Speaker 14: they made sense as a client. Of course they have
Speaker 14: the need, so.
Speaker 15: The relationship was there, and of course we see the
Speaker 15: culmination of that now.
Speaker 5: I'm curious.
Speaker 15: I mean, when it comes to the nuclear industry, you
Speaker 15: have bipartisan support, you read a lot of academics and
Speaker 15: other thought pieces that nuclear just makes so much sense,
Speaker 15: But there's still that reputation cloud, if you want to call.
Speaker 5: It, hanging over it.
Speaker 15: I'm curious when you think about the industry now versus
Speaker 15: when you were spun out of Exelon in twenty twenty two.
Speaker 2: How has it changed.
Speaker 14: Oh god, it feels like ten years, right, it's really
Speaker 14: thirty one months that we've been And back then the
Speaker 14: thought was, you know, there wasn't going to be a catalyst.
Speaker 14: It's always one of these things where in retrospect you
Speaker 14: think the pieces are coming together. Electrification of the transportation sector,
Speaker 14: home heating industry. We're on shoring a lot of industry
Speaker 14: now to deal with supply chain issues. But AI was
Speaker 14: the thing that just really drove the load projections to
Speaker 14: a point where you said, without nuclear it's not going
Speaker 14: to happen.
Speaker 3: Let us head to the Bloomberg philad the piece Earthshot Prize,
Speaker 3: which is happening right now on the sidelines of.
Speaker 5: The United Nations General Assembly.
Speaker 3: Bloomberg's Alex Steel, David SASAA join us and it is
Speaker 3: all going on at the Plaza Hotel today.
Speaker 5: Alex, I have to.
Speaker 16: Say, this is quite a set up here at the
Speaker 16: Earthshot Summit at the Plaza Hotel. This is sponsored, as
Speaker 16: you mentioned, a co hosted by Bloomberg Philanthropy's, but the
Speaker 16: whole goal is about trailbasing solutions and innovators to help
Speaker 16: our planet. And later on today there's also going to
Speaker 16: be the Goal Business Forum, where you have Bloomberg Philanthropy's
Speaker 16: teaming up with the World Bank and the IMF to
Speaker 16: kind of go through some of the big topics of
Speaker 16: our time, and in that is most definitely.
Speaker 5: Going to be AI and how to globally regulate that.
Speaker 16: We heard from President Biden earlier at the UN talking
Speaker 16: about the AI security and how to help that conversation
Speaker 16: on a global level and rupport. We'll be speaking with
Speaker 16: Eric Shaftsper later on today, the President and CIO over
Speaker 16: at Google, and Damien just kind of got stuck in here, yeah, radio,
Speaker 16: but he kind of dug it.
Speaker 5: He was into it.
Speaker 17: Central Bank's ambassadors, heads of state. I mean, it's all
Speaker 17: happening here. And what's interesting is we're talking to people
Speaker 17: like the European Investment Bank, We're talking to the Monetary
Speaker 17: Authority of Singapore. We're getting a sense of how they're
Speaker 17: financing sustainable development, how they're financing climate change solutions. And
Speaker 17: it's really an unbelievable vibe here. Alex I'm just happy
Speaker 17: to be here.
Speaker 16: Yeah, and everyone's really positive. Obviously, Guys in terms of
Speaker 16: the financing and the technology, but the real information kind
Speaker 16: of comes down on the ground, like can companies really
Speaker 16: make a return when they go green? And where and
Speaker 16: how did they do it? And what that long her
Speaker 16: from outlook w ends up being guys.
Speaker 3: Money Talks, Bloomberg Z, Alex Steele, Damien Sasa loving the
Speaker 3: energy down there, Thank you so much. Meanwhile, that does
Speaker 3: it for this edition of Bloomberg Technology. Clearly some key
Speaker 3: conversations still coming up later today.
Speaker 7: Ed.
Speaker 4: Yeah, don't forget to recap on the podcast. You can
Speaker 4: find it on the terminal as well as online on Apples, Spotify,
Speaker 4: and iHeart. This is Bloomberg Technology.