WEBVTT - Intel Taps AI Boom as Apple Faces Doubts 0:00:02.520 --> 0:00:14.840 Bloomberg Audio Studios, Podcasts, radio news. Bloomberg Tech is live 0:00:14.920 --> 0:00:18.400 from the heart of Silicon Valley with Ed lar Though 0:00:18.560 --> 0:00:19.680 in San Francisco. 0:00:22.760 --> 0:00:24.440 This is Bloomberg Tech coming up. 0:00:24.480 --> 0:00:27.479 Intel is tapping the market for fifteen billion dollars in 0:00:27.520 --> 0:00:31.480 fresh capital betting renewed AI enthusiasm can help fund its 0:00:31.520 --> 0:00:34.720 push into chips and physical AI plus. Apple gets a 0:00:34.840 --> 0:00:38.760 rare downgrade from Jeffreys on concerns about its iPhone roadmap. 0:00:38.760 --> 0:00:41.480 We'll speak with the analyst to discuss why he's turning 0:00:41.520 --> 0:00:45.959 more bearish, and Microsoft says AI agents are already transforming 0:00:46.200 --> 0:00:48.880 how software gets built. We'll speak with co pilot chief 0:00:48.960 --> 0:00:54.640 Charles Lamana about what's next. Intel down four percent. It 0:00:54.680 --> 0:00:57.640 wants to tap the market for fifteen billion dollars worth 0:00:57.640 --> 0:00:58.160 of stock. 0:00:58.440 --> 0:00:59.080 This will be the. 0:00:59.040 --> 0:01:02.880 First time that it does a public share sale since 0:01:02.920 --> 0:01:06.600 it listed back in nineteen seventy one. Let's get straight 0:01:06.640 --> 0:01:09.720 to it with bloombergs Ian King, who leads our coverage 0:01:09.800 --> 0:01:14.040 of semiconductors. So interesting when this hit the inbox this morning. 0:01:14.520 --> 0:01:17.640 Let's start with what they're doing. Fifteen billion dollars is 0:01:18.000 --> 0:01:20.520 a lot of money, and actually, if you look at 0:01:20.600 --> 0:01:22.560 what could follow it could go up two point twenty 0:01:22.560 --> 0:01:23.119 five billion. 0:01:23.240 --> 0:01:24.440 What do we need to know to start? 0:01:25.319 --> 0:01:27.200 Yeah, I mean you say fifteen billion is a lot 0:01:27.200 --> 0:01:30.280 of money, and that's that's true. But if you think 0:01:30.319 --> 0:01:32.959 about it in terms of what Intel has to achieve, 0:01:32.959 --> 0:01:36.080 which would be building new factories which cost twice side amount, 0:01:36.319 --> 0:01:38.640 which would be investing heavily to catch up with in 0:01:38.760 --> 0:01:43.600 video and AMD in accelerators, not actually that largest amount 0:01:43.680 --> 0:01:45.880 of money in the grand scheme of things that Obviously, 0:01:45.880 --> 0:01:48.520 though investors don't like the dilution this morning. 0:01:49.760 --> 0:01:52.360 This is opportunistic. This is a timing thing, right. The 0:01:52.440 --> 0:01:56.000 stock tripled so far in twenty twenty six, and there 0:01:56.000 --> 0:01:59.920 has been renewed enthusiasm by investors for Intel's AI story. 0:02:01.000 --> 0:02:04.520 Yeah, no, you're absolutely right in it makes sense for 0:02:04.640 --> 0:02:07.040 Intel to do this to go to the equity markets 0:02:07.120 --> 0:02:09.760 rather than to go back to the debt markets, because 0:02:09.760 --> 0:02:12.280 it's been trying to clean up that balance sheet, been 0:02:12.320 --> 0:02:14.480 making progress on that, and investors part of the reason 0:02:14.520 --> 0:02:17.280 why stock has gone up is because it has made 0:02:17.320 --> 0:02:20.239 progress on cleaning that balance sheet up. So this sort 0:02:20.240 --> 0:02:22.440 of helps that narrative, albeit in a way that some 0:02:22.480 --> 0:02:27.120 of the equity investors clearly don't like. But again, fifteen 0:02:27.120 --> 0:02:29.320 billion dollars, that's a nice amount, but where does it 0:02:29.320 --> 0:02:29.920 get us. 0:02:31.480 --> 0:02:33.400 You and I are on the phone very recently with 0:02:33.520 --> 0:02:38.280 Intel CEO Lit Bhutan and CFO Dave's Intner, and they 0:02:38.320 --> 0:02:41.480 gave us this past quarter a caf to expenditure number 0:02:41.520 --> 0:02:44.200 for the year that was bigger than that even they'd expected. 