Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive
Speaker 1: from coast to coast with Caroline Hyde and New York
Speaker 1: and Ed Lovelow in San Francisco.
Speaker 2: This is Bloomberg Tech coming up. Open AI ramps up
Speaker 2: with more computing capacity from Oracle, expanding the Stargate initiative. Plus,
Speaker 2: the US House of Representatives is on track to vote
Speaker 2: on Donald Trump's tax and spending bill.
Speaker 3: What does that mean for tech?
Speaker 2: And the Trump administration lifts some export license controls requirements
Speaker 2: for chip design software sales, specifically for China. Let's get
Speaker 2: right to financial markets and as that one hundred is
Speaker 2: pushing once again to fresh record highs strong jobs data
Speaker 2: for the month of June. Halfway through the show, we're
Speaker 2: going to go really deep on jobs and then we're
Speaker 2: going to look at the labor market when it comes
Speaker 2: to the technology sector. But there are other things happening
Speaker 2: that are pushing the tech sector in XT markets higher.
Speaker 2: A lot of it is related to compute capacity. Bloomberg
Speaker 2: broke a really big story last night, and I want
Speaker 2: to get right to it.
Speaker 3: The story's Oracles.
Speaker 2: On a two day basis, we saw a five percent
Speaker 2: jump in oracle yesterday. We're pushing a little bit higher
Speaker 2: again this Thursday. But the deal is open AI expanding
Speaker 2: the Stargate project, getting more compute capacity in new states
Speaker 2: and new sites beyond what they've already got in Texas.
Speaker 2: The person that broke that story Bloomberg's Brody Ford, and he's.
Speaker 3: With us now.
Speaker 2: I think we need to get to the details of
Speaker 2: what you reported, because there was a lot of detail
Speaker 2: in it, Brody, specifically in terms of gigawatts.
Speaker 3: The scale of this new capacity.
Speaker 4: Yeah, we saw earlier in the year, you know, Larry
Speaker 4: Ellison standing there in the White House talking about we're
Speaker 4: going to deploy five hundred billion dollars with open AI
Speaker 4: for data centers. A lot of people doubted that scale. Well,
Speaker 4: yesterday we broke that they have inked a pretty unprecedented
Speaker 4: deal four point five giggle watts. The usual rule of
Speaker 4: thumb is that a gigglewats about a nuclear reactor, and
Speaker 4: so we're talking about a scale of four and a
Speaker 4: half worth of nuclear reactors or powering about three and
Speaker 4: a half million homes. I mean, this is likely the
Speaker 4: largest cloud deal of all time, and it's gonna be
Speaker 4: tens of billions of dollars of chips of power. I mean,
Speaker 4: it's gonna be hard to wrap our head around what
Speaker 4: this looks like in the build out.
Speaker 3: Okay, what do we know?
Speaker 2: What are sources telling us about where these new sites
Speaker 2: are going to be, what's under consideration? And kind of
Speaker 2: like how near term this is?
Speaker 5: Right?
Speaker 4: So they've narrowed on a handful of data center sites, right,
Speaker 4: I mean a ten states like Wisconsin or Pennsylvania or Texas.
Speaker 4: They'll also be expanding the campus they've already built out
Speaker 4: in Abilene that a lot of us have seen, you know,
Speaker 4: images of how near term I mean, a lot of
Speaker 4: this stuff is tough to get off the ground. Oracle
Speaker 4: earlier this week said that the full ramp would likely
Speaker 4: not hit into twenty twenty eight, and so it's it's
Speaker 4: fairly far out, but I would expect to see some
Speaker 4: of these sites come out and a pretty rapid clip.
Speaker 4: We don't know exactly which one's gonna move first, but
Speaker 4: you know, I'm sure we're gonna be starting to get
Speaker 4: more details trickling out in the coming weeks and months.
Speaker 3: Let's talk about the Oracle side of this.
Speaker 2: This is a stop that's now again pushing fresh record
Speaker 2: highs almost every day. At the moment, it's up forty
Speaker 2: percent so far in twenty twenty five.
Speaker 3: This is a big win for Oracle.
Speaker 2: They are really pushing and changing their position in the
Speaker 2: landscape of infrastructure and AI cloud computing.
Speaker 4: Three years ago, if you said Oracle major cloud player,
Speaker 4: people would make fun of you, definitely, But today that's
Speaker 4: not the case, right. I mean, they're making I think
Speaker 4: around ten billion per year in cloud infrastructure. On Monday
Speaker 4: they said the deal that we connected is this opening
Speaker 4: I one will be thirty billion per year. I mean
Speaker 4: that is triple the size of their entire current cloud
Speaker 4: and so it's huge for revenue. The big question is
Speaker 4: what it means for margins, And that's kind of the
Speaker 4: classic with a lot of these AI businesses that they're
Speaker 4: going to be buying a lot of chips and power
Speaker 4: and construction, and that's going to constrain their margins. What
Speaker 4: does that mean for cash flow? That's what investors are
Speaker 4: asking this morning.
Speaker 2: Bloomberg's Brody Ford there with the reporting, let's get to
Speaker 2: the analysis. This expanded deal between Oracle and open Ai.
Speaker 2: It's also good news for some chip makers. That's according
Speaker 2: to Bloomberg intelligence, who say the likes of Nvidia and
Speaker 2: AMD are going to benefit here. Keunjin Sabani offered that
Speaker 2: note and he joins us. Now inside all of this infrastructure,
Speaker 2: at the heart of it is the compute, and the
Speaker 2: compute right now in this market is largely coming from Nvidia,
Speaker 2: but also to a greater extent increasingly from a AMD.
Speaker 2: What's the thesis here that you've got congent.
Speaker 6: Well, two points, As Brady mentioned, Oracle has been really
Speaker 6: beefing up their spending versus what we thought a year
Speaker 6: or two ago. Now if you look at the estimates
Speaker 6: now you're in for twenty five, it is going to
Speaker 6: be the fastest CSP in terms of capex increases, so
Speaker 6: definitely increasing the wallet share and becoming a serious buyer
Speaker 6: of the chips. Second point, it is one of the
Speaker 6: only hyper scalers or cloud providers among the top five
Speaker 6: who does not have a custom silicon or an ACIC program.
