WEBVTT - Tech Tumbles as Data Center Buildout Faces New Scrutiny 0:00:05.610 --> 0:00:09.150 Bloomberg Tech is live from the heart of Silicon Valley 0:00:09.690 --> 0:00:11.980 with Ed Ludlow in San Francisco. 0:00:14.230 --> 0:00:16.230 This is Bloomberg Tech. I'm Tim Stenevec in New York, 0:00:16.390 --> 0:00:20.050 in for Ed Ludlow. Coming up, it is a market meltdown. 0:00:20.070 --> 0:00:24.099 The NASDAQ 100 seeking more than 6% as the chipmaker 0:00:24.140 --> 0:00:29.680 sell-off deepens. NVIDIA currently down under pressure more than 8%. Plus, 0:00:29.720 --> 0:00:33.390 Agility Robotics hits the public market. CEO Peggy Johnson joins 0:00:33.430 --> 0:00:37.490 us live in the hour. And post-midterm jitters, taking full 0:00:37.570 --> 0:00:41.309 control of Elon Musk-led companies, both SpaceX and Tesla, tumbling 0:00:41.790 --> 0:00:45.430 again today. Shares losing more than $ 430 billion from their 0:00:45.470 --> 0:00:49.729 combined market values. SpaceX down more than 10%. Tesla down 0:00:49.750 --> 0:00:52.410 almost 11%. First, though, we got to check in on 0:00:52.430 --> 0:00:52.970 these markets. 0:00:53.050 --> 0:00:53.470 Look at that. 0:00:53.510 --> 0:00:57.840 The NASDAQ 100 down right now. 5.6%, just an ugly 0:00:57.900 --> 0:01:00.480 morning for tech stocks. It was down earlier as much 0:01:00.520 --> 0:01:04.560 as 6.2%. At its lows, the worst intraday going back 0:01:04.600 --> 0:01:08.959 to March of 2020, the depths of the pandemic. Chipmakers 0:01:09.140 --> 0:01:12.459 weighing on the index. Nvidia, Micron, and AMD all weighing 0:01:12.500 --> 0:01:16.500 down the NASDAQ 100. The SOX also getting pummeled, now 0:01:16.540 --> 0:01:20.680 down about 38%. From that June record, investors just bailing 0:01:20.700 --> 0:01:23.440 from the sector on speculation that the Democratic sweep in 0:01:23.480 --> 0:01:26.000 Congress will usher in a new era of regulation for 0:01:26.020 --> 0:01:28.690 the AI industry. In the S & P 500, there 0:01:28.770 --> 0:01:31.350 are some areas of green investors rushing for safety in 0:01:31.370 --> 0:01:34.429 defensive areas like consumer staples and health care, which are 0:01:34.510 --> 0:01:37.470 ever so slightly higher today. Let's jump right into these 0:01:37.530 --> 0:01:40.610 chip makers, though. Joining us now from San Francisco is 0:01:40.630 --> 0:01:43.730 Bloomberg's Ian Kink. Ian, what is today, I want to 0:01:43.750 --> 0:01:45.870 get to AMD, I want to get to Qualcomm, but 0:01:45.890 --> 0:01:48.970 I want to start with what's happening with the chip 0:01:49.070 --> 0:01:53.260 sector today. What is driving the flight from the sector? 0:01:54.490 --> 0:01:57.470 I mean, the industry itself had already told us, look, 0:01:57.670 --> 0:02:01.370 we are concerned that we can't get enough data centers 0:02:01.410 --> 0:02:04.830 built fast enough to meet demand, to house all of 0:02:04.870 --> 0:02:08.410 these chips we're making. Power is the issue. Building the 0:02:08.450 --> 0:02:11.790 buildings is the issue. Getting the land, getting the approval. 0:02:12.130 --> 0:02:14.730 This was already in people's minds. And now you have 0:02:14.770 --> 0:02:18.180 a change in the political landscape, which indicates change. that 0:02:18.190 --> 0:02:21.700 that issue may become even more difficult, that things may 0:02:21.980 --> 0:02:25.160 take longer. And so what we've seen is a bet 0:02:25.200 --> 0:02:27.300 that things are going really fast at the speed of 0:02:27.320 --> 0:02:30.380 the chip industry. And now we're seeing a pause. We're 0:02:30.400 --> 0:02:34.109 seeing people express concern that maybe they can't go as 0:02:34.230 --> 0:02:35.589 fast as they want to. 0:02:35.889 --> 0:02:39.109 Does it change your view of the cycle, of where 0:02:39.150 --> 0:02:40.350 we are in the build-out? 0:02:41.370 --> 0:02:44.430 I mean, I don't have a view of the cycle. It's, 0:02:44.790 --> 0:02:47.050 you know, we've seen these patterns. You and I have 0:02:47.090 --> 0:02:48.550 spoken about these. 0:02:48.190 --> 0:02:49.290 Patterns exist, right? 0:02:49.310 --> 0:02:54.680 The chip industry has always experienced this cyclical pattern. inability 0:02:54.740 --> 0:02:57.919 to match supply and demand. It's just a factor of 0:02:57.980 --> 0:03:01.100 its existence over the last 50 years. Even people like 0:03:01.139 --> 0:03:05.450 Jensen Wang, the CEO of NVIDIA, and Lisa Su, the 0:03:05.490 --> 0:03:07.669 CEO of MV, have said, look, at a certain point, 0:03:07.990 --> 0:03:11.330 supply and demand is going to move in a different direction, 0:03:11.370 --> 0:03:13.140 and we're going to go back into these kind of 0:03:13.200 --> 0:03:16.700 situations that we've been in before. The difference this time 0:03:16.740 --> 0:03:20.420 has been, well, the extent to which demand is strong 0:03:20.480 --> 0:03:24.060 and how long that would last. We're now seeing other concerns, 0:03:24.120 --> 0:03:27.950 other concerns that would indicate that the actual process of 0:03:28.010 --> 0:03:30.769 making this all real is becoming more difficult. 0:03:31.090 --> 0:03:35.490 I promised we'd get to AMD and Qualcomm. AMD down 15.8%, 0:03:35.490 --> 0:03:40.620 Qualcomm down right now 13.5%. Just on Qualcomm, the challenge 0:03:40.690 --> 0:03:43.560 that the company is facing, is it idiosyncratic or is 0:03:43.600 --> 0:03:44.680 it part of a bigger story here? 0:03:45.780 --> 0:03:49.000 Qualcomm has been a stock that's suffered this year, even 0:03:49.080 --> 0:03:52.640 when the chip stocks were up 60, 70 percent. And 0:03:52.680 --> 0:03:56.270 that's because it's in transition. Its smartphone market that it 0:03:56.390 --> 0:03:59.270 has depended on for years and been so successful is 0:03:59.390 --> 0:04:01.730 not a growth market at the moment. There are other 0:04:02.470 --> 0:04:04.970 issues related to the supply chain that are holding its back. 0:04:05.270 --> 0:04:07.570 And it's in a transition. It's becoming more of an 0:04:07.730 --> 0:04:12.560 automotive chip maker. It's becoming more of a networking chip maker, 0:04:12.820 --> 0:04:15.320 but these things take time, and in the process of 0:04:15.360 --> 0:04:18.080 that transition, you're going to see margins squeezed, which is 0:04:18.120 --> 0:04:19.560 what people are reacting to today. 0:04:20.070 --> 0:04:23.250 Bloomberg's Ian King out there in San Francisco. Ian, thanks 0:04:23.290 --> 0:04:24.830 so much. I know you've got a busy day coming 0:04:24.870 --> 0:04:26.810 up ahead of you. Appreciate your time. I want to 0:04:26.830 --> 0:04:30.050 dive deeper into tech markets. Joining us now is Anna Rathbun, 0:04:30.150 --> 0:04:33.130 founder and CEO of Grenadilla Advisory. Anna, Ian doesn't have 0:04:33.170 --> 0:04:35.510 a view on where we are in the cycle, but 0:04:35.540 --> 0:04:38.220 I'm wondering if you do and if that changed given 0:04:38.260 --> 0:04:39.580 what we saw happen on Tuesday. 0:04:39.600 --> 0:04:42.730 Yeah. You know, I think it's a hiccup to the 0:04:42.790 --> 0:04:47.820 broader market cycle of building these AI infrastructure buildings, data centers, 0:04:48.710 --> 0:04:51.130 And it's a big hiccup. And that's partly because the 0:04:51.190 --> 0:04:55.920 markets have sort of priced in an undisrupted build out 0:04:56.040 --> 0:04:57.350 of AI. 0:04:57.040 --> 0:04:58.000 Into the future. 0:04:58.180 --> 0:05:00.940 And now we have a disruption potentially in the form 0:05:01.220 --> 0:05:09.100 of more legislation potentially, moratoriums, tax breaks might go away, 0:05:09.120 --> 0:05:11.520 you name it. So I think this is just the 0:05:11.560 --> 0:05:15.040 market readjusting itself and correcting itself for when it's going 0:05:15.100 --> 0:05:17.820 to get paid. for a lot of these investments that 0:05:17.860 --> 0:05:19.500 we've been making into the data centers. 0:05:19.560 --> 0:05:21.260 Okay, so make the call for us. How big of 0:05:21.300 --> 0:05:22.570 a correction is this going to be? 0:05:23.589 --> 0:05:28.790 Well, you know, I think some stocks today, even just today, 0:05:28.850 --> 0:05:31.790 they're in correction, if not starting yesterday. So from a 0:05:31.850 --> 0:05:35.360 stock level, there are corrections already happening. But I think 0:05:35.440 --> 0:05:40.339 it's useful to look at this disruption from two different perspectives. One, 0:05:40.620 --> 0:05:43.679 there are companies that are going to get paid Simply 0:05:43.740 --> 0:05:47.570 because there's CapEx, right? So, you know, hyperscalers have been borrowing, 0:05:47.630 --> 0:05:50.670 we know they're going to CapEx, you know, companies like NVIDIA, 0:05:50.750 --> 0:05:54.330 chip makers, construction, anything that goes into the data centers, 0:05:54.870 --> 0:05:58.090 they're going to get paid, even as the data center build. 0:05:57.930 --> 0:06:00.010 Out slows down, it's still going to get built. 0:06:00.670 --> 0:06:03.510 The companies that are going to get paid when the 0:06:03.690 --> 0:06:07.279 data center is done, when it comes live, those are 0:06:07.300 --> 0:06:09.340 going to be delayed for a long time and there 0:06:09.400 --> 0:06:12.159 isn't going to be cash inflow that they were expecting sooner. 0:06:12.220 --> 0:06:13.200 Now it's going to be later. 0:06:13.440 --> 0:06:15.960 So if you look at it from those two perspectives, 0:06:16.260 --> 0:06:18.760 the companies are going to react differently and stock market 0:06:18.820 --> 0:06:22.910 is going to ultimately, after today's and yesterday's knee-jerk reaction, 0:06:23.190 --> 0:06:25.030 price those things in differently, in my opinion. 0:06:25.110 --> 0:06:28.010 Do the midterms change your thesis long-term at all about 0:06:28.050 --> 0:06:28.890 where you're putting your money? 0:06:29.990 --> 0:06:33.950 No, I do think that this is a momentary disruption 0:06:34.070 --> 0:06:36.070 and a lot of the sell off, I think, may 0:06:36.110 --> 0:06:39.390 be a buying opportunity for some of the high quality names. 0:06:40.029 --> 0:06:42.510 But over the long term, it's not like we're going 0:06:42.570 --> 0:06:45.500 to be stopping the build out of AI data centers. 0:06:45.890 --> 0:06:46.960 It's just slowing down. 0:06:47.020 --> 0:06:49.820 That changes the profile of the internal rate of return, 0:06:50.080 --> 0:06:53.120 not necessarily that the companies are going to get paid. Now, 0:06:53.200 --> 0:06:56.180 having said that, there are companies that are much more 0:06:56.240 --> 0:06:59.140 highly levered, and this is going to be a quality game. 0:06:59.470 --> 0:07:02.070 Do you have the cash to actually wait it out? 0:07:02.150 --> 0:07:05.150 Because that's what delaying does is that you have to 0:07:05.210 --> 0:07:08.190 continue to be going concerned. And that puts pressure on 0:07:08.290 --> 0:07:11.710 highly levered companies and new clouds in general are not 0:07:11.770 --> 0:07:13.590 only highly levered, but they get paid. 0:07:13.390 --> 0:07:16.050 When data centers go live. So that's a double whammy 0:07:16.090 --> 0:07:17.150 for certain industries. 0:07:17.370 --> 0:07:19.610 I know you have sort of a glasses half full 0:07:19.690 --> 0:07:22.590 view or maybe there's a silver lining here about what 0:07:22.650 --> 0:07:26.300 could actually happen politically as a result of this blue 0:07:26.310 --> 0:07:28.880 tsunami that we saw this week. Talk a little bit 0:07:28.920 --> 0:07:31.300 about that and sort of the discipline angle when it 0:07:31.340 --> 0:07:32.180 comes to cash burn. 0:07:33.270 --> 0:07:36.390 Yeah, I mean, so when there was nothing, no hurdle, 0:07:37.250 --> 0:07:39.740 we were thinking, borrow, borrow, borrow. We're going to build 0:07:39.760 --> 0:07:41.380 this as fast as we can. We're going to build 0:07:41.420 --> 0:07:44.560 it faster than our competitors. And we're going to buy 0:07:44.620 --> 0:07:47.220 capacity faster than our competitors. 0:07:46.680 --> 0:07:47.640 And more, right? 0:07:47.700 --> 0:07:50.650 So there was no discipline here. Do it as fast 0:07:50.710 --> 0:07:54.630 as possible. But... The political process has told us that 0:07:54.670 --> 0:07:58.530 there may be some hurdles here, and that hurdles, there 0:07:58.570 --> 0:08:01.630 may be a positive side to this, which is that 0:08:01.950 --> 0:08:06.010 now it may put some discipline, financial discipline to these 0:08:06.090 --> 0:08:08.600 companies putting money to work and building these things. 0:08:08.950 --> 0:08:10.590 The worry was always. 0:08:10.330 --> 0:08:13.280 That, okay, if you build it as fast as you can, 0:08:13.320 --> 0:08:16.160 at some point you're going to overbuild, and perhaps that 0:08:16.200 --> 0:08:18.700 will actually mitigate some of that risk. 0:08:19.520 --> 0:08:22.620 The NASDAQ 100 is down close to 6%. It was 0:08:22.640 --> 0:08:25.250 down 6.2% earlier in the session. That was the worst 0:08:25.290 --> 0:08:28.770 day going back to the COVID depths of March of 2020. 0:08:28.770 --> 0:08:30.980 Are you actually buying today or are you waiting to buy? 0:08:32.570 --> 0:08:35.010 You know, I'm dipping in. 0:08:35.309 --> 0:08:37.430 I'm dipping in because sometimes you don't want to be 0:08:37.450 --> 0:08:40.650 catching a falling knife. But most of my clients are 0:08:40.710 --> 0:08:44.530 very long term investors and some of the prices look very, 0:08:44.570 --> 0:08:45.170 very cheap. 0:08:45.270 --> 0:08:45.970 So if you're. 0:08:45.830 --> 0:08:48.170 Thinking long term and that AI build out is going 0:08:48.190 --> 0:08:50.890 to happen over the long term, it might be potentially 0:08:50.929 --> 0:08:51.620 a point to go in. 0:08:52.360 --> 0:08:55.340 Anna Rathman of Granadilla Advisory. And it's always good to 0:08:55.360 --> 0:08:57.460 catch up with you, especially on a day such as today. 0:08:57.500 --> 0:08:58.280 Appreciate your time. 0:08:59.220 --> 0:09:01.540 Well, Micron suspends plans for a memory chip plan in 0:09:01.580 --> 0:09:04.340 Taiwan due to a labor dispute. That's according to sources, 0:09:04.540 --> 0:09:07.640 throwing into question the fate of a major production base 0:09:07.679 --> 0:09:11.910 for crucial AI components. Tension between Micron and its workers 0:09:12.030 --> 0:09:17.170 flared this year after employees demanded higher compensation, seeking more 0:09:17.190 --> 0:09:21.140 of the record profits generated from the AI build-out. Coming up, 0:09:21.179 --> 0:09:24.040 more trouble for Tesla. The carmaker continuing to fall as 0:09:24.110 --> 0:09:27.330 investors worry about the impact of the midterm elections. Shares 0:09:27.370 --> 0:09:31.390 of Tesla over the last few days down almost 14%. 0:09:31.390 --> 0:09:32.790 This is Bloomberg Tech. 0:09:45.040 --> 0:09:48.180 Shares of Tesla falling on more worries that Democrats taking 0:09:48.210 --> 0:09:51.340 control of Congress will stifle Elon Musk's efforts to expand 0:09:51.340 --> 0:09:54.670 his business empire. Joining us now is Bloomberg's Craig Trudeau. 0:09:54.670 --> 0:09:56.869 We see Tesla down in the last two days about 0:09:56.870 --> 0:09:59.600 13 SpaceX down for a second day in a row. 0:09:59.640 --> 0:10:01.240 What is the concern that investors have? 0:10:01.820 --> 0:10:05.000 I think chief among them is probably the data centers 0:10:05.059 --> 0:10:08.480 that these companies are trying to stand up, mostly on 0:10:08.500 --> 0:10:11.410 the part of SpaceX, but also Tesla. You have the 0:10:11.429 --> 0:10:15.270 TerraFab project that they're working on with SpaceX that is 0:10:15.450 --> 0:10:20.349 at least AI adjacent, working on doing semiconductors together. I 0:10:20.390 --> 0:10:24.750 think also just a sort of overarching, Elon's turned himself 0:10:24.830 --> 0:10:28.360 into kind of a target rich billionaire over. 0:10:28.260 --> 0:10:29.040 The last few years. 0:10:29.900 --> 0:10:33.020 He has sort of given the Democrats a lot of 0:10:33.100 --> 0:10:37.160 reasons to kind of make him into the boogeyman. There's 0:10:37.660 --> 0:10:41.650 understandably a lot of consternation about with this very sweeping 0:10:41.690 --> 0:10:45.090 change in power, does that incentivize the Democrats that are 0:10:45.450 --> 0:10:48.790 coming into office both in Washington and in places like 0:10:48.840 --> 0:10:52.000 Texas where both of his companies are headquartered to really 0:10:52.040 --> 0:10:53.179 come after him and his business? 0:10:53.280 --> 0:10:56.300 Does it change the story of a potential Tesla-SpaceX tie-up? 0:10:56.800 --> 0:10:59.630 I think it maybe sort of reinforces why we've been 0:10:59.670 --> 0:11:03.350 hearing that there's a sort of push afoot to get 0:11:03.390 --> 0:11:08.880 this deal together early next year. These are two big companies. 0:11:09.000 --> 0:11:12.220 There's real potential for this to be a complicated transaction, 0:11:12.300 --> 0:11:16.150 even though it's one hand working with the other. Because 0:11:16.380 --> 0:11:21.300 of things like Tesla's major presence in China and how 0:11:21.360 --> 0:11:24.679 that conflicts with SpaceX being a major U.S. contractor and 0:11:24.720 --> 0:11:32.559 defense contractor, and yet some sort of understanding or view 0:11:33.059 --> 0:11:35.860 that if you sort of take your time with a 0:11:36.059 --> 0:11:37.740 deal like this, if you want to get it done, 0:11:38.520 --> 0:11:41.880 Maybe that's not such a smart strategy if this is 0:11:41.920 --> 0:11:43.819 a deal that's going to take some time and there's 0:11:43.860 --> 0:11:47.540 some risk that the GOP not only gives up Congress, 0:11:47.600 --> 0:11:48.940 but also the White House. 0:11:49.100 --> 0:11:52.380 I'm glad you brought in the SpaceX part of the business, 0:11:52.400 --> 0:11:55.239 the defense contracting business, because that's what I'm thinking about 0:11:55.300 --> 0:11:57.740 right now. I mean, this is a company that the U.S. 0:11:57.780 --> 0:12:00.439 government relies on. It's a company that other governments rely 0:12:00.480 --> 0:12:01.640 on for Star Shield. 0:12:02.020 --> 0:12:02.179 Right. 0:12:02.320 --> 0:12:04.080 Doesn't Elon hold a lot of cards here? 0:12:04.400 --> 0:12:08.420 I think he absolutely does, and especially from a perspective 0:12:08.700 --> 0:12:14.489 of space launches, but Starlink and Starshield has really just 0:12:14.850 --> 0:12:17.870 become something where we've seen a lot of reporting around 0:12:17.910 --> 0:12:22.170 the idea of attempts to stand up competitors by governments 0:12:22.190 --> 0:12:24.689 to try and not have all their eggs in one basket, 0:12:25.610 --> 0:12:28.690 and yet we're a couple years into all of those efforts, 0:12:29.030 --> 0:12:31.429 and it's hard to sort of fathom that anyone's going 0:12:31.460 --> 0:12:35.250 to be able to stand up a meaningful competitor anytime soon, 0:12:35.720 --> 0:12:38.560 in part because nobody's getting to space at the rate 0:12:38.620 --> 0:12:42.220 that SpaceX is. So it's not just that the satellites 0:12:42.440 --> 0:12:43.839 and the. 0:12:43.490 --> 0:12:45.350 Network itself is impressive. 0:12:45.970 --> 0:12:49.550 It's also the ability to sort of get those up 0:12:49.970 --> 0:12:53.630 into space that no one else possesses that ability either. 0:12:54.070 --> 0:12:57.010 Tesla down about 10% right now. SpaceX just today down 0:12:57.050 --> 0:13:01.690 about 8.7%. A big thank you to Craig Trudell of Bloomberg. Well, 0:13:01.710 --> 0:13:04.270 let's get back to another top story today. Apple planning 0:13:04.290 --> 0:13:07.590 to raise about $ 7 billion from its first investment-grade bond 0:13:07.650 --> 0:13:08.910 offering in more than a year. 0:13:09.070 --> 0:13:10.530 To help fund share buybacks. 0:13:10.929 --> 0:13:14.030 Bloomberg intelligence analyst Robert Schiffman writes that Apple's return to 0:13:14.070 --> 0:13:17.890 the bond market appears more opportunistic than funding-driven. 0:13:18.429 --> 0:13:19.570 He joins us now. 0:13:20.090 --> 0:13:22.630 Let's start there and then get to the bigger context 0:13:22.670 --> 0:13:25.760 of what's happening in markets today. Why is this opportunistic 0:13:25.800 --> 0:13:26.180 for Apple? 0:13:27.660 --> 0:13:31.059 Well, listen, I think Apple has to be in consideration 0:13:31.160 --> 0:13:34.730 once again for the tech code status. It's at all-time 0:13:34.750 --> 0:13:38.390 stock highs, got a $ 5 trillion market cap, AAA ratings, 0:13:38.890 --> 0:13:40.690 and bond spread's tighter than peers. 0:13:41.929 --> 0:13:42.530 So why borrow? 0:13:42.590 --> 0:13:47.340 It's cheap money. Remember, this is not a neocloud at 17% yield. 0:13:47.660 --> 0:13:51.730 They're going to borrow 10%. five and a half percent. 0:13:52.190 --> 0:13:56.589 It's a real opportunity, particularly with treasuries rallying to lower 0:13:56.630 --> 0:13:59.770 their weighted average cost of capital, buy back stock, help 0:13:59.809 --> 0:14:02.070 shareholders and do it without damaging bondholders. 0:14:03.030 --> 0:14:04.030 So timing's pretty good. 0:14:05.770 --> 0:14:05.990 Yeah. 0:14:06.370 --> 0:14:06.630 Okay. 0:14:06.809 --> 0:14:09.810 Listen, this is a flight to quality type market, and 0:14:09.830 --> 0:14:11.230 this is as quality as you can get. 0:14:11.270 --> 0:14:13.950 You know, Apple is probably the new unicorn, right? 0:14:14.290 --> 0:14:16.850 If you look at this whole hyperscaler space, everyone is 0:14:16.910 --> 0:14:19.850 bleeding cash. They're all looking to raise money. You know, 0:14:19.890 --> 0:14:22.820 we think Apple's going to generate $ 150 billion of free cash. 0:14:23.290 --> 0:14:26.280 In fiscal 2027. So what do they need to do 0:14:26.320 --> 0:14:27.940 with it? You know, I don't think there's a big 0:14:28.080 --> 0:14:30.830 M & A out there. They recently got rid of with, 0:14:30.870 --> 0:14:32.260 you know, they have a new CEO that came in, 0:14:32.590 --> 0:14:36.250 they got rid of their net cash neutral balance sheet target, 0:14:36.510 --> 0:14:38.770 which I think gives them free will to buy back 0:14:38.790 --> 0:14:41.880 a lot more stock. and potentially even raise dividends. 0:14:42.140 --> 0:14:43.840 Well, let's talk a little bit about the equity side 0:14:43.860 --> 0:14:45.400 of things. On the equity side, Apple is the best 0:14:45.440 --> 0:14:48.340 performer of the Mag 7 so far this year. And 0:14:48.360 --> 0:14:51.300 in a day where the NASDAQ composites down more than 4%, 0:14:51.300 --> 0:14:53.859 the NASDAQ 100 was down over 6%. Apple's only down 0:14:53.960 --> 0:14:57.210 eight-tenths of 1%. Your view on the sell-off, because we've 0:14:57.230 --> 0:14:59.130 spoken to you a lot in the past about Neocloud. 0:14:59.190 --> 0:15:01.930 Neocloud's under so much pressure right now. Some of the 0:15:01.990 --> 0:15:05.230 chip names under big pressure. The SOX is down about 38% 0:15:05.230 --> 0:15:07.110 from that June all-time high. 0:15:07.790 --> 0:15:08.609 Is the sky falling? 0:15:10.270 --> 0:15:10.970 Absolutely not. 0:15:11.230 --> 0:15:15.770 I do think, though, in markets of uncertainty, a simple 0:15:16.090 --> 0:15:19.630 sell first, ask questions later. People are just trying to 0:15:19.700 --> 0:15:22.920 figure out what the impact of a change in Congress 0:15:22.960 --> 0:15:24.560 is going to be. It feels like it's going to 0:15:24.600 --> 0:15:26.560 be negative. I don't think it's going to be nearly 0:15:26.600 --> 0:15:29.920 as bad as what people are thinking. Your last guest 0:15:30.020 --> 0:15:31.520 was one of the few bulls that are out there. 