Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. Bloomberg Tech is live
Speaker 1: from coast to coast with Caroline Hide.
Speaker 2: In New York and Ed Lovelow in San Francisco.
Speaker 3: This is Bloomberg Tech coming up. President Trump signed executive
Speaker 3: orders to boost AI development in the US. We'll dig
Speaker 3: deeper with White House officials Michael Kratzios and Shari ram Krishnan.
Speaker 2: Plus we get back to big tech earnings, but Tesla
Speaker 2: and Alphabet's results, Tesla sliding after Musk's warning for the
Speaker 2: quarters to come.
Speaker 3: And Intel's next on the docket. We'll discuss what to
Speaker 3: expect from the ship maker's results and it's turnaround efforts.
Speaker 3: Later today the ED.
Speaker 2: First, we check in on these markets that are once
Speaker 2: again at record highs. We're focusing in on what has
Speaker 2: really been the uplift, feel good factor of the fact
Speaker 2: that the trade deal starts to roll in Japan. All
Speaker 2: eyes on Europe and we look at the naz currently
Speaker 2: up quarter of percent if you're looking at the Nazbak
Speaker 2: one hundred, but it had been a new record highs.
Speaker 2: We're seeing it on other benchmarks as well, and I
Speaker 2: know you're digging in to the key contributors to the
Speaker 2: upside and the downside in terms of points.
Speaker 3: Yeah, let's go on the downside. Tesla is the earning
Speaker 3: story on track for its biggest drop since the first
Speaker 3: week of June, a period of transition, and the core
Speaker 3: business suffering. Alphabet is AI fueled growth but at a
Speaker 3: greater cost, raising capex later in the show, going deep
Speaker 3: on both those names and Nvidia in this session is
Speaker 3: pushing fresh record highs. Jensen one front and center of
Speaker 3: yesterday's Winning the AI Race summit, but sprinkled within that
Speaker 3: a warning from the President about how closely he's looking
Speaker 3: in a video Let's get out to Bloomberg's Michael Shephard
Speaker 3: here in Washington.
Speaker 4: D C.
Speaker 3: The executive orders of the fresh bit action by this
Speaker 3: president to enact his AI action plan, a standing ovation
Speaker 3: for Jensen one, and within it a warning, so to speak.
Speaker 5: Well that's raded.
Speaker 4: In this he we saw President Donald Trump embrace artificial
Speaker 4: intelligence is a pillar of his economic and national security agendas,
Speaker 4: and with it we saw him practically throw his arms
Speaker 4: around Jensen Wang himself during the event, singling the Nvidia
Speaker 4: CEO out for praise, really for the company's prowess in
Speaker 4: making the AI chips that power this new and transformative technology.
Speaker 4: But he did sprinkle a warning in there before going
Speaker 4: on to praise Jensen. He let it slip that he
Speaker 4: had thought about trying to break up in Video, which
Speaker 4: would be a startling and very much a market shaking move,
Speaker 4: and yet he said that he was talked out of
Speaker 4: it by AIDS, who pointed to the company's importance and
Speaker 4: how it had taken years to develop that pre eminence,
Speaker 4: and if the US government had gone after Nvidia, it
Speaker 4: would be really hard to walk that back.
Speaker 2: Mike Shepherd on the latest out of that AI Action
Speaker 2: Plan event and let's get more analysis, more people in
Speaker 2: the room. Michael Kratzios is one of them, Director of
Speaker 2: the White House Officer Science and Technology Policy, and it
Speaker 2: was let's just start such an enthusiastic welcome embrace of
Speaker 2: AI written large, Michael, I got to get your take.
Speaker 2: It was perhaps jovial in nature coming from the President
Speaker 2: of the United States, But what did you make of
Speaker 2: the fact that him, once upon a time considered even
Speaker 2: thinking of breaking up and video.
Speaker 6: I think it was a tremendous day for the country
Speaker 6: and for AI more broadly. We definitively turned the page
Speaker 6: on what the last administration had tried to do to
Speaker 6: really hamper this industry and chocolate with a high level
Speaker 6: of regulation that didn't allow it to fully spread its wings.
Speaker 6: What was tremendous about the event yesterday was not only
Speaker 6: the President's speech, but the participation that the Vice President
Speaker 6: himself and five Cabinet secretaries. This was a big moment
Speaker 6: for the American I industry and it really showed how
Speaker 6: committed this administration is to ensuring continued American dominance in
Speaker 6: this critical technology.
Speaker 3: Mister Crisis, you helped to write this document and form
Speaker 3: the policy alongside the advisors David Sachs and Shri Krishnan,
Speaker 3: who will be on the program later today. What I
Speaker 3: got from Corporate America is that they feel the action
Speaker 3: plan is actionable. It's heavily rooted in deregulation and expediting permits.
Speaker 3: Of the twenty three pages, which section do you think
Speaker 3: gets enacted by this administration?
Speaker 7: First?
Speaker 6: Well, we are racing ahead on all of them. I
Speaker 6: think the one piece that you didn't mention, which I
Speaker 6: think is also very critically important, is this focus on
Speaker 6: exporting American AI. This idea that we want the entire
Speaker 6: world to be running on American artificial intelligence stack. That is,
Speaker 6: our cloud, our chips, our algorithms, all of that needs
Speaker 6: to be exported and packaged to the world so that
Speaker 6: we become the ecosystem of choice globally. And that is
Speaker 6: something that Secretary Lutnik and Secretary of State Rubio have
Speaker 6: been tasked to work on and put together for the country.
Speaker 6: So between that and our very ambitious agenda on the
Speaker 6: actual infrastructure of empower it's going to power this, there's
Speaker 6: a lot of work for us to get done in
Speaker 6: the next few months.
Speaker 3: MISSUS crisis. What's the rulemaking process from here for exporting chips?
Speaker 3: In particular, the way that your colleague, mister Lutnik put
Speaker 3: it was that the administration is comfortable with large clusters
Speaker 3: going to third parties foreign countries, but American company access
Speaker 3: to that stack would be part of the evaluation process.