0:02:44.639 --> 0:02:47.400 The explanation was kind of like, we will only deploy 0:02:47.480 --> 0:02:50.000 CAPEX if we see a return on it. Talk about 0:02:50.000 --> 0:02:52.320 some of the projects that Intel's committed to and what 0:02:52.360 --> 0:02:53.240 it's trying to achieve. 0:02:54.080 --> 0:02:57.200 Yeah, I mean, under the good times predecessor, they built 0:02:57.200 --> 0:03:00.440 what are called shells, which are the actual physical fires 0:03:00.520 --> 0:03:03.800 in places like Ohio, in places like Arizona, but they 0:03:03.800 --> 0:03:06.680 didn't do the really expensive part, which is to buy 0:03:06.720 --> 0:03:09.680 the equipment and put the equipment in there. Now they're saying, 0:03:09.720 --> 0:03:12.640 look for our own stuff alone. We don't have enough capacity. 0:03:12.720 --> 0:03:15.399 That's kind of a good problem in a way. So 0:03:15.600 --> 0:03:18.440 they do need to spend more. But the real big 0:03:18.520 --> 0:03:21.560 step up in spending would come if they get that 0:03:22.000 --> 0:03:25.240 external customer that they're looking for. If if it's saying 0:03:25.360 --> 0:03:27.960 in Video or Apple decides to give them orders and 0:03:28.000 --> 0:03:30.560 they'll need that big chunk of change in a hurry 0:03:30.800 --> 0:03:33.880 to meet that big step up in demand. Haven't quite 0:03:33.960 --> 0:03:37.600 seen that yet, but this perhaps points as in that direction, 0:03:37.720 --> 0:03:40.160 makes us feel them, maybe that they're preparing. 0:03:39.800 --> 0:03:40.200 To do this. 0:03:41.600 --> 0:03:43.880 Intel down four percent in the session, up one hundred 0:03:43.920 --> 0:03:46.600 and sixty five percent here today, Bloomberg, Zy and King, 0:03:46.920 --> 0:03:49.680 thank you very much. Another top story, shares of Apple 0:03:49.760 --> 0:03:53.080 have been under pressure. The company was downgraded at Jeffrey's 0:03:53.400 --> 0:03:56.880 to underperform from hold, with a price target now of 0:03:56.880 --> 0:03:59.320 two hundred and sixty three dollars sixty six cents. The 0:03:59.400 --> 0:04:03.480 downray and make concerns over Apple's product roadmap. Jeffrey says 0:04:03.520 --> 0:04:07.119 it's supply chain checks suggests an all glass iPhone, which 0:04:07.200 --> 0:04:11.120 was expected in September twenty twenty seven, has been canceled 0:04:11.440 --> 0:04:12.840 due to low production yields. 0:04:12.920 --> 0:04:14.760 Here with more is Jeffrey's equity. 0:04:14.480 --> 0:04:17.320 Analyst Edison Lee Edison, it's great time you can we 0:04:17.360 --> 0:04:19.480 start with the supply chain checks. You know, to some 0:04:19.600 --> 0:04:21.880 people in the Bloomberg Tech audience, they might not be 0:04:21.920 --> 0:04:23.719 familiar with what it is you guys go out and 0:04:23.760 --> 0:04:27.040 do you've looked at the all glass iPhone. Let's start 0:04:27.080 --> 0:04:28.839 with that first conclusion that you've drawn. 0:04:30.080 --> 0:04:30.279 Yeah. 0:04:30.360 --> 0:04:30.680 Sure. 0:04:31.200 --> 0:04:35.120 In twenty twenty seven, there's the twentieth anniversary of the iPhone, 0:04:35.560 --> 0:04:38.560 and that's why our understanding of staid. Apple actually has 0:04:38.640 --> 0:04:42.800 this new design which is four glass, meaning that there 0:04:42.839 --> 0:04:46.720 will not be any battle midtrim that you will be 0:04:46.800 --> 0:04:50.159 able to see. So the entire IPHILM is actually wrapped 0:04:50.160 --> 0:04:53.360 in glass. And also there will be no physical buttons 0:04:53.520 --> 0:04:56.760 on the side. It's all replaced up by heptics. So 0:04:56.800 --> 0:05:01.400 that's why this is going to be a beautiful iPhone 0:05:01.440 --> 0:05:04.960 that will be marketed as a twentieth anniversary model. And 0:05:05.080 --> 0:05:08.840 we think that this new form factor for the iPhone 0:05:09.720 --> 0:05:14.760 what I call a strict iPhone. I think it's going 0:05:14.839 --> 0:05:19.479 to be a pretty expensive and also high end looking phone, 0:05:19.800 --> 0:05:22.919 and we think that over time it may not be 0:05:23.040 --> 0:05:25.120 just marketed as a one off product. I think that 0:05:25.160 --> 0:05:27.919 over time this form factor may actually be transported to 0:05:27.960 --> 0:05:30.880 the program promas maybe an F y twenty and F 0:05:31.000 --> 0:05:33.600 y twenty nine as well. So this is how Apple 0:05:33.720 --> 0:05:37.640 intended to move up the product ROMap and move up 0:05:37.680 --> 0:05:40.840 the esp which I think is very important right now 0:05:40.920 --> 0:05:42.880 given soaring memory costs. 