Speaker 1: From Mahard.
Speaker 2: We're Innovation, Money and Power Collie in Silicon Vallet NBN.
Speaker 3: This is Bloomberg Technology with Caroline Hyde and Ed Louvelove.
Speaker 4: I met Ludlower Caroline Hide in New York. Welcome to
Speaker 4: a special edition of Bloomberg Technology Live from Kubertina, California.
Speaker 4: It's glow time and the emphasis Apple's most important event
Speaker 4: of the year, the tech giant. I'm veiling some major
Speaker 4: changes to its product line up, a big focus on
Speaker 4: artificial intelligence and new generation of iPhones and changes to
Speaker 4: wearables coming out throughout the hour. We're joined by key
Speaker 4: guests Carolina Milanacy of Creative Strategies, plus a conversation with
Speaker 4: Ray Wang of Constellation Research. It's Caro, what are you
Speaker 4: looking at?
Speaker 5: Here's what else is coming up. Ed tech stocks are
Speaker 5: bouncing back following their biggest weekly decline in nearly two
Speaker 5: years last Oracle reporting earnings after the closing belt. Will
Speaker 5: ai compute demand support the stocks out performance this year,
Speaker 5: and we discuss AI's potential in biology with the found
Speaker 5: out of Chai Discovery, which just received backing from Open
Speaker 5: ai butt. First, we check in on that so called
Speaker 5: bounce back in the markets because it's dwindling ed. We
Speaker 5: are still up some four tenths of a percent, but
Speaker 5: we're not up to the extent that we were in
Speaker 5: earlier trading. We saw some dip buying most broadly. And look,
Speaker 5: this was a painful week that we come off. You
Speaker 5: remember that it was the worst week, worst day that
Speaker 5: we saw for certain numbers, like in video having its
Speaker 5: worst day since twenty twenty. Today we see just a
Speaker 5: little bit of dip by and it's only up a
Speaker 5: percentage point. Remember how much money, more than four hundred
Speaker 5: billion dollars lost on this one name alone over the
Speaker 5: course of what has been some five training days. But
Speaker 5: today it is all about Apple, and I want to
Speaker 5: look at how actually this is the worst performer on
Speaker 5: the nasac inte a points drag on the overall benchmark.
Speaker 5: We're off by one and a half percent. Looks so
Speaker 5: much to think about. You've got Webbush, You've got JP
Speaker 5: Morgan still reiterating that overweight, wanting to see dates, times,
Speaker 5: price points, but also what about Huawei's event that comes
Speaker 5: in a few hours time as well. Ed looks as
Speaker 5: though they're managing to get some pre orders locked in
Speaker 5: for their trifold phone. That's what's being reported. But get
Speaker 5: to it. What are we expecting from Apple?
Speaker 1: Right?
Speaker 4: Yeah, Apple session lows and it's actually closed down at
Speaker 4: twelve of the last seventeen product events. Here's what you
Speaker 4: need to know. Let's get to Bloomberg's Mark German, who's
Speaker 4: reported in detail what we expect, and Mark, I think
Speaker 4: we should start with the next generation iPhone because that's
Speaker 4: usually the point of emphasis. What have you learned our
Speaker 4: new iPhones?
Speaker 3: The big models this year will be the Pro versions.
Speaker 1: Not a lot of new stuff this year.
Speaker 3: So what we're focusing on as a design that essentially
Speaker 3: looks the same as last year's model. You're getting some
Speaker 3: camera upgrades. So on the Pro models right now you
Speaker 3: have a forty eight megapixel standard camera like the y
Speaker 3: angle camera.
Speaker 1: The other two or twelve megapixels.
Speaker 3: Now they're moving a second camera, the ultra wide angle
Speaker 3: to a forty eight megapixel.
Speaker 6: Right.
Speaker 3: You're also going to get this new button, a camera
Speaker 3: button that's going to come across all four models, the
Speaker 3: Pro versions and non pro versions. It's going to be
Speaker 3: a button on the right side and it's touch sensitive.
Speaker 3: You can swipe on it to zoom in.
Speaker 1: And out.
Speaker 3: You can touch it hard to take a picture, or
Speaker 3: you can lightly touch it to focus in on a subject.
Speaker 3: It's sort of like a button that you've been seeing
Speaker 3: on standard bslrs for many years now.
Speaker 1: The other changes on.
Speaker 3: The Pro models are slightly bigger displays and slimmer bezels
Speaker 3: A eighteen processors across the four.
Speaker 1: Models to help with Apple Intelligence. But overall, this is
Speaker 1: a very minor update year over year.
Speaker 3: The bigger changes are going to be coming to the
Speaker 3: company's other products, including the Apple Watch and the AirPods.
Speaker 4: We'll talk about the wearable side of the business. Apple
Speaker 4: Intelligence is really a focus as well, right, and the
Speaker 4: chronology of events is important because the new handsets will shit.
Speaker 4: What at the end of this month, This month you
Speaker 4: get iOS eighteen point one. What have you reported about
Speaker 4: the sort of staggered a rollout of Apple Intelligence.
Speaker 3: Yeah, so Apple Intelligence is not fully baked. I would
Speaker 3: say it's half baked.
Speaker 1: At this point, right.
Speaker 3: So the initial version of Apple Intelligence will come with
Speaker 3: things like the ability to summarize incoming notifications, the ability
Speaker 3: to record phone calls and get transcriptions, the ability to
Speaker 3: use AI to remove people or objects from certain photos.
Speaker 1: But over time, there's going to.
Speaker 3: Be more functionality coming, right, So the phones will initially
Speaker 3: ship without any Apple Intelligence. You'll get a seftwarepdate in
Speaker 3: October with those first few features I mentioned. You'll get
Speaker 3: another update in December with chat GPT integration, things like
Speaker 3: gen Moji's the ability to use AI to create Emoji's
Speaker 3: image playground for generative AI for image creation. And then
Speaker 3: next year, not until about March April, is when you're
Speaker 3: going to get the bigger enhancements to the theory that
Speaker 3: Apple talked about in June at their developer conference. Right,
Speaker 3: So this is a very staggered rollout. Now, let's be
Speaker 3: clear this is not by intention. This is because this
Speaker 3: was something that was mostly rushed together to get out
Speaker 3: for this year in response to the big AI praise
Speaker 3: you've seen from Globle, Meta and others.