Speaker 3: Do we get a successor to the diffusion rule? Have
Speaker 3: you started drawing up some guidelines?
Speaker 6: So that's being handled by BIS and Secretary Lutnik at Commerce,
Speaker 6: But generally speaking, what we're going to be doing and
Speaker 6: through the executive order of the President signed the Department
Speaker 6: of Commerce is tasked to work with American industry to
Speaker 6: create AI packages. These are packages that we then can
Speaker 6: work with the State Department to go out and export
Speaker 6: around the world. And part of that, because Commerce will
Speaker 6: be at the table when these packages are being created
Speaker 6: with our great chip companies and our algorithm companies and
Speaker 6: our model companies, we'll be able to have packages which
Speaker 6: we believe will be able to make it through the
Speaker 6: xport control restrictions of a commerce department and make them
Speaker 6: actually extraordinarily viable and very interesting and very appealing to
Speaker 6: lots of countries around the world who all are racing
Speaker 6: and very excited to have AI and deliver AI for
Speaker 6: their people.
Speaker 2: And boy are the US companies racing for AI. The
Speaker 2: investment that we hear coming from Alphabet, for example, opping
Speaker 2: by another ten billion in terms of capital expenditure. These companies,
Speaker 2: though a huge Alphabet potentially facing a breakup. We hear
Speaker 2: about Judge Meta in August. We also know that Meta
Speaker 2: itself is also being analyzed. Will these companies always be
Speaker 2: allowed to be huge if the AI innovation is the win?
Speaker 6: You know, that's not something that I particularly focus on
Speaker 6: or look at. I think you have to talk to
Speaker 6: the Department of Justice and others. But to be honest,
Speaker 6: I think we are very blessed in the United States.
Speaker 6: We have the greatest technology companies in the world that
Speaker 6: are delivering the greatest products in the world that citizens
Speaker 6: of the world all want to use. If you just
Speaker 6: look at the numbers of usage for a large language
Speaker 6: model builders, it's absolutely incredible. The entire world wants to
Speaker 6: run American rails, and we need to make sure that
Speaker 6: the regulations are out of the way to make sure
Speaker 6: that we can get it out there, not only to Americans,
Speaker 6: but also globally.
Speaker 2: And I thought what was really interesting was the comments
Speaker 2: coming from President Trump while announcing the AIX and signing
Speaker 2: executive orders, was one of copyright and almost trying to
Speaker 2: push back on this need to be compensated. If you're
Speaker 2: someone who's made the works that the ultimate models have
Speaker 2: been trained upon, what do you make of copyright and
Speaker 2: will that be in legislation?
Speaker 6: Yeah, you've burned a good point. In the President's speech,
Speaker 6: the President discussed the importance of being able to use
Speaker 6: materials in the training of these models, and this is
Speaker 6: something that is going back and forth and discussed a
Speaker 6: lot globally. And I think we're excited to kind of
Speaker 6: see where that all plays out. Ultimately speaking, what we
Speaker 6: want to do is be able to allow training to
Speaker 6: happen here in the United States, and that's something that's
Speaker 6: being sorted.
Speaker 2: Out in the courts.
Speaker 3: Mister Cratsios, why is the issue of visas and immigration
Speaker 3: of talent not included in the action plan?
Speaker 6: Well, we talk a lot about the importance of the
Speaker 6: people that are going to make the AI ecosystem thrive.
Speaker 6: And one thing that was very unique and special about
Speaker 6: this report, which actually doesn't get talked a lot about
Speaker 6: when it comes to the I ecosystem is the importance
Speaker 6: of actual builders in how we build out the infrastructure
Speaker 6: for AI. When we think of the people that we
Speaker 6: need to make AI succeed, we need HVAC people, we
Speaker 6: need electricians, we need all these amazing careers that we'll
Speaker 6: be able to actually build these massive data centers for
Speaker 6: the American people. So this report touches on that, and
Speaker 6: it also brings up the point that we need great
Speaker 6: talent and great Americans to be able to work on
Speaker 6: this technology.
Speaker 3: The way that mister Jensen Wong has put it time
Speaker 3: and time again is that more than fifty percent of
Speaker 3: the world's AI researchers are from China or currently in China.
Speaker 3: And if you look at recent newsflow, and I know
Speaker 3: that you do, mister Kratzios, all of these members of
Speaker 3: talent that are moving from Apple to Meta or Google
Speaker 3: to Meta in its Superintelligence lab our ivor first generation
Speaker 3: immigrants from somewhere around the world, but including China, do
Speaker 3: you acknowledge that the administration needs to come up for
Speaker 3: a plan to attract talent from outside of this country
Speaker 3: to fuel the AI industry.
Speaker 6: Here America is already the place where the best and
Speaker 6: brightest people from around the world want to come live,
Speaker 6: work and study. And we are blessed with that, and
Speaker 6: we continue to have amazing legal pathways for the greatest
Speaker 6: thinkers and minds and engineers to come work in the
Speaker 6: United States. Where I spend a lot of time thinking
Speaker 6: about is how we can make sure that we have
Speaker 6: more native born American talent succeeding and being employed by
Speaker 6: our great technology companies. The percentage of Americans that are
Speaker 6: now pursuing high end STEM degrees has been declined precipitously
Speaker 6: over the last twenty years. That is something that is
Speaker 6: a curve that we need to change. We need more
Speaker 6: Americans pursuing high end PhDs and things like artificial intelligence
Speaker 6: and computer science and engineering, and that's something that we're
Speaker 6: going to work very hard on.
Speaker 2: Michael. Also, what's included is well the focus on reskilling, retraining,
Speaker 2: and helping states and companies do that. There's enough there
Speaker 2: to support what is going to be a true upheaval
Speaker 2: in the labor market.