0:05:43.400 --> 0:05:46.039 This is what Mark German at Bloomberg has reported under 0:05:46.080 --> 0:05:48.640 the code name glass Wing, and he's given on this 0:05:48.720 --> 0:05:52.280 show a lot of detail. The second factor is ASPS. 0:05:52.839 --> 0:05:55.479 Very simply, why is it important that you see a 0:05:55.560 --> 0:05:59.240 path for Apple to maintain a higher average selling price? 0:06:00.920 --> 0:06:03.560 Well, I think that there are two reasons, right. Number 0:06:03.600 --> 0:06:07.120 one is that smartphone itself is a very mature product, 0:06:08.000 --> 0:06:11.400 and that's why the majority of the demand is going 0:06:11.480 --> 0:06:14.560 to come from replacement demand. And we think that with 0:06:14.680 --> 0:06:18.279 AI not yet taking hold right to change the utility 0:06:18.320 --> 0:06:20.839 of the smartphone, I think that new form factor is 0:06:20.880 --> 0:06:24.760 important for Apple to be able to raise the ASP 0:06:24.960 --> 0:06:29.440 over time, and particularly right now, AI has taken over 0:06:29.520 --> 0:06:31.680 as the king in the supply chain, and that's why 0:06:31.720 --> 0:06:34.120 Apple is no longer the king in the supply chain 0:06:34.120 --> 0:06:36.360 anymore as the biggest customers, and that's why I think 0:06:36.360 --> 0:06:39.360 one of the medium the long term challenges facing Apple 0:06:40.000 --> 0:06:43.000 is going to be supply chain challenges whether they security 0:06:43.080 --> 0:06:46.400 enough supply of chips, where they security enough supply of memory, 0:06:46.720 --> 0:06:50.080 and these prices continue to go up, and that's why 0:06:50.120 --> 0:06:52.120 to be able to introduce products that can sell at 0:06:52.120 --> 0:06:55.280 a higher prices to offset these supply chain challenges, I 0:06:55.320 --> 0:06:55.760 think it's. 0:06:55.640 --> 0:07:00.280 Important Edison On September first, Tim Cook steps down as 0:07:00.320 --> 0:07:04.119 CEO and becomes executive chair, and then John Turners takes 0:07:04.120 --> 0:07:08.320 over as CEO. How have you modeled for that change 0:07:08.360 --> 0:07:10.840 and do you see it reflected in the research that 0:07:10.880 --> 0:07:13.080 you put out on an all glass iPhone and in 0:07:13.120 --> 0:07:14.760 your supply chain checks. 0:07:17.240 --> 0:07:20.440 I think that right now, the two bottlenecks that Apple 0:07:20.560 --> 0:07:24.240 is facing number one's memory, number two is the advanced 0:07:24.400 --> 0:07:28.720 no capacity at TSMC, because the iPhones and also odd 0:07:28.800 --> 0:07:32.040 Apple products are usually powered by the most advanced notes 0:07:32.400 --> 0:07:35.480 at TSMC. But right now I think TSMC is most 0:07:35.520 --> 0:07:39.720 advanced notes going forward will be mainly used by AI 0:07:39.760 --> 0:07:43.680 companies who can pay more than consume electronics companies such 0:07:43.720 --> 0:07:46.800 as Apple, and that our memory is exactly the same 0:07:47.000 --> 0:07:50.080 situation where AI companies are crazy about memory. They wanted 0:07:50.080 --> 0:07:53.040 to pay higher prices for memory, and they will occupy 0:07:53.080 --> 0:07:56.040 the majority of the memory production capacity of amount of 0:07:56.040 --> 0:07:58.680 major players. And that's why in order for Apple to 0:07:58.720 --> 0:08:01.840 be able to get enough at the right prices and 0:08:01.920 --> 0:08:05.520 also to get enough ad faster process and trips at 0:08:05.560 --> 0:08:07.640 the right price at the right time, I think it's 0:08:07.680 --> 0:08:09.280 going to be a big challenge for app. 0:08:10.760 --> 0:08:14.600 One of the things that was conceded in the earning 0:08:14.640 --> 0:08:18.440 school was that they had misread demand and therefore had 0:08:18.440 --> 0:08:21.520 not placed the orders for enough capacity on lead edge chips. 