Speaker 5: This is a global product, mark how much will this
Speaker 5: steady nerves of a sales decline in places such as China.
Speaker 3: Well, it is a global product, but they're banking heavily
Speaker 3: on Apple Intelligence to sell its global products. But Apple
Speaker 3: Intelligence is not going to be available in the nearly
Speaker 3: thirty countries that make up the European Union and It's
Speaker 3: also not going to be available in China, which is
Speaker 3: obviously one of their biggest markets and a big sales driver.
Speaker 1: Right.
Speaker 3: I've seen some analysts reports over the last twenty four
Speaker 3: hours indicating that you're going to see an iPhone supercycle,
Speaker 3: particularly due to strong sales in China due to Apple Intelligence. Well,
Speaker 3: Apple Intelligence has not coming to China at least for
Speaker 3: the foreseeable future, and there's going to be no iPhone supercycle, right.
Speaker 3: The things that sell iPhones in big quantities or bigger
Speaker 3: quantities than usual are major design changes.
Speaker 1: You're not seeing major design changes this year.
Speaker 2: Right.
Speaker 3: You're also not seeing as much tent of demand as
Speaker 3: you may have seen one or two years ago. You're
Speaker 3: seeing people hold onto their cash longer. So if you're
Speaker 3: anticipating an iPhone supercycle, I think you should rethink your
Speaker 3: expectations at least for this year. Where I think you
Speaker 3: will probably see an iPhone supercycle is maybe next year
Speaker 3: with the iPhone seventeen, which is going to have bigger
Speaker 3: design changes, and it's going to launch by the time
Speaker 3: that Apple Intelligence is fully rolled out and maybe even
Speaker 3: available on you in China.
Speaker 4: Bloomberg's Mark Gunman with the reporting of what we expect.
Speaker 4: Thank you very much. Let's get the analysis with Carolina
Speaker 4: Milianac creative strategies, principle and list, and let's just pick
Speaker 4: up where Mark left off. Do we expect a supercycle
Speaker 4: driven by the sixteen generation and Apple Intelligence?
Speaker 7: We do not, Okay, and exactly love Mark said. There
Speaker 7: are a couple of reasons. One is that normally you
Speaker 7: see a supercycle where there are great design changes that
Speaker 7: how do we're still drive sales of smartphones? The first
Speaker 7: thing that you see soft story, something that you discover afterwards,
Speaker 7: but what gets you into the store is the redesign.
Speaker 7: And the second part is the fact that right now
Speaker 7: Apple Intelligence is only available in English, and so that
Speaker 7: limits the amount of people that can take advantage of it.
Speaker 4: I find that a really interesting point because, for example,
Speaker 4: I look at IDC data, an IDC Data forecast that
Speaker 4: for four year twenty four iPhones basically flat, but next
Speaker 4: year looks a lot better. Is that just because the
Speaker 4: expectation is the consumer waits and sees how the rollout
Speaker 4: of Apple Intelligence goes before getting themselves a new iPhone.
Speaker 7: I think it's a bit of a delayed gratification as
Speaker 7: far as the psychle right the idea of that. In
Speaker 7: my opinion, there's going to be a long tail of
Speaker 7: sales that Apple Intelligence actually enables, but because of a
Speaker 7: rollout from a country perspective, the culture or part of
Speaker 7: Apple Intelligence. It's not just about being half baked or rushed.
Speaker 7: Is the fact that it takes a lot to actually
Speaker 7: make Apple Intelligence relevant at a country, language, and cultural level.
Speaker 7: Is not just a software feature. It takes up so
Speaker 7: much more that is really linked to the individual user,
Speaker 7: and so it's going to take longer.
Speaker 5: What about the good old other devices, what about the
Speaker 5: air pods? We are expecting a lot from the watches
Speaker 5: in terms of new innovation. There will that be enough
Speaker 5: to kick off a new buying cycle.
Speaker 7: I do think that other devices, there are rumors around
Speaker 7: the watch and also the AirPods will definitely contribute to
Speaker 7: Apple really pushing higher sale and revenue. Apple watches become
Speaker 7: so important to so many people, and not just the
Speaker 7: basic model that we respect redesigned with Apple Watch ten,
Speaker 7: but also with the Ultra that obviously has a much
Speaker 7: higher price point. I do think that that is going
Speaker 7: to get some excitement and maybe steal the show from
Speaker 7: a hardware design perspective today.
Speaker 4: I still want to understand the simple story. How does
Speaker 4: the consumer and every day technology user actually use Apple Intelligence?
Speaker 4: Do you know have the answer to that?
Speaker 7: For me, generally, AI is about taking more out of
Speaker 7: your device, whether it is you know, your iPhone or
Speaker 7: your Mac or something else. So from a user perspective,
Speaker 7: it's making your workload easier. Everything that you're doing should
Speaker 7: be streamlined because of intelligence. And then the other part
Speaker 7: with Apple is the fact that Apple knows me very
Speaker 7: well as a user. You know, they have a lot
Speaker 7: of information about me. So everything that Apple Intelligence is
Speaker 7: going to be able to give me is very contenstualized
Speaker 7: and personal. And I think that's how you get that
Speaker 7: emotional connection from the user to Apple Intelligence versus you know,
Speaker 7: we hear a lot from other vendors how you can
Speaker 7: plan your next vacation or you plan the next party.
Speaker 7: And I was jokingly saying I need to upgrade my
Speaker 7: life in order to take advantage of Apple Intelligence or
Speaker 7: any else, right, But no, it is really that is
Speaker 7: making using a phone that has become much more complex easier.
Speaker 5: To that point, Krolina, Apple uses are loyal. It is
Speaker 5: what makes the company the most valuable in the world
Speaker 5: from a public perspective. But there is Samsung that already
Speaker 5: has AI integrated. There is Huawei that's likely to follow
Speaker 5: in a few hours time with its trifold innovations and
Speaker 5: already pre selling. Are we ever going to be tempted
Speaker 5: elsewhere by AI innovations from other places other sources?