Speaker 6: What does that mean is majority of the capex that
Speaker 6: is is going to spend to bring up this four
Speaker 6: point five gigle wats of capacity is going to merchant
Speaker 6: GPU providers, likes and media which it has been buying.
Speaker 6: Most of GPS from in the past, but also AMD
Speaker 6: because as they announced, they're ordering about one hundred and
Speaker 6: thirty k M three point fifty five for the second half,
Speaker 6: which equates to somewhere between three to four billion dollars
Speaker 6: of revenue for AMD.
Speaker 2: Just real quick, con Jen Brody was giving us the
Speaker 2: reporting on the dollar value of this deal to Oracle, right,
Speaker 2: it's that thirty billion dollars that we were talking about
Speaker 2: earlier in the week per year starting in fiscal twenty eight.
Speaker 2: Are you able to model or do the math on
Speaker 2: what these kinds of deals and the value of them
Speaker 2: are to AMD and Video in terms of like number
Speaker 2: of chips that they will send that way, or kind
Speaker 2: of the pipeline of business that they're securing through Oracle.
Speaker 6: To some extent, because there are a lot of assumptions,
Speaker 6: but what we can map is the gigawards to the
Speaker 6: chip spending. So rather than the revenue that Oracle will
Speaker 6: collect the four point five gigabards, assuming that's all brand
Speaker 6: new data center build out, one gigaward approximately in today's term,
Speaker 6: equates to sixty billion dollars of capex, which includes everything
Speaker 6: from chips and hardware. So even if you had to
Speaker 6: like make take conservative stance and cut it half for chips.
Speaker 6: That still leaves you for what every gigaward at least
Speaker 6: thirty billion.
Speaker 3: Dollars Bloomberg Intelligence is congense.
Speaker 2: Vanni, there with the analysis, we had the reporting, We
Speaker 2: got the analysis.
Speaker 3: Now let's get the market reaction.
Speaker 2: Janet Murray, head of market analysis at RBC Berandolphin, found
Speaker 2: it really interesting these big capital projects in infrastructure just
Speaker 2: keep coming. What does that signal to you about what
Speaker 2: the market should model for in the coming years ahead?
Speaker 6: As thanks for having me.
Speaker 7: I think the significance of this deal is that the
Speaker 7: demountable computing power is just incestiable. And remember when deep
Speaker 7: SIK come out, a lot of investors were worries that
Speaker 7: actually they may not be the need for so much
Speaker 7: computing power if the modeling is so efficient, But actually
Speaker 7: that's not true. We see that there is high visibility
Speaker 7: of the scale of the investment by sovereigns, by hyperscalars
Speaker 7: and many corporates. So I guess this is really the
Speaker 7: big conclusion is that the runway still is still very
Speaker 7: long and the incentive to invest is still very high.
Speaker 7: So I think the theme of investment in a particularly
Speaker 7: in semiconductors and cloud which are the AI infrastructure is particalarly.
Speaker 2: Relevant Janet and Brodie's reporting. He's saying that this expansion
Speaker 2: between Oracle and Open AI is four point five giggle
Speaker 2: watt's worth of capacity and in the context of energy,
Speaker 2: you could power this country at that scale. How do
Speaker 2: you think about the energy sector and the energy infrastructure
Speaker 2: requirements that markets are going to have to fund to
Speaker 2: support these types of data center expansion.
Speaker 7: Again, I think the utility side energy side of things
Speaker 7: goes hand in hand with the need for from shooting power,
Speaker 7: and that's why we have seen our hyperscalar like meta
Speaker 7: investing in nuclear energy for example. So I think the
Speaker 7: quest or cheaper, more efficient energy would be there, and
Speaker 7: I think that is why I think the US warming
Speaker 7: basically the region that would lead the AI race, because
Speaker 7: the US is basically self sufficient in the energy production
Speaker 7: relatively cheaper energy compared to say Europe and for example,
Speaker 7: the UK. So I guess that's a very important conclusion,
Speaker 7: is that there is incentive for companies to invest and
Speaker 7: base their production in the US to access is cheap
Speaker 7: energy base.
Speaker 2: Janet, the story this Thursday is treasuries are falling, the
Speaker 2: dollar is stronger, and equity markets, particularly the technology sector,
Speaker 2: pushing fresh record highs on the Nasdaq one hundred. Give
Speaker 2: me your reaction to the jobs data and the coprint
Speaker 2: that we got this morning.
Speaker 7: Well, I would say that data is basically goldilots because
Speaker 7: on one hand, you get better than expected jobs data
Speaker 7: in general a softening trend, but it's still okay. It's
Speaker 7: still reflective of a solid labor market. An employment rate
Speaker 7: is lower, and at the same time, wage growth is
Speaker 7: actually slower despite a shrinking labor force. So I would
Speaker 7: say it's a goldilocks, which market clearly likes. And I
Speaker 7: think the conclusion is that the Federal Reserve really is
Speaker 7: in urgency to cut raise. But that's fine because I
Speaker 7: think the markets would prefer the evidence of a strong
Speaker 7: labor market rather than fretting over the exact timing of
Speaker 7: the rate cut.
Speaker 2: I do see some outperformance in technology. Why is that?
Speaker 2: Why is that? Is it just a waiting issue right
Speaker 2: now and technology is what this market is or is
Speaker 2: there something in this economy and the path forward for
Speaker 2: the Fed that makes this sector more attractive right now?
Speaker 1: Yeah?
Speaker 7: I guess there are lots of reasons right. First of all,
Speaker 7: in terms of earning it's growth profile, technology is still
Speaker 7: the brightest spot out there, as I mentioned, a clear
Speaker 7: visibility on AI investment. I think secondly, I think in
Speaker 7: terms of the productivity gains, I think the tech sector
Speaker 7: is likely to see or have a lot of those
Speaker 7: productivity surplus. And of course, I think in terms of
Speaker 7: the US market, I think the tech sector is where
Speaker 7: the actionists to access the aif them et cetera, and
Speaker 7: if we see for example, rape cuss really coming by.
