Speaker 1: Bloomberg Audio Studios, podcasts, radio news from the heart of
Speaker 1: where innovation, money and power collide in Silicon Valley and beyond.
Speaker 1: This is Bloomberg Technology with Caroline Hyde.
Speaker 2: And Ed Ludlow.
Speaker 3: Live from New York and San Francisco. This is Bloomberg
Speaker 3: Technology Coming up. Tesla is first up for the MAGS
Speaker 3: seven Tech earnings. Can Elon Musk inject some excitement back
Speaker 3: into the company.
Speaker 4: Plus Verizon sinks as it loses more mobile phone subscribers
Speaker 4: than expected in the face of competition and cuts across government.
Speaker 3: And data center drama. Amazon confirms strong AWS demand. That's
Speaker 3: as analysts call out concerns in cloud computing leases. But
Speaker 3: first we check in on these markets, and we've got
Speaker 3: a bounce back after yesterday's sell off. We almost make
Speaker 3: up for it today up two point four percent. Let's
Speaker 3: call it on the Nasdaq one hundred. Look, there's still
Speaker 3: anxiety as we head into earnings, and many people are
Speaker 3: buying out options to protect any downside moves in some
Speaker 3: of these MAGS seven names. But we are managing to
Speaker 3: shake off some of yesterday's sell off, and indeed we're
Speaker 3: still worrying about the future of j Powell, but for
Speaker 3: now tentative buying. I'm looking at Bitcoin on the up
Speaker 3: and up ninety thousand now many feeling that this is
Speaker 3: becoming to trade more like gold than it has been
Speaker 3: tech stocks. That decoupling pushes the way from maybe ninety
Speaker 3: two to ninety four thousand to be hit in terms
Speaker 3: of a price point end. But what are you digging
Speaker 3: in on the micro Tesla?
Speaker 4: And it's one of the many names that are up
Speaker 4: in the session, but over the course of twenty twenty
Speaker 4: five so far is down more than forty percent year
Speaker 4: to date. It is the worst performing of the mag
Speaker 4: seven so far this year by far, almost double the decline.
Speaker 4: And what you see in some of the other names,
Speaker 4: including in video for example, earnings are after the well.
Speaker 4: And as much as people will talk about fundamentals and
Speaker 4: the fact that in the first three months of this
Speaker 4: year deliveries were at their lowest level for almost three years,
Speaker 4: it is solely about Elon Musk right, his relationship with
Speaker 4: the administration. How focused is Elon Musk on Tesla relative
Speaker 4: to all the other companies involved in and his duties
Speaker 4: in government care.
Speaker 3: Such a good point, and now let's just dig into
Speaker 3: Tesla a little bit more the broader implications on tech
Speaker 3: on tech more for livery megs Zha Day is with us.
Speaker 3: You've put out some great pieces just looking ahead to earnings.
Speaker 3: This is a company that trades on vibes more often
Speaker 3: than fundamentals. Can Elon Musk inject the vibes back in here?
Speaker 5: I mean that's sort of the main focus right now.
Speaker 5: And this is not really a new thing for Tesla,
Speaker 5: right like, it always is really important how Elon Musk
Speaker 5: feels and kind of how confident or not his sounds
Speaker 5: on the call, But I feel like this time it's
Speaker 5: ever more so. And that's because there's like the company
Speaker 5: right now is sort of in an information air pocket
Speaker 5: sort of speak people more or less understand the results
Speaker 5: are not going to be kind of really strong. There
Speaker 5: are not huge expectations around margins, around sales, around profit.
Speaker 5: Everything's more or less expected to be disappointing. We also
Speaker 5: have a big focus on Robotaxi, but we also know
Speaker 5: that the Robotaxi launch is going to be in Austin
Speaker 5: in June. So right now, what can you know on
Speaker 5: mask bring to the table. It really is about whether
Speaker 5: his focus is going to be moving away from doors
Speaker 5: and what else he can talk about about the cheaper car. Yeah,
Speaker 5: it's really about the vibes right now.
Speaker 4: Lindberg's act today out of New York City, Thank you
Speaker 4: very much. Meanwhile, Amazon Web Services is putting some of
Speaker 4: its data center leases on pause. That's according to a
Speaker 4: Wells Fargo and List note, citing industry sources. Amazon's head
Speaker 4: of Data Centers pushing back, writing quote, this is routine
Speaker 4: capacity management and there haven't been any recent fundamental changes
Speaker 4: in our expansion plans. Fortunately for our customers, they're able
Speaker 4: to focus on their business and leave these details to us.
Speaker 4: We called it data center drama at the top. Mnigrafeo
Speaker 4: is here with the full of picture.
Speaker 6: What do we know?
Speaker 2: M right ed.
Speaker 6: So.
Speaker 7: Miller was responding to a note that Wells Fargo had
Speaker 7: put out yesterday that they had spoken to analysts over
Speaker 7: the weekend who said our industry sources over the weekend
Speaker 7: who said that AWS had paused a portion of its
Speaker 7: data center leasing discussions on the co location side, particularly
Speaker 7: in international markets. Well said that it wasn't clear of
Speaker 7: the magnitude of the pause, but it's following a similar
Speaker 7: trend that we've already seen from Microsoft that these two
Speaker 7: companies are pulling back on spending on those data centers.
Speaker 8: And the reason why investors care about.
Speaker 3: This is because they want to watch to get a.
Speaker 7: Kind of read on consumer demand how these companies are
Speaker 7: thinking about demand for cloud and AI. You can get
Speaker 7: a read on that if these companies are spending more
Speaker 7: on data centers now. Wells Fargo also said that it's
Speaker 7: not clear whether AWS slowing some leases is an area
Speaker 7: of concern or just the natural ebbs and flows of
Speaker 7: hyper scale activity. And we did see Miller pull up,
Speaker 7: I guess pushing back on those comments today, saying that
Speaker 7: the demand here is still strong. The shares dropped yesterday
Speaker 7: in Amazon, but they are rebounding and actually outperforming the
Speaker 7: nabscack right now, but still down very much year to
Speaker 7: date ed as.
Speaker 3: We can see, off by twenty one percent. Emily Graffeo
Speaker 3: with all things Amazon, we thank you. Look, let's get
Speaker 3: you a broader a wider impact of TARIS onto the
Speaker 3: tech sector and what we think about AI demand. Martin
Speaker 3: Orton's with us in Power, Chief investment strategist. Look, let's
Speaker 3: take your case for the moment as to the bounce
Speaker 3: back on the day Marta, are people really putting any
Speaker 3: new money to work or is this more protecting on
Speaker 3: the downside.
Speaker 9: Well, it is kind of interesting because there has been
Speaker 9: reports that while we initially saw that big by the
Speaker 9: dip movement come back and play in the wake of
Speaker 9: the Liberation Day, in the wake of April second, we
Speaker 9: have seen a little bit more of a cautious tone
Speaker 9: more recently, and that relates to hedging activity and the like.
Speaker 9: I think when we're taking a look at the environment
Speaker 9: today and we're thinking about how this terriff environment compares
Speaker 9: to other periods of uncertainty like COVID, this has something
Speaker 9: that at least seems to have a little bit more
Speaker 9: legs to it, a little bit more kind of prolonged uncertainty,
Speaker 9: and I think that can at least shake some of
Speaker 9: the weak buyers off that decision tree in the sense
Speaker 9: that they're not necessarily going to move necessarily as quickly
Speaker 9: as they had into this market. But on the positive side,
Speaker 9: I think we are seeing valuations improve and so that
Speaker 9: would suggest to me that while you know, we could
Speaker 9: see uncertainty persists for a while, at least there's a
Speaker 9: bit more margin of safety baked into prices.
Speaker 4: We were showing at the top of the program Tesla's
Speaker 4: year to date performance, Amazon's year to date performance. It
Speaker 4: sounds like you're a bit more comfortable with where things
Speaker 4: sit from evaluation perspective, at least, even if the leaders
Speaker 4: of those companies can't quantify for us or tell us
Speaker 4: what's going to happen next.
Speaker 6: With Tariff's where you're bringing.
Speaker 9: Up that juxtas position where we're looking to earnings and
Speaker 9: to management to give us certainty, but they might not
Speaker 9: have it at these early days when we're looking at
Speaker 9: this terrafor and yet at the same time prices are
Speaker 9: pulling back and giving us that margin of safety. So
Speaker 9: you know, if we're looking at the start of the
Speaker 9: year December twenty twenty four, those valuations for the market
Speaker 9: at large and technology in particular the mag seven were very,
Speaker 9: very stretched. In fact, if you're looking at it on
Speaker 9: a historical basis, they're in the ninth or tenth decile
Speaker 9: of their own histories. And yet as we roll forward
Speaker 9: to today and we look at the impact from deep
Speaker 9: seek and the cell off we saw in January February,
Speaker 9: and then the continued volatility from tariffs, we're looking at
Speaker 9: valuations that are a lot more approachable, not necessarily cheap,
Speaker 9: but more in line with historical levels. So for an
Speaker 9: investor who has been conservatively positioned, has been on the sidelines,
Speaker 9: now may be a time to edge in with the
Speaker 9: understanding that this uncertainty could persist for quite some time.
Speaker 3: That has been some certainty. Voice five leaders over at
Speaker 3: AWS trying to push back on this narrative that maybe
Speaker 3: they're curtailing their leases for data centers, but still it
Speaker 3: just builds into this worry about whether AI demand, AI
Speaker 3: use is really there to the extent we thought, Marta,
Speaker 3: give us your read on data centers on the AI
Speaker 3: trade here.
Speaker 9: Well, it's interesting because even before we enter this macroeconomic
Speaker 9: uncertainty period, we have uncertainty around AI. We saw the
Speaker 9: big spend, we saw the big numbers, we saw the
Speaker 9: enthusiasm from the mag seven, from tech leaders, and yet
Speaker 9: we were still looking for that return on investment and
Speaker 9: that continues today. So it's as though the narrative hasn't
Speaker 9: really shifted. We're still looking for those sparks, those hopes,
Speaker 9: and I think we're going to have investors on the
Speaker 9: edge of their seats as they're looking at earnings this
Speaker 9: quarter to see if there's any sort of revelation there.
Speaker 9: But so far there hasn't been a whole lot of
Speaker 9: new information. Maybe some green shoots when we look at
Speaker 9: how some of these companies had been able to monetize
Speaker 9: on the margin, but still those color apps and massive
Speaker 9: use case across the economy, it continues to remain a
Speaker 9: little bit further out. So I think this is, you know,
Speaker 9: yet one more uncertainty that we're going to have to
Speaker 9: deal with in this quarter in the coming months.
Speaker 4: We so, I keep hearing from leaders in the semiconductor
Speaker 4: industry that they are highly confident capital expenditures will rise
Speaker 4: again this year, and they'll rise by more than they
Speaker 4: did last year, and next year they will rise by
Speaker 4: more than they.
Speaker 6: Do in twenty twenty five.
Speaker 4: But what happens if we get to the key earning
Speaker 4: states this week, next week, and the week after and
Speaker 4: there's no guidance issued at all, they just say we
Speaker 4: can't give you the information. What would that do for
Speaker 4: the technology investors' confidence?
Speaker 9: Well, you know, it's kind of an interesting question. I
Speaker 9: think it's a very relevant one because we've already seen
Speaker 9: that in earnings a bit so far, this season. Early
Speaker 9: in this season, we've seen different companies say, hey, we're
Speaker 9: going to give you a few different scenarios, or we
Speaker 9: can't reconfirm our guidance, or we just don't have a
Speaker 9: great great deal of clarity on how the coming months
Speaker 9: will unfold. And so I think that is a possibility
Speaker 9: that we have to plan for as investors that while
Speaker 9: we're looking for earning season to provide us that clarity
Speaker 9: on how tariffs are impacting businesses, we simply might not
Speaker 9: have it. Liberation Day was only a few weeks ago.
Speaker 9: The scale of the tariffs are changing in real time,
Speaker 9: so it's a very hard time for companies to truly
Speaker 9: understand how they're going to position and how they might
Speaker 9: respond to this environment. So I think what a lot
Speaker 9: of companies would do. I would imagine, especially some of
Speaker 9: these companies with a longer term orientation when it comes
Speaker 9: to AI, is they're going to say, hey, we see
Speaker 9: this long term, massive opportunity that is in front of us.
Speaker 9: We know there's going to be kind of the management
Speaker 9: of it as we deal with macroeconomic uncertainty in the
Speaker 9: here and now, but we're not going to lose sight
Speaker 9: of our long term goal of you know, what we
Speaker 9: can do with AI and making it this world dominant technology.
Speaker 9: So I think there's going to be some kind of
Speaker 9: time horizon management that we see with these earnings. But
Speaker 9: as investors, we might be weathering more volatility without greater
Speaker 9: information in the here and now, just the tech sector.
Speaker 3: Whether this uncertainty around Powell better or worse than other industries.
Speaker 9: You know, that's a great question, you know when I
Speaker 9: think about that, that can you know, that added dynamic
Speaker 9: to the environment that we're in.
Speaker 8: I think that's.
Speaker 9: Something that will affect sectors broadly and affect asset classes broadly.
Speaker 9: If we have some sort of prolonged, deepening uncertainty over
Speaker 9: the power to replace you know, a FED chairman and
Speaker 9: maybe more politicize the FED. I don't think there's a
Speaker 9: whole lot of places to hide there. Maybe that's something
Speaker 9: you know, some of the enthusiasm around gold, maybe there's
Speaker 9: some enthusiasm around cash. But when we think about the
Speaker 9: equity sectors, that seems to be kind of a something
Speaker 9: that kind of blankets the equity sectors broadly in terms
Speaker 9: of impact.
Speaker 3: Oh, Martha, there's been excitement around bitcoin.
Speaker 8: Have you been.
Speaker 3: Asking or indeed in discussing with any of your clients
Speaker 3: about more exposure into crypto.
Speaker 9: You know, it's so interesting. I had a question yesterday
Speaker 9: about crypto and bitcoin. I think there's a real enthusiasm
Speaker 9: for that trade. Were speaking about the numbers a bit
Speaker 9: earlier here that decoupling from technology moving a bit more
Speaker 9: toward gold. Personally speaking, I find bitcoin a difficult asset
Speaker 9: class to necessarily predict its future movements. One of the
Speaker 9: troubles with cryptocurrency broadly is knowing what that fair value prices,
Speaker 9: which can help kind of determine overvaluation, undervaluation future movements.
Speaker 9: And while there's certainly utility and enthusiasm around it, predicting
Speaker 9: its behavior is a bit.
Speaker 3: More difficult now.
Speaker 9: Maybe conversations around Powell and to social posts give bitcoin
Speaker 9: a little bit more of a shiny look when we're
Speaker 9: thinking about volatility on monetary policy. But I do think
Speaker 9: that's one of the asset classes that has that unpredictable
Speaker 9: flavor that makes it a little bit more difficult to handicap.
Speaker 4: What bitcoin and some areas of the technology industry have
Speaker 4: in common, for example, the manufacturing of chips or electronics,
Speaker 4: is that the administration have policies for it, right, they
Speaker 4: have people that Trump is brought in to be zas
Speaker 4: I'm thinking about David Sachs. If you're an investor and
Speaker 4: you're thinking which areas or corners of the tech market
Speaker 4: should I go to, why don't you just go to
Speaker 4: the ones that the president keeps talking about.
Speaker 8: I mean, that's a great point.
Speaker 9: If we're thinking about twenty twenty five and what has
Speaker 9: driven market action in twenty twenty five, It's been fiscal policy,
Speaker 9: It's been what's happening in the Trump administration and what's
Speaker 9: in favor with the Trump administration and what's out of
Speaker 9: favor with the Trump administration. So the extent that that
Speaker 9: is that marginal push for how asset classes behave, then
Speaker 9: I think there's there's good reason to have enthusiasm around
Speaker 9: something like technology, which has you know, especially from an
Speaker 9: AI perspective, a lot of Trump administration enthusiasm is to
Speaker 9: building out the US as as a superpower there and
Speaker 9: then to your point, around crypto and making that a
Speaker 9: more fairly or friendly regulated area. But you know the
Speaker 9: question is is that already in the price is that
Speaker 9: enthusiasm already den at least as it comes to.
Speaker 4: Cryptel, Martin Norton, Bempare great conversation, Thank you very much, joining.
Speaker 10: Us time now for talking tech and first up.
Speaker 3: Boeing It's agreed to sell off its digital flight navigation
Speaker 3: unit to Toma Bravo in a ten point six billion
Speaker 3: dollar cash deal. It's the latest move by the company
Speaker 3: to lower its fifty eight billion dollar debt load.
Speaker 8: Now the deal.
Speaker 3: Involves the Japesson business and its subsidiaries. I will allow
Speaker 3: Boeing to continue capturing data for maintenance and repairs. Plus
Speaker 3: an increasing rivalry between China's jd dot Com and mat One.
Speaker 3: Look at sent Chez tumbling in Hong Kong, training falling
Speaker 3: by as much as eight percent. This is his investors
Speaker 3: begin to worry about a hit in profitability for the competition.
Speaker 3: Now both stocks have fallen more than twenty five percent
Speaker 3: from their highs in March, underperforming the Hangsang Tech Index
Speaker 3: and more Chinese tech companies rashally eyeing potential usipos. Beijing
Speaker 3: Smart Walnut could seek to raise a one hundred million
Speaker 3: dollars alongside other firms and similar goals like Shenzhen Cloudsky
Speaker 3: and Zongie Group. That's according to sources, all of this
Speaker 3: is actually despite the US market turmoil and rising geopolitical
Speaker 3: tensions between Washington and Beijing.
Speaker 6: Ed.
Speaker 4: Yeah, let's stick with this story and bring in Bloomberg's
Speaker 4: Henry Ren out London. The thing about this, right that
Speaker 4: we understand them resources is these are US listings under
Speaker 4: consideration by Chinese technology companies, not firm commitments. They might
Speaker 4: not have to happen, but we do have some size
Speaker 4: and scope on what they try to raise. And it's
Speaker 4: interesting that some of them are our data center infrastructure
Speaker 4: names as well.
Speaker 2: Henry.
Speaker 8: Yeah.
Speaker 11: Indeed, so we're seeing, actually, despite all those trade tensions,
Speaker 11: we're seeing more Chinese companies actually more willing to list
Speaker 11: in the US in recent months. That's arguably after the
Speaker 11: recent Deep Seats tech breakthrough in China and arising investors
Speaker 11: sentiment toward those Chinese tech companies.
Speaker 8: And it's not necessarily just tech.
Speaker 11: We mentioned the smart oneut which is a firm that's
Speaker 11: specializing in coaching young kids of doing computer programming, and
Speaker 11: not just about infrastructure tech companies, software companies as well,
Speaker 11: and we've also just last week saw Charji, which is
Speaker 11: a famous tea chain China also pursued US listing and
Speaker 11: this deal is actually bigger, with four hundred million US
Speaker 11: dollars being raised in an IPO price at the upper
Speaker 11: bound of the price range in the last week, so
Speaker 11: we can see that there actually has been a revival
Speaker 11: investor interest into Chinese names after the Deep Seek's breakthrough.
Speaker 3: How does the Chinese government feel about that, the tapping
Speaker 3: of liquidity in the United States.
Speaker 11: Yeah, I think that's an important goal of Chinese companies
Speaker 11: despite all those trade tensions between US and China, protecting
Speaker 11: those private companies is one of the key goals of
Speaker 11: the government. That's actually a bit different from the things
Speaker 11: that we've been seeing over the past two years during
Speaker 11: the tech crackdown phase of the regulation crackdown.
Speaker 8: And so expecting more to come.
Speaker 11: Actually, but one thing that we need to monitor closely
Speaker 11: is whether the US sanctions on those Chinese firms is
Speaker 11: on the rise.
Speaker 4: Henry Caroy brought us the moves over nine in Hong
Speaker 4: Kong on JD in May twe what's the story in
Speaker 4: the competition between those two.
Speaker 11: Yeah, that's actually a very interesting one because this has
Speaker 11: been a story that we've been.
Speaker 8: Tracked for the past few months.
Speaker 11: But the tension, the excalation between the competition of those
Speaker 11: two Chinese tech companies is really on the rise in
Speaker 11: the past few days, because there have been some several
Speaker 11: things over the weekend, including JD saying that it's planning
Speaker 11: to hire about one hundred thousand more delivery men in China.
Speaker 11: JD's funder, Richard Liu, appeared in a press story that
Speaker 11: he's delivering meal orders to clients by himself. JD signed
Speaker 11: a deal with Starbucks in China to delivery to deliver
Speaker 11: coffee for the coffee chain.
Speaker 8: And at the end and these two.
Speaker 11: Companies JD and may twey came, they were involved in
Speaker 11: a heated exchange on Chinese social media, with JD saying
Speaker 11: that may twe is forbidding its own own drivers of
Speaker 11: delivering JD's orders, while made One is saying that it's
Speaker 11: actually not the case. So lots of developments recently and
Speaker 11: competition is definitely on the rice in China's food delivery arena.
Speaker 4: Bloomberg's Henry Renn, thank you very much. Now coming out,
Speaker 4: Verizon sees mobile phone subscribers full in the first quarter.
Speaker 4: We'll discuss why Telecoms Giant is pointing to moves by
Speaker 4: the Trump administration as the reason snacks.
Speaker 6: This is Bloomberg Technology.
Speaker 4: Verizon shares flat after the company reported a larger than
Speaker 4: expected decline in mobile phone subscribers in the first quart
Speaker 4: of Verizon is the first of the big three US
Speaker 4: telecon companies to report first quarter results. Let's get the
Speaker 4: details with Bloomberg's Kelsey Griffiths.
Speaker 9: What do we know.
Speaker 12: Yeah, so Verizon reported their first quarter earnings today and
Speaker 12: they lost a lot of subscribers. It was more than
Speaker 12: a Wall Street analysts we're expecting, and they're attributing that
Speaker 12: to a couple of factors. One of them is just
Speaker 12: a drop in seasonal promotions and that very tight competition
Speaker 12: we're seen in the mobile market. However, there is also
Speaker 12: another factor, which is a lot of downsizing in the
Speaker 12: federal government, and that's something that Verizon CEO Hans Vesberg
Speaker 12: actually cited on a call with analysts today.
Speaker 3: Broad Bands still going strong though, Kelsey Griffiths, we thank
Speaker 3: you very much for the latest in terms of earnings.
Speaker 3: Let's go to another tech giant, which has earnings later
Speaker 3: in the week, but right now, Alphabet is back in
Speaker 3: court today fighting to stop the government's push to break
Speaker 3: up Google. It follows last year's ruling that the company
Speaker 3: has a monopoly oversearch. Bloombox Sarah Forden joins us for
Speaker 3: more really interesting details coming out when it regards to
Speaker 3: the Generative AI, the Gemini offering, and the payments being
Speaker 3: made to Samsung for example.
Speaker 13: Yes, so the government is actually not only concerned about
Speaker 13: Google's monopoly of research, but they're also alleging that the
Speaker 13: AI capacity has helped it to enshrine its monopoly of research.
Speaker 13: So we had testimony yesterday and today from a Google
Speaker 13: executive talking about how they paid Samsung inordinate amounts of
Speaker 13: money to pre install their Gemini AI product on Samsung phones.
Speaker 3: Meanwhile, the pushback is that the extreme remedies being considered
Speaker 3: are selling off of chrome or access to their data
Speaker 3: to rivals. Well, that seems to be the narrative coming
Speaker 3: from Google. When do we expect to hear from some
Speaker 3: of the key leaders of the business.
Speaker 13: So this trial is expected to last three weeks, so
Speaker 13: we're going to have at least the rest of this
Speaker 13: week and probably a good portion of next week with
Speaker 13: the government presenting its case for breaking up Google. We
Speaker 13: are not going to see probably the Google side of
Speaker 13: the case until the end of that process, so could
Speaker 13: be like a couple of weeks away, sir.
Speaker 4: What's extreme about this case is that the government wants
Speaker 4: all four of the sort of remedies as a bucket
Speaker 4: combined together, and Google will argue that is too severe.
Speaker 4: It's unprecedented to an extent. How do you see this
Speaker 4: one going up. It's a multi week's trial, but it's
Speaker 4: going to come close.
Speaker 13: Yeah, So this is really what the judge is going
Speaker 13: to have to weigh, and of course it is very
Speaker 13: complex and he's you know, getting you know, technical testimony
Speaker 13: from the experts on this. The government is saying that
Speaker 13: Google is basically kind of controlling the gateway to the
Speaker 13: Internet and it needs to open it up to allow
Speaker 13: the potential for other browsers to compete. So we could
Speaker 13: have other search engines that could be just as attractive
Speaker 13: to consumers to users as as Google's currently is. Google
Speaker 13: is saying, you know, these remedies are are not really
Speaker 13: addressed in a problem. They want to do something much
Speaker 13: more limited, maybe focusing on you know, sharing browser installs,
Speaker 13: so you would have a drop down menu where you
Speaker 13: could click on other browsers if you if you wanted to,
Speaker 13: and then they would propose a revenue sharing arrangement.
Speaker 3: Bloomberg Sarah fordan great breakdown, We thank you, welcome back
Speaker 3: to Bloomberg Technology, and Caroline Hide.
Speaker 6: In New York and I medal'd low in San Francisco.
Speaker 4: Let's take a look at the markets, and the story
Speaker 4: really is big tech leading US higher. But then as
Speaker 4: that one hundred is up two and a half percent,
Speaker 4: it fell two and a half percent in yesterday's session
Speaker 4: or Monday session, so we are sort of to an
Speaker 4: extent treading water as big tech earning start in earnest.
Speaker 2: Bitcoin is interesting.
Speaker 4: It's up twenty percent from an April seventh low, and
Speaker 4: what the market commentators are saying is that in this
Speaker 4: time of uncertainty, it is behaving more like gold is
Speaker 4: an asset class when you're riding the uncertay of the voluntility.
Speaker 4: But we're now above ninety one thousand US dollars per token.
Speaker 4: There's two other single names that I'm looking at Cara
Speaker 4: One is Netflix. It's up for a third straight session
Speaker 4: since it's earning sprint where it hit record profit in
Speaker 4: the quarter. It no longer issues that subscriber number. But
Speaker 4: the stock is also at an all time high, up
Speaker 4: seven percent in the session at one point of session
Speaker 4: up seven point eight percent. A lot of momentum there,
Speaker 4: and then Tesla we're up four point six percent. But again,
Speaker 4: you're about to tell us why one single session a
Speaker 4: market does not make because it might be up almost
Speaker 4: five percent now, but twenty twenty five is not being
Speaker 4: kind to Tesla.
Speaker 3: So true, certainly we're expecting their results after the closing
Speaker 3: bell ed amid mounting pressure, whether it's slowing ev demand,
Speaker 3: whether it's rising competition, whether it's questions around growth strategy.
Speaker 3: Not to mention, of course, of the political backlash to
Speaker 3: Elon Musk. But as you point out, ed, let's look
Speaker 3: at the year to date trading off by forty one percent.
Speaker 3: What can we expect what injection of enthusiasm when we're
Speaker 3: going to get from Elon? From these Creatudell joins us Craig.
Speaker 3: I mean, this company doesn't trade on fundamentals. It's already
Speaker 3: trading at seventy eight times future earnings at the moment
Speaker 3: despite the sellof, and often it rides on how much
Speaker 3: enthusiasm Mealon brings.
Speaker 14: Yeah, that's absolutely right, and it may be the case
Speaker 14: that we get a set of numbers from from Tesla
Speaker 14: after the clothes that you know, are as bad as
Speaker 14: we've seen in years, based on how how rough the
Speaker 14: deliveries numbers were that were reported weeks ago. Morgan Stanley
Speaker 14: was out with a report this morning, you know, sort
Speaker 14: of estimating that the automotive gross margins for the company
Speaker 14: excluding regulatory credits may be as bad as we've seen
Speaker 14: in more than a decade. But you know that won't
Speaker 14: necessarily matter if if you know, Musk sort of waves
Speaker 14: some bright shiny objects, because this stock is we've seen
Speaker 14: time and time again that you know, his his rhetoric
Speaker 14: is as is as important as anything.
Speaker 4: There is some particular and specific excitement from the retail
Speaker 4: investor or the Tesla vehicle and stock owner that looked
Speaker 4: at the wording on the IR site, which reads, in
Speaker 4: addition to posting first quarter results, Tesla management will hold
Speaker 4: a live company update and question and answer webcast. A
Speaker 4: company update is being taken to mean we might get
Speaker 4: something more than just commentary on the numbers.
Speaker 14: Yeah, and that's a perfect example out of just you know,
Speaker 14: how little it takes to move these these shares right
Speaker 14: where it may be the case that this is strictly,
Speaker 14: you know, a slight change in language to describe an
Speaker 14: earnings call, and we don't know whether whether that's all
Speaker 14: this is or if there is something you know, sort
Speaker 14: of more up the company's sleeve for after the close.
Speaker 14: You know, the timing is in line with you know,
Speaker 14: when they've passed, how just you know, regular earnings calls.
Speaker 14: In the past, we've heard you know, Musk sort of
Speaker 14: refuse to answer certain questions and say, you know, these
Speaker 14: earnings calls aren't the right form for this. We'll see
Speaker 14: whether he takes a different approach to this conversation post earnings.
Speaker 3: I mean, Craig, timing is everything when it comes to
Speaker 3: how long Enalmusk is going to be doing his special
Speaker 3: job over at the White House. One hundred and thirty
Speaker 3: days is technically what he's actually allowed per year. That'll
Speaker 3: be the end of May.
Speaker 14: Yeah, and I think people are really fixated on this.
Speaker 14: You had Dan Ives just in the last couple of
Speaker 14: days again sort of say that Musk needs to to
Speaker 14: leave Doge and sort of end that chapter. I think
Speaker 14: all of this sort of talking speculation about you know,
Speaker 14: when officially he'll step back. I do wonder whether we'll
Speaker 14: sort of you know, second guests, whether we were putting
Speaker 14: too much, you know, into all that when we've seen,
Speaker 14: we've had every indication that Musk is going to continue
Speaker 14: to play, you know, an outsize role in US politics.
Speaker 14: And you know, even if he does officially step back
Speaker 14: from from Doge, he himself has said and Vice President
Speaker 14: Ja d Vance have said, you know, he's going to
Speaker 14: continue to have a close relationship with the White House.
Speaker 14: And so you know, officially that that chapter might be
Speaker 14: done or or you know, getting close to the final chapters.
Speaker 14: But you know, I would be skeptical that this is
Speaker 14: going to be something that there's a sort of post
Speaker 14: political Elon Musk in our near future.
Speaker 4: Prey Trudell, who leads Auto's coverage around the world, thank
Speaker 4: you very much.
Speaker 2: Let's stick with Tesla.
Speaker 8: Dan Levy.
Speaker 4: Barclays has a price target on the stock of two
Speaker 4: hundred and seventy five dollars. Dan, I'm going to go
Speaker 4: straight to the boiler plate and the footnote in the
Speaker 4: ten K which came out in January and the New Year,
Speaker 4: and Tesla in it talks about how it's highly dependent
Speaker 4: on Elon Musk, and it explains that although he is
Speaker 4: highly active in our management. He does not devote his
Speaker 4: full time and attention to Tesla. They list all the
Speaker 4: other obligations that he has across private companies and now.
Speaker 6: Of course that includes Doge.
Speaker 4: You wrote this morning that a source of potential webside
Speaker 4: for this stock could be a re engaged Musk. Where
Speaker 4: do you want to see him re engage and how
Speaker 4: on earth are you going to measure that based on
Speaker 4: an earnings call?
Speaker 2: Yeah, thanks Head and Caroline for having me.
Speaker 15: I think what we need to see is an Elon
Speaker 15: mask that is increasingly devoting his time, resource and attention
Speaker 15: to Tesla. We know that the key man rich for
Speaker 15: Tesla is very high. Elon is Tesla. Tesla is Elon
Speaker 15: more so than ever. There is not much in the
Speaker 15: way of other sort of key management that's as pronounced,
Speaker 15: and so I think what could go a long way
Speaker 15: for the stock, or what could help the stock is
Speaker 15: Elon musk reminding people that he is there, that he
Speaker 15: is present and is still a very central part of
Speaker 15: the strategy and operations at Tesla.
Speaker 4: Dan, what are automotive gross margins excluding the sale of
Speaker 4: regulatory credit?
Speaker 6: It's going to tell us about Tesla.
Speaker 2: Well, people will tell you two sides of that.
Speaker 15: One side of it is that this is a company
Speaker 15: that has come a long way from where they were
Speaker 15: several years ago. Just to give some context, we were
Speaker 15: at one point three years ago at thirty percent automotive
Speaker 15: gross margins. We're at just more than ten percent for
Speaker 15: this quarter. I think it's a reminder of where the
Speaker 15: automotive business is. At the same time, I think it
Speaker 15: is also a view from some people of Okay, the
Speaker 15: future of Tesla really is in non automotive streams. That's
Speaker 15: where the growth is going to come from, from FSD,
Speaker 15: from optimists, etc. And so that's why you could theoretically
Speaker 15: have a result tonight that is weak. From the fundamentals,
Speaker 15: it's a miss. You get weak gross margins. Potentially there's
Speaker 15: downside on volume for the year. But reiterating that FSD
Speaker 15: driverless date in June, or that opportunity in June, Elon
Speaker 15: re engaging himself is the narrative piece that sort of
Speaker 15: weighs out.
Speaker 2: On all of this.
Speaker 3: Remind us Dan of the business model that comes with
Speaker 3: getting these robotaxis on the road in Austin in June.
Speaker 15: Well, June will be an event that's arguably the easier
Speaker 15: part of it. The business model that you talk about,
Speaker 15: that's the much harder part. It is a very long
Speaker 15: path to monetization with a lot of spend. It won't
Speaker 15: be easy, and then there's obviously a regulatory angle to that.
Speaker 2: But I think Tesla is.
Speaker 15: You know, as far as the stock goes, it is
Speaker 15: more about the narrative than anything.
Speaker 2: Else in our model.
Speaker 15: We think it will take years before this actually shows
Speaker 15: up as a positive any sort. Just a reminder Weaimo,
Speaker 15: which many view as the leader in driverless robotaxi operations
Speaker 15: and really is one of the only ones that are
Speaker 15: still doing it, is still burning a significant amount of
Speaker 15: cash on these operations and on the scaling.
Speaker 2: Scaling isn't easy and.
Speaker 3: They're already on the road in plenty of places.
Speaker 8: Dan.
Speaker 3: Lastly, is there brand damage that is undoable?
Speaker 15: Now undoable is a question mark, but clearly there's been
Speaker 15: some brand damage or some some pressure on sales related
Speaker 15: to Elon Musk's political dealings. I think we've seen that,
Speaker 15: you know Europe especially you know, that's been reported throughout
Speaker 15: the media. I think it remains to be seen how
Speaker 15: how much that actually weighs on sales in the long term.
Speaker 15: Just a reminder that you know, in this environment, you know,
Speaker 15: at least in the US, Tesla is now you know,
Speaker 15: on a relative basis, more affordable. It's certainly one of
Speaker 15: the remaining vehicles on the EV market that's still available
Speaker 15: at a good price tag. And arguably there there's an
Speaker 15: opportunity here with with Tesla having the tariff advantage on
Speaker 15: their side with limited non US content in their vehicles.
Speaker 3: Dan Levy a Barclice, We thank you. Coming up, I'm
Speaker 3: going to speak for the Dana Grayson of Construct Capital.
Speaker 3: This company raises three hundred million dollars in its latest fund.
Speaker 3: This is a three by technology. Construct Capital has announced its
Speaker 3: third fund, raising three hundred million dollars to reimagine industrial
Speaker 3: sectors in the United States. Dana Grayson, as co founder
Speaker 3: and general partner, joins us Now, Dana, three hundred million
Speaker 3: is a lot when you're looking at the seed and
Speaker 3: first injection of money into these sorts of companies. Where
Speaker 3: is this coming from? What al Peace is still interested
Speaker 3: in manufacturing and logistics here in the US.
Speaker 16: Yes, that's a great question. You know, I think what
Speaker 16: we've seen over the past, you know, two decades that
Speaker 16: I've actually been investing in the space, but in particular
Speaker 16: over the past five years, is a ton of renewed
Speaker 16: interest in the space, most importantly, first and foremost from
Speaker 16: entrepreneurs who have built their careers in traditional tech sectors
Speaker 16: over the last twenty years, some more recent than that,
Speaker 16: turning their attention to the industrial spaces from the LP side,
Speaker 16: you know, urlps were very thankful for our strong, stable,
Speaker 16: LP based traditional endowments, foundations, large family offices. They're investing
Speaker 16: for the next ten twenty years. They're really looking at
Speaker 16: long term returns and building new swaths of the public markets,
Speaker 16: and that's where we think a lot of this industrial
Speaker 16: innovation will end up. These tech first industrial companies can
Speaker 16: create a whole new segment of the public markets that
Speaker 16: hasn't really been appreciated today.
Speaker 3: You're based out in Washington. How much more helpful has
Speaker 3: it been to have sort of the winds of change
Speaker 3: over at Washington, sort of being at the back of
Speaker 3: American dynamism. Is it's cool to at least local manufacturing.
Speaker 3: That's what all the towers are about.
Speaker 16: Sure, we think of them as the foundational industries of
Speaker 16: our economy. Again, we think about it on the long term,
Speaker 16: if you look back twenty years, you look at labor arbitrage,
Speaker 16: which was the main toolkit that a lot of US
Speaker 16: corporates use to recover from financial crises, most notably the
Speaker 16: dot com bubble. They sent a lot of jobs offshore
Speaker 16: to save money, and they stopped investing in technology that
Speaker 16: this has more recently and rightfully so become a governmental
Speaker 16: concern and issue, not just this administration, but administration's previous
Speaker 16: to this as well. Especially over the last five to
Speaker 16: eight to ten years, we realize how drastically far behind
Speaker 16: we are in our manufacturing base, in our industrial base,
Speaker 16: not having the tools and the technology to actually be
Speaker 16: productive at the scale we should be as an American economy.
Speaker 4: Dana Karr mentioned American dynamism, and I think Andrees and
Speaker 4: Horowitz's approach is that they'll say it's about the national interest,
Speaker 4: or Founder's fund will say it's about the military industrial complex.
Speaker 4: But they're at the growth stage mostly right, You're at
Speaker 4: the very early stage in which specific areas of industry
Speaker 4: are you seeing innovations that need to be supported financially
Speaker 4: Right now?
Speaker 16: Absolutely, I think there is an America first need to it,
Speaker 16: but it's more about the technologies. It's about the workers.
Speaker 16: It's about setting up competitive jobs that they can start
Speaker 16: at the brass tack, start at the first principles of
Speaker 16: how they go to work every day, what they do,
Speaker 16: and how that bubbles up in the economy.
Speaker 3: So if you look.
Speaker 16: Back, we look at this as sort of a new
Speaker 16: tech sector, not just an American thing, not just an
Speaker 16: industrial sector. It's how do we turn these industrial industries
Speaker 16: into tech industries like we've done with it jobs since
Speaker 16: the dawning of the Internet. We enjoyed mobile, we enjoyed
Speaker 16: big data, we are now really enjoying the advances of AI.
Speaker 16: And all of these industrial jobs aren't even connected, let
Speaker 16: alone you know, built on top of mobile technology. So
Speaker 16: there is a national interest in competitive, dynamic and comparative
Speaker 16: advantage that comes out of that, but it's been woefully
Speaker 16: neglected for the past twenty five years, and that's a
Speaker 16: lot of technical debt we have to dig ourselves out of.
Speaker 4: When the pitch book hits your desk, how close are
Speaker 4: you looking at that startup's ability to get access to
Speaker 4: public funding or I guess down the road be acquired
Speaker 4: by a bigger company that isn't really innovating right now
Speaker 4: and whatever their manufacturing processes are.
Speaker 16: Yeah, I mean I think first and foremost we look
Speaker 16: for you know, you mentioned early stage. You know, the
Speaker 16: early stage investing sector is really built on incredible founders.
Speaker 16: Incredible founders that can move at a pace that they
Speaker 16: just couldn't do inside a big company or the big
Speaker 16: companies cannot do on their own. We do think about
Speaker 16: companies that should be acquired one day. We think about
Speaker 16: companies that can go public one day. You know, we
Speaker 16: think of ourselves as early stage but full life cycle.
Speaker 2: Investors or boutique.
Speaker 16: We can help entrepreneurs at the beginning, but we can
Speaker 16: also help them with that full commercial scale up to
Speaker 16: help them think about a public market exit one day.
Speaker 16: So we think about true disruption. You know, we look
Speaker 16: at what's missing in the economy. What are the technologies AI,
Speaker 16: physical AI, the things that we're good at here in
Speaker 16: this country, and how do we apply that to these sectors.
Speaker 4: Dana Race and of construct Capital, thank you. A critical
Speaker 4: piece of infrastructure for the growing commercial space industry is
Speaker 4: right here on Earth.
Speaker 2: Ground.
Speaker 4: Antennas send and receive data from satellites in orbit, but
Speaker 4: the infrastructure is aging the tech obsolete and historically it's
Speaker 4: been expensive and time consuming to build the start up.
Speaker 6: Northward just closed the.
Speaker 4: Thirty million dollars Series A to fund address mass produced
Speaker 4: phased array Antenna's Bridget Memla is the co founder and
Speaker 4: CEO and joins us.
Speaker 2: Now in this environment, how.
Speaker 6: Difficult was it to raise that round?