Speaker 6: I think we can get it done, and I think
Speaker 6: the Secretary of Labor and many other secretaries are very
Speaker 6: excited about driving these programs forward. As I talked to
Speaker 6: builders that are building out Stargate, they're saying that somewhere
Speaker 6: between twenty five or fifty states is where they have
Speaker 6: to bring in electricians and other folks in to actually
Speaker 6: work on these projects. And that's something that we need
Speaker 6: to fix. That's a curve that we need to bend
Speaker 6: and get more people being able to work on these
Speaker 6: actually high paying, very efficient, great jobs for Americans and
Speaker 6: be able to allow them to participate in the revolution.
Speaker 3: Miscristus very quickly. The plan includes a provision to contract
Speaker 3: only with developers using non bias models. The President brought
Speaker 3: the issue up also talked about woke in the context
Speaker 3: of models. Explain why that was included. Please, we have
Speaker 3: thirty seconds.
Speaker 6: The President has been very clear from day one about
Speaker 6: trying to remove Marxist DII ideology from the federal government,
Speaker 6: and a big part of that is making sure that
Speaker 6: the models and the technology that we actually perture and
Speaker 6: spend taxpayer dollars on does not support these types of ideologies.
Speaker 6: And that's why you're going to see changes in the
Speaker 6: way that we procure AI models to make sure that
Speaker 6: we eliminate this.
Speaker 3: Michael Kratzius, Director of the White House Office of Science
Speaker 3: and Technology Policy, Grateful to have you back on the
Speaker 3: show after a busy twenty four hours here in d C.
Speaker 3: Thank you know coming up. Elon Musk warns of rough
Speaker 3: quarters ahead, following one of Tesla's worst stretches since I
Speaker 3: first started producing EB So we're going to go to
Speaker 3: that next. This is Bloomberg Tech.
Speaker 8: We probably could have a few rough quarters and I'm
Speaker 8: not saying it well, but we could Q four, Q one,
Speaker 8: maybe Q two. But once you get to autonomy at
Speaker 8: scale in the second hand of half of next year something.
Speaker 8: By the end of next year, I think the I'll
Speaker 8: be surprised if the economics, I'm not very compelling.
Speaker 2: As a CEO. Elon Musk there on the earnings call
Speaker 2: yesterday has discussed the results. The share prices reaction is stark.
Speaker 2: William Stein is with US managing director and senior analyst
Speaker 2: at Truest Securities. Was there anything about this autonomy promise
Speaker 2: that is enough to make up for the ugly fundamental
Speaker 2: picture in the here and now? William?
Speaker 9: Oh?
Speaker 10: Sure, if you take a very long term view and
Speaker 10: look at the track record of this remarkable human being
Speaker 10: and the team that he's been able to assemble, they've
Speaker 10: done some just really amazing things with new technology in
Speaker 10: automotive and certainly in AI, and it's moving more in
Speaker 10: that direction. So one can, you know, certainly take that
Speaker 10: very much optimistic view on the long term. However, the
Speaker 10: short term clearly sounds worse.
Speaker 3: William. On the earnings call, you asked a question about
Speaker 3: the more affordable model. What happened was Lars interjected, I
Speaker 3: think it's Lars when I checked the tape and said
Speaker 3: we're not going to talk about and then Elon interjected
Speaker 3: and said, it's just a model. Why I've checked the
Speaker 3: tape so many times it's just a model. Why why
Speaker 3: is it that important that he answered you a question?
Speaker 3: And where does it fit into robotaxi? Please?
Speaker 10: So I don't think it's so relevant to Robotaxi. But
Speaker 10: this lower cost vehicle is something they've promised for a
Speaker 10: while that is supposed to be a half step between
Speaker 10: what they're doing now and what they promised at the
Speaker 10: last analyst day, which would be a significantly cost reduced car,
Speaker 10: a smaller form factor, and a different architecture entirely. What
Speaker 10: he talked about yesterday, or what I asked him to
Speaker 10: talk about, was give us more detail on this interim
Speaker 10: thing that you said you were making in the first
Speaker 10: half of this year. You reiterated that in the press
Speaker 10: release and on the call, But we're all scratching our
Speaker 10: heads where is it? And his saying that the form
Speaker 10: factor looks like a model, why, from my perspective, that
Speaker 10: is not surprising at all. I was trying to draw
Speaker 10: out from him some details as to what the architecture
Speaker 10: is going to look like and to what degree the
Speaker 10: cost is going to come down as a result of
Speaker 10: the new innovations he's bringing.
Speaker 2: Yeah, he didn't.
Speaker 4: Bite on that.
Speaker 2: We've got no clarity and ultimately the interjection of a
Speaker 2: new cheaper model is what's meant to perhaps drive sales
Speaker 2: in the next second half and the next future year.
Speaker 2: If we're not getting that clarity, are we just going
Speaker 2: to get canibalization? If it looks and feels like a.
Speaker 10: Model, why, I think that's a very smart point you're making.
Speaker 10: And the way that I'm thinking about this is, remember,
Speaker 10: there are some consumer tax credits that are going away.
Speaker 10: There are also regulatory tax credits or regulatory credits that
Speaker 10: revenue is going to decline from that. I see an
Speaker 10: incremental reduction in the cost and therefore the price that
Speaker 10: they can charge customers as perhaps maintaining volumes at this
Speaker 10: level of growing them a little bit. I don't think
Speaker 10: this is going to be even a significant evolution in
Speaker 10: the story.
Speaker 3: William Stein from Turier Securities, thank you very much, recapping
Speaker 3: One of the questions posed on the call. Google parent
Speaker 3: Alphabet was also about with this earnings last night, the
Speaker 3: company said demand for AI products boost sales and now
Speaker 3: requires an extreme increase in capital spending. Schweeder Cajeria, managing
Speaker 3: director of Global Internet at Wolf Research, joins us I
Speaker 3: put the earnings transcript through various generative AI tools. And
Speaker 3: the answer I got out Schwetter was AI fueled growth
Speaker 3: at a higher cost. Does that summit for you?
Speaker 10: I think so.
Speaker 11: First of all, thanks for having me ed. I think so.