0:15:32.340 --> 0:15:34.460 We agree. We tend to think that, you know, there 0:15:34.600 --> 0:15:37.120 might be some sort of delays in terms of cash 0:15:37.140 --> 0:15:39.040 coming in. But that also means there might be some 0:15:39.080 --> 0:15:41.240 delays in cash going out. I think that's actually going 0:15:41.260 --> 0:15:44.010 to boost the balance sheets, at least of the hyperscalers. 0:15:44.030 --> 0:15:47.110 When we're talking about the triple B and upspace, I 0:15:47.130 --> 0:15:49.590 think those names are all fine. Again, I still think 0:15:49.630 --> 0:15:51.430 that most of the NEOs are going to be able 0:15:51.450 --> 0:15:54.170 to get funded because we're still talking about working capital 0:15:54.210 --> 0:15:58.320 issues and not ultimate demand issues. That being said, this 0:15:58.420 --> 0:16:00.420 market is splitting between have and have nots. But when 0:16:00.660 --> 0:16:03.800 you've got a tape like today where it's very hard 0:16:04.320 --> 0:16:06.660 to long and it's very easy just to get a 0:16:06.680 --> 0:16:07.960 little bit lighter and say we're going to figure it 0:16:07.980 --> 0:16:10.090 out later, that's what happens. But just look at what's 0:16:10.110 --> 0:16:13.650 happening in the credit markets. Credit spreads, particularly across high-quality 0:16:13.690 --> 0:16:16.310 tech today, are generally flat to a little bit tighter. 0:16:17.430 --> 0:16:18.970 So we're not having the same sort of move. This 0:16:19.010 --> 0:16:22.290 is an equity valuation issue about timing of cash flows, 0:16:22.340 --> 0:16:25.200 not actually ultimately receiving those cash flows. 0:16:26.160 --> 0:16:29.850 Bloomberg Intelligence Analyst Robert Schiffman joining us on a day when, 0:16:29.890 --> 0:16:32.890 on the equity side, we're certainly seeing a sea of red. Robert, 0:16:32.910 --> 0:16:35.550 appreciate your time, as always. Well, coming up, a milestone 0:16:35.570 --> 0:16:39.960 for U.S. humanoid developers. Agility Robotics is going public. CEO 0:16:40.270 --> 0:16:43.520 Peggy Johnson joins us to discuss the IPO and what's 0:16:43.540 --> 0:16:44.880 to come for the company. 0:16:44.920 --> 0:16:47.100 That's coming up next on Bloomberg Tech. 0:16:56.560 --> 0:16:57.290 Thank you. 0:17:00.770 --> 0:17:04.550 Agility Robotics is betting humanoid robots can become a big business. 0:17:04.609 --> 0:17:07.450 Now Wall Street gets to weigh in. The company going 0:17:07.490 --> 0:17:10.129 public and begins trading on the NASDAQ today under the 0:17:10.190 --> 0:17:15.620 ticker AGLT. Joining us now is Agility's CEO, Peggy Johnson. Peggy, 0:17:15.660 --> 0:17:18.840 today's market move notwithstanding and what happened in the election 0:17:19.020 --> 0:17:21.419 this week, we'll get to that in just a second. 0:17:21.480 --> 0:17:24.120 Big picture, why is now the right time to test 0:17:24.180 --> 0:17:26.480 investor appetite for a humanoid robot company? 0:17:27.869 --> 0:17:30.270 Well, thanks for having me. Now is the right time 0:17:30.330 --> 0:17:35.409 because we have customer commitments. We have pending orders. We 0:17:35.470 --> 0:17:38.930 are scaling up manufacturing. And all of this is focused 0:17:39.130 --> 0:17:42.899 on filling the labor gap that is growing by the day. 0:17:43.160 --> 0:17:48.960 It's very hard to fill these tasks that are physically challenging, repetitive, 0:17:49.800 --> 0:17:54.540 very injury prone at times. And Agility's Digit robot is 0:17:54.600 --> 0:17:55.840 ready to step in and do that. 0:17:56.470 --> 0:17:59.250 This is the first dedicated humanoid company to go public 0:17:59.609 --> 0:18:02.820 in the US. It's certainly a major milestone for a 0:18:02.840 --> 0:18:04.619 category that I think for a lot of people and 0:18:04.680 --> 0:18:08.399 including investors still has a lot to prove. On the 0:18:08.460 --> 0:18:10.659 timing of this with the route that we're seeing in 0:18:10.720 --> 0:18:13.700 markets today and this week, the changing of the guard 0:18:13.740 --> 0:18:17.320 in Washington, in the House and the Senate come January, 0:18:17.820 --> 0:18:19.379 was this still a good time to debut? 