Speaker 7: I think the more you're going to get value from
Speaker 7: your data and your day to day experience, the harder
Speaker 7: is going to be for you to move. And we know,
Speaker 7: of course that Apple Intelligence is one part of the
Speaker 7: AI that gets delivered through Apple products. GBT is going
Speaker 7: to be another one, and going forward, I'm expecting to
Speaker 7: see Gemini as well on Apple products. So the user
Speaker 7: options to use avers, but then when it comes to
Speaker 7: the most personal experiences, the trust on the brand is
Speaker 7: what is going to keep them with.
Speaker 4: Our bare Krolyne a Milanacy, Prince blandalists that create a strategy,
Speaker 4: someone that looks at the market, but you're so hands
Speaker 4: on with all of the available technology as well. Thank you.
Speaker 5: Tech talks. Can They rebound from their worst weekly performance
Speaker 5: in nearly two years, and the recent declines have been
Speaker 5: led by the likes of Nvidia, shedding more than four
Speaker 5: hundred billion dollars in market cap last week alone. Alex
Speaker 5: Simonova is here to really talk through the pain trade
Speaker 5: of last week and spin it forward. We are raising
Speaker 5: our gains on the day. Why did we see such
Speaker 5: losses last week and Friday?
Speaker 8: Yeah, so, last week's so off really highlighted the perils
Speaker 8: of the high tech concentration that so many people have
Speaker 8: been worried about for much of this year. When you
Speaker 8: have one group comprising s big share of the broader market,
Speaker 8: the so called Magnificent seven stocks making up more than
Speaker 8: a third of the S and P five hundred index.
Speaker 8: When the momentum is going in the right direction, you know,
Speaker 8: it lifts all boats.
Speaker 5: Things are good.
Speaker 8: But when you have any kind of growth fears emerge,
Speaker 8: any kind of disappointing earnings, you know the growth hears
Speaker 8: that we saw from last week's payrolls data, the momentum
Speaker 8: goes pretty rapidly to the downside. You have the systemic
Speaker 8: funds that have been piling into tech, They begin to
Speaker 8: sell and that accentuates the moves to the downside. And
Speaker 8: then you have a lot of investors this year, we're
Speaker 8: chasing the rally, which means that they bought tech stocks
Speaker 8: at very expensive prices, and so when it's time to
Speaker 8: de risk, those losses become pretty extreme. Of course, we
Speaker 8: saw the S and P five hundred post a weekly
Speaker 8: decline of four percent, its worst week since the SEVB
Speaker 8: collapse in March twenty twenty three, and then tech stocks
Speaker 8: their worst week.
Speaker 5: In two years. Bespoke saying as well, Ultimately stocks are
Speaker 5: off to their worst September in sixty years. We'll SEEPI
Speaker 5: will inflation data set us in a better fundamental picture
Speaker 5: or not? Do you think?
Speaker 1: Yeah?
Speaker 8: You know, it seems to be the case. As you mentioned,
Speaker 8: seasonality is playing a big factor here, going back to
Speaker 8: nineteen fifty, September is the worst month of the year
Speaker 8: for stocks, and we're seeing that really play out. But
Speaker 8: the fundamental picture hasn't changed much. Yes, that Job's data
Speaker 8: was disappointing, but we aren't seeing pronounced layoffs at this point.
Speaker 8: If you look at the earnings picture, things are still
Speaker 8: looking good. Companies are delivering on earnings. We're supposed to
Speaker 8: see them expand beyond the magnificent seven stocks. We're expecting
Speaker 8: a rate cut, so things should still farewell.
Speaker 5: For the rest of the year. Just need Apple to
Speaker 5: deliver today as well. The worst points drag on the
Speaker 5: NASDAC Alex sim and Eva, we love having her. Thank
Speaker 5: you more markets now, Semasha Prinstical Asset Management joins us.
Speaker 5: We're hearing about the momentum trade that pulls back last week.
Speaker 5: What about this week? Sema, Hey, thanks for having me on.
Speaker 9: I think it's a tough environment, to be honest, it
Speaker 9: seems that tech has become a bit of a barometer
Speaker 9: for investor sentiment. As we know, there's a lot of
Speaker 9: question marks a moment around the state of the economy
Speaker 9: where the FED is going to be quick enough to
Speaker 9: move so until maybe you get either sufficient evaluation correction
Speaker 9: improvement fundamentals or you get some really interesting news from
Speaker 9: one of these companies. I think tech is unfortunately going
Speaker 9: to have as somewhat challenging couple of months.
Speaker 4: Seema, good morning is ed here at Apple Park in Cupertino.
Speaker 4: I think trying to tie today's event to that economic
Speaker 4: picture you outlined the question around. For example, a super
Speaker 4: psychle also is dependent on the economic health of the
Speaker 4: consumer of the buyer. And one place that I'm looking
Speaker 4: at the moment is the spending power, health of the
Speaker 4: middle and higher income earners. What does that data set
Speaker 4: tell you at the moment?
Speaker 9: Yeah, and I think that's so true. I mean, when
Speaker 9: we look at the consumer data as you took, as
Speaker 9: you're looking at a broad perspective, it looks fairly weak. There's
Speaker 9: a slowing process taking place. But then again, if you
Speaker 9: look towards the actual income levels, you can see that
Speaker 9: most of the strains are really limited to the lower
Speaker 9: income side. The medium to high income simply fairly strong.
Speaker 9: That they have not been as impacted by high interest rates.
Speaker 9: So you continue to see that purchasing power. But the
Speaker 9: problem is is that a lot of the gains, the
Speaker 9: real wealth gains have been driven by the equity market
Speaker 9: strengthen the acuity market. So if you get any further
Speaker 9: concerns about that, you could see that feeding through to
Speaker 9: middle income hire income households really on to requestion the
Speaker 9: kind of purchases that they want to make. Apple, of course,
Speaker 9: folds right in those crosshairs.
Speaker 5: Sima. We talk a lot to not only institutional investors
Speaker 5: on the show, but retail investors who have been so excited, enamored,
Speaker 5: hyped around certain names like in nvidio, double leveraging double
Speaker 5: two x some of these ETF exposures. Are they right
Speaker 5: to at the moment? Should we be still focused so
Speaker 5: much on mag seven?
Speaker 9: But I think you're right that the retail investor base
Speaker 9: has been driven a lot.
Speaker 5: By FOMO for what of a better word.