Speaker 11: There's just a tremendous amount of focus on AI, and
Speaker 11: the conclusion here from the earnings is that AI related
Speaker 11: investments are showing are bearing fruit, not only in search,
Speaker 11: which is their bread and butter, but also in cloud,
Speaker 11: where revenue grew significantly higher than where expectations were. So
Speaker 11: fundamentals are getting stronger for Google, They're showing it, and
Speaker 11: they're justifying with greater gap xpend so that they can continue.
Speaker 11: The durability is justified.
Speaker 2: We'll see whether Ed was putting into notebook ILM and
Speaker 2: making it into a podcast shreutter. But I am interested
Speaker 2: as to why this is negative for Amazon. Your note
Speaker 2: is so interesting. Ultimately, think that this is a beat
Speaker 2: across the board. You think this is a good news
Speaker 2: story for METSA but not for Amazon.
Speaker 11: Well, I think it is a positive. I should have
Speaker 11: been a little bit clearer in my note, just to
Speaker 11: be you know, a little bit more upfront. In the
Speaker 11: second quarter, I think it would be positive for Amazon.
Speaker 11: With the cloud numbers, we're pretty strong for Google, and
Speaker 11: there's not a ton of reason to think Amazon also
Speaker 11: wouldn't have seen benefits of demand. The incremental negative pieces
Speaker 11: that Google also commented on applied demand remaining tight and
Speaker 11: so the capacity constraints. They are not out of the woods.
Speaker 11: And one of the key focus areas for investors was
Speaker 11: whether we'd see acceleration in AWS revenue growth in the
Speaker 11: back half, and as early as the third quarter. We
Speaker 11: may not see that just yet. It could be pushed
Speaker 11: into Q four or beyond.
Speaker 3: One of your self psych colleagues had a know oubt
Speaker 3: that basically said Google's hand has been forced by open
Speaker 3: AI and open hours commitment to spend also in the
Speaker 3: talent domain. How honest do you feel Alphabet or Google
Speaker 3: were about the pressures they're facing to spend their way
Speaker 3: into a situation or out of a situation.
Speaker 11: Well, I think that there's a growing amount of pressure
Speaker 11: and that is pretty well documented across these you know,
Speaker 11: across what Mark Zuckerberg is saying and what is actually happening.
Speaker 11: But the benefit with Google is also that they do
Speaker 11: also have the advantage of the infrastructure of the Deep
Speaker 11: Deep Mind Research group of some of the best engineers
Speaker 11: that are out there. So not only a high bay package,
Speaker 11: but also who you work with, how how innovative you
Speaker 11: work is all that also matters. I do think that
Speaker 11: there was some truth behind what Sundar was saying that,
Speaker 11: you know, the retention levels are kind of where they
Speaker 11: want want to be.
Speaker 2: Schwider Cojuria of Wolf Research is always great to get
Speaker 2: your notes and your expertise on the show. Thank You Now.
Speaker 2: Another company out with earnings, Service Now. The company says
Speaker 2: it's these strong outlook for revenue growth in the third
Speaker 2: quarture as customers adopts AI software tools. I spoke with
Speaker 2: Service Now CEO Bill McDermott. You're out to the company's
Speaker 2: savings on labor with the help of its own AI.
Speaker 12: We're slowing down the hiring in jobs that are quite
Speaker 12: frankly soul crushing jobs. I mean, just think about like
Speaker 12: it support. You know, ninety seven percent of standard software
Speaker 12: automatically generated by AI now, and the pressure on supporting
Speaker 12: function and people has been cut in half. Customer support
Speaker 12: eighty percent of the customer inquiries in cases now are
Speaker 12: fully managed by agentic AI. And think about security and
Speaker 12: risk management in real time. All the patchwork and the
Speaker 12: change management is done by agents now. And the same
Speaker 12: is true go to market. You know, think about people
Speaker 12: that talk to customers. There's no prep work anymore. Their
Speaker 12: AI teammate is doing that for them at service now,
Speaker 12: So the speed of the company has accelerated dramatically. The
Speaker 12: supporting cast of the sole crushing work is now being
Speaker 12: done by agents. They work hard twenty four by seven.
Speaker 12: You don't have to pay them, and they don't need
Speaker 12: any lunch, and they don't have any healthcare benefits, so
Speaker 12: they're very affordable. And that really complements all workforce. So
Speaker 12: we're still hiring, but we're hiring less in those supporting functions.
Speaker 12: And I suppose that's going to happen to all well
Speaker 12: run companies. And I say that because we now need
Speaker 12: to think about how you've run a core operation on service. Now,
Speaker 12: how you change the way you run your business processes.
Speaker 7: It could be ordered a cash, procure to pay.
Speaker 12: Hire to retire, designed to product. These are all processes
Speaker 12: that go across functions and we need to have those
Speaker 12: twentieth century ORG charts obliterated. We now need to work
Speaker 12: in teams. Teams need to work across processes and the
Speaker 12: agents need to be the best friend to humans. And
Speaker 12: if we do this right, the GDP of the world
Speaker 12: will go up. Companies will outperform not just on the
Speaker 12: op X costs, takeout and productivity, but they will be
Speaker 12: building new horizons, new business models, and new dreams on
Speaker 12: the service now platform. And we're excited.
Speaker 2: Service Now CEO Bill McDermott. Now, let's just shift to
Speaker 2: IBM shares briefly because they are down pretty significantly day
Speaker 2: of their lows. But actually spoke with Avin Krishna yesterday,
Speaker 2: the CEO of IBM. He had been pretty upbeat about
Speaker 2: his revenues, thinking it was of high quality, felt good
Speaker 2: about the product. He also felt good about federal spending
Speaker 2: and had been a key question mark. They think that
Speaker 2: this is an opportunity that they want to modernize and
Speaker 2: leverage technology within the federal government and there are opportunities
Speaker 2: and they want to compete for that business. It is
Speaker 2: time now for talking tech and first up, more fallout
Speaker 2: from Microsoft's SharePoint floor Now. Hackers have compromised several entities
Speaker 2: in South Africa, including the National Treasury. As according to
Speaker 2: cybersecurity firm ICE Security, South Africa's National Treasury has said
Speaker 2: it's seeking help from Microsoft after identifying malware on its network.
