WEBVTT - Ark Investment CEO Cathie Wood Talks H-1B Visas, China Tech Sector, TikTok

0:00:02.520 --> 0:00:07.160
<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

0:00:07.360 --> 0:00:10.240
<v Speaker 2>Let's go to one of our favorite tech investors. Kathy Would, founder,

0:00:10.360 --> 0:00:12.840
<v Speaker 2>CEO and CIO of ARC invest joins us around the

0:00:12.840 --> 0:00:16.079
<v Speaker 2>table to talk about this world. Kathy, we want to

0:00:16.079 --> 0:00:17.560
<v Speaker 2>get into your tech investments, we want to get into

0:00:17.560 --> 0:00:19.119
<v Speaker 2>your views, but we got to put this question to

0:00:19.160 --> 0:00:22.239
<v Speaker 2>you around H one B visas and this new application fee.

0:00:22.800 --> 0:00:24.400
<v Speaker 3>What do you make of it? What's the impact?

0:00:24.960 --> 0:00:30.960
<v Speaker 1>Well, again, this is part of President Trump's negotiating process,

0:00:31.120 --> 0:00:35.760
<v Speaker 1>and I think he's negotiating quite intensively right now with India.

0:00:36.560 --> 0:00:39.760
<v Speaker 1>I think India would be have the biggest impact here

0:00:39.880 --> 0:00:43.400
<v Speaker 1>in terms of, you know, workers in the United States.

0:00:43.840 --> 0:00:47.040
<v Speaker 1>So I think this is a little bit like tariffs,

0:00:47.240 --> 0:00:50.520
<v Speaker 1>and it's going to capture all the headlines and it's

0:00:50.600 --> 0:00:54.720
<v Speaker 1>going to really take the oxygen out of the room.

0:00:54.760 --> 0:00:59.440
<v Speaker 1>Because there's a lot of really good fundamental activity happening

0:00:59.440 --> 0:01:03.280
<v Speaker 1>in the United statesating relating to policy.

0:01:03.320 --> 0:01:05.000
<v Speaker 2>Well, a lot of that, a lot of the innovation,

0:01:05.040 --> 0:01:07.840
<v Speaker 2>a lot of that Silicon Valley kind of goodness really

0:01:07.880 --> 0:01:09.959
<v Speaker 2>comes from the talent and the labor pool.

0:01:10.000 --> 0:01:11.479
<v Speaker 3>We've been talking about this for quite some.

0:01:11.520 --> 0:01:14.720
<v Speaker 2>Time in terms of how do you train your engineers.

0:01:14.760 --> 0:01:18.200
<v Speaker 2>You train Americans to do a lot of what Silicon

0:01:18.280 --> 0:01:21.240
<v Speaker 2>Valley depends on foreign workers to do. Does this impact

0:01:21.600 --> 0:01:26.800
<v Speaker 2>innovation in Silicon Valley and doesn't impact megacap tech stocks tech.

0:01:26.560 --> 0:01:27.959
<v Speaker 3>Companies that are dependent on this.

0:01:28.240 --> 0:01:33.120
<v Speaker 1>Well, from what we know of this administration, they ultimately

0:01:33.720 --> 0:01:38.279
<v Speaker 1>want to keep students who have been educated in the US,

0:01:38.400 --> 0:01:41.120
<v Speaker 1>foreign students that have been educated in the US in

0:01:41.160 --> 0:01:44.520
<v Speaker 1>the US. So really, I just think this is part

0:01:44.560 --> 0:01:49.160
<v Speaker 1>of the negotiation with India and that when all is

0:01:49.160 --> 0:01:53.080
<v Speaker 1>said and done, we're probably going to loosen up the

0:01:53.280 --> 0:01:55.480
<v Speaker 1>H one visa visa program.

0:01:55.560 --> 0:01:58.080
<v Speaker 2>But in the short term, is that going to have

0:01:58.120 --> 0:01:59.320
<v Speaker 2>an impact on tech companies.

0:01:59.360 --> 0:02:01.960
<v Speaker 1>I think what it's going to do is force tech

0:02:02.000 --> 0:02:04.160
<v Speaker 1>companies to do what they're already doing and that has

0:02:04.200 --> 0:02:08.400
<v Speaker 1>become more efficient. And the other thing to note is, uh,

0:02:08.680 --> 0:02:11.880
<v Speaker 1>you know, coding is changing dramatically. The number of coding

0:02:12.000 --> 0:02:16.799
<v Speaker 1>jobs and openings has dropped dramatically. Because of AI, all

0:02:16.840 --> 0:02:20.000
<v Speaker 1>of us can become coders. You've heard a vibe good.

0:02:21.880 --> 0:02:23.079
<v Speaker 2>That's a lot of faith gout.

0:02:25.160 --> 0:02:30.680
<v Speaker 1>You know, this is natural language programming generative AI is

0:02:31.000 --> 0:02:34.680
<v Speaker 1>prompting chat GBT to get your programs going.

0:02:34.960 --> 0:02:36.000
<v Speaker 3>We can all do that.

0:02:36.000 --> 0:02:38.760
<v Speaker 1>That's simplifying it, but I do think it gives you

0:02:38.800 --> 0:02:42.760
<v Speaker 1>a sense of the kind of productivity, that possibilities that

0:02:43.000 --> 0:02:47.200
<v Speaker 1>are possible, that that will impact these tech companies longer term.

0:02:47.520 --> 0:02:50.200
<v Speaker 4>Come takes me on to my next question. Is Chinese

0:02:50.240 --> 0:02:53.320
<v Speaker 4>tech getting out perform US tech from a stock market

0:02:53.360 --> 0:02:55.239
<v Speaker 4>point of view over the next year.

0:02:56.360 --> 0:02:59.480
<v Speaker 1>Well, you know, the valuations are quite different. They're they're

0:02:59.600 --> 0:03:01.760
<v Speaker 1>roughly half of what they are in the United States.

0:03:01.840 --> 0:03:05.760
<v Speaker 1>We're very impressed at how quickly China is moving here.

0:03:06.200 --> 0:03:09.800
<v Speaker 1>I think the Deepseek moment gave us an opportunity to

0:03:09.919 --> 0:03:14.520
<v Speaker 1>understand that China is very focused on the open source

0:03:14.600 --> 0:03:15.480
<v Speaker 1>software movement.

0:03:15.560 --> 0:03:16.920
<v Speaker 3>We forced them into that.

0:03:17.160 --> 0:03:22.320
<v Speaker 1>US did because our company stopped selling into China out

0:03:22.360 --> 0:03:24.760
<v Speaker 1>of fear of IP theft. So they've gone the open

0:03:24.760 --> 0:03:27.600
<v Speaker 1>source route and are moving very quickly.

0:03:28.120 --> 0:03:29.840
<v Speaker 3>I think competition is a good thing.

0:03:29.919 --> 0:03:31.880
<v Speaker 1>It's a good thing for the United States, it's a

0:03:31.919 --> 0:03:35.640
<v Speaker 1>good thing for China. I also think what's good about

0:03:35.760 --> 0:03:40.080
<v Speaker 1>China recently is it is focused now on the idea

0:03:40.120 --> 0:03:43.440
<v Speaker 1>that maybe commoditization has gone too far, especially in the

0:03:43.480 --> 0:03:48.600
<v Speaker 1>electric vehicle space, so called involution. They are thinking that

0:03:48.760 --> 0:03:52.600
<v Speaker 1>means whatever that means, so they're thinking that, and it

0:03:52.680 --> 0:03:58.160
<v Speaker 1>is true it is expensive to develop these large language models,

0:03:58.200 --> 0:04:00.840
<v Speaker 1>even though they say it's not a lot of pre

0:04:00.920 --> 0:04:03.800
<v Speaker 1>training that takes place before you get a deep seek

0:04:04.480 --> 0:04:09.000
<v Speaker 1>And if you're not profitable as a company, you're you're

0:04:09.000 --> 0:04:11.400
<v Speaker 1>going to have a lot of trouble competing in that space.

0:04:11.440 --> 0:04:14.280
<v Speaker 1>So I think even that is changing, which is interesting.

0:04:14.360 --> 0:04:16.680
<v Speaker 4>When does AI become profitable? When can I assume a

0:04:16.760 --> 0:04:21.200
<v Speaker 4>margin on AI? And I'm talking about the large language

0:04:21.200 --> 0:04:25.120
<v Speaker 4>model companies here, huge amount of investment going in at

0:04:25.120 --> 0:04:29.320
<v Speaker 4>the moment, Kathy and everybody scratching their head wondering does

0:04:29.360 --> 0:04:31.760
<v Speaker 4>all of it deliver? Does all of it produce a

0:04:31.880 --> 0:04:33.920
<v Speaker 4>rate of return? Are we going to have to see

0:04:33.960 --> 0:04:39.200
<v Speaker 4>some sort of Subbuterian sort of clearing of the clearing

0:04:39.240 --> 0:04:41.760
<v Speaker 4>of the market at some point? What does that look like?

0:04:42.120 --> 0:04:43.840
<v Speaker 4>What is your sense of kind of where we are

0:04:43.920 --> 0:04:44.480
<v Speaker 4>at the moment.

0:04:45.360 --> 0:04:49.719
<v Speaker 1>I think that the number of companies competing, truly competing

0:04:49.760 --> 0:04:52.800
<v Speaker 1>in the large language model space has shrunk.

0:04:52.920 --> 0:04:54.840
<v Speaker 3>These aquihires that.

0:04:54.880 --> 0:04:59.240
<v Speaker 1>Open AI and meta that's all about you know, other

0:04:59.360 --> 0:05:01.280
<v Speaker 1>companies not making it so.

0:05:01.240 --> 0:05:03.240
<v Speaker 4>That the prices is already solved.

0:05:03.360 --> 0:05:04.200
<v Speaker 3>The process has.

0:05:04.120 --> 0:05:05.840
<v Speaker 4>Started, but do you think is going to win?

0:05:07.279 --> 0:05:08.200
<v Speaker 3>Well, I think the.

0:05:08.720 --> 0:05:15.800
<v Speaker 1>Big four right now are Open, Ai, Anthropic, XAI, and

0:05:16.160 --> 0:05:20.240
<v Speaker 1>Gemini those four, and we don't know if this is

0:05:20.279 --> 0:05:22.640
<v Speaker 1>going to be a four horse race or a two

0:05:22.680 --> 0:05:26.080
<v Speaker 1>horse race. Let's see over time how they leapfrog one another,

0:05:26.120 --> 0:05:27.640
<v Speaker 1>and they are doing that regularly.

0:05:27.680 --> 0:05:28.440
<v Speaker 3>It's very interesting.

0:05:28.480 --> 0:05:34.200
<v Speaker 1>But you ask about profitability companies that are not hiring people,

0:05:34.279 --> 0:05:39.200
<v Speaker 1>the number of new job openings is falling. They are

0:05:39.560 --> 0:05:43.720
<v Speaker 1>already enjoying huge productivity increases. That's why margins have been

0:05:43.760 --> 0:05:48.400
<v Speaker 1>sustained even with the tariff hit recently. In fact, tariff's

0:05:48.440 --> 0:05:51.359
<v Speaker 1>being put in place. The counter to that is, okay,

0:05:51.520 --> 0:05:53.159
<v Speaker 1>we have to cut costs.

0:05:53.200 --> 0:05:55.120
<v Speaker 3>And that has been and.

0:05:55.080 --> 0:05:58.279
<v Speaker 1>They're willing to pay twenty dollars a month, some are

0:05:58.320 --> 0:06:01.920
<v Speaker 1>willing to pay two hundred dollars a month, and those

0:06:02.080 --> 0:06:06.560
<v Speaker 1>who are replacing PhDs, they're willing to pay two thousand

0:06:06.640 --> 0:06:08.159
<v Speaker 1>dollars a month or more.

0:06:09.080 --> 0:06:10.440
<v Speaker 3>And so as long.

0:06:10.440 --> 0:06:14.560
<v Speaker 1>As these companies get that signaling that companies are willing

0:06:14.600 --> 0:06:17.880
<v Speaker 1>to pay, they will continue to invest in this race.

0:06:18.000 --> 0:06:20.039
<v Speaker 5>Kathy, you say competition is a good thing. We've talked

0:06:20.080 --> 0:06:22.599
<v Speaker 5>about the landscape. Let's talk about you. So there's a

0:06:22.600 --> 0:06:27.080
<v Speaker 5>lot more tech, innovation, robotics, ETFs out there.

0:06:27.120 --> 0:06:31.640
<v Speaker 1>Now, how do you plan to compete? It's a great question, Lizzie.

0:06:32.000 --> 0:06:37.080
<v Speaker 1>I think our differentiation is our research. We have what

0:06:37.279 --> 0:06:41.080
<v Speaker 1>I believe is the first sharing economy company in the

0:06:41.279 --> 0:06:44.120
<v Speaker 1>asset management space. When it comes to research, we give

0:06:44.200 --> 0:06:48.120
<v Speaker 1>our research away. We have given our Tesla model away

0:06:48.160 --> 0:06:51.719
<v Speaker 1>for example, approach, yes, the open source. From that point

0:06:51.720 --> 0:06:55.240
<v Speaker 1>of view, I think we have a very loud voice

0:06:55.240 --> 0:06:58.120
<v Speaker 1>out there when it comes to innovation, and I think

0:06:58.480 --> 0:07:01.320
<v Speaker 1>some of the calls we've made start in twenty fifteen

0:07:01.400 --> 0:07:07.960
<v Speaker 1>with bitcoin and at the same time roughly Tesla, Pallenteer, Coinbase,

0:07:08.200 --> 0:07:11.720
<v Speaker 1>Nvidia in the earliest days, we were there when most

0:07:11.760 --> 0:07:15.080
<v Speaker 1>people thought it was a PC gaming chip company. So

0:07:15.280 --> 0:07:18.040
<v Speaker 1>I think we've got a loud voice. You're asking about

0:07:18.120 --> 0:07:21.280
<v Speaker 1>conversion because we have these other companies out there which

0:07:21.440 --> 0:07:27.560
<v Speaker 1>with huge distribution. Well thanks to Bloomberg, you know, we

0:07:27.600 --> 0:07:30.600
<v Speaker 1>are able to share with you our research, and it's

0:07:30.680 --> 0:07:33.600
<v Speaker 1>research that others aren't doing in quite the same way.

0:07:33.680 --> 0:07:35.440
<v Speaker 5>But when you look at the numbers arcs of about

0:07:35.480 --> 0:07:39.520
<v Speaker 5>forty percent this year, flows are absolutely flat. What can

0:07:39.560 --> 0:07:42.440
<v Speaker 5>you do about that? If great performance just isn't drawing

0:07:42.440 --> 0:07:42.960
<v Speaker 5>people in.

0:07:43.480 --> 0:07:43.680
<v Speaker 3>Well.

0:07:43.760 --> 0:07:50.480
<v Speaker 1>What's interesting about that is most active managers are outflowing today,

0:07:50.560 --> 0:07:53.320
<v Speaker 1>So the fact that we're flat is very interesting. And

0:07:54.080 --> 0:07:58.000
<v Speaker 1>what's more interesting to us and very gratifying having entered

0:07:58.160 --> 0:08:02.760
<v Speaker 1>UK and Europe, is that we are about to cross

0:08:02.960 --> 0:08:07.360
<v Speaker 1>one billion dollars here in Europe and the UK, which

0:08:08.080 --> 0:08:13.080
<v Speaker 1>in two years time we acquired rise in two years ago,

0:08:14.200 --> 0:08:15.320
<v Speaker 1>is very significant.

0:08:15.360 --> 0:08:15.720
<v Speaker 3>I think.

0:08:15.800 --> 0:08:18.840
<v Speaker 1>I think here in Europe a quarter of our reader base,

0:08:18.920 --> 0:08:22.600
<v Speaker 1>even before we launched was in Europe and the question

0:08:22.800 --> 0:08:26.520
<v Speaker 1>was when are you coming to Europe. So we are

0:08:26.640 --> 0:08:30.360
<v Speaker 1>getting the flows here in the UK and Europe, and

0:08:30.400 --> 0:08:33.640
<v Speaker 1>we're really excited about the momentum behind those flows.

0:08:33.960 --> 0:08:36.160
<v Speaker 2>Kathy, I want to get your take on a deal

0:08:36.480 --> 0:08:40.360
<v Speaker 2>that was preliminarily announced on Friday between the United States

0:08:40.400 --> 0:08:42.720
<v Speaker 2>and China when it comes to TikTok, and I think

0:08:42.760 --> 0:08:45.080
<v Speaker 2>you're a unique person to have this conversation with given

0:08:45.160 --> 0:08:50.240
<v Speaker 2>your early exposure to Chinese tech stocks. TikTok has now

0:08:50.240 --> 0:08:53.040
<v Speaker 2>been We're still waiting for all the details, but we

0:08:53.200 --> 0:08:58.040
<v Speaker 2>understand is being given seven board seats to Americans. There's

0:08:58.080 --> 0:09:00.600
<v Speaker 2>a question of a licensing agreement. There's a question of

0:09:00.679 --> 0:09:03.360
<v Speaker 2>some of the holders, including the Murdos or Larry Ellison,

0:09:03.400 --> 0:09:06.440
<v Speaker 2>among others. What kind of precedent does that set for

0:09:06.520 --> 0:09:10.080
<v Speaker 2>you as someone who is exposed to Chinese tech. Is

0:09:10.120 --> 0:09:12.920
<v Speaker 2>this the new norm or is this an idiosyncratic story.

0:09:13.520 --> 0:09:18.640
<v Speaker 1>I think this is idiosyncratic. I think during our election

0:09:19.440 --> 0:09:24.120
<v Speaker 1>President Trump promised that he would be open minded to

0:09:24.960 --> 0:09:29.120
<v Speaker 1>keeping TikTok us. It's so important to the young people

0:09:29.520 --> 0:09:32.800
<v Speaker 1>and many more people in the United States. So I

0:09:32.840 --> 0:09:35.880
<v Speaker 1>do think it's a one off, special case. I also

0:09:35.920 --> 0:09:39.200
<v Speaker 1>think it's a part of a broader negotiation with China.