Speaker 9: I think FOMA has been a real driver for the
Speaker 9: continued interest in those MAGA seven on the big brand names. Unfortunately,
Speaker 9: at the moment that investor's sentiment has deteriorated so that
Speaker 9: Pomo no longer exists at this point in time.
Speaker 3: So I think the.
Speaker 9: Retail investor is taking a look back, say, look, if
Speaker 9: we're worried about the economy, there has to be some
Speaker 9: kind of impact on these big brands, and we need
Speaker 9: to see a point where it starts to look more interesting.
Speaker 9: From an institutional base, I think the general thesis around
Speaker 9: tech and THEAI and the impact of Magnificent seven still exists.
Speaker 9: We're still looking at the companies and saying they will
Speaker 9: deliver over a five seven year perspective, So it still
Speaker 9: makes sense to have exposure. But your marginal buyer is
Speaker 9: probably questioning at the moment these valuations and whether this
Speaker 9: is the right time to have exposure.
Speaker 5: That's exactly what we hear. People are trading these names
Speaker 5: at the moment, and that's what we see the individual
Speaker 5: volatility on how do you keep the diversification mindset in
Speaker 5: this market? How are you seeing an opportunity?
Speaker 9: So episode, when we look at the large tech space,
Speaker 9: we have maintained our exposure, we have pulled back a
Speaker 9: little bit, We're still quite overweight, and the reason is
Speaker 9: that we're still looking at it as a little bit
Speaker 9: of a defensive play. So these companies they have the quality,
Speaker 9: they've got the large balance sheets, the cash flow, which
Speaker 9: means that they shouldn't continue to do well even if
Speaker 9: there isn't a macdanton and we will be looking for
Speaker 9: opportunities to increase exposure. But at this point in time,
Speaker 9: a lot of it is around diversifications, so not just
Speaker 9: having exposure to tech, but other parts of the market
Speaker 9: which are a little bit more defensive, so your typical
Speaker 9: defensive place such as utilities, some of those consumer staples
Speaker 9: as well.
Speaker 1: Sam.
Speaker 4: I've asked you on Bloomberg Technology before how you use
Speaker 4: generative AI in your professional and daily life, and I
Speaker 4: think the next extension of that you're seeing any evidence whatsoever,
Speaker 4: that all the investment and capital expenditure into capacity to
Speaker 4: build generative AI tool is translating into productivity gains in
Speaker 4: any of the economies with which you're concerned more response.
Speaker 9: So you are hearing news, corporate news really specifically of
Speaker 9: companies saying that they have seen a productivity gain or
Speaker 9: that they're envisaging that if they were to invest further
Speaker 9: into AI, there will be some significant productivity gains. Even
Speaker 9: if you look at the UK government, it's something that
Speaker 9: they talk about repeatedly that if they were to invest
Speaker 9: in those areas that they could see further government savings
Speaker 9: over the coming years.
Speaker 5: In terms of if it's.
Speaker 9: Coming to fruition, I'm not necessarily seeing so much of
Speaker 9: that news, but there is still that expectation that ALI
Speaker 9: will deliver and it still sits at the frontier of
Speaker 9: all productivity gains and even growth gains over thecoming future.
Speaker 5: Seema, we were discussing but a week or so ago,
Speaker 5: if in Video or the FED were more important, what
Speaker 5: is it for you now?
Speaker 9: So I think that you know they still they both
Speaker 9: have a very significant impact on the market, if anything,
Speaker 9: on a day by day basis of to actually argue
Speaker 9: that in Vidia does. But as I said, I think
Speaker 9: these companies are almost a barometer of investor sentiment, and
Speaker 9: at the moment, investor sentiment is being driven by what
Speaker 9: the market thinks the FED is going to do. So
Speaker 9: if we were to see the FED coming in with
Speaker 9: a sizeable interest rate cut next week and also downplaying
Speaker 9: the concerns of recession, then I think investor sentiment would
Speaker 9: improve and you could see an and them plicit bounced
Speaker 9: back in a lot of these Max seven. So much
Speaker 9: of it is tied together at this point.
Speaker 4: Seema very quickly. What's the biggest headwind that we're not
Speaker 4: talking about the technology investors might face.
Speaker 9: I do think that the China story, we all know
Speaker 9: that it's there. I don't think Whate's ignoring it. But
Speaker 9: I think we have got growing concerns about the strength
Speaker 9: of the consumer in China, where the economy is going,
Speaker 9: and of course, given the tech cycle, how much that
Speaker 9: feeds into tech demand I think is probably one of
Speaker 9: the areas that we're going to be watching most closely
Speaker 9: over the coming months.
Speaker 5: Smasha, Principal Asset Management are joined to have you thank
Speaker 5: you coming up, We're talking tech. The headlines you need
Speaker 5: to know plus much more from Coopertino, counting you down
Speaker 5: to Apple's big launch event one pm Eastern, telling M
Speaker 5: local this a blueberg technology time now talking tech first
Speaker 5: up in video backed Skana AI sees potential for more
Speaker 5: strategic partnerships in Japan. This is as rising US China
Speaker 5: tensions spur the country to boost its own AI ecosystem.
Speaker 5: Sacana CEO David has spoke with Bloomberg saying his recent
Speaker 5: funding round of over one hundred million dollars was more
Speaker 5: than enough ammunition to develop its tech plus. Japanese chip
Speaker 5: startup Rapidness is seeking to raise nearly seven hundred million
Speaker 5: dollars from a new and existing investors. Now, the company
Speaker 5: plans to issue new shares to finance its chip development
Speaker 5: efforts and the construction of its foundry in Hokkaido. Rapidus
Speaker 5: aims to challenge industry leader t SMC and initially planned
Speaker 5: to seek a loan before opting for investments. Meanwhile, Google
Speaker 5: heads back to court. The search engine giant is set
Speaker 5: to face allegations from the US Justice Department. Then it
Speaker 5: manipulates that six are seventy seven billion dollar display advertising
Speaker 5: market violating and trust laws. This comes just one month
Speaker 5: after it lost the landmark ruling that illegally dominated online search.
Speaker 5: Now coming up, we're going to be tall king not
Speaker 5: only about Apple, but Huawei too, and also Apple within China.
Speaker 5: Ray Wang from Constellation Research to discuss the big event
Speaker 5: in Kupatino and then the big Huaweih showdown from New York.
