WEBVTT - AI, Crypto Anxiety Creates Volatile Week for Markets 0:00:02.520 --> 0:00:13.840 Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive 0:00:13.880 --> 0:00:17.720 from coast to coast with Caroline Hyde in New York 0:00:17.960 --> 0:00:19.919 and Ed Lovelow in sentrancs go. 0:00:22.720 --> 0:00:25.560 This is Bloomberg Tech coming up, AI and crypto anxiety. 0:00:25.560 --> 0:00:28.520 It sends stocks on a wild ride amid volatile trading. 0:00:28.520 --> 0:00:29.480 Will have the details. 0:00:29.800 --> 0:00:32.680 This is Open AI teams up with fox Conn design 0:00:32.800 --> 0:00:36.199 AI data center hardware in the United States, and we 0:00:36.320 --> 0:00:39.640 speak with the CEO of Cerebrus about the US's approval 0:00:39.760 --> 0:00:43.400 of selling advanced AI chips to the Middle East. All 0:00:43.440 --> 0:00:47.160 of this coming in the context of deepening market anxiety. 0:00:47.360 --> 0:00:50.240 After we are whip swored time and time again, let's 0:00:50.280 --> 0:00:52.000 just check out what's happened on the markets over the 0:00:52.040 --> 0:00:54.600 course of the five trading days. What a week it 0:00:54.640 --> 0:00:57.160 has been. It is off by four percent for the Nasdaq. 0:00:57.200 --> 0:00:58.960 This is the worst week we seen for the Nasdaq 0:00:59.000 --> 0:01:04.280 one hundred April since, of course, the first concerns about 0:01:04.520 --> 0:01:08.080 trade tariffs came into the market. We are seeing significant 0:01:08.120 --> 0:01:10.160 pressure on some of your biggest AI winners. Let's move 0:01:10.200 --> 0:01:12.720 on and see how some of the nazdac key Points 0:01:12.720 --> 0:01:15.480 contributors are doing on this day in Vidio off by 0:01:15.480 --> 0:01:17.959 two point seven percent and Video is now down eight 0:01:18.120 --> 0:01:21.240 percent over the course of five training days, but Oracle 0:01:21.560 --> 0:01:25.839 on course for its worst week since March twenty eighteen. 0:01:26.600 --> 0:01:30.000 The AI bubble anxiety continues, and we want to dig 0:01:30.040 --> 0:01:32.280 into all of that and the market reaction this week 0:01:32.319 --> 0:01:35.160 with bluem egxecut's reporter Carmen Rhinikey, who has been across 0:01:35.200 --> 0:01:39.640 the story day in day out. Carmen, why are we 0:01:39.800 --> 0:01:43.160 seeing this ongoing pressure on some of the biggest winners. 0:01:43.520 --> 0:01:46.240 Yeah, it's really interesting, and like what a week it's been, right, 0:01:46.280 --> 0:01:48.480 you know, we have in Video with this blowout innings 0:01:48.480 --> 0:01:51.960 report and then two down days immediately following it. Really, 0:01:51.960 --> 0:01:54.040 what it seems to be happening is there are so 0:01:54.200 --> 0:01:57.080 many macro pressures on the market right now that that's 0:01:57.120 --> 0:01:59.880 adding a lot of weight and dragging down the major indexes. 0:02:00.120 --> 0:02:02.320 But at the same time we're seeing. 0:02:02.040 --> 0:02:05.160 That in Video's report, as good as it was, wasn't 0:02:05.240 --> 0:02:07.960 enough to quell some of these overall AI fears, right, 0:02:08.240 --> 0:02:10.680 and so we're seeing a sell off. We're seeing very 0:02:10.800 --> 0:02:13.160 risk off mentality in. 0:02:13.080 --> 0:02:13.840 The markets right now. 0:02:13.840 --> 0:02:15.720 And one thing that has been kind of interesting is 0:02:15.720 --> 0:02:18.120 looking at the stocks that are up today, we're actually 0:02:18.160 --> 0:02:21.880 seeing Apple outperform and it usually has lately sort of 0:02:21.960 --> 0:02:25.280 been opposite of these big AI names because it doesn't 0:02:25.280 --> 0:02:28.120 have a huge AI piece of the puzzle. And then 0:02:28.120 --> 0:02:30.720 we're also seeing Google up, which is still really big 0:02:30.760 --> 0:02:33.400 optimism after Gemini three. So it's just interesting to see 0:02:33.440 --> 0:02:35.040 a little bit of the split that's happening there in 0:02:35.040 --> 0:02:35.440 the market. 