Speaker 2: Plus Amazon's Prime Day plan if at fires. The company's
Speaker 2: extended Prime Day sales were men to give more time
Speaker 2: for customers to browse, and z Shopers compared prices. Many
Speaker 2: went to Walmart, the sales at the retailer growing twenty
Speaker 2: four percent, and Elon Musk's Neuralink is expected to implant
Speaker 2: chips into twenty thousand people by the year twenty thirty one,
Speaker 2: generating at least a billion dollars in annual revenue. That's all,
Speaker 2: according to documents reviewed by Bloomberg, Neuralink has raised one
Speaker 2: point three billion dollars for investors and is now valued
Speaker 2: a nine billion according to Pitchbook. Welcome back to Bloomberg Tech.
Speaker 2: Let's check on these markets because there are at new
Speaker 2: record highs and as that one hundred up three tenths
Speaker 2: of a percent. Yes, there are key moves to the downside.
Speaker 2: Tesla being one of the men on the upside, with
Speaker 2: the in video once again crushing it to a new
Speaker 2: record high more than four trillion dollars in market cap.
Speaker 2: We are up on the cross the benchmark today hope
Speaker 2: about that European trade deal to fueling some risk on sentiment.
Speaker 2: Move though to a company that has no risk on sentiment,
Speaker 2: in fact, following the most in a year, down sixteen percent,
Speaker 2: SD micro Franco, Italian chip maker. Now I'm looking at
Speaker 2: the ADRs traded here in the US, but it was
Speaker 2: damn Similarly in Europe. This is after their numbers showed
Speaker 2: a surprise operating loss instead of a profit. The every
Speaker 2: structuring costs, but also big exposure to the automotive sector
Speaker 2: like Tesla one of the key clients, and they're seeing
Speaker 2: some slowdown margins also not looking good for the third quarter.
Speaker 2: We've had that from NXP and of course Texas Instruments.
Speaker 2: To add.
Speaker 3: AI developers and chip makers are rallying behind President Trump's
Speaker 3: AI action. Yesterday I caught up with AMD CEO Lisa Sue,
Speaker 3: who said the efforts to bring semiconductor production to the
Speaker 3: US were strategically important, but come at a higher cost.
Speaker 3: Listen to this.
Speaker 13: I think the AI action plan absolutely helps this notion
Speaker 13: of bringing up the resources that are necessary, whether it's
Speaker 13: regulatory or power or you know, just ensuring that there's
Speaker 13: a view that this is a priority. And if it's
Speaker 13: a priority for the administration, it'll be a priority for
Speaker 13: the industry. And you know, it kind of coalesces all
Speaker 13: of the aspects that are necessary. So it's still hard work.
Speaker 13: I don't want to say that you know, we can
Speaker 13: do this, you know quickly. It's still multi years.
Speaker 3: But you will move some chips from Arizona this year.
Speaker 13: I think you said absolutely, we're going to start manufacturing
Speaker 13: this year, and we're going to add to it as
Speaker 13: we go forward.
Speaker 3: One of the things you addressed on stage was the
Speaker 3: idea of the relative price comparison for a semiconductor made
Speaker 3: here in the United States versus abroad. There is a
Speaker 3: marginal degree of greater expense. I think you said it
Speaker 3: was less than twenty percent, more than five percent, somewhere
Speaker 3: high double digits. But if you are building the broader
Speaker 3: high performance compute system in the United States, does it matter?
Speaker 3: I mean, how do you approach the sort of economics
Speaker 3: of it.
Speaker 13: I think the economics of it are we have to
Speaker 13: consider the just resiliency in the supply chain. I think
Speaker 13: we learned that, frankly ed from the pandemic. You know,
Speaker 13: the idea that you think about your supply chains, not
Speaker 13: just by the lowest cost, but also about reliability, about
Speaker 13: resiliency and all those things. I think that's how we're
Speaker 13: thinking about US manufacturing. And yes, it will be a little.
Speaker 2: Bit more expensive.
Speaker 7: You know.
Speaker 13: Frankly, some of the work that has been done to
Speaker 13: encourage semiconductor investment has been helpful. But when you really
Speaker 13: average it across everything else that you need to build
Speaker 13: this computing infrastructure, I think it's a very good investment
Speaker 13: for us to make to assure that we have you know,
Speaker 13: American manufacturing and resiliency.
Speaker 3: The AI Action Plan will be followed by action, you know,
Speaker 3: executive orders from the President and other pieces of specific policy.
Speaker 3: What is left to do, to your mind, what is
Speaker 3: it actually that needs to be enacted, either from a
Speaker 3: supply chain point of view or your ability to sell
Speaker 3: your technologies around the world.
Speaker 2: Well, what I really like.
Speaker 13: About the AI Action Plan is I actually believe it's
Speaker 13: quite actionable. So there are lots of things in there
Speaker 13: where when we look at it, it's a perfect blueprint
Speaker 13: for public private partnership. And you know, we're going to
Speaker 13: be active with the administration to try to help shape
Speaker 13: some of those conversations about you know what should be exported,
Speaker 13: what an open ecosystem looks like. How do we ensure
Speaker 13: that AI for science is front of mine. You know,
Speaker 13: we're very active with the Department of Energy on you know,
Speaker 13: the entire national lab infrastructure which can really help accelerate
Speaker 13: AI in the country. So yeah, we're ready to go.
Speaker 3: That was a m d CEO Lises who speaking to
Speaker 3: me at the AI summit in DC yesterday. Let's talk
Speaker 3: more about the impact of this new USAI policy framework,
Speaker 3: the AI Action Plan. Irene Soliman, headed AI Research and
Speaker 3: Policy for Hugging Face, was in the room yesterday now
Speaker 3: in the room with us here in the DC studio,
Speaker 3: And you know, I haven't got it with me now.
Speaker 3: But when I printed out the twenty three page document,
Speaker 3: I turned page one and in the indexing open source
Speaker 3: and open weight was so high up, which was a
Speaker 3: surprise to many people. For hugging face that that clearly
Speaker 3: is a good result.
Speaker 9: Absolutely, it's not just for hugging face, it's for the
Speaker 9: community at large. It's time that the US gets back
Speaker 9: to its roots of open source and what that means
Speaker 9: for the future of innovation.
Speaker 2: Why is open source, I mean so important to the
Speaker 2: future of innovation and this so called race of US
Speaker 2: versus China.
Speaker 9: So much of what has started this AI boom today
Speaker 9: is really the foundation of open science, the original papers
Speaker 9: that created the kinds of transformers that we're seeing today,
Speaker 9: and there's something in that report for everybody. So we're
Speaker 9: really looking forward to the next generation of manufacturing, to
Speaker 9: the and to the many areas of science where we're
Speaker 9: seeing where we're seeing more development through open source and
Speaker 9: open science.
Speaker 2: It's not just language models.
Speaker 9: There's many communities that rely on sharing and with community work.
Speaker 3: What Lisa Su was talking about there was an involvement
Speaker 3: in forming policy from her perspective. How involved has hugging
Speaker 3: face bin with this administration? And you know we had
Speaker 3: mister Kratzios on the show earlier. True Round Christian will
Speaker 3: be we on just after you are these conversations you
Speaker 3: were involved in as this document was written up.
Speaker 9: We were lucky to engage deeply with this administration. I
Speaker 9: will say that we are we are a little tech
Speaker 9: and we've also appreciated the attention that this administration has
Speaker 9: given to little tech. With our two hundred plus team.
Speaker 3: One of the interviewes ide yesterday was with SBA director
Speaker 3: Kelly Leffler, who said the same thing that you know,
Speaker 3: her interpretations of heard domain is that this is written
Speaker 3: with a view to how it impacts main street companies
Speaker 3: of all sizes as they kind of get to grips
Speaker 3: of using AI. Why is that important?
Speaker 2: Well, so much of.
Speaker 9: AI, I think it's easy to overlook those hobbyists. Part
Speaker 9: of what our platform wants to encourage is the kind
Speaker 9: of person who's just been toying with AI in their rooms, who.
Speaker 2: Really wants to skill up.
Speaker 9: We talked a little bit yesterday and today about training
Speaker 9: and deployment. We want everybody to be able to ensure
Speaker 9: that they can contribute to AI because everybody is affected
Speaker 9: by it.
Speaker 2: That's what's so important. Perhaps more about the AI evaluation
Speaker 2: ecosystem as well. I know that's something that you prioritize
Speaker 2: a lot at Hugging Face and you think about ultimately
Speaker 2: the societal implications that US talk about how they support
Speaker 2: the labor market. But I'm interested in the note on
Speaker 2: bias or potential bias or what ultimately they see as
Speaker 2: bias within some of the large language models and how
Speaker 2: that's adopted by federal government in the US. I mean,
Speaker 2: how have you interpretated that, Yes, so the AI.
Speaker 9: Ecosystem is really a thriving area for research for development.
Speaker 9: I'm sorry, I'm unable to hear some of that question.
Speaker 9: If you could repeat that.
Speaker 2: Caroline, can you hear me now? Ed do you jump in?
Speaker 9: Oh?
Speaker 3: Jump in? We have some You know, it's a technology
Speaker 3: show where sometimes the technology fails just a little. You
Speaker 3: heard Lisasu talk about science the application of AI. She
Speaker 3: meant in I think infrastructure, but in energy for example.
Speaker 3: One of the panelists I believe you listened to with
Speaker 3: Jake Lucerrarian from Gecko, heavy emphasis on how AI can
Speaker 3: help the energy industry boost its output. You're also interested
Speaker 3: in the science application. You came away reading the document
Speaker 3: and the President's speech feeling what about that domain.
Speaker 9: A huge part of AI, of course, is going to
Speaker 9: be energy. The energy was high yesterday, and as the
Speaker 9: plan says, it's only going to get higher, we're seeing
Speaker 9: it hugging fased. People really using actually smaller models to
Speaker 9: enhance their workstream. Some of the most downloaded models are
Speaker 9: energy efficient. As we scale up our infrastructure, people need
Speaker 9: to rely on what is easy to deploy.
Speaker 3: There is a heavy emphasis on exporting the American technology
Speaker 3: stack or simply exporting American AI. That's the bit of
Speaker 3: the open source debate that I really want to understand
Speaker 3: from you, because at the same time, this administration frames
Speaker 3: this as competition. America wants to lead with its commercial
Speaker 3: leadership of AI against China in particular, as much as
Speaker 3: it wants to foster an open source ecosystem.
Speaker 7: Are both achievable.
Speaker 9: One of the biggest takeaways that we have from this
Speaker 9: action plan is this US tech stack. So there's not
Speaker 9: just this race for the frontier, this race for AGI,
Speaker 9: there's really this race for the global ecosystem. A huge
Speaker 9: part of open source and open weights is what people
Speaker 9: are able to locally deploy, and this is the emphasis
Speaker 9: on the American tech stack. We need the US to
Speaker 9: develop more of those open weight and light weight models.
Speaker 3: Are in Finally, you were in the room, and you know,
Speaker 3: some people were taken a back a little bit, But
Speaker 3: about who was in the room, the mix of policy makers,
Speaker 3: leaders in your industry, What was it that was most
Speaker 3: discussed in between the panels? You know, what is it
Speaker 3: that you exchange views on with your peers.
Speaker 9: It was a mix, it was It was a huge
Speaker 9: variety of people in that room. Which is who needs
Speaker 9: to be a part of this AI conversation. Some of
Speaker 9: the conversations we were having is about the next areas
Speaker 9: that we're excited about. We're looking forward to the next
Speaker 9: generation of manufacturing, towards robotics, towards what we can be
Speaker 9: doing to make sure that AI is being deployed in
Speaker 9: every sector in a meaningful way.
Speaker 2: Irene Sleiman, head of AI Research and Policy at Hunting Place,
Speaker 2: joined to have you on now coming up, President trumpnveil's'
Speaker 2: AI road map has been talking about throughout. Sharam Christian
Speaker 2: is going to be joining US White House Senior Policy
Speaker 2: Advisor for AI. You Jos us to discuss next. This
Speaker 2: is blumbed tech.