Speaker 7: I think law barn Yiel's law interest rate also partically
Speaker 7: benefit those growth areas as well. So really a combination
Speaker 7: of factors.
Speaker 2: If you're a technology investor, that was the what you
Speaker 2: needed to know. Janet Mouri, head of market analysis at
Speaker 2: RBC BRA and Dolphin, thank you very much. There is
Speaker 2: a lot more coming up the house pools and all
Speaker 2: nighter as Republicans race to get a tax bill to
Speaker 2: President Trump's desk before their July fourth deadline. We're going
Speaker 2: to live to Washington, DC next and we will have
Speaker 2: the latest on where things stand.
Speaker 3: Don't go anywhere. This is Bloomberg Tech.
Speaker 8: Live, the good life, good name.
Speaker 3: Welcome back to Bloomberg Tech.
Speaker 2: You're looking at live pictures from Capitol Hill where House
Speaker 2: Minority Leader Hakeem Jeffries is delivering a blistering rebuttal of
Speaker 2: the tax bill that's now going into its sixth hour.
Speaker 3: Here with the very.
Speaker 2: Latest, Bloomberg's Tyler Canda out in Washington, DC. What is
Speaker 2: the latest? What do we expect to happen? What do
Speaker 2: we need to know?
Speaker 5: Yeah, hey, Ed, So, the House Democratic Leader Hawking Jeffries
Speaker 5: has something known as the magic minute, which means that
Speaker 5: he can speak for however long as he wants, and
Speaker 5: as you mentioned, he started at four fifty three am Eastern,
Speaker 5: so we could be in this for the long haul.
Speaker 5: But it really does feel like they're sort of delaying
Speaker 5: the inevitable because Republicans a pure poised to pass President
Speaker 5: Trump's signature legislative Achievement, which would be the one big,
Speaker 5: beautiful bill. Once Leader Jeffries is done speaking, House Speaker
Speaker 5: Mike Johnson might take the mic, or they could try
Speaker 5: to get this done as soon as possible and this
Speaker 5: would proceed immediately to a vote on finalized passage. Once
Speaker 5: that happens, we're looking for that magic number of two
Speaker 5: hundred and seventeen, which means House Speaker Mike Johnson can
Speaker 5: only afford to lose three votes, but he appears to
Speaker 5: have it. It seems like Republican leadership was able to
Speaker 5: flip some of the staunches critics of this bill, those
Speaker 5: members of the House Freedom Caucus, those Republicans that were
Speaker 5: pitching themselves as fiscal hawks, and our reporting on the
Speaker 5: Hill this morning indicates that they did get some sort
Speaker 5: of concessions and assurances from this White House in order
Speaker 5: to flip their votes, including one that I know that
Speaker 5: you pay close attention to, which is when it comes
Speaker 5: to the phase out of those clean energy tax credits.
Speaker 5: Ralph Norman told our reporter on the Hill today that
Speaker 5: one of the assurances that the White House gave them
Speaker 5: was that there would be strict enforcement when it does
Speaker 5: come to the phase out, particularly around solar and win
Speaker 5: tax subsidies. So that's something to look forward and look
Speaker 5: out to as we try to glean more details on
Speaker 5: exactly what it took to get these Republicans to flip
Speaker 5: their vote when it came to the procedural vote.
Speaker 2: Earlier this morning, tailer technology markets in real time and
Speaker 2: as that one hundred already pushing fresh record high is
Speaker 2: now extending its gain in the session to one percent.
Speaker 2: It is a short week because it is a July
Speaker 2: fourth holiday this Friday in the United States. There's a
Speaker 2: lot being made of, like the symbolism of the President
Speaker 2: signing this bill July and fourth. I heard you speaking
Speaker 2: with Bloombogs, Matt and Miner about that earlier.
Speaker 3: Why is that symbolism.
Speaker 5: There, Well, it really was this self imposed deadline from
Speaker 5: the administration that they wanted to get this done by
Speaker 5: July fourth. We are expecting a pretty big signing ceremony
Speaker 5: either later today or tomorrow, so that President Trump can
Speaker 5: tout this legislative achievement that they're really hoping we'll pair
Speaker 5: with some of these potential trade deals frameworks that we
Speaker 5: could get next week ahead of that July ninth deadline
Speaker 5: that they have put into effect. Because the administration is
Speaker 5: really hoping for a few different things to happen here.
Speaker 5: They want to see a confluence really of economic factors
Speaker 5: going into the summer so that they can help push
Speaker 5: ahead when it comes to President Trump's economic agenda. Now,
Speaker 5: of course they're dealing with criticism. We have the House Speaker,
Speaker 5: for example, railing against some of the changes when it
Speaker 5: comes to Medicaid. But this administration is really trying to
Speaker 5: focus people on this idea of stabilizing the debt to GDP. Yes,
Speaker 5: this bill is going to add significantly to the national debt,
Speaker 5: but it is the other policies that they're looking to
Speaker 5: put into place that ultimately they say will help grow
Speaker 5: the economy.
Speaker 2: The national debt pile the big focus of Elon Musk,
Speaker 2: as we've discussed all week, Bloomberg Tyler Kendall terrific work
Speaker 2: out in Washington, DC.
Speaker 3: Thank you very much. Let's get to another big story.
Speaker 2: The US and China are beginning to implement their recent
Speaker 2: trade deals, and as part of that, there's some easing
Speaker 2: of restrictions on critical technologies, including export license requirements for
Speaker 2: chip design, software sales, particularly in China. Bloomberg's Peter Elstrom,
Speaker 2: who leads the team in covering Asia tech and European tech,
Speaker 2: is with us. So what we're talking about is EDA
Speaker 2: and as of last night, we're hearing from the key players,
Speaker 2: the key names in the DA space that they're now
Speaker 2: free to do business in China.
Speaker 3: What do we need to know?
Speaker 9: Yeah, that's right. So this is a strange one. It
Speaker 9: was just in May when we found out from the
Speaker 9: companies that they were going to have these export restrictions
Speaker 9: on China. Their EDA software is necessary to be able
Speaker 9: to design semiconductors. It was also strange the way that
Speaker 9: it got announced. It was the companies that actually were
Speaker 9: these new restrictions, it was not the Commerce Department, which
Speaker 9: is the agency behind that. Again this time it's kind
Speaker 9: of similar. We had Semens come out first. Cadence Design
Speaker 9: Systems and Synopsis are also affected here. They came out
Speaker 9: and then they said it in fact, those restrictions are
Speaker 9: now being rolled back. They're not going to have the
Speaker 9: same kind of restrictions on servicing and supporting selling into
Speaker 9: China to support their customers.
Speaker 3: So what's going on.
Speaker 9: Behind the scenes? As you say, the US and China
Speaker 9: are now in the middle of East trade negotiations. Back
Speaker 9: in May, China was kind of playing tough. They were
Speaker 9: not exporting some of the rare earth the minerals that
Speaker 9: American companies needed. Now that the negotiations are preceding, China
Speaker 9: struck this tentative agreement to be able to ship those again.
Speaker 9: In the US and China are coming back to the
Speaker 9: table and as a result, these companies are going to
Speaker 9: have a little bit more breathing space. But that's very unusual.
Speaker 9: You've got export controls, which are typically national security issues
Speaker 9: now being traded as part of the trade negotiations.
Speaker 2: We're seeing some of the chip makers push higher, but
Speaker 2: really the stories around the software name, Cadencenopsis, the two
Speaker 2: that you mentioned also pushing higher. Will show those in
Speaker 2: just a second. The modern day cutting edge chip has
Speaker 2: billions of transistors. Right, No human brain can do the
Speaker 2: blueprint or designed for that. But there is some concern
Speaker 2: here that Huawei, in particular, if they are having free
Speaker 2: access to EDA, that they can use that technology in
Speaker 2: that software platform to close the gap a little bit,
Speaker 2: you know, design their own cutting edge chips. Why is
Speaker 2: America not more concerned about that, Peter, Yeah, that's a.
Speaker 9: Key issue in the technology race between the two countries.
Speaker 9: You have the US ahead and a few different key areas.
Speaker 9: In particular, DA is one of the most important ones.
Speaker 9: Of course, semiconductor equipment is another one. The Netherlands ASML
Speaker 9: is by far the leading player. While Way however, has
Speaker 9: been able to break through some of these barriers. It's
Speaker 9: become a national champion for China. It's helped try to
Speaker 9: focus on some of these key bottlenecks that they have.
Speaker 9: DA is one of the key areas, or if they're
Speaker 9: able to use these tools, they can step ahead and
Speaker 9: design some of these chips. They have the surprise the world,
Speaker 9: i'd say, with some of their advancements and semiconductors, particularly
Speaker 9: this seven nanometer chip that they used in one of
Speaker 9: their smartphones in the past. But now they have not
Speaker 9: been able to make some of the progress, have not
Speaker 9: been able to move forward quite as quickly. So these
Speaker 9: tools are going to help them make some of those
Speaker 9: steps going forward again. That's why it's so surprising that
Speaker 9: they're trading this away in the negotiations between the US
Speaker 9: and China.
Speaker 2: Bloomberg's executive editor for Global Technology, Peter Elstrom, thank you
Speaker 2: so much. It's time for talking tech, and first up,
Speaker 2: Deep Seek ramps up hiring. The Chinese AI startup posted
Speaker 2: ten positions on LinkedIn, indicating it maybe looking to lure
Speaker 2: talent from outside of its homeland. The listings include three
Speaker 2: roles focused on general intelligence, with the positions based in
Speaker 2: Beijing and Han Joe plus ASML and other European semiconductor
Speaker 2: stocks extended losses. Today, there was a report from Nicky
Speaker 2: Asia that said Samsung would be delaying its completion of
Speaker 2: a chip factory in Texas. The report, citing sources, says
Speaker 2: the delay is due to Samsung struggling to find customers
Speaker 2: for the plant's output and some news that broke this hour.
Speaker 2: Core Weaves the first company to receive the latest AI
Speaker 2: system based on Nvidia's newest chip. Dell delivered the first
Speaker 2: GB three hundred MVL seventy two.
Speaker 3: Rack of servers to core Weave and would deploy them.
Speaker 2: In the US, with core Weave aiming to bring more
Speaker 2: of the tech online throughout the year. Open AI is
Speaker 2: one of Corweave's customers and the infrastructural players, saying the
Speaker 2: new systems will work well for larger, more complex models.
Speaker 2: That's the reporting, that's the detail. I want to get
Speaker 2: some more analysis on this. One man deep seeing of
Speaker 2: Bloomberg Intelligence is with us. There's this like constant tracking
Speaker 2: of the launch and ramp of Nvidia's latest generation server
Speaker 2: design that has the latest generation chip and chip combination
Speaker 2: in it.
Speaker 3: Col Weave goes first, what do you make of that?
Speaker 8: Well, when I look at in video's release cycle, they
Speaker 8: are on a one year rhythm and in between that
Speaker 8: year now they are launching the black Vell Ultra before
Speaker 8: the Ruben series comes online. And look, they're almost giving
Speaker 8: a fifty percent performance upgrade with the black Vel Ultra
Speaker 8: in terms of token processing. So from that perspective, Corviv
Speaker 8: having that chip first really gives them a leg up
Speaker 8: over the hyperscalers, which will also get their in Vidia allocation.
Speaker 8: But for Corviv, you know they have a backlog of
Speaker 8: about twenty six billion. To convert that backlock to revenue,
Speaker 8: you need the most kind of impressive in Vidio chips
Speaker 8: first and that helps with the faster backlock conversion.
Speaker 10: So really good news for Corevive, especially on the training front,
Speaker 10: because a lot of these latest black Ultra chips I
Speaker 10: believe will be used for training and then the older
Speaker 10: series will be used for in printing over time.
Speaker 2: So call we've stock really pushed higher after news came out.
Speaker 2: I'm also looking at Dell, like, help us understand the
Speaker 2: Dell component in this ecosystem.
Speaker 8: Yeah, well, Dell is the one who is making that server,
Speaker 8: So in Vidia is providing the chip and krviv is
Speaker 8: really bringing those racks and the servers online to be
Speaker 8: consumed in a cloud consumption model. But Dell is the
Speaker 8: one who is actually assembling that server and making sure
Speaker 8: that it can be delivered to coreviv. So from that perspective,
Speaker 8: they are part of that supply chain and it's a
Speaker 8: good thing that they get to, you know, do that
Speaker 8: for Nvidia before any other server maker like Quanta or
Speaker 8: you know, any other Chinese OEMs come into play.
Speaker 2: Very quick, we just have twenty seconds, Mandy, Well, what's
Speaker 2: the BI big picture thesis right now on how this
Speaker 2: AI infrastructure build outs going.
Speaker 8: I mean, Oracle and open Ai really raised up the
Speaker 8: ante when it comes to you know, their big announcement
Speaker 8: the thirty billion dollar contract and now this news. So
Speaker 8: to my mind, you know, the infrastructure supercycle is really
Speaker 8: playing out and you're seeing that right now.
Speaker 2: Man, keep seeing Bloomberg Intelligence of BI. Great to have
Speaker 2: the reaction here on the show.
Speaker 3: Welcome back to Bloomberg Tech.
Speaker 2: Let's get right to the markets and I'll start with
Speaker 2: the technology sector in the acuity market. Right then, a's
Speaker 2: that one hundred continuing to push fresh record highs. But
Speaker 2: we got the job's data for June strong labor market,
Speaker 2: and the story is really clear. Equities pushed higher outperformance
Speaker 2: in the tech sector, but you also saw treasuries full
Speaker 2: the dollar strengthen. Take all of that in aggregate. It's
Speaker 2: really important. This is what the bomb market looks like.
Speaker 2: I know we go there less often, but there is
Speaker 2: always a relationship between what's happening in yields and particularly
Speaker 2: valuations around technology sector. Now, this was the blowout jobs report,
Speaker 2: and there's any one guy that I want to go
Speaker 2: to on a daylight today, that's Bloomberg's Economics and Policy
Speaker 2: correspondent Michael McKee.
Speaker 3: As you know, I just don't know.
Speaker 2: I don't really understand the granularity of the job's data,
Speaker 2: the revisions, the changes, what is the need to know
Speaker 2: in June, and the kind of explanation for why markets
Speaker 2: reacted the way they did.
Speaker 3: Well.
Speaker 11: The explanation for why markets reacted the way they did
Speaker 11: is fairly simple. The economy seems stronger than it was
Speaker 11: expected to be, and that would suggest that corporate earnings
Speaker 11: can stay strong. But this is a report that looks
Speaker 11: better on the surface than it does underneath. It's not terrible,
Speaker 11: but it's not as great as it looks. We had
Speaker 11: one hundred and forty seven thousand jobs created, and the
Speaker 11: unemployment rate falls to four point one percent. But of
Speaker 11: those one hundred and forty seven thousand jobs, seventy three
Speaker 11: thousand were in government employment.
Speaker 3: Most of that.
Speaker 11: State and local education schools are out in June, so
Speaker 11: there's probably a seasonal adjustment problem with these numbers that
Speaker 11: will cause them to be revised lower. Private payrolls were
Speaker 11: up only seventy four thousand. That's lower than we had
Speaker 11: been seeing, so there is some concern about all this.
Speaker 11: And of course the unemployment rate falls because one hundred
Speaker 11: and thirty thousand people left the labor force, so ed
Speaker 11: not quite as good as anticipated, and of course we
Speaker 11: want to know how they're doing out in.
Speaker 3: Your neck of the woods.
Speaker 11: We lost five thousand jobs in computer manufacturing, another thousand
Speaker 11: in semiconductor manufacturing. Web search portals and hosting lost three
Speaker 11: hundred jobs, so on the tech side not so great either.
Speaker 2: I'm really grateful for that level of detail on the
Speaker 2: tech sect, like we're going to go deep into what
Speaker 2: the environment is right now, particularly in software with our
Speaker 2: next guest, But what I'm seeing on the news cycle
Speaker 2: and timel this morning is very FED related a lot
Speaker 2: of questions directed towards the administration and about what the
Speaker 2: FED should or shouldn't do.
Speaker 11: Why is that, Well, everybody wants lower interest rates because
Speaker 11: of course it's going to mean higher corporate profits. But
Speaker 11: this report pretty much pushes the FED out of that.
Speaker 11: For the July meeting, there was only a couple of
Speaker 11: FED officials who were talking about July. September still stays
Speaker 11: on the calendar as the most likely first month for
Speaker 11: a rate cut. We'll see what happens next week when
Speaker 11: we get the CPI report on the fifteenth. That could
Speaker 11: make a difference to the Fed. But at this point
Speaker 11: it looks like the Fed stays on hold. And of
Speaker 11: course the President will keep tweeting that he doesn't like j.
Speaker 12: Powell.
Speaker 2: Bloomberg's Michael McKee, International Economics and Policy correspondent. It's great
Speaker 2: to have you back on Bloomberg Tech. Let's get right
Speaker 2: to tech and more on the jobs outlook in the sector.
Speaker 2: Eric Wosakowski is the Bespoke Partner's CEO, an absolute specialist
Speaker 2: in executive search, particularly in the fields of SaaS software
Speaker 2: also private equity here in the United States, and I
Speaker 2: want to talk about what that market is like right now,
Speaker 2: particularly at the higher end. There's been so much in
Speaker 2: the news cycle about talent poaching. Frankly, but just on
Speaker 2: the data this morning, was there any read through for
Speaker 2: you that directly correlates to what you're seeing in the
Speaker 2: technology sector?
Speaker 8: Ed?
Speaker 13: Thank you for having me on. I tend to agree
Speaker 13: with Michael. I think the headline news sounds fantastic, but
Speaker 13: I think when you peel back the onion, private sector jobs,
Speaker 13: particularly in tech and innovation, are flat. CEOs today are
Speaker 13: trading on uncertainty in the market, whether it be the
Speaker 13: impact of the tariffs, the geopolitical environment. That said, I
Speaker 13: don't think it's a negative situation because I think what
Speaker 13: we saw yesterday with Microsoft announcing they're cutting more jobs
Speaker 13: is CEOs over the last six months have really tightened
Speaker 13: their belt to see how the market pivots. If we
Speaker 13: get negative implications from tariffs, they're going to be able
Speaker 13: to weather the storm. But I actually think the underpinnings
Speaker 13: here are on a positive economy in the next six
Speaker 13: to twelve months, a strong future, and I think CEOs
Speaker 13: are sitting back with capital to invest. Is they get
Speaker 13: favorable news on tariffs in the geopolitical environments and hopefully
Speaker 13: a rate cut.
Speaker 2: We did hear from the administration, so to speak. This morning,
Speaker 2: Stephen Moran gave an interview to Open Interest, one of
Speaker 2: our earlier shows. He leads the Council of Economic Advisors.
Speaker 2: Let's listen to what he said.
Speaker 14: What we see is an economy that continues to continues
Speaker 14: to defy expectations, continues to define all the doom and
Speaker 14: gloom that's out there, whether it's about the border, or
Speaker 14: immigration or tariffs, just labor market continues to power ahead.
Speaker 14: There were tons of predictions that there'd be a disaster
Speaker 14: of labor market because of the border policies, and nothing
Speaker 14: could be further from the truth. The economy continues to
Speaker 14: create jobs, and if you look at the details of
Speaker 14: the jobs, all of the job gains since the president
Speaker 14: of office are due to native born Americans, and there's
Speaker 14: actually been a decline in foreign born worker which means
Speaker 14: that all of the benefits of the expanding economy are
Speaker 14: recurring to Americans instead of migrants.
Speaker 2: What Stephen outlined, they're seeing in the relationship between policy
Speaker 2: and how it impacts fiscal policy and political policy and
Speaker 2: how it impacts the jobs market. Do you see what
Speaker 2: he explained reflected in software and SATs.
Speaker 13: I don't think it's reflected yet. I think there's an
Speaker 13: opportunity going forward because the largest creator of high paying
Speaker 13: good jobs in the United States is innovation and private equity.
Speaker 13: And I think when we look at the number of
Speaker 13: deals that are done in private equity, the investment that's happening,
Speaker 13: I think we're still in a wait and see mode.
Speaker 13: I think if you look year over year, the number
Speaker 13: of private equity deals is down. That said, in speaking
Speaker 13: with the investment banking firms, their mandate pipelines are full.
Speaker 13: In speaking with our private equity clients, they're reviewing a
Speaker 13: record number of new deals. And I think the next
Speaker 13: six to twelve months, I really think we're going to
Speaker 13: start to see the deal activity pick, which is going
Speaker 13: to fuel investment in jobs.
Speaker 2: So the big story has been mister Mark Zuckerberg, according
Speaker 2: to mister Sam Outman, the CEO of Open Ai, approaching
Speaker 2: talent in the field of AI, but let's call it
Speaker 2: software and offering. According to Sam Outman, pay packages of
Speaker 2: one hundred million US dollars.
Speaker 3: Is that the kind of market that you're seeing.
Speaker 13: This is what you specialize in absolutely, and we're not
Speaker 13: privy to those particular deals. But I think the labor
Speaker 13: market at the high end in software tech SaaS is
Speaker 13: very tight because you don't have that natural flow of
Speaker 13: deals and exits that creates natural term You've got a
Speaker 13: number of assets that are at the ready to transact
Speaker 13: in the next six to eighteen months, and so executives
Speaker 13: today are not reticent to make a move, and so
Speaker 13: that notion of poaching, the notion of having to overpay
Speaker 13: to attract star executives for those open roles you need,
Speaker 13: is absolutely happening. The premium proven executives are at a
Speaker 13: premium right now, and that's why they're demanding outsize pay
Speaker 13: AI is clearly another area that's on the frontier. The
Speaker 13: top executives that are leading way there are demanding outsized
Speaker 13: pay packages.
Speaker 2: Eric just very quickly, how does Bespoke use technology to
Speaker 2: find a solution in that type market.
Speaker 13: So we have, as far as I know, the first
Speaker 13: executive index in executive recruiting. It's focused particularly on the
Speaker 13: software market. We used AI and mL to index six
Speaker 13: hundred and seventy six thousand software executives in North America.
Speaker 13: The technology gives us key indicators on job fits, propensity
Speaker 13: to make a move and the like, and so we,
Speaker 13: as far as I know, are the first and are
Speaker 13: going to continue to push the envelope on technology and recruiting.
Speaker 2: Eric Walzakowski, it's great to have you on the program,
Speaker 2: Bespoke Partner's CEO on this job's Day, but also there's
Speaker 2: so much conversation around what's happening right now in the
Speaker 2: technology jobs market.
Speaker 3: Thank you very much.
Speaker 5: So.
Speaker 2: Coming up, Amy Saper from Uncoort Capital joins us talk
Speaker 2: about the state of seed stage investing and competition to
Speaker 2: get in early. How common a theme has that been
Speaker 2: in recent weeks? Really looking forward to this one. Stay tuned.
Speaker 2: That's next.
Speaker 3: This is Bloomberg Tech. It's time for the VC Spotlight.
Speaker 2: Our next guest is a classically trained singer, backed Michael
Speaker 2: Jackson in one of his music videos and competed across California.
Speaker 2: She's also worked at some of the world's most important
Speaker 2: technology companies, Twitter, Uber, and Stripe, and she's now a
Speaker 2: partner at Uncourt Capital, at one point two billion dollar
Speaker 2: venture firm chasing the biggest potential names in AI. Amy
Speaker 2: Safer joins us here in San Francisco, Welcome to the program.
Speaker 2: Thanks for having me increasingly on this program. At all
Speaker 2: of the dinners I'm going to, there is a big
Speaker 2: battle to get in earlier. Actually, sometimes founders don't really
Speaker 2: have a fully baked idea. And reading your notes and
Speaker 2: the thesis, but also being subscribed to tasting notes on
Speaker 2: Cork's newsletter, that's kind of where the focus.
Speaker 3: Is right now. Absolutely so.
Speaker 15: Here at Kirk we are focused on seed investing, so
Speaker 15: we typically write the first institutional check into a company.
Speaker 15: We are really excited about what we're seeing in AI,
Speaker 15: and we back founders with a deep belief on a
Speaker 15: new customer segment or a new company, and we're trying
Speaker 15: to back the founders that are building the companies that
Speaker 15: are really going to define this next decade, and virtually
Speaker 15: all of those have AI as they're.
Speaker 3: Undercurrent right now.
Speaker 2: What is also true is that the scale of the
Speaker 2: seed round is being redefined. I see seed rounds in
Speaker 2: the high tens of millions, depending on which sort of
Speaker 2: corner of the technology market it is.
Speaker 3: How has that changed things for you? Yeah, absolutely so.
Speaker 15: I think if you look overall of the seed market,
Speaker 15: it is true that rounds are getting larger. I think
Speaker 15: the average in Q one was over three million, up
Speaker 15: from maybe two and a half last year. So the
Speaker 15: large rounds of the tens and twenty millions do make
Speaker 15: the headlines. Those are not the norm of what we're seeing,
Speaker 15: though they do occur. I do think it's true that
Speaker 15: companies and founders are raising a little bit more reflective
Speaker 15: of the increased expectations that the Series A investors are
Speaker 15: placing relative to a couple of years ago.
Speaker 2: There's what you can do in the field of AI,
Speaker 2: and then there's what you can do with AI. What
Speaker 2: is it that you're looking for in a founder right now?
Speaker 2: Like people would say, well, I'm ANAI adjacent company or
Speaker 2: I'm AI we're native, they might just be using AI
Speaker 2: to do something else. They might be not necessarily developing
Speaker 2: a new technology so to speak.
Speaker 15: Yeah, absolutely, so, I think AI is already rapidly shifting
Speaker 15: from being a sector that you might invest in into
Speaker 15: encompassing every startup so whether their core product is AI native,
Speaker 15: and we do have several of those in our portfolio
Speaker 15: IVO for example, in the Legal Contract Review GPT zero
Speaker 15: for copy editing. We also have companies that are selling
Speaker 15: to AI companies so tail scale counts companies like Mistroll
Speaker 15: and Perplexity and others amongst their customers set and are
Speaker 15: emerging as the de facto networking solution for those AI companies.
Speaker 15: So we are focused on companies that are cognizant that
Speaker 15: the market is changing right now, and so whether they
Speaker 15: are building that into their product, whether they're using it
Speaker 15: in their back office to streamline some of their operations,
Speaker 15: or whether they're selling to AI customers, it really is
Speaker 15: everywhere right now.
Speaker 2: I invite you to reflect on your music career, but
Speaker 2: I think largely your career in technology Stripe Uber, Twitter
Speaker 2: now known as X. Are you more of an operator
Speaker 2: than then traditional finance and how are you helping the
Speaker 2: founders that you're backing.
Speaker 16: Yeah.
Speaker 3: Absolutely.
Speaker 15: I leverage my operating career every day, and I will
Speaker 15: say my background is a mix of product, product marketing,
Speaker 15: international expansion. I use the product marketing side far more
Speaker 15: than I thought. I'm particularly attracted to companies and founders
Speaker 15: that are largely technical, building AI enabled applications for engineering,
Speaker 15: product and design teams, and they might not have a
Speaker 15: product marketing or a sales background, and so I help
Speaker 15: them define who's their ideal customer, how do you reach them?
Speaker 15: How do you get your first sets of customers? And
Speaker 15: that's such a critical set of activities to do with
Speaker 15: the seed stage.
Speaker 2: I know a lot of bench capitalists watch this program.
Speaker 2: Many of you are not operators. You have a finance background,
Speaker 2: nothing against any of that, but really interested in the
Speaker 2: operator side of the story.
Speaker 3: Where is it that the founders are struggling right now?
Speaker 2: Like capital is basically commoditized, right, so what is it
Speaker 2: that they say, like we really need your help with
Speaker 2: imminent Is it hiring putting operational staff?
Speaker 3: In absolutely?
Speaker 15: I think it's two main things at the seed stage
Speaker 15: that we focus on. One is really honing on getting
Speaker 15: as specific as possible about who your ideal customer is.
Speaker 15: And that's so critical for the seed stage because you
Speaker 15: have the large horizontal players, the lms that are trying
Speaker 15: to be the horizontal layer for everyone. Where seed stage
Speaker 15: companies and early stage companies can really compete is by
Speaker 15: focusing on a particular customer segment and owning their workflow.
Speaker 3: End to end.
Speaker 15: And so we spend a lot of time there and
Speaker 15: then helping them identify the right talent that they need
Speaker 15: to achieve those milestones and reach those.
Speaker 2: Customers, Amy say pert partner un Court Capital, thank you
Speaker 2: very much for joining us here. Former OpenAI board member
Speaker 2: Helen Toner says Mark Zuckerberg and Meta's lavish spending for
Speaker 2: top AI talent may not guarantee their success. On Bloomberg
Speaker 2: Insight with has Linda I'm in.
Speaker 16: What we're really seeing here with Meta is metas started
Speaker 16: to get a reputation of having a little bit of
Speaker 16: a dysfunctional AI team, not really having its organizational structures
Speaker 16: set up in a way that Billy butts them succeed
Speaker 16: and innovate. And what I think we're seeing here is
Speaker 16: CEO Mark Zuckerberg really stepping in and saying, Wow, we
Speaker 16: have to do something differently. We need a big new push,
Speaker 16: we need a big new effort. The real question is
Speaker 16: can it turn around Meta's fortunes and can it turn
Speaker 16: Meta into a real juggernaut.
Speaker 2: Staying on Meta, the company's Twitter alternative Threads has grown
Speaker 2: to three hundred and fifty million monthly users since his
Speaker 2: debut two years ago. Still, the social media platform is
Speaker 2: continuing to work on finding their own identity among the industry.
Speaker 2: So the subject to today's Tech in Depth newsletter written
Speaker 2: by Bloombers Kirk Wagner. I said Twitter, I of course
Speaker 2: meant X the platform formerly known as Twitter. I don't
Speaker 2: know about Threads. Like when it launched, I used it
Speaker 2: a lot because I like the interaction between Instagram and threads.
Speaker 2: Like one thing I posted there I could take there.
Speaker 2: I don't use it in the same way to share
Speaker 2: news as I do potentially on x or even LinkedIn.
Speaker 2: But it's it's your teching depth newsletter. What's the kind
Speaker 2: of conclusion here.
Speaker 12: Well, I think we're in the same boat, ed, because
Speaker 12: that was sort of my thinking here as we come
Speaker 12: up on the two year anniversary of this product. I
Speaker 12: like threads, I use threads, but I still ask myself,
Speaker 12: what is this thing for?
Speaker 8: Right?
Speaker 12: I think with Twitter, old Twitter, I knew what that was.
Speaker 12: That was the place I went for breaking news. That
Speaker 12: was a place I shared breaking news. That was where
Speaker 12: I assumed that I would get, you know, things that
Speaker 12: are happening right then, right now, right around me. And
Speaker 12: I just don't really feel that from Threads. And part
Speaker 12: of that is that I don't think they leaned into
Speaker 12: politics during this last election cycle, and in my opinion,
Speaker 12: sort of missed an opportunity to plant that flag on
Speaker 12: the news side, and they made a few things changes
Speaker 12: in the last few months that make me think maybe
Speaker 12: they do care more about news and they want to
Speaker 12: move in that direction. But again, two years in, my
Speaker 12: one critique of platform is what do we use it for?
Speaker 8: Well?
Speaker 2: Also, how does meta position it and value it, you know,
Speaker 2: as a platform visa the WhatsApp and Facebook and Instagram
Speaker 2: commercially or otherwise.
Speaker 12: Yeah, I mean I spoke to you know, the executive
Speaker 12: who's running that team, Emily Dalton Smith, earlier this week
Speaker 12: and she said, you know, it's a platform for exchanging
Speaker 12: of ideas, right, It's clearly text. It's very much meant
Speaker 12: to stoke some type of interaction between people in a
Speaker 12: way that even Instagram I think is very much you know,
Speaker 12: you sort of post something and people observe it. Right,
Speaker 12: this is meant to be more back and forth. But again,
Speaker 12: what are you talking about there?
Speaker 8: Right?
Speaker 12: Like people will find their communities, But what makes you
Speaker 12: want to open that app every single day and make
Speaker 12: that a destination for yourself? And that's where I feel like,
Speaker 12: you know, I at least don't know exactly why I'm
Speaker 12: opening threads.
Speaker 3: All the time.
Speaker 12: I hope that it will be because it becomes a
Speaker 12: news source for me down the line. I just don't
Speaker 12: think we're there.
Speaker 2: Yet Bloombos Kurt Wagner, who is also the author of
Speaker 2: Battle for the Bird, the book on Twitter Elon Musk's
Speaker 2: acquisition of Twitter in its transition to X really really
Speaker 2: highly recommend you go read that. That's why I kept
Speaker 2: referring to Twitter. Let's get to another really important piece
Speaker 2: of reporting. Immigration lawyers are advising clients to scrub their
Speaker 2: social media accounts of controversy or politically sensitive topics, warning
Speaker 2: the posts could be used to block their entry to
Speaker 2: the US or.
Speaker 3: As grounds to remove them.
Speaker 2: Bloomberg Cecilia Deannastasio has been reporting this and it's a
Speaker 2: particular segment that we're talking about. It's people who are
Speaker 2: online influence, influencers to a certain extent. What have you
Speaker 2: learned and what's the need to know?
Speaker 17: Sure, so one in five Americans gets their news today
Speaker 17: from influencers. Influencers have a lot of power over what
Speaker 17: people think, especially politically these days, and what we heard
Speaker 17: from immigration lawyers is that just bite influencers status as
Speaker 17: citizens in the US, they are being advised not to
Speaker 17: post on topics that the lawyers are considering hot button
Speaker 17: for fear of potential repercussions.
Speaker 3: So this is potentially severe.
Speaker 2: It's part of a broader backdrop where migration in and
Speaker 2: out of the United States is in focus. We talked
Speaker 2: about it earlier in the Hour in the job sector.
Speaker 2: Are there any sort of examples of where this is
Speaker 2: already happening.
Speaker 17: Sure, we have seen several examples of influencers in the US,
Speaker 17: both people who have been born here, people who emigrated here,
Speaker 17: people who might be undocumented facing repercussions.
Speaker 15: For the way that their speech is viewed by.
Speaker 17: People both close to government and inside of the government.
Speaker 17: One of the examples that we use in our story
Speaker 17: is far left leaning twitch streamer Hassan Piker, who's been
Speaker 17: very outspoken on Palestine. He was detained in questioned when
Speaker 17: he was bring back into the country to Chicago O'Hare,
Speaker 17: and what he told us in an interview was that
Speaker 17: he believes that this was a tactic for people to
Speaker 17: become afraid of sharing their opinions on topics that might
Speaker 17: not align with current governmental positions.
Speaker 2: Cecilia just very quickly. Has there been any reaction to
Speaker 2: our reporting from the government.
Speaker 17: We haven't seen anything yet, but one of the concerns
Speaker 17: that have heard from people who have read the story
Speaker 17: is that today's influencers who speak on politics tend to
Speaker 17: actually be more conservative than left leaning, according to a
Speaker 17: recent pupil and considering some of the concerns around speaking
Speaker 17: about certain topics in certain ways, there are worries that
Speaker 17: that gap might actually widen overtime.
Speaker 2: The HS Assistant Secretary for Public Affairs, Trishop Pacoffin also
Speaker 2: emailing us saying that their officers are following the law,
Speaker 2: not agendas. Really check out that reporting from the team Bloomberg.
Speaker 2: Cecilia Deannastasia, thank you very much. That does it for
Speaker 2: this edition of Bloomberg Tech. It's a show week in
Speaker 2: the United States. There won't be any show this Friday
Speaker 2: because of the July fourth holiday, but this was a
Speaker 2: big show, so much to recap.
Speaker 3: Check out the b Tech podcast.
Speaker 2: You know where to find it on all the Bloomberg
Speaker 2: platforms and online, iHeart, Spotify and on Apple.
Speaker 3: From San Francisco, this is Bloomberg Tech.