0:09:40.040 --> 0:09:44.520
<v Speaker 1>I think if anyone can re enact a Nixon in

0:09:44.640 --> 0:09:49.280
<v Speaker 1>China moment, it is President Trump. He has been toughest

0:09:49.440 --> 0:09:54.800
<v Speaker 1>on China. Everyone trusts that he will strike a good deal.

0:09:55.320 --> 0:09:57.680
<v Speaker 1>In everyone in the US trust he will strike a

0:09:57.679 --> 0:10:01.000
<v Speaker 1>good deal with China, and I think we're probably going

0:10:01.040 --> 0:10:05.360
<v Speaker 1>to get more better than expected news longer term. You'll

0:10:05.360 --> 0:10:08.400
<v Speaker 1>hear a lot of saber rattling in the meantime, but

0:10:08.520 --> 0:10:10.360
<v Speaker 1>this is one indication of that.

0:10:10.960 --> 0:10:15.320
<v Speaker 2>If TikTok a good investment, if the US has more

0:10:15.559 --> 0:10:18.319
<v Speaker 2>hold over it, and counter to that is byedance, a

0:10:18.360 --> 0:10:21.800
<v Speaker 2>good investment. If this is a deal that's being created.

0:10:22.240 --> 0:10:25.920
<v Speaker 1>You know, the one question we always have when there

0:10:26.000 --> 0:10:29.920
<v Speaker 1>is a breakup like that is does a company lose

0:10:30.200 --> 0:10:32.800
<v Speaker 1>some of the network effect in some way? Now they

0:10:32.840 --> 0:10:37.360
<v Speaker 1>were already supposed to be separate China and the US.

0:10:38.080 --> 0:10:39.360
<v Speaker 3>We'll see, We'll see.

0:10:39.720 --> 0:10:44.160
<v Speaker 1>TikTok has been an amazing company. Has taught us a lot.

0:10:44.280 --> 0:10:47.280
<v Speaker 1>This is what I mean about Chinese competition. They taught

0:10:47.400 --> 0:10:50.160
<v Speaker 1>our companies a lot. I will say. I will say

0:10:50.160 --> 0:10:53.760
<v Speaker 1>that a company called Vine in the US was the precursor,

0:10:53.840 --> 0:10:56.760
<v Speaker 1>and Twitter at the time bought it was not able

0:10:56.960 --> 0:10:59.559
<v Speaker 1>to activate it in the way TikTok has.

0:11:00.120 --> 0:11:02.520
<v Speaker 3>TikTok ran away with that. You would you want a

0:11:02.520 --> 0:11:03.000
<v Speaker 3>piece of it?

0:11:03.679 --> 0:11:05.560
<v Speaker 1>You know, we have to do a deeper dive when

0:11:05.640 --> 0:11:07.760
<v Speaker 1>we get into the data room.

0:11:08.280 --> 0:11:11.480
<v Speaker 4>Kryptos down a little bit. Bitcoin's selling off this morning,

0:11:11.600 --> 0:11:13.600
<v Speaker 4>like these kind of levels of you buya Rosilla.

0:11:14.760 --> 0:11:20.440
<v Speaker 1>Well, we've been increasing our exposure generally to the digital

0:11:20.480 --> 0:11:25.280
<v Speaker 1>asset space. I think Bitcoin has been the leader of

0:11:25.400 --> 0:11:28.840
<v Speaker 1>the back. The others are following. Ether has followed now

0:11:28.920 --> 0:11:34.040
<v Speaker 1>Solona and hyper liquid is a new one, the new

0:11:34.120 --> 0:11:38.319
<v Speaker 1>kid on the block. We think this is three revolutions

0:11:38.320 --> 0:11:43.200
<v Speaker 1>in one a monetary revolution, a financial services revolution, and really,

0:11:44.240 --> 0:11:48.440
<v Speaker 1>in a much broader sense, a digital property rights. Immutable

0:11:48.480 --> 0:11:52.440
<v Speaker 1>property rights online never happened before, only possible because of

0:11:52.440 --> 0:11:53.640
<v Speaker 1>blockchain technology.

0:11:54.040 --> 0:11:57.959
<v Speaker 4>Okay, down by a round, cryptozed down big coin is

0:11:57.960 --> 0:12:00.680
<v Speaker 4>that around two? Said this morning Kathy grac very much. Indeed,

0:12:00.800 --> 0:12:03.320
<v Speaker 4>Kathy Wood, founder and CEO of ARC invest