0:02:35.880 --> 0:02:38.120 And much of this, of course has been built into 0:02:38.160 --> 0:02:41.520 the worry about yes in Nvidia has the demand people 0:02:41.560 --> 0:02:44.440 starting to dig into account's receivable into inventory. 0:02:44.480 --> 0:02:46.919 But that felt like a bizarre. 0:02:46.520 --> 0:02:50.280 To try and in retrospect understand why we were seeing 0:02:50.280 --> 0:02:52.480 a sell off rather than seeing that and then seeing 0:02:52.480 --> 0:02:53.280 a stock sell off. 0:02:53.320 --> 0:02:55.400 So can you talk to us about how things are 0:02:55.400 --> 0:02:56.680 happening in timing wise? 0:02:57.360 --> 0:02:58.200 The timing has. 0:02:58.040 --> 0:03:00.240 Been so interesting, and I think you're totally right that 0:03:00.680 --> 0:03:03.240 we you know, I speak to a lot of investors 0:03:03.280 --> 0:03:05.280 and people were sort of pulling on different things, but 0:03:05.320 --> 0:03:08.280 there was no real, like smoking gun, great answer as 0:03:08.320 --> 0:03:10.880 to why you know, we were seeing this sell off. 0:03:10.919 --> 0:03:13.320 But we have been seeing the market sort of react 0:03:13.440 --> 0:03:16.960 more to things around a fed cut. If there's going 0:03:17.040 --> 0:03:19.320 to be a great cut in December. So this morning, 0:03:19.560 --> 0:03:21.440 you know, it looked like things were kind of positive, 0:03:21.440 --> 0:03:25.640 and then around the Williams comments, but then you know, 0:03:25.680 --> 0:03:28.840 we get you mish out, and so it just seems 0:03:28.880 --> 0:03:32.120 like there's a ton of macro and that is really 0:03:32.160 --> 0:03:33.600 what's moving the market. 0:03:33.840 --> 0:03:37.640 I think one discourse that has been throughout is debt 0:03:38.080 --> 0:03:40.880 and debt particularly among players like Core Weave in the 0:03:40.880 --> 0:03:43.520 Neo clouds, but Oracle in particular, the CDs. 0:03:43.560 --> 0:03:45.480 The credit to fault swaps of Oracle have become. 0:03:45.320 --> 0:03:49.440 Almost like a way in which we show anxiety in 0:03:49.480 --> 0:03:51.920 the great debt parlor of certain companies. 0:03:52.200 --> 0:03:53.880 Is it rational? No one thinks. 0:03:53.600 --> 0:03:56.000 Oracle is suddenly going to default, but it is being 0:03:56.080 --> 0:03:57.240 used as some sort of hedge here. 0:03:57.600 --> 0:04:00.000 Yeah, totally. And I mean the stock is just comped, 0:04:00.000 --> 0:04:02.800 completely fallen off. You know, it had that huge jump 0:04:03.080 --> 0:04:05.600 and then we've erased all of that. And the debt 0:04:05.720 --> 0:04:08.320 question is a really big thing on investors' minds, and 0:04:08.360 --> 0:04:10.160 I think it really plays into the fears of the 0:04:10.200 --> 0:04:13.560 AI bubble or the debate around it being a bubble, 0:04:13.600 --> 0:04:16.719 because if these companies start loading up on debt, there's 0:04:16.800 --> 0:04:19.040 the potential that it could they could become over lever 0:04:19.200 --> 0:04:22.200 that could be a bigger issue down the line. And 0:04:23.000 --> 0:04:25.840 you know, with everything as circular as it is, even 0:04:25.839 --> 0:04:28.560 though these companies keep addressing it, you know, Jensen spoke 0:04:28.600 --> 0:04:32.479 about it in videos calls. Investors are just not convinced yet. 0:04:32.640 --> 0:04:35.880 You know, they're just seeing the house of cards. They're 0:04:35.920 --> 0:04:36.640 worried about it. 0:04:36.920 --> 0:04:39.080 They need to see the return on aiblu most common. 0:04:39.120 --> 0:04:41.720 Rhinochy has been across this story. Have a feeling she'll 0:04:41.760 --> 0:04:43.919 continue to be, so we thank her. Let's turn to 0:04:43.960 --> 0:04:45.320 the world of digital currencies. 