Speaker 5: From Kubatino, this is Bloomberg Technology.
Speaker 4: Welcome back to a special edition of Bloomberg Technology.
Speaker 5: I'm Ed Ludlow.
Speaker 4: Caroline hides out in New York. But right now we're
Speaker 4: live from Apple Park in Cupertino, California, and it's glow time.
Speaker 4: The emphasis on a new generation of iPhone, a refreshed
Speaker 4: wearables offering, and the future of AI. Our live coverage
Speaker 4: continues in just a few moments time a conversation with
Speaker 4: Ray Wang of Consolation Research. But Caro, we got to
Speaker 4: check in on these markets.
Speaker 5: We do because last week was brutal and we know
Speaker 5: that we gave up what was more than four one
Speaker 5: hundred billion and one name alone over the course of
Speaker 5: five trading days. We had the worst week for the
Speaker 5: NASACK six two thousand, well twenty twenty two. Now NASDAK
Speaker 5: now up six tens percent, not managing to hold on
Speaker 5: to previous gains. The stock six hundred is up three
Speaker 5: quarters percent, So actually we are seeing a risk on
Speaker 5: sentiment worldwide, although we are fading some of those gains.
Speaker 5: Bitcoin up one and a half percent. Fifty five thousand
Speaker 5: eight straight days of net outflows from those Bitcoin ETFs.
Speaker 5: Are we going to start to see people treading back
Speaker 5: into putting money in these ets exposed to spot Bitcoin
Speaker 5: move on? Have a look at some of the individual names. Actually,
Speaker 5: on Friday, amid the turbulence, we saw Roadblocks give some
Speaker 5: big announcements, the CEO saying their new goal is for
Speaker 5: ten percent of the global video game content revenue. They
Speaker 5: were hire earlier on training We're now falling some eight
Speaker 5: tens percent for that particular name. Armou holds on to
Speaker 5: its gains, up almost four percent. Why well, it's all
Speaker 5: around those reports that its own technology, its own chip designs.
Speaker 5: Will We're powering Apple's iPhone sixteen. The Apple will will
Speaker 5: reveal the A eighteen ship we understand on Monday with
Speaker 5: the company embracing Arm's newest V nine chip design. We'll
Speaker 5: see whether that comes to fruition. Meanwhile, Apple off by
Speaker 5: three quarters of percent, and that is the biggest points
Speaker 5: drag across the indexes today. And we want to talk
Speaker 5: more about Apple. Turned to today's big take. It focuses
Speaker 5: on Apple's transition from tech rebel to tech overlord. Liume
Speaker 5: Meg's Max Chafkin Crow wrote this piece which is getting
Speaker 5: a lot of traction on the terminal and online. Max,
Speaker 5: this is a company that back in the day was
Speaker 5: the rebel and now it's the most valuable company in
Speaker 5: the world.
Speaker 9: Yeah.
Speaker 2: Absolutely, and I mean just in that stark way. Of course,
Speaker 2: it's been a reversal, but in the same way that
Speaker 2: you know, back forty years ago, Apple was arguing that
Speaker 2: there were these larger competitors IBM, you know, sort of
Speaker 2: most prominently, that we're dominating unfairly. You have, you know,
Speaker 2: sort of a swirl of critics, including regulators around the world,
Speaker 2: the DOJ, as well as you know, some of Apple's
Speaker 2: biggest partners starting to sort of loudly say that, you know,
Speaker 2: something needs to be done. And when you even when
Speaker 2: you look at the kind of like the body language,
Speaker 2: the language around these launches, you really see just how
Speaker 2: you know, there is a gravity around Cooper, Tino not
Speaker 2: just today, not just on an announcement day, but in
Speaker 2: the tech industry in general and really in the global
Speaker 2: economy more broadly.
Speaker 5: What about Apple's defense? They just say that better Apple's defense.
Speaker 2: And you know this starts to parallel other sort of
Speaker 2: conversations around other large technology companies. Is essentially that customers
Speaker 2: love us. That like you're the Department of Justice, which
Speaker 2: dropped a big lawsuit back in March, you know, alleging
Speaker 2: customer harm. Apple says, this thing that you're attacking, which
Speaker 2: is the fact that our stuff works better together than
Speaker 2: it does with anything else, is exactly the thing that
Speaker 2: customers care about.
Speaker 7: It.
Speaker 2: It's the thing that has differentiated us, and it's the
Speaker 2: thing that will you know, make our products continue to
Speaker 2: sell well. So that's where the debate really.
Speaker 4: Is, Max, what a p to drop on iPhone day
Speaker 4: of all days? I mean, the work counts what four
Speaker 4: thousand words? But I got through it. And what you
Speaker 4: do is you document the history of this company and
Speaker 4: then pose the question, for all the regulatory pressure, the strategy,
Speaker 4: the competition, will it matter. And I think in the
Speaker 4: short term the answer is no.
Speaker 2: Yeah, I mean the answer for sure and the short
Speaker 2: term is no, you know, the Department of Justice is saying, hey,
Speaker 2: it's really bad that you dominate all these markets that
Speaker 2: you have, all the profits that like there are no
Speaker 2: competitors here, and you know, those are exactly the sorts
Speaker 2: of things that Wall Street investors tend to like. You know,
Speaker 2: It's why Apple is the most valuable company in the world.
Speaker 2: I think when you start to ask, Okay, what is
Speaker 2: the long term what's going to be the long term
Speaker 2: consequence here, that's where the hard questions start.
Speaker 5: I mean, you.
Speaker 2: Do have a sense and this is this is a
Speaker 2: conversation that's been going on probably for a decade, but
Speaker 2: has gotten louder that Apple, you know, for all it's
Speaker 2: reputation for innovation and so on, has has maybe you know,
Speaker 2: maybe lost a step, as critics would say. And then
Speaker 2: you do have these sort of very slow moving regulatory actions.
Speaker 2: But we're regulatory actions that of course can have consequences.
Speaker 2: You know, we're seeing this Department of Justice, second Department
Speaker 2: of Justice case against Google, Department of Justice seeking to
Speaker 2: break up Apple. You know that those are the kinds
Speaker 2: of things that Apple is going to have to contend
Speaker 2: with and perhaps contemplate in the years.