0:08:21.960 --> 0:08:24.920 Just how much did that that surprise you? Edison the 0:08:24.920 --> 0:08:26.560 mismanagement of the supply chain. 0:08:28.640 --> 0:08:31.120 I wouldn't describe that as mismanagement, but I think that 0:08:31.200 --> 0:08:33.959 the structure of the supply chain has been dramatically altered 0:08:34.000 --> 0:08:37.640 by AI, and I think before AI came along, Apple 0:08:37.800 --> 0:08:40.480 is the biggest is the biggest customers of many companies 0:08:40.559 --> 0:08:45.280 including TSMC, including maybe Heinex or even part of Stepsum. 0:08:45.720 --> 0:08:48.400 But I think that they're no longer the biggest and 0:08:48.440 --> 0:08:50.600 I think that they potentially can fall to number three 0:08:50.720 --> 0:08:54.400 in twenty twenty seven in TSMC because other AI companies 0:08:54.720 --> 0:08:58.640 are actually moving forward with bigger orders and also higher 0:08:58.679 --> 0:09:01.679 bility to pay more. And as a result of that, 0:09:01.720 --> 0:09:04.480 I think Apple needs to, I think, manage to supply 0:09:04.600 --> 0:09:08.120 chain a lot more efficiently. But in order to offset 0:09:08.360 --> 0:09:12.040 these bottom ers and also offset these higher cost the components, 0:09:12.520 --> 0:09:16.599 I think the most feasible role math for them is 0:09:16.640 --> 0:09:20.839 sexual to introduce higher price items so that consumers that 0:09:20.880 --> 0:09:24.000 wanted to pay more and they can offset higher component 0:09:24.080 --> 0:09:25.439 cost and protect the margin. 0:09:26.960 --> 0:09:30.280 Apple's down two percent after a Jeffrey's downgrade. We speak 0:09:30.280 --> 0:09:33.200 with Edison Lee of Jeffries. Thank you very much. Indeed, 0:09:33.320 --> 0:09:36.160 we're also looking at shares of Microsoft this morning. The 0:09:36.200 --> 0:09:41.439 information is reporting that Microsoft plans to significantly increase production 0:09:41.520 --> 0:09:45.560 of its internal AI chips and they are citing sources 0:09:45.600 --> 0:09:49.160 on that, and they plan to unveil the newest designs 0:09:49.160 --> 0:09:53.040 of that this fall. The stock off session highs up 0:09:53.120 --> 0:09:56.319 one point eight percent. Separately later in the show, from 0:09:56.400 --> 0:09:57.439 chips to software. 0:09:57.880 --> 0:09:59.280 We're going to speak later this our. 0:09:59.160 --> 0:10:03.320 Charles Lamana, Microsoft EVP of co Pilot Agents and platform. 0:10:03.360 --> 0:10:06.480 Co Pilot was a really big feature the recent earnings print. 0:10:06.679 --> 0:10:09.559 Also coming up, Pauline and mcpadden of Bailly Gifford joins 0:10:09.640 --> 0:10:12.440 us to discuss her long term term bet is. The 0:10:12.480 --> 0:10:15.320 AI race between the US and China starts a heat up. 0:10:15.440 --> 0:10:16.360 This is Bloomberg Tech. 0:10:29.040 --> 0:10:32.839 When it comes to technological advancements, access to capital. 0:10:32.480 --> 0:10:34.720 Has long been a US advantage. 0:10:34.920 --> 0:10:38.160 Now Beijing's closing that gap by tapping a twenty eight 0:10:38.240 --> 0:10:42.400 trillion dollar market as AI emergence as the next engine 0:10:42.640 --> 0:10:45.600 of economic growth. Bloomberg's microheff that joins us with a 0:10:45.600 --> 0:10:47.439 big take, and it was a big take. 0:10:47.520 --> 0:10:50.240 What do we need to know, Well, it really does. 0:10:50.280 --> 0:10:52.760 In Kudro's story of colleagues in Asia for all their 0:10:52.880 --> 0:10:57.439 deep reporting on this and their story focuses initially on CXMT. 0:10:57.679 --> 0:11:00.280 This is the chip maker whose ip O lest month 0:11:00.600 --> 0:11:04.760 really caught global attention, raising nine point eight billion dollars 0:11:04.760 --> 0:11:08.400 in its initial sale, but then seeing its shares jump 0:11:08.640 --> 0:11:11.679 almost five hundred percent in the first day of trading. 