0:04:45.480 --> 0:04:46.720 There's volatility there too. 0:04:46.760 --> 0:04:50.040 Bitcoin on track for its worst month since twenty twenty two. 0:04:50.400 --> 0:04:53.240 Look how much it shed twenty five percent of its 0:04:53.279 --> 0:04:54.720 value in November alone. 0:04:55.000 --> 0:04:57.359 It's not just bitcoin though, According to data from coin. 0:04:57.240 --> 0:05:00.800 Gecko, the total market value for virtual coins below three 0:05:00.920 --> 0:05:03.080 trillion dollars the first time since April. 0:05:03.360 --> 0:05:05.240 James Siefert is with us Bluemeg Intelligence. 0:05:05.279 --> 0:05:08.600 You cover alternative investments and talk us through some of 0:05:08.640 --> 0:05:10.640 the selling pressure. You look at it particularly from the 0:05:10.720 --> 0:05:13.960 ETF lens, but more broadly, is it institutional money that's 0:05:14.000 --> 0:05:16.560 stepping away ever since that big sell off leverage wash 0:05:16.600 --> 0:05:17.359 out in October? 0:05:18.200 --> 0:05:21.120 Yeah, So I absolutely think this is still hangovers a 0:05:21.160 --> 0:05:24.159 little bit from that October tenth sellout that you just mentioned. 0:05:24.360 --> 0:05:26.680 There's no way to know for sure it's institutional or retail, 0:05:26.720 --> 0:05:29.160 but there's some big sellers out there. And what I 0:05:29.200 --> 0:05:31.479 would say is the ETFs have mostly held strong. I 0:05:31.480 --> 0:05:34.480 mean we as on a percentage basis. The amount of 0:05:34.480 --> 0:05:37.000 outflows we saw from the ets was way bigger. In April, 0:05:37.680 --> 0:05:40.240 it was about six billion that came out. Right now 0:05:40.240 --> 0:05:43.080 we're about five point three five point four billion that 0:05:43.080 --> 0:05:44.760 have come out of the ETFs, but it's from a 0:05:44.839 --> 0:05:47.560 much higher base, so the percentage basis is way smaller, 0:05:47.560 --> 0:05:49.640 So most of the selling is happening from, you know, 0:05:49.920 --> 0:05:51.960 the actual spot crypto markets. A lot of people like 0:05:51.960 --> 0:05:53.880 to look at the ETFs and they think like, oh, 0:05:53.920 --> 0:05:57.680 they're causing this problem or they're exacerbating things, but really 0:05:57.720 --> 0:05:59.440 they're just a piece of the pie. And right now, 0:05:59.480 --> 0:06:01.200 like I said, it's only about five point three billion 0:06:01.240 --> 0:06:03.160 that have come out of the ETFs the US spot products, 0:06:03.520 --> 0:06:05.400 So for most of this is happening actually to the 0:06:05.440 --> 0:06:06.120 coins directly. 0:06:06.520 --> 0:06:08.600 It's interesting that many who have been in this space 0:06:08.600 --> 0:06:10.560 for a very long time don't see this as a 0:06:10.560 --> 0:06:13.880 particularly anxiety inducing moment because they've seen sell off some 0:06:13.920 --> 0:06:14.560 pressure before. 0:06:14.600 --> 0:06:15.960 It's a volatile asset class. 0:06:16.080 --> 0:06:18.960 But when you say exacerbating the situation, how much a 0:06:19.040 --> 0:06:23.080 digital asset treasuries exacerbating the situation. The sudden move we 0:06:23.160 --> 0:06:26.880 saw for companies to put digital assets on their balance sheet. 0:06:27.960 --> 0:06:31.120 Yeah, so I absolutely do think that the dats are 0:06:31.560 --> 0:06:33.840 exacerbating things here. So right, I think they were a 0:06:33.839 --> 0:06:35.600 bit of a flywheel on the way up right, they 0:06:35.600 --> 0:06:37.239 were trading at a bit of a premium. They're issuing 0:06:37.279 --> 0:06:40.120 stock to buy the underlying currencies. They were issuing debt, 0:06:40.320 --> 0:06:42.839 preferred stock and vertible debt to buy the underlying currencies. 0:06:43.040 --> 0:06:44.760 And when they're trading at a premium, that's spinning in 0:06:44.760 --> 0:06:47.239 one direction. Right now, things are spinning the opps direction. 