Speaker 13: I think the AI Action Plan is actually extremely well done.
Speaker 13: President Trump knows that small business is big business.
Speaker 10: It amounts to shock therapy for American competitiveness and the
Speaker 10: AI industry.
Speaker 14: I think the key component is it's very much all
Speaker 14: about energy. The fear right now before this action plan
Speaker 14: was that we weren't doing enough, and so what's exciting
Speaker 14: is that the action plan is addressing this head on
Speaker 14: with permitting as well as a call to arms.
Speaker 6: I think the third pillar around making sure that we
Speaker 6: are expediting the export of our American AI stack. That
Speaker 6: is really core to our mission at Armada.
Speaker 13: Well, what I really liked about the AI Action Plan
Speaker 13: is I actually believe it's quite actionable.
Speaker 3: That's just what a few of the AI leaders had
Speaker 3: to say yesterday in Washington about President Trump's AI Action
Speaker 3: Plan here with more in the administration's AI rollout. Is
Speaker 3: one of the people that helped formulate write that policy
Speaker 3: in that document, Shariram Krishnan, White House Senior Policy Advisor
Speaker 3: for AI, to get it here in person in Washington,
Speaker 3: d C. There was a point towards the end of
Speaker 3: that sequence of comments about exporting the American technology stack,
Speaker 3: exporting chips in particular. Your colleagues in the cabinet, mister Lutnik,
Speaker 3: for example, talked about this at length on stage. Are
Speaker 3: we going to get a set of rules and how
Speaker 3: will we decide the volume and specificity of the types
Speaker 3: of chips that we can sell, particularly into China?
Speaker 7: Thank you Ed for having me here. I think you
Speaker 7: know you're going to work on that. I think if
Speaker 7: you look at the executive order that President Trump signed,
Speaker 7: which is about America setting the standard, what you're going
Speaker 7: to see is we're going to work closely with our
Speaker 7: friends in commerce, especially in BIS and what we're going
Speaker 7: to figure out is what those policies are going to be.
Speaker 7: But the metap point here is President Trump said was
Speaker 7: very clear we need America to set the standard for
Speaker 7: how AI is being used globally, from chips to models,
Speaker 7: to every part of the stack. And what we have
Speaker 7: seen over the last six months, be it with Huawei
Speaker 7: on the chip side, or be it with models like
Speaker 7: deep Seak, we have competition, and yesterday's plan sets a
Speaker 7: very clear note that we need to be making sure
Speaker 7: that our standards exist worldwide.
Speaker 3: I read all twenty three pages as many times as
Speaker 3: I could. I think twenty three on the version I have,
Speaker 3: but we can agree to disagree. There's a heavy emphasis
Speaker 3: on deregulation and permitting that we get to the onshoring
Speaker 3: component for exporting American AI. What is it tangibly? What
Speaker 3: action will be taken to open that up, be it
Speaker 3: on the software end or the hardware end of the stack.
Speaker 7: Yes, So if you prison, Trump signed three executive orders
Speaker 7: yesterday and one of them deals exactly with this. And
Speaker 7: what we're going to do is we're going to work
Speaker 7: with industry to come up with a gold standard for
Speaker 7: what the American stack should be. And there's going to
Speaker 7: be a process how we figured this out, and then
Speaker 7: we're going to try and make sure that when we
Speaker 7: work with our partners and our allied countries that they
Speaker 7: are using our stack instead of the competitions.
Speaker 2: So many would look at the four point two trillion
Speaker 2: dollar market capitalization of Nvidia and wonder doesn't need any
Speaker 2: more help in exporting its tech stack right now? How
Speaker 2: much more support does an AMD or an Nvidia need.
Speaker 7: You think, Well, the way we look at it is
Speaker 7: we want America to win. We want American GPUs and
Speaker 7: American models to be used. And Nvidia and AMD happened
Speaker 7: to be great American companies along with many many others,
Speaker 7: and so our job is to create the playing field
Speaker 7: where company where Jensen or I saw doctor Lisa Sue
Speaker 7: earlier can go sell their products worldwide.
Speaker 2: Let's talk about that team. Because there were some absences,
Speaker 2: Let's say it we would think that Intel would be
Speaker 2: a company about some imported on its earnings. There would
Speaker 2: be integral to manufacturing here in the US, TSMC from
Speaker 2: abroad coming in and putting money to work here in
Speaker 2: the United States as well. What we do we interpret
Speaker 2: by those who weren't in the room.
Speaker 7: I'm not sure I would read too much into that.
Speaker 7: I think if you look at yesterday's event, it was
Speaker 7: amazingly well attended. We had industry leaders from across the stack,
Speaker 7: from the semi conductor space to energy, do AI models
Speaker 7: to AI applications, and as you said, you know, we
Speaker 7: really want American semi conductor industry to win, and you
Speaker 7: saw today's event being extremely well represented.
Speaker 3: When it came to that, you have advised the President
Speaker 3: and collectively as a group, looked at policy, but there
Speaker 3: was a moment that we have to address yesterday where
Speaker 3: the President, after making various people stand up, said that
Speaker 3: he had looked at breaking up in video, but then
Speaker 3: came to understand how crucial they were to the American
Speaker 3: technology stack and that his aid so basically said to him,
Speaker 3: Jensen's great. Can I ask you, did you ever discussed
Speaker 3: with the president the idea of breaking up in video
Speaker 3: and why that was included in his speech.
Speaker 7: I wasn't in that meeting with the president, but I
Speaker 7: think what the President was referring to is that Nvidia
Speaker 7: has just done a phenomenal job in building products and
Speaker 7: applications and GPUs that the world is using and that
Speaker 7: they are so ahead of the curve. So if you
Speaker 7: listen to the second part of what the President said,
Speaker 7: he talked about how it's going to take several years
Speaker 7: for people to catch up with them. And I think
Speaker 7: that's one of the pieces that's put America in this
Speaker 7: poll position when it comes to the GPUs that everybody
Speaker 7: in the world wants to get access to.