0:18:20.869 --> 0:18:23.450 Well, you know, the market will move by the minute, 0:18:23.540 --> 0:18:26.280 but we are building a business for the next decade 0:18:26.440 --> 0:18:28.379 and we are in it for the long run. I 0:18:29.100 --> 0:18:32.379 will say, even with the changing of the guard, robotics 0:18:32.619 --> 0:18:37.040 is a very bipartisan issue. Both sides recognize the growing 0:18:37.119 --> 0:18:41.380 labor gap. And as we move to reshore more manufacturing 0:18:41.580 --> 0:18:45.100 into the U.S., we are going to need more. robots 0:18:45.340 --> 0:18:50.220 like Digit to help us augment the scarce human labor 0:18:50.260 --> 0:18:53.350 that we have to step into these roles. So for us, 0:18:53.630 --> 0:18:57.590 it's the right time. We're well capitalized. We're already working. 0:18:57.930 --> 0:19:01.310 And while it may be the early innings for this business, 0:19:02.109 --> 0:19:03.689 we are already on the field and playing. 0:19:04.690 --> 0:19:06.609 Do you mean with GXO logistics? 0:19:06.650 --> 0:19:07.050 Where else? 0:19:08.250 --> 0:19:10.950 GXO Logistics is one of our customers. And in fact, 0:19:10.970 --> 0:19:14.080 they just doubled down. They are now deploying into two 0:19:14.300 --> 0:19:18.900 additional facilities beyond the Georgia facility that we have been 0:19:19.100 --> 0:19:23.530 operating at. We have Scheffler, who has deployed robots in 0:19:23.570 --> 0:19:27.970 their North Carolina plants. A number of customers that we 0:19:28.070 --> 0:19:31.399 have brought on just over the last few months, another 0:19:31.500 --> 0:19:37.679 four additional customers, including Agco, an agricultural manufacturing company, it's 0:19:37.720 --> 0:19:40.440 a new category for us, that is looking to bring 0:19:40.480 --> 0:19:43.209 robots on into their Heston, Kansas facility. 0:19:43.230 --> 0:19:46.030 You know, one thing I wonder about when it comes 0:19:46.070 --> 0:19:50.280 to humanoid robots working alongside actual human beings is... is 0:19:50.320 --> 0:19:56.780 from a psychological perspective and from a safety perspective, how 0:19:56.820 --> 0:20:00.060 you ensure that it's done in a way that actually works. 0:20:01.420 --> 0:20:01.700 Right. 0:20:01.800 --> 0:20:04.840 We need to augment what humans are doing. And so 0:20:04.900 --> 0:20:08.510 you can think of the robot is helping the humans 0:20:08.590 --> 0:20:12.530 do the tasks, offload the tasks that are physically challenging 0:20:12.650 --> 0:20:15.270 for them. One of the things that we did with 0:20:15.350 --> 0:20:19.280 our next generation robot, Digit 5, is make it safe 0:20:19.820 --> 0:20:25.320 to be cooperatively operating in close proximity with humans. So 0:20:25.520 --> 0:20:29.100 up until now, all humanoids have been limited to operations 0:20:29.359 --> 0:20:33.689 inside of fenced off areas, typically doing a single task 0:20:33.750 --> 0:20:37.200 at a time. Now, with Digit 5, our next gen 0:20:37.500 --> 0:20:41.129 that'll be available the first half of next year, Digit 0:20:41.170 --> 0:20:43.310 comes out of the work cell and can take on 0:20:43.330 --> 0:20:47.639 a number of different tasks throughout the facility. and also 0:20:47.700 --> 0:20:51.180 can operate through several shifts because of a fast charge 0:20:51.220 --> 0:20:54.220 battery that we have deployed in digit five. So we've 0:20:54.280 --> 0:20:57.960 really stepped up to the needs of our customers. We're 0:20:58.020 --> 0:21:00.310 listening to them and we're continuing to build in the 0:21:00.369 --> 0:21:02.410 features that they need to get the job done. 0:21:02.750 --> 0:21:06.109 Why not stay private for longer? You know, this is 0:21:06.150 --> 0:21:11.630 still an emerging category. Deployments are still limited. Why not 0:21:11.670 --> 0:21:14.790 stay private and avoid the scrutiny of being publicly traded 0:21:14.830 --> 0:21:15.869 until you're bigger? 0:21:16.350 --> 0:21:17.389