0:06:47.320 --> 0:06:49.839 There are some dats out there that are selling underlying 0:06:49.839 --> 0:06:52.520 assets we know, with some ethereum ones and things along 0:06:52.600 --> 0:06:54.520 those lines. So I think this is And then also 0:06:54.520 --> 0:06:55.960 there's a lot of traders out there that are doing 0:06:55.960 --> 0:06:58.560 things or they're hedging the underlying asset and hedging against 0:06:58.560 --> 0:07:02.960 the actual DAT company themselves, So that whole interaction is 0:07:02.960 --> 0:07:05.440 definitely kind of spinning the opposite direction of the way. 0:07:05.440 --> 0:07:07.000 It's been spinning for the last few months. 0:07:07.160 --> 0:07:08.880 And then also there's a lot of concerns about quantum 0:07:08.839 --> 0:07:11.600 computing from there's a blogger who everyone kind of respects 0:07:11.600 --> 0:07:13.640 in the space has moved up his timelines, and a 0:07:13.680 --> 0:07:15.360 lot of people like to say it's fun, it's not 0:07:15.440 --> 0:07:18.160 real concern, but people are starting to take the seriously, 0:07:18.200 --> 0:07:21.240 including the leader and founder of Ethereum Metallic. So I 0:07:21.240 --> 0:07:23.280 think there's a whole bunch of things here that are compounding. 0:07:23.280 --> 0:07:24.600 Obviously you just spoke about it. 0:07:24.760 --> 0:07:27.000 There's a bunch of risk off in AI names and 0:07:27.080 --> 0:07:30.400 just equity risk assets in general. And then I think 0:07:30.480 --> 0:07:32.880 also maybe this might be we often see a bit 0:07:32.920 --> 0:07:35.120 of selling around this time of year, maybe into December, 0:07:35.160 --> 0:07:37.120 particularly DTS for tax loss harvesting. 0:07:37.320 --> 0:07:38.760 Maybe that's being pulled forward a little bit. 0:07:39.360 --> 0:07:42.360 That's interesting. What I want to go back to is 0:07:42.360 --> 0:07:43.560 the quantum side of the equation. 0:07:43.640 --> 0:07:47.040 Look, we know that the dat situation digital asset treasuries 0:07:47.040 --> 0:07:49.360 has been a case in point is Michael Saylor and 0:07:49.400 --> 0:07:51.640 what he did with strategy, and people worrying that maybe 0:07:51.640 --> 0:07:53.840 that even falls out some of the key benchmarks and 0:07:53.840 --> 0:07:56.400 that adds to the selling pressure. But quantum is more 0:07:56.400 --> 0:07:59.760 about cryptography and how that might be broken. Briefly, James, 0:07:59.800 --> 0:08:01.040 is that what people are worrying about? 0:08:01.960 --> 0:08:03.680 Yeah, I mean I won't pretend to be an expert 0:08:03.720 --> 0:08:07.320 on quantum cryptography or cryptography in general, but essentially the 0:08:07.320 --> 0:08:09.960 concern is that that quantum computing would be able to 0:08:10.160 --> 0:08:13.200 hack the encryptions that basically keep you know, Bitcoin and 0:08:13.240 --> 0:08:17.160 other cryptocurrency safe. There are you know, quantum resistant cryptographies 0:08:17.200 --> 0:08:18.760 that can be used and are planned to be used 0:08:18.800 --> 0:08:21.560 in other cryptocurrencies and even proposals for bitcoin, but they're 0:08:21.600 --> 0:08:23.680 not instituted yet. So the concern is is this going 0:08:23.720 --> 0:08:27.360 to happen faster than most people are expecting, But the 0:08:27.480 --> 0:08:29.320 industry is on top of it. It's just, you know, 0:08:29.360 --> 0:08:31.040 it's a genuine concern at this point as far as 0:08:31.040 --> 0:08:31.600 I'm concerned. 0:08:32.120 --> 0:08:36.000 As you say, hashtag fud fear, uncertainty, doubt. Haven't had 0:08:36.000 --> 0:08:38.839 that acronym in a little while. James Siefert of Bloembag Intelligence, 0:08:38.880 --> 0:08:41.079 Thanks so much for breaking things down. Let's get an 0:08:41.080 --> 0:08:44.800 investor perspective for you now. