Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is live
Speaker 1: from coast to coast with Caroline Hide in New York
Speaker 1: and Ed Lovelow in sentances.
Speaker 2: Go this is Bloomberg Tech coming up us Paul's TSMC's
Speaker 2: waiver on essentral gear to its China chip making facility,
Speaker 2: adding further curbs to its semiconduction production capabilities, plus.
Speaker 3: Tech stock slide to start September im in a global
Speaker 3: sell off with all Magnificent seven names in the red.
Speaker 3: We dig into the fourth day of losses for Nvidio,
Speaker 3: and we speak.
Speaker 2: With the CEO of Crypto dot com about a new
Speaker 2: partnership with Trump Media.
Speaker 3: So first we check in on these markets which are
Speaker 3: under pressure from a global perspective. This is in many
Speaker 3: ways the bond market that is a tail that wags
Speaker 3: the dog when it comes to the equity market. Bond
Speaker 3: markets sell off why, particularly in the UK, we're worried
Speaker 3: about ability of governments to repay debt at the moment,
Speaker 3: but we are seeing just a risk of tone to
Speaker 3: this September start, and we're looking at big tech off
Speaker 3: by one and a quarter percent. Magnificent seven last time
Speaker 3: I checked, Ed all in the red.
Speaker 4: In particular in video, there's.
Speaker 2: Market sentiment and then there's news flow. In the show,
Speaker 2: we're going to talk about Tesla three pieces data from China,
Speaker 2: Bloomberg reporting on India launch and master Plan Part four
Speaker 2: in Vinya. Maybe it's a post earnings thing. There is
Speaker 2: anxiety broadly about the mag seven names and concentration risk
Speaker 2: at the index level. And then TSMC. We just broke
Speaker 2: the story the US pulling a key waiver for TSMC
Speaker 2: to get key gear to a pretty much sole facility
Speaker 2: for chip making in China. I want to get the details.
Speaker 2: Let's bring in Bloomberg Senior editor Mike Shephard and Mike,
Speaker 2: what's the need to know here specifically on TSMC in China.
Speaker 5: Well, this adds at another speed bump for a TSMC,
Speaker 5: and the supplier is in trying to bring equipment, chemicals
Speaker 5: and other things that they need for this facility in Nanjing.
Speaker 5: It is not a major portion of TSMC's overall manufacturing
Speaker 5: picture accounts for a relatively small fraction of the company's revenue,
Speaker 5: and yet it is symbolically significant because the move mirrors
Speaker 5: with the US government announced on Friday, and that is
Speaker 5: that Samsung and sk Heinex would face similar restrictions on
Speaker 5: their facilities in China going forward. All of this takes
Speaker 5: effect at the end of the year. They have until
Speaker 5: December thirty first before these new restrictions snap back into effect.
Speaker 5: What happened, in Essen said, is that the company's lost
Speaker 5: what is considered really a blanket waiver of validated end
Speaker 5: user agreement that they were trusted to be able to
Speaker 5: ship goods and material into those manufacturing facilities in China
Speaker 5: for chip making. That's ending, and it's part of the
Speaker 5: US government's broader effort to restrict China's access, even if
Speaker 5: it's foreign companies making things inside China, to restrict access
Speaker 5: by China overall to advanced technology.
Speaker 3: So, Mike, an additional one thousand or so licenses are
Speaker 3: going to have to be processed every single year by
Speaker 3: US officials.
Speaker 4: But who does that hamper? Who is the supplier here?
Speaker 3: Is it the I mean I think of ASML in Europe,
Speaker 3: is that the knock on effect we see.
Speaker 5: Here, Well, we could see a knock on effect on
Speaker 5: those We looked into the supplier question at the end
Speaker 5: of last week, and it will be a little bit
Speaker 5: of a drag. It's unclear which companies will be affected
Speaker 5: because it's not just ASML, it's even the chemical makers
Speaker 5: and other kinds of suppliers that may face some of
Speaker 5: those speed bumps. Now, as I mentioned the facility that
Speaker 5: TSMC is operate in Nanjing, it is an older grade
Speaker 5: technology there. It's sixteen nanometer chip technology that has been
Speaker 5: out in the market care for really a decade, so
Speaker 5: it may not be the most cutting edge of material,
Speaker 5: but what we're looking out overall is going to be
Speaker 5: some delays. This adds, as you noted, a thousand more
Speaker 5: permits that may need to be in the pipeline and
Speaker 5: approve by a government that is really understrained here in
Speaker 5: Washington from staffing and budget cuts and may not be
Speaker 5: as enthusiastic about issuing those kinds of approvals. We did
Speaker 5: see at the end of last week with the Samsung
Speaker 5: and s k Heinex announcement, an indication from the Commerce
Speaker 5: Department that, look, these approvals are not going to go
Speaker 5: to any sort of equipment or other supplies that may
Speaker 5: be used to upgrade or expand capacity at those facilities,
Speaker 5: So they are interested in keeping things where they are
Speaker 5: rather than allowing expansion or improvement in technology of those plans.
Speaker 3: The US versus China AI race continues Michael Sheppard, We
Speaker 3: appreciate it. Look, let's get the wider context here of
Speaker 3: a tech sector that is facing another day of losses.
Speaker 3: The Magnificent seven names in particular, every single one is
Speaker 3: in the red. Let's get over to bluem executary report
Speaker 3: around va Selica for more in Chicago and the pressure
Speaker 3: point here is one evaluation is it is it more
Speaker 3: the bond market that dictates or just a desire to
Speaker 3: be risk off at this moment.
Speaker 6: Hey, good morning, thanks for having me. I'd say there's
Speaker 6: probably some combination of all of those right now. I
Speaker 6: would just add that most of these mag seven names
Speaker 6: have been very strong performers this year, especially over the
Speaker 6: past few months since the April low. It is a
Speaker 6: natural place for investors to be wanting to take profits,
Speaker 6: especially if there's any sort of broader sense of uncertainty
Speaker 6: or any kind of risk off sediment. This is sort
Speaker 6: of the place you might go first in order to
Speaker 6: take profits just because of how well they've done. Now
Speaker 6: you mentioned valuations, because of how much they've risen over
Speaker 6: the past couple of months. We have gotten to a
Speaker 6: point where a lot of people are starting to feel
Speaker 6: maybe they're a little bit frothy, maybe there's some room
Speaker 6: for consolidation. On the downside, there's a lot of sort
Speaker 6: of sentiment about that right now.
Speaker 2: Ryan, let's focus on in Video is down for a
Speaker 2: full straight day, right, longest streak of decline since since March,
Speaker 2: which on the face of it isn't really that big
Speaker 2: a deal. But there's a lot of focus on the
Speaker 2: terminal this morning about weighting of the S and P
Speaker 2: five hundred and how much of a contribution in Video
Speaker 2: alone made to the gains we've seen inequity markets this year.
Speaker 6: So last week Nviigya came out with this report and
Speaker 6: it was broadly positive, but you did have some questions
Speaker 6: about China revenue. You have some questions about the sustainability
Speaker 6: of growth right now. And I'll say that the report
Speaker 6: was strong enough that we did see people increase their estimates,
Speaker 6: which had the impact of reducing the forward multiple. But
Speaker 6: I think, like you said, this is a stock that's
Speaker 6: done very well this year. It is absolutely enormous in
Speaker 6: terms of market cap and its weight within the major indexes.
Speaker 6: So it does seem like a natural place for investors
Speaker 6: to be taking some profits, especially since we're now past
Speaker 6: the earnings catalyst and it just given the overall weight
Speaker 6: that it has in major indexes, is kind of natural
Speaker 6: that we are sort of feeling the trimmers of that
Speaker 6: just across the overall equity market.
Speaker 2: Those Ryan las Selca, thank you very much. Let's stay
Speaker 2: with video. Anthony saglum Ben and Paraised Financial chief market
Speaker 2: strategist joins us now and I use the phrase concentration risk, Anthony,
Speaker 2: but there's two types of concentration risk. There's Nvidia's waiting
Speaker 2: in key benchmark indexes, right, and then there's the concentration
Speaker 2: risk of where in Vidias derived sales the hyperscalers which
Speaker 2: came up in the print last week. Of those two,
Speaker 2: which is the market most nervous about right now.
Speaker 7: I know I would say, you know, I think it's
Speaker 7: the letter. I think revenue risk when you heard in
Speaker 7: video report and you kind of and I think it
Speaker 7: gets highlighted it very well. The overall numbers were very good.
Speaker 7: There's some obviously uncertainty about the revenue that's being generated
Speaker 7: in China, which kind of brought some of the kind
Speaker 7: of the data revenue down, But at the end of
Speaker 7: the day, the overall picture for AI and in Vidia's
Speaker 7: place in AI is very strong. But it really is
Speaker 7: about execution. And when you kind of dig into the
Speaker 7: numbers and you see the hyperscalers having such a dominant
Speaker 7: role in driving their revenue, you know, mag seven companies
Speaker 7: accounting for forty percent of their revenue or so, you
Speaker 7: have to take a step back because if over time
Speaker 7: investors in those companies want a little bit more payback,
Speaker 7: they want to see return on investment. Uh, they're concerned
Speaker 7: about the cap X that's being spent by these companies.
Speaker 7: Well that's in Vidia's revenue, and so there is a
Speaker 7: little bit of unease around that. But I would point
Speaker 7: out the NANSDAC just finished August up for the fifth
Speaker 7: straight month, and as you guys highlighted, there's been a
Speaker 7: lot of strength in the Magnificent seven names. And so
Speaker 7: September is wall streets hate this month or they hate
Speaker 7: the month of September, and that's what we're kind of
Speaker 7: seeing today. Our view is that technicals are not stretched.
Speaker 7: There is a little bit of risk that markets could
Speaker 7: pull back, but I do believe fundamentals for Nvidia and
Speaker 7: technology as a whole remained very solid.
Speaker 3: I mean, yes, Anthony was seeing in Vidio down on
Speaker 3: two weeks, but over year to date up twenty five percent.
Speaker 3: But the idea that you've got concentration in where the
Speaker 3: revenue comes from for in video, and then you've got
Speaker 3: concentration in video and those mag seven names in ultimate
Speaker 3: rewards that every investor has felt right now, how many
Speaker 3: people are trying to trim that overall concentration in their books.
Speaker 7: You know, I think a lot of traders and institutional
Speaker 7: investors probably got ahead of the seasonal factors that they
Speaker 7: probably looked at some of the earnings or suspected that
Speaker 7: there could be a little bit of volatility around in
Speaker 7: video's earnings. And so I don't think there's a massive
Speaker 7: repositioning happening around in video. But as you mentioned, it's
Speaker 7: eight percent of the S and P five hundred. We've
Speaker 7: seen the NASDAC and the MAGS Magnificent seven have very
Speaker 7: strong performance since the April lows. We're in a weaker
Speaker 7: seasonal kind of factor for the markets, and so I
Speaker 7: think it's just natural that you're seeing a little rotation
Speaker 7: out of big tech. I don't think that's bad for
Speaker 7: the market overall. What we saw in August is areas
Speaker 7: like financials and energy and materials actually did pretty well.
Speaker 7: And when you look at the earnings expectations over the
Speaker 7: third quarter, actual expectations for Nvidia and Big Tech and
Speaker 7: Magnificent seven went up last month, and they actually have
Speaker 7: gone up over the last two months. So when we
Speaker 7: look at fundamentals, we think they're still strong in technology.
Speaker 7: But as I said earlier, it's about execution, and at
Speaker 7: these stretched valuations, investors sho expect a little bit more
Speaker 7: volatility around these really concentrated names that make up a
Speaker 7: lot of the major indexes today.
Speaker 3: Calm Context, Anthony segum Beni, it's great to have you
Speaker 3: on from Americ Price. Thank you kicking off the September trade. Meanwhile,
Speaker 3: coming up Klana, it's preferring to go public after delays
Speaker 3: earlier this year. We look at why the fintech company
Speaker 3: seeks evaluation size fourteen billion dollars.
Speaker 4: This is a blue back tech.
Speaker 3: Klana and its backers are looking to raise more than
Speaker 3: a billion dollars in a highly anticipated IPO as soon
Speaker 3: as next week. And mex Matthew Griffin is with us,
Speaker 3: joining us for more and a week of marketing kicks
Speaker 3: off formally ahead of what could be September the ninth,
Speaker 3: pricing trading September the tenth. What are the key facts
Speaker 3: that we know about this business.
Speaker 8: It's a really interesting road that Klara has taken to
Speaker 8: get here. They started as a sort of comparable to
Speaker 8: PayPal payments company. They rose to prominence during the pandemic
Speaker 8: in buy now, pay later financing for consumer purchases, and
Speaker 8: now just in the last few months, they're really making
Speaker 8: a new push to become a digital bank, to offer
Speaker 8: debit cards, to offer a bank accounts to people. So
Speaker 8: it'll be really interesting to see which peers they end
Speaker 8: up trading, like, who investors have in mind when they're
Speaker 8: thinking about this company, and how each of these businesses
Speaker 8: fit together, how that banking push goes. As we get
Speaker 8: a little bit further out past the IPO.
Speaker 2: I remember covering with Caro twenty twenty one that valuation
Speaker 2: in the private market it's forty six billion or something
Speaker 2: like that. So at the top end it's a fourteen
Speaker 2: billion dollar evaluation. But there's a biggest story about IPO
Speaker 2: environment this week alone. What are you saying.
Speaker 8: We've had a really hot summer at this point. In IPOs,
Speaker 8: I mean, just today you've got filings from Figure, they're
Speaker 8: a blockchain based lending company. Also in financial technology, you've
Speaker 8: got Gemini, which is a crypto exchange, and then you've
Speaker 8: also got Legends that's an engineering and HVAC company backed
Speaker 8: by Blackstone, which is a possible sign that the pipeline
Speaker 8: is broadening out a little bit.
Speaker 4: The reason that's important is, you know.
Speaker 8: A lot of IPOs were paused during the March volatility
Speaker 8: that we saw this spring because of tariffs. Things have
Speaker 8: bounced back. They're looking a little bit more like what
Speaker 8: investors hoped they'd see. But some of the first companies
Speaker 8: we saw go were, for example, e Toro, fintech, you know,
Speaker 8: companies that aren't directly affected by tariffs. So now we're
Speaker 8: seeing more companies. We're seeing companies that offer physical goods
Speaker 8: and services, and so that's potentially a thing that investors
Speaker 8: are going to take as a sign of hope for
Speaker 8: the pipeline this year and for a broader revival.
Speaker 2: Right Bloomberg's Matthew Griffin, great reporting, Thank you very much. Meanwhile,
Speaker 2: fintech firm Resolute, has kicked off a process for some
Speaker 2: employees to sell their shares in the company at a
Speaker 2: seventy five billion dollar valuation. That's according to a memo
Speaker 2: seen by Bloomberg. The secondary sale, we'd value each share
Speaker 2: at one three hundred and eighty one dollars, and sources
Speaker 2: say staff of the firm would be able to sell
Speaker 2: as much as twenty percent of their personal stakes Cara Significant.
Speaker 3: Meanwhile, coming up, the CEO of Crypto dot com is
Speaker 3: joining us. It's going to be talking about the company's
Speaker 3: latest partnership with Trump Media and a new focus on
Speaker 3: the growing sports predictions market. But before that, we get
Speaker 3: back to this market that is in cell off mode.
Speaker 3: Nazak one hundred of by one point four percent. In fact,
Speaker 3: the worst two days sell off we've seen since April
Speaker 3: in video off for four straight days. We haven't seen
Speaker 3: that since March of this year. Another three percent is gone.
Speaker 3: There's a brummeg tech. It's time now for talking tech
Speaker 3: and first up Amazon Well, it's launched its cloud services
Speaker 3: in New Zealand, says it will invest four point four
Speaker 3: billion dollars in data centers in the country.
Speaker 4: Now.
Speaker 3: The move comes as the country is looking to attract
Speaker 3: more foreign investment. The construction, operation and maintenance of the
Speaker 3: data centers expected to add about one thousand full time jobs.
Speaker 4: Plus.
Speaker 3: Lazan has appointed Dmitri Chevalenko, the Cheap Business Officer of Perplexity,
Speaker 3: to its port effective today now. Prior to joining Perplexity,
Speaker 3: Chevalenko previously held senior roles ober at LinkedIn and at Meta.
Speaker 4: But Lazard CEO Peter Orzag says that.
Speaker 3: Dimitri's AI expertise will support its long term strategy and
Speaker 3: cryptocurrency exchange Gemini space station, and it seeks to raise
Speaker 3: as much as three on ore and sixteen point seven
Speaker 3: million dollars in its IPO. The firm, of course, led
Speaker 3: by the Winklevoss Twins, plans to market sixteen point seven
Speaker 3: million shares seventeen to nineteen dollars each, giving the company
Speaker 3: evaluation of some two point two billion dollars at the
Speaker 3: top end of the range.
Speaker 5: ED.
Speaker 2: Let's stick with the digital currency space and bringing Chris Marslick.
Speaker 2: He's the CEO of crypto dot Com, which last week
Speaker 2: announced the partnership with Trump Media and a blank check
Speaker 2: Vehicle to launch a new crypto treasury business its focus
Speaker 2: buying Upcrypto dot COM's own token known as Chronos or Crow.
Speaker 2: I think, Chris, it's one of those stories where we
Speaker 2: start with the basics.
Speaker 4: Where did the idea.
Speaker 2: Come from to do this of a Kronos treasury company,
Speaker 2: Where did it originate?
Speaker 9: I think it's a little bit of a trend by
Speaker 9: now and a pioneer and by micros MicroStrategy, and I
Speaker 9: think every single blockchain from the top, say twenty will
Speaker 9: have a leading treasury company that will be focusing on
Speaker 9: driving demand for it and acquiring as much as physically possible.
Speaker 9: And we thought that partnering with Trump Media to do
Speaker 9: so is just the perfect match.
Speaker 2: So there are a number of initiatives between Crypto dot
Speaker 2: Com and Trump Media or the broader Trump family. Where
Speaker 2: did that relationship start, Who did you first meet and
Speaker 2: how long have you held those relationships?
Speaker 9: So I think it comes dates back a couple of years.
Speaker 9: And you know, we always look forward to working with
Speaker 9: people who are procrypto, who want to help drive this
Speaker 9: industry forward. And I think it has to be said
Speaker 9: that both the current administration and specifically Trum Media Technology
Speaker 9: Group has probably done it out in this space. We've
Speaker 9: helped them exit get on their big contrast strategy with
Speaker 9: a multi billion dollar a bit Com purchase. We help
Speaker 9: them cussid coins, so we provide infrastructure, and this new
Speaker 9: play on cr is just an extension of the relationship.
Speaker 3: Extension of a relationship that broadens out to ETFs, that
Speaker 3: broadens out to payments, a subscription creation. But it also
Speaker 3: broadens out the conversation that people are having about more
Speaker 3: broadly benefits to the Trump's broader family when it comes
Speaker 3: to crypto, Chris, when you're having those conversations with friends
Speaker 3: with family, how do you talk about whether or not
Speaker 3: there might be any conflicts of interest?
Speaker 4: Which I will reiterate.
Speaker 3: The family and indeed spoke to you for the administration
Speaker 3: would say there are none.
Speaker 9: And you know you have to agree with their statements
Speaker 9: because everything is held in brid trusts and this is
Speaker 9: a published company that operates independently, and you know, we
Speaker 9: are still a privately held company. But we love partnering
Speaker 9: with people who to really take this industry forward. So
Speaker 9: I think people need to understand that the administration has
Speaker 9: set a certain agenda which places cryptocurrency industry at the
Speaker 9: very center of it. With setting out a very ambitious
Speaker 9: role for America in this space, and anything we can
Speaker 9: do to help, we'll do so we'll support it.
Speaker 3: What's interesting is you say you're still privately held. What
Speaker 3: are the plans of crypto dot com? More broadly, we're
Speaker 3: just hearing of IPOs of Gemini and the like. Would
Speaker 3: you ever think of an IPO? Would you ever think
Speaker 3: about selling parts of the business?
Speaker 9: Right? I have to admit it's quite tempting to consider
Speaker 9: these options, given how richly the market values crypto companies
Speaker 9: these days. We certainly have the numbers to do so.
Speaker 9: We've done about one point five billion in revenue last year,
Speaker 9: about a billion in gross profit, reinvested about seven hundred
Speaker 9: million of it. So let's say a free had a
Speaker 9: million net profitability this year. I think it's going to
Speaker 9: be better, especially if we see the Federate cut and
Speaker 9: a strong Q four following. So we have the numbers,
Speaker 9: and we've been approached by all the top names in
Speaker 9: them of the investment banks. We want to be a
Speaker 9: very well run company, so we are working on preparing everything,
Speaker 9: but no decisions have been made at this point. We
Speaker 9: think that we actually enjoy operating as a private company.
Speaker 9: It alls us to move really fast. We've got a solid,
Speaker 9: solid baland street, so we don't have to make any
Speaker 9: decisions in a short term.
Speaker 2: Some breaking news this morning that you're looking at starting
Speaker 2: sports prediction markets, particularly for the NFL. That's so interesting.
Speaker 2: There was market reaction from some of the established players
Speaker 2: that in that space. Right, explain how it's going to get.
Speaker 4: It's going to work, but why.
Speaker 9: Look, we think that prediction markets are going to be huge,
Speaker 9: and sports is a part of it, but it's not
Speaker 9: the whole thing. And if there is any company out there,
Speaker 9: a large business that wants to build out a prediction
Speaker 9: market operation, we are the perfect infrastructure partner. We are
Speaker 9: regulated by the CFTC. We've got battle tested trading technology,
Speaker 9: very robust, APIs all the best market makers. We want
Speaker 9: to be the liquidity center for prediction markets on shore
Speaker 9: in the US. So we'll play very aggressively in that space.
Speaker 3: And you're someone who's comfortable perhaps in markets that regulation
Speaker 3: is always trying to catch up with, Chris, it's interesting
Speaker 3: that the CFDC federal courts are still debating whether, ultimately
Speaker 3: sports prediction.
Speaker 4: Markets counter is gambling. How do you think about the
Speaker 4: regulation process? Having given what you've lived through when it
Speaker 4: comes to crypto.
Speaker 9: I think it's news space and it's going to evolve,
Speaker 9: and the regulatory setup is going to have to evolve
Speaker 9: with it. We've gone through this journey with cryptocurrency. We
Speaker 9: are used to being the role of being in the
Speaker 9: role of a trusted counselor to regulators and helping them
Speaker 9: understand how they can do their job effectively while allowing
Speaker 9: market participants to make use of these wonderful instruments.
Speaker 2: Just very quick, Chris, do you expect that this could
Speaker 2: be some sort of meaningful contribution to revenues this year?
Speaker 2: You kindly gave us your financials for last year. Just
Speaker 2: model it out for us.
Speaker 9: I think it's still it's not going to be a
Speaker 9: massive contributor this year, but we're also very aggressive and
Speaker 9: pricing for our partners, Like it's all about building liquidity
Speaker 9: right now. But if you look at what's going to
Speaker 9: be in like five years time, I think it's going
Speaker 9: to be a massive business line for US.
Speaker 3: Crypto dot com CEE Chris Mazlek is great speaking with you.
Speaker 3: Coming against meanwhile coming up Tesla well in underwhelms and
Speaker 3: it's India debut, so much more news on that particular company,
Speaker 3: but we are more broadly looking at Tesla shares by
Speaker 3: one and a half percent. In fact, ed every single
Speaker 3: Magnificent seven name is in the red today. We are
Speaker 3: looking at a market that is under pressure as we
Speaker 3: head into a pretty tumultuous month of September. Checking out
Speaker 3: mag seven off by more than two percent ed.
Speaker 2: Yeah, the Tesla one's so interesting, Like there's three stories
Speaker 2: out there Bloomberg breaking the numbers on what's a pretty
Speaker 2: soft launch for them in India. But again there's this
Speaker 2: like macro level, macro level. Yeah, it's a macro level thing.
Speaker 2: Anxiety about how much concentration risk there is right now,
Speaker 2: particularly within Vidia. We've had some great conversations about that,
Speaker 2: our earlier guest saying that September the most hated month.
Speaker 10: Carol.
Speaker 4: Notable.
Speaker 3: Whether we'll see or not some of the pressure continue
Speaker 3: on in video. Is so good to have your voice
Speaker 3: back on this show as we enter the month of September.
Speaker 3: Four straight days of glosses for the company. This is
Speaker 3: Bloomberg Tech.
Speaker 2: Welcome back to Bloomberg Tech, and we'll get right to
Speaker 2: markets and right to video. It's kind of the biggest
Speaker 2: drag right now, down for a fourth straight session, which
Speaker 2: is the biggest run of decline since March, which actually,
Speaker 2: let's be honest, it's not much to right home about
Speaker 2: other than we've just had a long weekend following in
Speaker 2: Nvidia's earnings print which was last Wednesday. There's this macro
Speaker 2: level anxiety of concentration risk because of Nvidia's waiting and
Speaker 2: other magsv waitings. At the index level, there's still some
Speaker 2: kind of unpicking of what happened at earnings. And thankfully
Speaker 2: for US, Bloomberg's Ian King, who has led semiicinducts of
Speaker 2: coverage at this company since the nineties, joins US onset
Speaker 2: and that's the thing. I don't think anything's really changed
Speaker 2: since Wednesday or Thursday of last week, but the market
Speaker 2: is moving in that general downward direction.
Speaker 11: Yeah. I mean, their earnings was kind of a non
Speaker 11: event in many respects. There was a lot of left
Speaker 11: in the kind of TBD category. We still really don't
Speaker 11: know what's going to happen with China, when that revenue
Speaker 11: is going to come back, how much of it is
Speaker 11: going to come back, but we believe probably will be
Speaker 11: some China revenue. So that was a kind of a
Speaker 11: mixed message. We know that Invidia is still concentrated on
Speaker 11: a few extremely big customers, but again nothing surprising there,
Speaker 11: and fundamental demand, as they said, was okay.
Speaker 3: And in though the broader context that leans into the
Speaker 3: China story is again another headline that hits TSMC's ability
Speaker 3: to get chip equipment, for example, in the country. So
Speaker 3: the US China tension not to mention, of course China
Speaker 3: really leaning into its own domestic creative creativity, whether it's
Speaker 3: innovation on chip design or indeed manufacturing, is that speaking
Speaker 3: to some of this weakness.
Speaker 11: It could possibly, I mean, what it's reminding us of,
Speaker 11: as if we could forget, is that this is a
Speaker 11: very volatile situation and that the trend is towards decoupling,
Speaker 11: that China goes its own way and tries to wean
Speaker 11: itself off American technology. That's something that's been happening and
Speaker 11: this kind of event is a reminder of that and
Speaker 11: obviously long term that is not good for in video
Speaker 11: or any other US technology.
Speaker 2: Stop with Rsie and King, thank you very much, just
Speaker 2: turn to Tesla. Loads of news out on Tesla China
Speaker 2: data month or month change, year and year drop customers
Speaker 2: switching to local rivals. Tesla struggling elshere in Asia. It's
Speaker 2: Indian order numbers disappointing investors, a story that Bloomberg broke.
Speaker 2: And then Elon Musk is downplaying the car business. He
Speaker 2: says Tesla will derive eighty percent of its value from
Speaker 2: the Optimus robot, the still in development. A trio of stories.
Speaker 2: Bloomberg's Craig Trudell joins us from London. Actually, I want
Speaker 2: to start with the India piece of it if we can.
Speaker 2: That's a story that Bloomberg broke, and we have specific
Speaker 2: numbers about initial orders that India has for Tesla. Just
Speaker 2: explain that to us.
Speaker 12: Great, Yeah, just a little over six hundred orders at
Speaker 12: this point, and you know, just to put that number
Speaker 12: into perspective, Tesla delivered roughly that number of vehicles around
Speaker 12: every four hours in the first half, so really really tiny.
Speaker 12: And this is not necessarily a show, right. India is
Speaker 12: a very price price conscious, price sensitive market. There's not
Speaker 12: a lot of demand for more expensive vehicles, and part
Speaker 12: of that, of course has to do with you know,
Speaker 12: tax treatment and tariffs. Tesla's getting some relief from that perspective,
Speaker 12: but not a whole lot. And you know, I do
Speaker 12: think that even with the the sort of relief being
Speaker 12: you know, only so helpful, I think there was still
Speaker 12: some hope or some you know, prayers that maybe you know,
Speaker 12: India would be a source of growth for this company company,
Speaker 12: and it's looking like, you know, a pretty slow start
Speaker 12: for them there.
Speaker 4: I meanwhile, China is not source of growth.
Speaker 3: We've seen yet another dismal monthly numbers in terms of
Speaker 3: four percent lower in terms of units being shipped, not
Speaker 3: to mention Europe's number last week, which was very ugly. Craig,
Speaker 3: all of this just speaks to an ongoing weakness in
Speaker 3: car sales or Tesla.
Speaker 12: Yeah, and I do think, you know, the US, of course,
Speaker 12: will be very interesting to see over the next you know,
Speaker 12: a few weeks. We'll get quarterly deliveries at the beginning
Speaker 12: of next month. I think everyone is, of course counting
Speaker 12: on there being a big pull ahead of people in
Speaker 12: America wanting to take advantage of the tax credits before
Speaker 12: they go away, and Tesla really kind of utilizing that
Speaker 12: for all it's worth. But the big question for me
Speaker 12: is what's on the other side of that. And also,
Speaker 12: you know, even even if we see you know, a
Speaker 12: strong US number, will it be offset by the fact that,
Speaker 12: you know, the China slow down is substantial and the
Speaker 12: europe you know, sales. I think it's safe to refer
Speaker 12: to them as an out and out collapse at this point.
Speaker 2: Craig Tesla's published Master Plan Part four in the last
Speaker 2: twenty four hours. But the bit we're paying attention to
Speaker 2: was some commentary from Mila Musk on X about the
Speaker 2: future of the business. And it's not cars or robotaxis,
Speaker 2: it's humanoid robots.
Speaker 12: Yeah, and I do wonder how much of this is
Speaker 12: you know, an effort on Musk's part to kind of
Speaker 12: paper over and distract from from how much of a
Speaker 12: challenge they're having on the car side. And the question,
Speaker 12: of course, with this potential for optimist is when is
Speaker 12: this thing actually going to be ready for you know,
Speaker 12: actual revenue generation, you know, when anyone's been able to
Speaker 12: pin Elon down on a sort of rough sense of
Speaker 12: a date. He talked back in January about maybe the
Speaker 12: second half of next year. This thing is, you know,
Speaker 12: effective for really cool videos, for little demonstrations, but in
Speaker 12: Elon terms, you know, this thing is not necessarily doing
Speaker 12: something useful yet, And until and unless we see that,
Speaker 12: it's really hard to kind of take him at his
Speaker 12: word that this valuation of the company is going to
Speaker 12: be tied to something that is still just an internal
Speaker 12: developmental project.
Speaker 3: At this point, we're watching those little cool videos as
Speaker 3: you're speaking. Creatudell, Thanks for breaking down all of those
Speaker 3: stories for us. Let's keep the conversation going because Pierre
Speaker 3: Farragho is with US New Street Research had a global
Speaker 3: tech infrastructure. Who has I think it is four hundred
Speaker 3: and sixty five price target on Tesla. Clearly see forty
Speaker 3: percent upside from here. But when you're hearing the master
Speaker 3: Plan part four, are you sing optimists could really be
Speaker 3: eighty percent of revenue?
Speaker 13: Well, optimist is about you know, creating like humanoid robots
Speaker 13: that could take billions of jobs on the planet. So
Speaker 13: as long as you remain vague on timeline and what
Speaker 13: the scenario looks like, yes, it's very easy to imagine
Speaker 13: that Tesla would be first like extended in terms of
Speaker 13: valuation with like a successful robot taxi operation, and then
Speaker 13: of course like a fleet of like hundreds of millions
Speaker 13: of human in robots with dwarf Actually, is the economic
Speaker 13: value of even a robot taxi business. So you have
Speaker 13: to remember that you know this this planned Tesla publishes
Speaker 13: and even likes to comment on, is really like a vision,
Speaker 13: like a stretch vision. Is always been managing managing his businesses,
Speaker 13: bringing up like the very long term visions, and he
Speaker 13: has his way of presented presenting these versions very often
Speaker 13: with like a slightly distorted time timescale, you know when
Speaker 13: he talks about like mass and the conquest of mass
Speaker 13: and the SpaceX and things like that. So you have
Speaker 13: to put the comments in the right context. So today
Speaker 13: we know that the robot taxi business in the most
Speaker 13: boutish case which should be test like in scale with
Speaker 13: robot taxes, doesn't really have significant competition. Given like the
Speaker 13: quality of their cost base, that business would be worth
Speaker 13: multiple trillions than would be already like a multiple as
Speaker 13: the existing motor business. And yes, on top of that,
Speaker 13: a human robot bull case where Tesla dominates the space
Speaker 13: again and human aid robots can take over hundreds of
Speaker 13: millions of jobs, you can easily get like you know,
Speaker 13: to like the large number of trillions, like close to
Speaker 13: ten trillion dollars of valuation. This is what I have
Speaker 13: in my model and what you should bang on beck
Speaker 13: On today.
Speaker 8: Maybe not.
Speaker 2: I spent a lot of time reading the document. It's
Speaker 2: like an economic theory, right, they're basically arguing that because
Speaker 2: Tesla can scale, if they do build all of these things,
Speaker 2: there will be this sort of great economic impact around
Speaker 2: the world to people of all class economic classes. Is
Speaker 2: that something pair that is it analyst covering a specific
Speaker 2: name or specific stock that you kind of model for
Speaker 2: you go, okay, in the future, Tesla is going to
Speaker 2: change the world economy as we know it.
Speaker 13: Yeah, it's a very good it's a great question ed.
Speaker 13: So let's look at you know, like what is tangible
Speaker 13: at Tesla today is that's EOTO business, And let's look
Speaker 13: at what good and is do covering Tesla. You understand
Speaker 13: teslas technological you know leadership, you know, how early is
Speaker 13: it coming to the market, is what kind of deformance,
Speaker 13: what kind of features? And then you measure sort of
Speaker 13: the deformance of Tesla's course based like the cost efficiency.
Speaker 13: And so that's what we've done over the last five
Speaker 13: years looking at Tesla and what you're seeing that Tesla
Speaker 13: came into the market five years ago in large scale
Speaker 13: with really like a cosway that was not that nobody
Speaker 13: could approach, and also with like a performance, like a
Speaker 13: quality of innovations that nobody could approach today. As you
Speaker 13: see in China, local Chinese competitors are actually capable of
Speaker 13: being very competitive with Tesla in terms of innovation and
Speaker 13: in terms of cost as well. We've done very detailed
Speaker 13: analysis of the cost of manufacturing a car, bid and
Speaker 13: others versus Tesla, and what you see that they are
Speaker 13: a bass on par so that type of analytical where
Speaker 13: you can do it on a business that is actually
Speaker 13: ramping today if you look at it like in the
Speaker 13: longer term, it's more difficult to do. But what you
Speaker 13: can get from Tesla is very interesting perspective that by
Speaker 13: having a very very proactive and very integrated model and vision,
Speaker 13: they can actually hit technological and innovation leadership with by
Speaker 13: far the most advanced cause base, which is exactly where
Speaker 13: they are today on the robot Taxta front. They have
Speaker 13: the cheapest platform and the platform that today is you know,
Speaker 13: the jury is still slightly out, but probably like the
Speaker 13: highest platforming platform as well. And then of course Ilan's
Speaker 13: bet is to put Tesla in the same position with
Speaker 13: the human and robot into three years from now.
Speaker 4: Peah, you mentioned China several times.
Speaker 3: I just want to broad out out the conversation briefly.
Speaker 3: When you're looking at TSMC being limited for equipment can
Speaker 3: get in. You cover KLA, I see you cover Tokyo Electron,
Speaker 3: you cover aland research. How much these companies can be
Speaker 3: impacted by US China.