0:11:11.920 --> 0:11:14.760 And what that really signaled is that Chinese capital markets 0:11:14.800 --> 0:11:18.560 are really going to play an increasingly significant role in 0:11:18.600 --> 0:11:21.240 the AI and tech build out in the world's second 0:11:21.360 --> 0:11:24.360 largest economy. And in the past we have seen Beijing 0:11:24.440 --> 0:11:28.520 employee state supports to try to help industries like solar 0:11:28.559 --> 0:11:31.920 panels and electric vehicles took great success and effect and 0:11:32.000 --> 0:11:35.680 helping propel them to the lead. But artificial intelligence, as 0:11:35.760 --> 0:11:38.080 we know it is something that's different. It is so 0:11:38.240 --> 0:11:40.400 capital intensive, and we just need to look at the 0:11:40.480 --> 0:11:43.679 landscape here in the US with the trillions of dollars 0:11:43.720 --> 0:11:48.439 in pledges in investment here in data center and other infrastructure. 0:11:48.720 --> 0:11:51.160 And just this morning we saw Intel announcing that it 0:11:51.240 --> 0:11:55.000 was going to offer an additional fifteen billion dollars in 0:11:55.280 --> 0:11:59.160 shares as a part of trying to feed that beast 0:11:59.360 --> 0:12:03.439 of the need from more capital to keep building in China. Look, 0:12:03.760 --> 0:12:07.120 there is a mismatch still between the size of the 0:12:07.240 --> 0:12:10.760 US stock and bomb market and the financial markets in Beijing. 0:12:10.880 --> 0:12:13.559 It's roughly in the order of about five times smaller 0:12:13.600 --> 0:12:15.800 than what we have here in the US, but it 0:12:15.840 --> 0:12:18.840 is not insignificant. It is a two twenty eight trillion 0:12:18.880 --> 0:12:21.960 dollar stock and bomb market that investors can turn to. 0:12:22.400 --> 0:12:25.400 And Chinese authorities are also looking at home at the 0:12:25.520 --> 0:12:29.079 high rate of domestic savings. They are sitting on household 0:12:29.120 --> 0:12:32.120 savings of twenty six trillion dollars that perhaps can be 0:12:32.240 --> 0:12:36.560 tapped directly or indirectly through this to help feed the 0:12:36.559 --> 0:12:40.040 beast of artificial intelligence growth, which is one of Chinese 0:12:40.040 --> 0:12:44.679 President Chiji Pag's top priorities economically over the next decade. 0:12:45.200 --> 0:12:48.040 Bloembergs Mike Shepard, thank you very much. Let's stick with 0:12:48.120 --> 0:12:50.640 the global AI race. Our next guest believes that some 0:12:50.640 --> 0:12:54.800 of the most compelling long term growth opportunities remain outside 0:12:54.880 --> 0:12:58.040 the US. Pull in a pattern investment manager of International 0:12:58.080 --> 0:13:02.080 concentrated Growth Strategy for join US Now you heard what 0:13:02.160 --> 0:13:05.040 shep was reporting on there. You know, we often frame 0:13:05.960 --> 0:13:08.840 the US China AI race in terms of who has 0:13:09.000 --> 0:13:12.480 better chips, who is doing the most work on advanced models, 0:13:13.040 --> 0:13:16.840 But access to capital seems an important swing factor right now. 0:13:18.520 --> 0:13:21.400 I mean that's always been the case that capital matters, 0:13:21.440 --> 0:13:24.720 and particularly in a high CAPEX or CAPEX intensive industry 0:13:24.880 --> 0:13:26.800 like artificial intelligence. 0:13:27.840 --> 0:13:28.920 I'd maybe take a step back. 0:13:28.960 --> 0:13:31.280 I think for long term investors of what really matters 0:13:31.320 --> 0:13:35.200 is more finding outliers, and those outliers will the naturally 0:13:35.280 --> 0:13:38.280 have greater access to capital because they are fundamentally better 0:13:38.559 --> 0:13:40.880 businesses in some ways, I actually think I might be 0:13:40.920 --> 0:13:42.560 a bit of a boring guest for you today because 0:13:42.559 --> 0:13:44.280 I'm going to be repeating quite a lot of older 0:13:44.320 --> 0:13:45.720 information rather than giving. 0:13:45.600 --> 0:13:46.440 You new news. 0:13:46.559 --> 0:13:49.800 But I think increasingly market participants tend to be conflating 0:13:50.000 --> 0:13:51.719 new and important, and. 0:13:51.679 --> 0:13:53.840 It's particularly easy to do an AI. 0:13:53.840 --> 0:13:56.559 Given the piece of change and growth, and it's exacerbated 0:13:56.640 --> 0:14:00.280 by structural market dynamics. I think, you know, sixty percent 0:14:00.280 --> 0:14:03.200 of US investing has done through passive vehicles, seventy five 0:14:03.240 --> 0:14:06.960 percent of trading volumes from quant funds, and there's increasing 0:14:07.000 --> 0:14:10.760 retail participation so markets have never been faster and noisier 0:14:10.840 --> 0:14:13.240 in being able to take that step back and focus 0:14:13.360 --> 0:14:16.520 on the fundamental attributes of a company. What are what 0:14:16.600 --> 0:14:19.040 industry are they trying to disrupt? What new industry are 0:14:19.040 --> 0:14:22.560 they creating? Are they investing in innovation over the long term? 0:14:22.840 --> 0:14:25.840 And long term here means five or ten years, because 0:14:25.960 --> 0:14:29.520 true change takes decades in not quarters. I think those 0:14:29.560 --> 0:14:31.480 are the kinds of businesses that are going to grow 0:14:31.520 --> 0:14:34.080 well in the long term, regardless of which industry they're in. 0:14:35.120 --> 0:14:37.240 Okay, so I'm happy to park the new for a 0:14:37.240 --> 0:14:39.400 second and stick with the important. I did spend a 0:14:39.400 --> 0:14:41.280 bit of time going through the holdings in your funds. 0:14:41.360 --> 0:14:45.800 So two interesting parallel case studies. Is TSMC is a 0:14:45.880 --> 0:14:49.320 top holding, right as is sk Heinex on the memory side. 0:14:49.720 --> 0:14:52.720 The case studies in that big take they're outlined are 0:14:53.200 --> 0:14:56.960 CXMT on the memory side, compare with sk and also 0:14:57.120 --> 0:15:00.000 China's efforts to have domestic manufacturing capacity. 0:15:01.120 --> 0:15:02.680 How would you sort of interpret that. 0:15:03.840 --> 0:15:06.880 I think China's been a tremendous engine for growth and 0:15:06.920 --> 0:15:09.440 disruption and innovation for a very long time, and I 0:15:09.440 --> 0:15:10.440 certainly wouldn't. 0:15:10.080 --> 0:15:11.160 Want to bet against China. 0:15:11.200 --> 0:15:14.600 Indeed, we have holdings in China such as BID and 0:15:14.680 --> 0:15:18.840 Pinduo Duo and Tensent, and they're tremendous companies. But I 0:15:18.880 --> 0:15:23.040 think companies like TSMC and sk Heinex and ASML are 0:15:23.080 --> 0:15:23.680 almost in a. 0:15:23.680 --> 0:15:24.480 League of their own. 0:15:24.560 --> 0:15:28.960 TSMC in particular has created effectively monopoly at the leading 0:15:29.040 --> 0:15:31.480 edge of chips, and that's going to be very difficult 0:15:31.480 --> 0:15:34.520 to disrupt, not just because of access to capital, which 0:15:34.560 --> 0:15:37.160 is a limiting factor still given the amount of money 0:15:37.200 --> 0:15:40.640 it takes to build a leading node fab, but also 0:15:40.720 --> 0:15:44.480 because there's so much inherent process knowledge that TSMC has 0:15:44.520 --> 0:15:47.080 built up over decades, and that is incredibly hard to 0:15:47.120 --> 0:15:50.080 replicate even if Chinese companies had access to a lot 0:15:50.080 --> 0:15:52.160 of the equipment that they need, which they simply do 0:15:52.240 --> 0:15:55.080 not because of export controls. And I think a similar 0:15:55.120 --> 0:15:58.200 story is probably going to happen with sk Heinex, where 0:15:58.520 --> 0:16:01.280 a growing proportion of the revenue and earnings are coming 0:16:01.320 --> 0:16:05.360 from HBM high bandwidth memory, which is very complicated to 0:16:05.400 --> 0:16:10.840 make again requires quite complex processes and equipment, and CSMT 0:16:11.040 --> 0:16:13.240 doesn't actually have access to a lot of that equipment 0:16:13.320 --> 0:16:16.880 yet now will they be able to replicate it over time? Perhaps, 0:16:17.480 --> 0:16:18.560 but it will take. 0:16:20.280 --> 0:16:22.080 If I was going to give it the sort of 0:16:22.160 --> 0:16:25.760 umbrella label of the AI trade, you know, your non 0:16:25.960 --> 0:16:32.040 US focus is tsmcsml SKHNEX, very very chip concentrated. Where 0:16:32.120 --> 0:16:36.000 is the non USAI opportunity outside of semiconductors that you 0:16:36.040 --> 0:16:36.840 look at right now? 0:16:37.800 --> 0:16:40.400 I mean there's a number of them, but I'd perhaps 0:16:40.400 --> 0:16:43.960 pull out two really exciting ones that actually reported relatively recently. 0:16:44.040 --> 0:16:45.520 So I am going to give you some new. 0:16:45.440 --> 0:16:49.400 News, please, and that's Shopify on the one hand, and 0:16:49.480 --> 0:16:50.840 Mericado Libra on the other hand. 0:16:50.920 --> 0:16:52.520 I'd contrast them again because. 0:16:52.280 --> 0:16:55.560 I think that there's some recognition that what Shopify is 0:16:55.600 --> 0:16:59.640 doing with AI is bearing fruit so fundamentally immediate complexity 0:16:59.680 --> 0:17:02.960 from and consumers. And what AI does is it introduces 0:17:03.000 --> 0:17:06.879 ever more complexity into the shopping journey, so increasing the 0:17:06.920 --> 0:17:08.800 autonomous agents are capable. 0:17:08.440 --> 0:17:09.960 Of making decisions for consumers. 0:17:10.000 --> 0:17:11.919 That means that you need more of a source of 0:17:12.040 --> 0:17:14.359 ground truth for those agents to be able to rely 0:17:14.480 --> 0:17:18.639 on when offering up potential purchases to their users. So 0:17:18.760 --> 0:17:23.000 catalog shopifies record of all the items that merchants has 0:17:23.119 --> 0:17:27.040 and all the metadata associated with that is showing two 0:17:27.119 --> 0:17:32.200 times higher conversion on orders than simply scraping website data 0:17:32.320 --> 0:17:35.679 when AI agents are involved, and that's tremendous for a 0:17:35.720 --> 0:17:40.760 company that monetizes based on GMV. On the other hand, 0:17:40.800 --> 0:17:43.960 I put Marcado Libro where it's almost a classic example 0:17:44.000 --> 0:17:45.879 of again a lot of investors are not taking the 0:17:45.920 --> 0:17:48.400 long term view here, because what Marcado Libra is doing 0:17:48.480 --> 0:17:50.640 is something they've done multiple times in the past, where 0:17:50.640 --> 0:17:53.879 they're investing substantially and growing users because they see this 0:17:54.320 --> 0:17:57.320 as a really critical inflection point in the markets. And 0:17:57.359 --> 0:18:00.160 so they're seeing a very strong GMV growth, very strong 0:18:00.240 --> 0:18:05.560 use your growth on the back of lower shipping requirements 0:18:05.920 --> 0:18:08.920 and lower take rates for merchants. And at the same 0:18:09.040 --> 0:18:11.720 time they're investing in AI in order to speed up 0:18:11.760 --> 0:18:14.800 the cadence of development internally, so they've seen seventy five 0:18:14.880 --> 0:18:18.960 percent higher deployment of code internally at the same time 0:18:19.320 --> 0:18:21.159 as the number of rollbacks. 0:18:20.640 --> 0:18:21.359 Has gone down. 0:18:21.480 --> 0:18:24.199 So not only are they moving faster, they're moving out 0:18:24.240 --> 0:18:27.920 of higher quality and I think that's that's really exciting, 0:18:28.240 --> 0:18:30.600 and the market probably isn't recognizing. 0:18:30.000 --> 0:18:33.840 That Shopify has US listed shares but is a Canadian company. 0:18:33.840 --> 0:18:38.320 Mircado Libre and Argentinian multinational fully in paddin of Bailey 0:18:38.359 --> 0:18:41.320 giff back on Bloomberg Tech, Thank you very much. Indeed, 0:18:41.359 --> 0:18:44.600 now coming up, game Stop. CEO Ryan Cohen is said 0:18:44.640 --> 0:18:48.480 to be considering pulling his fifty six billion dollar bid 0:18:48.680 --> 0:18:51.119 for eBay. We have the details of that report. Next 0:18:51.400 --> 0:18:52.360 the cisplom VEG Tech. 0:18:56.920 --> 0:18:59.760 I'm not going to call my shots, but we're coming 0:19:00.119 --> 0:19:01.280 eBay one way or another. 0:19:06.960 --> 0:19:09.480 That was GameStop CEO Ryan Cohen, with just a month 0:19:09.520 --> 0:19:13.040 ago signaling full speed ahead with his offer for eBay. Today, 0:19:13.280 --> 0:19:17.280 that conversation shifted, with sources telling Bloomberg that Cohen may 0:19:17.359 --> 0:19:20.400 pull the fifty six billion dollar bid and it's considering 0:19:20.440 --> 0:19:24.440 a partnership or joint venture with eBay instead. Bloomberg's Bailey 0:19:24.440 --> 0:19:27.960 Lipshaltz and Spencer Sopa join us now with the details. Bailey, 0:19:27.960 --> 0:19:29.320 I'm going to start with you on the kind of 0:19:29.320 --> 0:19:32.200 deal side of this. We're reporting that he is considering 0:19:32.240 --> 0:19:35.600 pulling the bid. There's the added layer that GameStop is 0:19:35.600 --> 0:19:38.000 one of the EBA's biggest shareholders. Just go over that 0:19:38.040 --> 0:19:39.080 side of what we're reporting. 0:19:39.200 --> 0:19:42.320 Yeah, as you mentioned, potentially pulling a bid, potentially pursuing 0:19:42.359 --> 0:19:44.800 a joint venture, something that Ryan Cohen was very vocal 0:19:44.800 --> 0:19:47.840 about the synergies in his mind that GameStop and eBay 0:19:47.880 --> 0:19:48.199 would have. 0:19:48.480 --> 0:19:50.920 To your point, GameStop is. 0:19:50.840 --> 0:19:54.360 The second largest shareholder of eBay, right behind Vanguard, obviously 0:19:54.680 --> 0:19:56.440 a lot of passive money there, with his stake just 0:19:56.520 --> 0:19:59.080 under ten percent, so a pretty sizable stake in the company. 0:19:59.240 --> 0:20:01.760 GameStop had been doing pretty much everything they could to 0:20:01.880 --> 0:20:05.600 raise capital and try to diversify their offerings, previously leaning 0:20:05.600 --> 0:20:08.480 into things like collectibles, and as you had talked to 0:20:08.560 --> 0:20:11.280 Ryan Cohen about a month ago, really setting insights on 0:20:11.520 --> 0:20:14.000 a deal a takeover of eBay, again, a company that's 0:20:14.160 --> 0:20:15.960 magnitudes larger than Game Stop. 0:20:16.640 --> 0:20:19.399 Right, Spence, I'm reading our report and the idea of 0:20:19.440 --> 0:20:23.200 this joint venture. Ryan Cohen seems to want to leverage 0:20:23.560 --> 0:20:27.880 Game's physical store footprint, you know, explain our reporting there, 0:20:27.880 --> 0:20:30.760 but also some of the history of like where eBay 0:20:30.760 --> 0:20:31.560 would fit in with that. 0:20:33.640 --> 0:20:36.440 Yeah, well, I think the big lesson here is if 0:20:36.440 --> 0:20:38.760 you're going to announce to the world a fifty six 0:20:38.840 --> 0:20:41.840 billion dollar deal, you should make sure you have fifty 0:20:41.840 --> 0:20:47.760 six billion dollars first. But with stores, and again this 0:20:47.800 --> 0:20:49.639 is a big capitulation and We'll have to see what 0:20:49.680 --> 0:20:52.639 eBay thinks about this, but the notion is game Stop 0:20:52.680 --> 0:20:54.840 has a network of stores all over the country and 0:20:54.880 --> 0:20:57.879 people can use those stores to bring in collectibles and 0:20:57.920 --> 0:20:59.720 have things authenticated and such. 0:21:01.080 --> 0:21:03.320 EBAs tried similar versions of that. 0:21:03.400 --> 0:21:06.840 More with like decluttering your closet and garage, like bringing 0:21:06.960 --> 0:21:10.439 your golf clubs to a FedEx location. There was some 0:21:10.480 --> 0:21:13.800 big initiative they had ten years ago. So it's not 0:21:14.320 --> 0:21:17.679 really a fresh idea. And you can just think of 0:21:17.720 --> 0:21:20.840 all the stumbles Amazon has had with physical store space, 0:21:21.240 --> 0:21:24.960