Speaker 3: We appreciate the clarity stream open source, very prominent, very
Speaker 3: high up in the AI Action Plan. Why that's something
Speaker 3: you're particularly focused on as well.
Speaker 7: Yes, And this is an issue nearer and dearer to
Speaker 7: my heart. And this is something which I think the
Speaker 7: Biden administration got totally wrong, where they tried to basically
Speaker 7: scare people about open source. We believe that open source
Speaker 7: is the integral part of innovation, of how academic research
Speaker 7: is done, how you get little tech to innovate quickly
Speaker 7: and be on a level playing field. And we think
Speaker 7: America should win. And you know the first day when
Speaker 7: I took this job, we had Deep Sea come out
Speaker 7: and really, you know, send a signal that America wasn't
Speaker 7: actually leading in open source at the time, and we
Speaker 7: believe that needs to be rectified. And that's why in
Speaker 7: the action plan we send a very strong signal that
Speaker 7: open source or open weights America is going to have
Speaker 7: a leadership position.
Speaker 2: Another thing near in dat to your heart is pro wrestling,
Speaker 2: and it feels like we're in a wrestling match between
Speaker 2: China and the US, and I'm really interested as to
Speaker 2: how you navigate the rules of that wrestling match. For example,
Speaker 2: China gives US rare earth metal access in return, we
Speaker 2: give them some H twenties. But how does Vidio navigate
Speaker 2: if China stops and chokes that will they have to
Speaker 2: be limited in H twenty How do they get certainty
Speaker 2: in this environment?
Speaker 7: Well, first of all, if you're talking for wrestling, let's
Speaker 7: speak clear. We are the face. We have the baby
Speaker 7: face who's going to alt go over for all of
Speaker 7: you pro wrestling fans. But look, you know the way
Speaker 7: we think about it is we want the American tech
Speaker 7: stack to win. One of the metrics I talk about
Speaker 7: is every token that is inferenced worldwide, we want it
Speaker 7: to be on an American GPU or using an American model.
Speaker 7: How many our quarterllion tokens there are, and when it
Speaker 7: comes to the head twenty, I think the way we
Speaker 7: think about it is we would much rather have Nvideo
Speaker 7: or AMD be the GPU of choice rather using Huawei
Speaker 7: or somebody else's And that's how we see it.
Speaker 2: In video is a babyface as a fan favorite. I
Speaker 2: love it. Sharam krish Nan has been great having time
Speaker 2: with you. Thank you, White House Senior policy advisor for AI.
Speaker 2: Back to earnings now and looking after the closing bell today,
Speaker 2: it's Intel's turn reporting second call to earnings and giving
Speaker 2: its new leadership a chance to update investors on the
Speaker 2: company's opposed turnaround efforts. For more Meg's in King joins us, Now,
Speaker 2: I just want to reflect for a moment on the
Speaker 2: numbers we're expecting. I know, we've got a chart to
Speaker 2: show it.
Speaker 11: All.
Speaker 2: These are woeful, like one cent for earnings per share.
Speaker 2: You were singling out the revenue number.
Speaker 5: Yeah, that revenue number below twelve billion, if that's what
Speaker 5: they come in at, is going to be probably the
Speaker 5: second or arguably the worst total that they've had in
Speaker 5: more than a decade. You know, they're clearly at the
Speaker 5: bottom or bouncing along the bottom at the moment, and really,
Speaker 5: you know, it's difficult to describe how far things have
Speaker 5: declined in terms of where this.
Speaker 2: Company used to be and where the anxiety does up is.
Speaker 2: Actually this is reflecting some pulling supposedly, even ahead of
Speaker 2: tariff implications, people actually rush to do orders. So what
Speaker 2: does nip Bhutan need to signal here?
Speaker 5: Yeah, No, you're absolutely right, even if they have a
Speaker 5: good quarter, the glingering concern will be well, it's not
Speaker 5: going to continue because of what's going on in the
Speaker 5: market right now. Yeah, I mean, it's all about the
Speaker 5: diagnosis and the prescription. Really, what is this company going
Speaker 5: to do going forward to change this momentum to solve
Speaker 5: all of the issues that we know? It's he and
Speaker 5: that's what investors really want to hear from him.
Speaker 2: How much more can he cut? Because that has been
Speaker 2: the initial prescription. Hasn't it been just delayer? Get management
Speaker 2: speaking more clearly to those underneath to be able to
Speaker 2: be more efficient. But they can even pull that string
Speaker 2: so far.
Speaker 5: Yeah, No, that's a very good point, Caroline, that yes, great,
Speaker 5: cutting costs helps, and you know, we need a cultural
Speaker 5: shift within the company to be more lean, to be
Speaker 5: more adaptive and flexible in this difficult situation.
Speaker 2: We're in.
Speaker 5: All of that message resonated, but the fundamental problem there
Speaker 5: is that you can't cut your way to growth, right.
Speaker 5: You can only grow by having better products and more customers.
Speaker 5: And we don't know how they're going to do that
Speaker 5: yet and what people really want to hear.
Speaker 2: And we've got a minute left in but just thinking
Speaker 2: of what the AI action plan means for them, they
Speaker 2: were absent in the room yesterday. Are we anticipating any
Speaker 2: sort of federal help for them to build a manufacturing US?
Speaker 11: Yeah.
Speaker 5: I mean what they've said is what the plan we
Speaker 5: had isn't going to work. We can't catch in video
Speaker 5: with our current products, so we're going to have to
Speaker 5: come up with a different plan as to how we
Speaker 5: can cash in on this massive opportunity. Obviously that in
Speaker 5: video is grasping with both hands, and the answers will
Speaker 5: think about it and we'll come back to you so
Speaker 5: bad time. We want to really hear what they're.
Speaker 2: Going to do, inking you'll be across those earnings later
Speaker 2: after the bell. Thank you so much. Now, that does
Speaker 2: it for this edition of Bloomberg Tech. Do not forget
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