Speaker 13: Well, they're all going to you know, be sitting on
Speaker 13: their hands waiting for like directions of how the negotiation
Speaker 13: and the relationship between the US and China is going
Speaker 13: to be is going to be handled. If you take
Speaker 13: specifically like semicap equipment players, they are generating a lot
Speaker 13: of their revenue still both twenty percent of their revenues
Speaker 13: is coming from China today and to us it's an
Speaker 13: overhand it's a concern. It's probably coming down normalizing over time.
Speaker 13: So we see that as a potential, you know, headwinds
Speaker 13: on their financial performance. But you have to take things
Speaker 13: back to where they are. It's only twenty percent of
Speaker 13: their business. Yeah, that's kind of like a peakish at
Speaker 13: a peak, so it's not like a game changer for them.
Speaker 3: Of course, Pierre fair Good giving us honest on what's
Speaker 3: game changing in China New Street Research.
Speaker 4: We so appreciate it.
Speaker 3: Meanwhile, coming up and recent Horror It's partner Olivia Moore
Speaker 3: joins us discuss the top one hundred gen AI consumeer apps.
Speaker 4: Let's see how many you're using the supreme bak tack.
Speaker 3: And recent Horowitz has again released it's top one hundred
Speaker 3: Jannit of AI consumer apps, fifty AI first Web products
Speaker 3: at fifty top AI.
Speaker 4: First Mobile apps.
Speaker 3: And for that to discuss, we have Olivia Moore joining
Speaker 3: a sixteen Z partner on the consumer team focused on AI.
Speaker 3: We are so thankful because like many in the world,
Speaker 3: we are a wash with the latest, greatest Jenai app
Speaker 3: that we should download and when we should use it.
Speaker 4: What's interesting with.
Speaker 3: Your list is that we're starting to see basically stability.
Speaker 4: We're not seeing a whole host of new names. Each
Speaker 4: iteration app exactly yeah.
Speaker 10: On this version of the list, we only had eleven
Speaker 10: new names of the fifty on web, which was a
Speaker 10: real marked divergence from the last list when it was
Speaker 10: seventeen new names on web. And perhaps most striking to me,
Speaker 10: we've done this list five times now we do it
Speaker 10: every six months, and there were fourteen names that have
Speaker 10: made every single list, which for the fact that we're
Speaker 10: only two years into AI means that we're starting to
Speaker 10: see some really exciting stability.
Speaker 2: Olivia, mister Ela Musk has put in the spotlight recently
Speaker 2: app store methodology, so to the avoidance of any doubt,
Speaker 2: which you just go through the methodology of how Andrees
Speaker 2: and Horowitz has put this list together for the fifth time.
Speaker 10: I believe, Yeah, it's all objective data. So for our
Speaker 10: web list, we use a provider called similar Web. We
Speaker 10: rank every single website globally by the number of monthly visits,
Speaker 10: and then we take the first fifty that are generative
Speaker 10: AI native. And then on the mobile app side, we
Speaker 10: use another provider called sensor Tower. We rank them by
Speaker 10: monthly active users, and we take the first fifty again
Speaker 10: that are AI native.
Speaker 2: So there are some takeaways. Right chat GPT still dominates,
Speaker 2: as you can see on the left hand side of
Speaker 2: the screen, Google is making progress. The way I explained
Speaker 2: this to Caroline this morning and how I approach it
Speaker 2: is I'm starting to see these tools like streaming subscriptions.
Speaker 2: I use all of them, some of them I pay for.
Speaker 2: Bloomberg gives me a corporate access to chat GPT. Some
Speaker 2: of them are free, but at some point I've got
Speaker 2: to decide which I don't want any more. Does the
Speaker 2: data show any of that, like short term use moving
Speaker 2: to others.
Speaker 10: Yeah, it's really interesting. There's a lot of cross app usage.
Speaker 10: Quite a few general LM products made the list, and
Speaker 10: you might expect that consumers would pick one of these,
Speaker 10: like chat GBT or Perplexity or claud or pep seek instead.
Speaker 10: What we're seeing in the early days is consumers are
Speaker 10: using all of them, but maybe for different reasons every time.
Speaker 10: But we're also seeing the emergence of things like consumer
Speaker 10: subscriptions that cost two hundred dollars a month to use
Speaker 10: the best version of CHATCHYBT in Perplexity, and so for
Speaker 10: moving towards that version of the world, we might expect
Speaker 10: to see them have to make a choice, so you're
Speaker 10: not paying thousands and thousands of dollars per month across
Speaker 10: your AI subscriptions.
Speaker 3: So blend this with a sixteen z's own perspective here
Speaker 3: on whether there will be an NLM to rule them all,
Speaker 3: whether we'll all end up defaulting to ultimately CHATCHYBT, or
Speaker 3: whether it's Gemini or Glock whether actually we will be
Speaker 3: specific and we will see that there are lanes for
Speaker 3: different apps for different use cases and they will have
Speaker 3: different benefits.
Speaker 4: Yeah.
Speaker 10: I think the interesting thing about this list is CHATCHYBT
Speaker 10: is definitely in the lead. So the number two Gemini
Speaker 10: has about twelve percent of the traffic on web, so
Speaker 10: it's a very big drop off between number one and
Speaker 10: number two. But there's also an incredibly long tail here.
Speaker 10: There's app on this list that have never raised funding.
Speaker 10: There's apps on this list that have millions of users
Speaker 10: but maybe do something as specific as removing a background
Speaker 10: from a photo or generating a PowerPoint presentation. So I
Speaker 10: think our view as a firm is that we have
Speaker 10: the best models in the world from OPENINGI, Google and
Speaker 10: many other companies that they're making available through API. Some
Speaker 10: of them are even being open sourced, and that allows
Speaker 10: companies and developers that are more opinionated about products to
Speaker 10: build things that will serve customers for more specific use cases,
Speaker 10: and in many cases those customers are probably more likely
Speaker 10: to pay versus maybe using the free version of something
Speaker 10: like a CHATGBT.
Speaker 3: I think what's interesting is for the last couple of
Speaker 3: weeks we've been obsessed about how enterprise is adopting or
Speaker 3: not adopting to efficiency. The MIT report the fact that
Speaker 3: ninety five percent of pilots are ultimately not bringing ROAI.