Speaker 4: To come Bloomberg's Max Chafkin with that big take, just
Speaker 4: incredible and detailed writing on an important day. But there's
Speaker 4: one area where perhaps Apple isn't as dominant, an area
Speaker 4: where it's still proving the work that it's done, and
Speaker 4: that is in the domain of artificial intelligence or Apple intelligence.
Speaker 4: Let's get some analysis with Constellation Research. Is Ray Wang,
Speaker 4: who's in his hometown right next to me. I mean,
Speaker 4: we can get to the discussion about a super cycle
Speaker 4: about year on year generations of iPhone, But for me,
Speaker 4: the simple question is does the consumer or iOS user
Speaker 4: understand how they're going to use it hospicial intelligence through
Speaker 4: Apple Intelligence in their daily lives, you.
Speaker 10: Know, And I think what's been happening all the time
Speaker 10: is the fact that you know they have it in
Speaker 10: the background. It's ambient the ability to write better, the
Speaker 10: ability to take an image and have it actually transform
Speaker 10: into a picture, the ability to actually suggest make suggestions
Speaker 10: for you grammatically. That's all been happening in the background.
Speaker 10: And Apple's view on AI is very different than everyone else's.
Speaker 10: It's mass personalization at scale, it's privacy, and more important,
Speaker 10: it's the ability to actually do that in the background.
Speaker 10: As an ambient experience. That's what makes it so special,
Speaker 10: and people trust them much more than other AIS.
Speaker 4: I find the chronology and timeline of what's to happen interesting.
Speaker 4: I have an iPhone fifteen pro. When we were here
Speaker 4: one year ago, I went out and upgrade. Did will
Speaker 4: I upgrade in the sixteen? I don't know? But Apple
Speaker 4: Intelligence will be available to me. Nonetheless, how do you
Speaker 4: interpret that?
Speaker 10: Yeah, I think it's really important. A mass majority of
Speaker 10: subscribers are basically on a subscription model, and so they're
Speaker 10: just going to renew on that cycle. So every three years,
Speaker 10: every four years, that's going to be the area that
Speaker 10: you see that. So the move to FI G that
Speaker 10: was actually one of the moves. The move to AI
Speaker 10: is going to be the next set of moves, and
Speaker 10: that's causing the refresh cycle. There's one point three four
Speaker 10: billion iPhones out there, and of course it's going to
Speaker 10: be a two hundred and forty million recycle refresh cycle,
Speaker 10: the two hundred fifty million refresh cycle that's going to
Speaker 10: happen every three to four years, and especially if you've
Speaker 10: got to carry a contract where you're paying monthly fee
Speaker 10: and subscription.
Speaker 5: Revenue ray that cycle, you talk of those numbers that
Speaker 5: need updating and upgrading. They're not just in America, they're
Speaker 5: in China and they're in the EU. We've just heard
Speaker 5: about the limitations of Apple Intelligence there and also the
Speaker 5: market that's being hoovered up by Huawei. What do you
Speaker 5: make of that competition.
Speaker 10: Yeah, so Huawei's competition is going to be limited. They
Speaker 10: won't be able to actually sell in the US. So
Speaker 10: even if they have three million orders as they mentioned
Speaker 10: already in v mall, that's going to change the market
Speaker 10: just in the outside markets outside of the US. But
Speaker 10: you also see Apple pushing hard into India and that
Speaker 10: growing market. I mean, it's a status symbol, it's a
Speaker 10: luxury device, it's not just a functional utility. So that's
Speaker 10: a very very different market, and they're pricing it different.
Speaker 10: They're coming at it from different price points and market points.
Speaker 4: There is something fascinating happening in China, which is very simple.
Speaker 4: Apple Intelligence will not be available there, but they're cited nonetheless,
Speaker 4: So even if they can't access it now, they might
Speaker 4: upgrade because of the promise that it will come eventually.
Speaker 4: What does your research tell you about that phenomenon?
Speaker 10: I guess no, we see that happening everywhere. People are
Speaker 10: looking forward to some of those features. I think at
Speaker 10: the end of the day, Apple's going to have to
Speaker 10: comply to country regulations. They're going to have to do
Speaker 10: it for the EU, They're going to have to do
Speaker 10: it for China. EI regulations are going to be very regional.
Speaker 10: You might see that emerge as well in the Middle East.
Speaker 10: I'm headed out to the Middle East for the Global
Speaker 10: AI Summit and we're going to be talking about and
Speaker 10: hearing some of those things as well.
Speaker 5: Where are you worried? It doesn't sound like you are.
Speaker 5: It sounds like even with market no longer being the
Speaker 5: top five player in China for Apple, and indeed some
Speaker 5: of these limitations in the EU, it sort of doesn't matter.
Speaker 5: You think there will be a super cycle no matter
Speaker 5: of what.
Speaker 10: I definitely believe in that super cycle because all the
Speaker 10: forces of subscription, all the forces in terms of you know,
Speaker 10: status symbol, and of course the features that are going
Speaker 10: they might be they might be spec bumps, but the
Speaker 10: bottom line is consumers are going to stick with what
Speaker 10: they have given their ecosystem, given the access to Apple
Speaker 10: services and more importantly the fact that you know that
Speaker 10: is their only access point right now in terms of
Speaker 10: privacy and AI.
Speaker 4: Very real quick wearables refresh how important?
Speaker 10: Oh I think the world are important because that's the
Speaker 10: entry point for a lot of folks. So watch refresh.
Speaker 10: It's going to be important and maybe we'll see something
Speaker 10: for AirPods, ray.
Speaker 4: Rang Constellation research always on it, always star at Caroline,
Speaker 4: what you.
Speaker 5: Got and bullish ed bullish coming up AI startup Chi
Speaker 5: Discovery receiving backing from investors including open Ai. We're discussed
Speaker 5: with the found in next. This is brttly big technology.
Speaker 5: Eil Musk is reportedly working on a deal that would
Speaker 5: leverage his XAI startups data in exchange for some of
Speaker 5: Tesla's revenue. Nam most Kurt Wagner joins us some more
Speaker 5: and what is a Wall Street journal piece again about
Speaker 5: the intertwine of his companies. Can you tell us what
Speaker 5: is being reported on? What would get in exchange? What
Speaker 5: would XAI give to Tesla?