Speaker 17: Good morning, good morning, Thank you for having me. Glad
Speaker 17: to be here. You know, I think we're in a
Speaker 17: really fortunate position where we're building a capability that is
Speaker 17: relevant and so, you know, we had an oversubscribed funding
Speaker 17: ground and we were really emphasizing just getting into the
Speaker 17: field quickly to meet customer demand. There's a lot of
Speaker 17: appetite to serve up increased capacity for grounds.
Speaker 2: That's why we're here.
Speaker 17: That's why we're doing what we're doing.
Speaker 4: Andreas and Horowitz led the round with Ourpine Space founder's fund.
Speaker 4: Is that is a returning investor. I went down a
Speaker 4: deep rabbit hole on phased array antenna.
Speaker 2: Yeah, there are others out there.
Speaker 4: Bel three Harris has done some work Blue Halo. What
Speaker 4: technologically speaking is different about your design and what you
Speaker 4: want to build.
Speaker 17: For us, we're really emphasizing increased manufacturing capacity and lower cost.
Speaker 17: And so that kind of comes in from being a
Speaker 17: vertically integrated company where we're able to not look at
Speaker 17: one silver bullet solution, but our ability to look across
Speaker 17: the technology stack and in diligence every piece of material
Speaker 17: in our system to be able to hit a lower
Speaker 17: price point. And so our systems are intentionally designed for
Speaker 17: deployability and designed to get into the field quickly with
Speaker 17: that capability. And so we were able to with our
Speaker 17: last demonstration with Planet Labs, hit a ten x cost
Speaker 17: reduction relative to existing PHASEORAY technology as well as a
Speaker 17: five x reduction in time to actually field the technology.
Speaker 3: This money, you're going to be increasing production facilities budget,
Speaker 3: Where is it all going to be local, all US
Speaker 3: or all California?
Speaker 17: Oh yeah, yeah, we're operating out of Torrents, California. We
Speaker 17: have a thirty five thousand square foot manufacturing facility that
Speaker 17: we're spinning up so that we can meet the demand
Speaker 17: for the capacity and we're looking to actually begin some
Speaker 17: operational capability later this calendar year.
Speaker 4: How exposed is the supply chain to China when we
Speaker 4: think about integrated circuits and sort of the wire harness
Speaker 4: legacy satellite biz, which is but also you want to
Speaker 4: do business outside of America, this is a global network
Speaker 4: you want to support.
Speaker 17: Yeah, I mean, I think we're benefiting in our supply
Speaker 17: chain from parts where a lot of a lot of
Speaker 17: parts do have optionality to them, and that's something that
Speaker 17: we're intentionally designing for. So we're intentionally designing for systems
Speaker 17: where we can have the benefit of choice.
Speaker 8: And largely we.
Speaker 17: Do choose a lot of domestic companies to support different
Speaker 17: pieces of our supply chain and our components. We do
Speaker 17: have that kind of lean to ourselves. But you know,
Speaker 17: like you mentioned, we're planning to be a company that
Speaker 17: has international deployments. We want to be friendly to other
Speaker 17: nations and so we've been really fortunate to have positive
Speaker 17: collaborations with that so far.
Speaker 4: And recent Horowitz and Founders Fund are both investors in SpaceX,
Speaker 4: actually both investors in Anderil, another Southern California example. Beyond
Speaker 4: the money, how much is it about you know, your
Speaker 4: investors opening the door to those people being your customers.
Speaker 2: Yeah.
Speaker 17: I think they have been tremendously valuable and supportive. That's why,
Speaker 17: you know, we were excited to double down with them
Speaker 17: as well in this latest funding ground, I think, you know,
Speaker 17: for our capabilities there. Uh, you know, we're getting a
Speaker 17: lot of inbound interest from customers directly, but they both
Speaker 17: commercial and government we're having you know, I think for us,
Speaker 17: we're excited to be a dual use company where we
Speaker 17: are building you know, common capabilities, common geographies, being able
Speaker 17: to pass on those economies of scale to our customers.
Speaker 17: So you know, if you look at the government sector,
Speaker 17: those are companies that are you know, dealing with existing
Speaker 17: networks that are more brittle and that are low in capacity.
Speaker 17: And so the opportunity to leverage commercial to get more
Speaker 17: capacity fielded very quickly and to be able to inform
Speaker 17: our capabilities in that way is something that we've actually, like,
Speaker 17: I've even received LinkedIn dms from from different folks that
Speaker 17: are really enthusiastic about the capabilities.
Speaker 8: And so yeah, both both commercial.
Speaker 3: And government has name dropping linked in the capital intensity.
Speaker 3: How long is thaty million gonna last? Your bridget? You've
Speaker 3: just raised it, but I hate to Oscar and you're
Speaker 3: gonna have to do it again.
Speaker 8: Yeah, yeah, we are.
Speaker 17: You know, we're operating in the hard tech sector. It
Speaker 17: is a more capital intensive sector. I think we are
Speaker 17: benefiting from a system that is designed to be efficient
Speaker 17: with capital, and we're also a system that you know,
Speaker 17: we're planning to be operational in the near term horizon.
Speaker 17: You know, it's it's not the kind of thing where
Speaker 17: you have, you know, a ten year timeline before you
Speaker 17: can have an operational capability. For us, it's really important
Speaker 17: to get into the field quickly. I think that's both
Speaker 17: a business incentive for us, but it's also a mission incentive.
Speaker 17: You know, space is now the domain of much of
Speaker 17: our critical infrastructure. It's it's not you know, an experimental territory.
Speaker 17: Space is it's industrialized. That's very core to our mission
Speaker 17: is supporting an industrialized space economy where missions can't go down.
Speaker 17: And so from a mission standpoint, we are very passionate
Speaker 17: about fielding our technology quickly.
Speaker 6: Five seconds valuation.
Speaker 3: I don't know if I can speak to that.
Speaker 6: Yeah, we'll cut it another time.
Speaker 4: Bridget Men, the CEO, northward at the end of a
Speaker 4: packed Bloomberg Technology from San Francisco, New York City. So
Speaker 4: much more to come this week earning starting in earnest.
Speaker 8: This is Bloomberg