Speaker 3: When you're thinking about consumer perspective here that some of
Speaker 3: them names.
Speaker 4: Are sort of enterprise and nature.
Speaker 3: Are people getting return on their AI investment to the
Speaker 3: amount that they need to?
Speaker 10: Yeah, we're seeing a big kind of what I call
Speaker 10: the great expansion of consumer software, which is really new
Speaker 10: in the AI era, which is that previously you would
Speaker 10: see consumer companies take years, if not decades to actually
Speaker 10: transition their software to enterprise. Think about Canva took them
Speaker 10: eight plus years to even have a teams plan. Now
Speaker 10: we have companies like eleven Labs that are going from
Speaker 10: zero to hundreds of millions of revenue in two years
Speaker 10: or less. And many of these companies are actually making much,
Speaker 10: if not most, of their revenue from enterprises, which is
Speaker 10: really exciting. We do take a look at the retention data,
Speaker 10: and our data shows that for generative AI products, there's
Speaker 10: a lot of tourism. So if you're a free user,
Speaker 10: you're probably less likely to retain than you would be
Speaker 10: on a comm or a Duolingo or PREAI subscription. But
Speaker 10: if you're a paid user, you're just as likely as
Speaker 10: to retain, So that suggests that the ROI is there,
Speaker 10: at least for those consumer and prosumer users.
Speaker 2: Olivia, we've told you what we're up to. Which apps
Speaker 2: are you using and how are you using them?
Speaker 10: I have a lot of appleing use. I publish my
Speaker 10: whole stack recently. I am a power user of Chat GBT.
Speaker 10: I'm also a power user of Google on their Ultra subscription.
Speaker 10: I'm a big fan of vo three and the new
Speaker 10: Nano Banana Photoshop esque video editing image editing model that
Speaker 10: they launched. I also use a lot of products like
Speaker 10: Krea for creative tools. Gamma used to create almost all
Speaker 10: of my presentations. There's everything as specific as a product
Speaker 10: now called Happenstance that lets you search through your network
Speaker 10: much more easily than LinkedIn. I would say my top
Speaker 10: advice for anyone interested in AI is just to try
Speaker 10: the products because it's absolutely the easiest way to learn.
Speaker 3: When you're thinking about investing. I look at you know
Speaker 3: some of the names on here. Mid Journey is a
Speaker 3: fascinating case study which has never taken money and been
Speaker 3: able to scale and hold on and retain users. Where
Speaker 3: do you think the best dollar is allocated from an
Speaker 3: A sixteen zier the.
Speaker 10: Moment, Yeah, it's a good question. We invest both in
Speaker 10: the model companies themselves, many of which have grown extremely quickly,
Speaker 10: and then at the application layer companies. I think we're
Speaker 10: very focused to your earlier point about companies that are
Speaker 10: vertically oriented and our building for specific users. We talk
Speaker 10: about founders that have kind of an earned secret or
Speaker 10: a special insight and are almost maniacal about building.
Speaker 4: For a specific user.
Speaker 10: And so often these are not the extremely general, broad
Speaker 10: based products that you can do anything on, but are
Speaker 10: products that are really really specific for one or two
Speaker 10: things that users might want to do and almost become
Speaker 10: their system of record or a new core workspace or
Speaker 10: canvas for them to get things done.
Speaker 2: Olivia more Partner and jreson Horror. It's great to have
Speaker 2: you on Boomberg Tech. Thank you very much. Now coming up,
Speaker 2: these beautiful images are from the Hubble telescope, but plans
Speaker 2: for telescopes that could give us an even deeper view
Speaker 2: of space could be delayed following US budget cuts. We're
Speaker 2: going to talk about that next stay with us. This
Speaker 2: is Bloomberg Tech.
Speaker 3: Cuts by the Trump administration are threatening to delay construction
Speaker 3: of a new powerful telescope, one that scientists say can
Speaker 3: fastly expand our understanding of the universe. US astronomers warn
Speaker 3: the setback may give China and edge in space research
Speaker 3: as bring in bluemogs. Bruce Einhorn, who's been covering this story,
Speaker 3: It's a beautifully written sort of deep dive into what
Speaker 3: these funding cuts could mean.
Speaker 4: But why US versus China? Why is this a worry
Speaker 4: from a national security perspective?
Speaker 14: Bruce, Well, the US has long been a leader in astronomy,
Speaker 14: dating back to the end of World War Two, and
Speaker 14: it's part of a broader pushed by the United States
Speaker 14: to invest in science. And you know, there are lots
Speaker 14: of spillover effects from having those sorts of investments. China
Speaker 14: is making big investments in science now. There is concern
Speaker 14: among many scientists that Trump administration's plans to reduce spendings,
Speaker 14: say by the National Science Foundation, will have in effect
Speaker 14: not just on the projects themselves, but also on the
Speaker 14: scientific ecosystem of post and graduate students and all the
Speaker 14: people who are there to make sense of all the
Speaker 14: data that gets.
Speaker 2: Generated Bruce, just really quick, is there any evidence that
Speaker 2: the US government kind of heeds the warning from the
Speaker 2: scientific community here in America.
Speaker 14: Well, we're still waiting to find out just what the
Speaker 14: budget allocation will be. Of course, the budget process is
Speaker 14: still very much underway. The administration had proposed a pretty
Speaker 14: big cut, more than fifty percent to the National Science
Speaker 14: Foundation as part of its budget proposal. There has been
Speaker 14: some pushback from Capitol Hill about that, and we're still
Speaker 14: waiting to see just how much money will get allocated.
Speaker 2: Bloomberg's Bruce Einhorn, thank you very much. That does it
Speaker 2: for this edition of Bloomberg Tech. Carrow markets in focus
Speaker 2: because of the mag seven declines. But what an episode
Speaker 2: it has been to start a short week.
Speaker 3: Only twelve stocks eleven now in the green run then
Speaker 3: as that one hundred.
Speaker 4: Don't forget to check out all.
Speaker 3: Of our coverage on our podcast to find on the
Speaker 3: terminal as well as online on Apple Spotify.
Speaker 4: And iHeart great to have you back in. This is
Speaker 4: Boomberg Tech