Speaker 11: So in this you know proposed deal, Xai would help
Speaker 11: Tesla with some of their full self driving technology, other
Speaker 11: AI projects including you know, the humanoid robot project that
Speaker 11: Tesla is working on, and exchange for a share of
Speaker 11: revenue that's driven by these projects, right, and Caroline, as
Speaker 11: you mentioned, we were just talking about this last week, Right,
Speaker 11: this idea of all of the different companies in Elon's
Speaker 11: universe working together and the pros and cons of those.
Speaker 11: I think in this case, you know, if you're an
Speaker 11: ex Ai investor, this sounds like a great deal.
Speaker 1: Right.
Speaker 11: Suddenly you have a huge you know, potential revenue stream,
Speaker 11: a huge potential client in Tesla. I imagine Tesla investors
Speaker 11: may feel slightly different, But I think this is yet
Speaker 11: another example of the Elon world starting to collide with
Speaker 11: all of his various businesses.
Speaker 5: That has been pushed back from certain Tesla investors about
Speaker 5: the sharing of chips, for example, and video chips. Now
Speaker 5: Elon's own response to this very story has been pushed back,
Speaker 5: and indeed he was saying previously, well, the chips sort
Speaker 5: of laying around in a warehouse unless I put them
Speaker 5: to work for Xai. Will we hear more investor pushback?
Speaker 11: I think you might, because there is this feeling that
Speaker 11: Elon right now is using Tesla sort of the crown
Speaker 11: jewel of this empire. He has to elevate or boost
Speaker 11: his other businesses, right, Xai being one of them. Now again,
Speaker 11: I think those two companies probably share a lot of investors,
Speaker 11: So maybe there are some folks who are invested in
Speaker 11: Xai who would say, hey, this is a.
Speaker 1: Great opportunity for us.
Speaker 11: But if you are just invested in Tesla's you'd be
Speaker 11: asking yourself, well, why are we giving business to Elon's
Speaker 11: other company that I have nothing to do with? Right,
Speaker 11: So I do imagine there will be some invests here
Speaker 11: are who are at least scratching their heads saying, is
Speaker 11: this really the best option or the best opportunity for us,
Speaker 11: or is this just the best opportunity for Elon and
Speaker 11: his other businesses.
Speaker 4: When he responded to that Wall Street Journal report, he
Speaker 4: said he hadn't read it, but that it wasn't accurate,
Speaker 4: But he did concede that at a basic level, XAI
Speaker 4: engineers speak to Tesla engineers. And I remember the week
Speaker 4: that Elon Musk walked into what was Twitter headquarters. Now
Speaker 4: x you and I reported. The first thing we reported
Speaker 4: is that Elon brought in Tesla engineers to basically cod
Speaker 4: assess the staff. And this is kind of normal right
Speaker 4: in Elon inc That there's a sort of more casual
Speaker 4: relationship between the companies and its stuff.
Speaker 11: One hundred percent normal. This is exactly what Elon you know,
Speaker 11: has done, has shown to do. He shares employees, he
Speaker 11: shares resources among companies. You know, if you work for
Speaker 11: Elon at one company, you kind of work for the
Speaker 11: Elon universe of companies.
Speaker 1: So I think we have seen this happen.
Speaker 11: You know, as you mentioned, Edgie's pushing back on the story,
Speaker 11: but oftentimes you push us back on things that end up.
Speaker 1: Being true or at least mostly true.
Speaker 11: So it's hard to take that, you know, to me
Speaker 11: and this is not going to happen. And as you
Speaker 11: point out, I do think that there's a relationship here.
Speaker 11: It's just, you know, a matter depends what it's going
Speaker 11: to ultimately look like.
Speaker 5: Kurt Wagner, we thank you so much. Let's stick with
Speaker 5: artificial intelligence now, but from a biology perspective. A startup
Speaker 5: Chai Discovery, which founded just six months ago and already
Speaker 5: it has raised thirteen million dollars from AI heavyweights Thrive Capital,
Speaker 5: Open ai Amy to bring artificial intelligence to drug discovery.
Speaker 5: Josh Meyer is the founder of Chi Discovery, joining us now.
Speaker 5: Congratulations on the round. I am so interested in chai
Speaker 5: on and this open source model compared to others. When
Speaker 5: we're thinking of Alpha fold, when you're thinking of evolutionary
Speaker 5: scales model, you say it's better. How on what measurements?
Speaker 6: Well, first of all, thanks so much for having me here.
Speaker 6: We're really excited to be putting out this model for
Speaker 6: the community. You're asking a great question, and you know
Speaker 6: one of the properties about this field right now. It's
Speaker 6: actually almost challenging to evaluate these models. Now I cam
Speaker 6: here to one another. A lot of these models are
Speaker 6: available only under non commercial settings, which means it's hard
Speaker 6: for a company like us to actually benchmark against them.
Speaker 6: But we find on one of the benchmarks, for example,
Speaker 6: a benchmark called Postbusters, we find our models about seventy
Speaker 6: seven percent versus the seventy six percent from Alpha fold three.
Speaker 6: The models are really neck and neck, and we're really
Speaker 6: excited to put out a model and make it available
Speaker 6: for everyone, including for companies that want to engage in
Speaker 6: drug discovery.
Speaker 5: Josh, Alpha fold has the juggernauts of Google Alphabet behind it.
Speaker 5: Behind you sit some empty chairs, and we understand, just
Speaker 5: a team of ten, what will about thirty million go towards?
Speaker 5: Is it about the talent? Is it about the compute,
Speaker 5: where do you want to build?
Speaker 6: Well, we're going into really exciting times. Drug discovery is
Speaker 6: an extremely hard process. The fact that drug discovery works
Speaker 6: at all with the tools that are available today is
Speaker 6: nothing short of miraculous. So we're really excited to kind
Speaker 6: of participate in this market and build tools that we
Speaker 6: hope will make a difference in the process.
Speaker 1: I think the results speak for themselves.
Speaker 6: This is why we were excited, even just a couple
Speaker 6: of months of work to put that out for the community,
Speaker 6: for folks to evaluate themselves and to hopefully find find
Speaker 6: it useful. But there's so much work ahead of us,
Speaker 6: and I'm really just grateful for the incredible team we
Speaker 6: have behind us, my co founders, for example, Matt mcparltlan
Speaker 6: and Jack denn and Jacques but Trum among others. It's
Speaker 6: just such a great team to be working with, and
Speaker 6: I think we're just inspired by the possibilities that are
Speaker 6: ahead of us.
Speaker 4: There's been a lot of hope and enthusiasm for the
Speaker 4: impact that AI will have on drug discovery for a while.
Speaker 4: But you are showing improvement to success rates. When does
Speaker 4: that sort of manifest itself in the real world. Pushes
Speaker 4: forward the field that one day a consumer or a
Speaker 4: patient gets access to this work.
Speaker 6: We're in the really early innings of AI and drug discovery.
Speaker 6: We're seeing those first signs of life in CHAI one.
Speaker 6: For example, we've shown that you can integrate starting constraints
Speaker 6: into the model, the kinds of things that you might
Speaker 6: derive from white lab experiments, and use those in order
Speaker 6: to get significantly better improvements on understanding how molecules interact
Speaker 6: with one another. Those molecules are the basis of life
Speaker 6: as we know it, so we think with these kinds
Speaker 6: of new capabilities, we can use them to better understand
Speaker 6: how molecules interact and then use that understanding to reprogram
Speaker 6: them and then hopefully come up with better medicines and
Speaker 6: just increase make humanity better for all of us.
Speaker 5: Keep coming back when those discoveries are occurring via your model,
Speaker 5: we appreciate it. Try Discovery founder Josh Meyer, Oracle just
Speaker 5: erasing its earlier gains on the day that's ahead of
Speaker 5: the company reporting earnings today, with investors hopeful that there
Speaker 5: is a continued momentum in this name the cloud business
Speaker 5: fueled by AI demand. Bloomberg's Brodie Ford covers Oracle and
Speaker 5: it's training high. We're now off. There is a lot
Speaker 5: of hope that we can vindicate the thirty percent run
Speaker 5: up this year in this stock totally.
Speaker 12: This is one of those funny cases where you have
Speaker 12: a mature company that's known for something, but now a
Speaker 12: business line that's what ten percent of total revenue is
Speaker 12: all folks care about oci Oracle cloud infrastructure. A lot
Speaker 12: of folks didn't take it seriously three years ago, but
Speaker 12: now it's had a lot of wins with companies doing
Speaker 12: generative AI. Elon's Xai is famously a customer, and so
Speaker 12: we're seeing a lot of immense month Oracle's cloud infrastructure
Speaker 12: and as you see, yeah, one of the best performing
Speaker 12: software companies of the year. Investors are hopefully it'll continue.
Speaker 5: Some analysts are a little bit nervous. One putting it
Speaker 5: that they wanted to know if Oracle is an AI
Speaker 5: faker that coming from Jordan klin Over at Mazuho, why
Speaker 5: would it be deemed a faker.
Speaker 12: It reminds me of the debate around the AI server companies.
Speaker 12: The question is is this just something that's needed now
Speaker 12: because the traditional giants like Azure aws don't have the
Speaker 12: capacity or is there really something different about Oracle's cloud
Speaker 12: that all means it will continue lasting. I mean, there's
Speaker 12: spending eight billion dollars a year on Capex building out
Speaker 12: new data centers, so I'm sure they seem pretty confident
Speaker 12: that this will continue and demand.
Speaker 5: They being Larry Ellison and team. Absolutely, he's a busy guy.
Speaker 5: It seems late like what he's also technically the controller
Speaker 5: of Paramount. That must have given you a chuckle.
Speaker 12: Yeah, I'm expecting some call the question on the earnings
Speaker 12: call tonight about that, because I think Paramount and the
Speaker 12: Ellison team has made some comments about like, oh, we'll
Speaker 12: use Oracle technology to help us make movies. No one's
Speaker 12: clear if that means they don't have filmmaking technology. But
Speaker 12: I imagine we'll see some interesting press releases about how,
Speaker 12: you know, Paramounts using Oracle cloud infrastructure or AI script writing.
Speaker 12: There's gonna be some interesting coll mingling here. I imagine.
Speaker 5: Let us know what goes on on that call. He always does,
Speaker 5: Bradie Ford, we appreciate it. Meanwhile, Ed, we are counting
Speaker 5: down just over one hour from glow time. What's some
Speaker 5: on my view?
Speaker 4: Yes, yeah, look, I think We know what the basics are, right,
Speaker 4: iPhone sixteen generation four variants Base and then the two
Speaker 4: PC Pro and Pro Max. But it's still the same question,
Speaker 4: which is about Apple Intelligence. How do I use it
Speaker 4: in the course of my daily life? How do I
Speaker 4: use it at work? And, as Mark German has reported
Speaker 4: in detail, this kind of staggered roll out where the
Speaker 4: new generation hands set will ship next month, but iOS
Speaker 4: eighteen point one will be in at the end of
Speaker 4: this month. iOS eighteen point one will be next month.
Speaker 4: How does that go down with consumers? And it's not
Speaker 4: available in China in the EU? Refresh Apple Watch Refresh
Speaker 4: on the wearable side of things as well, but it's
Speaker 4: often in the story, right Carol on stage, help me
Speaker 4: understand how I'll be doing this in my daily life.
Speaker 5: We've only got a minute. But the stock is lower
Speaker 5: it usually is on these days though, right we watch?
Speaker 1: True?
Speaker 4: Yeah, I mean I just love history and Apple stocks
Speaker 4: closed down and twelve of the last seventeen iPhone events
Speaker 4: sell the news kind of event. But there is a
Speaker 4: feeling this time might be different because if there's not
Speaker 4: a substantive hardware update fifteen to sixteen generation, it is
Speaker 4: the software side that might drive us forward if we
Speaker 4: are to have a so called super cycle.
Speaker 5: It is still a three point three trillion dollar company,
Speaker 5: World's most valuable. We thank you Ed Ludlow for everything
Speaker 5: you're doing right now, everything you're going to do for
Speaker 5: the rest of the day as glow time kicks off.
Speaker 5: That does it for this addition of Blue mag Technology.
Speaker 5: Do not forget to check out our podcast as well.
Speaker 5: You can find it on the terminal as well as
Speaker 5: on Apple, on Spotify, and iHeart so much more to
Speaker 5: come from Ed in Kupertino. This is bloomg Technology.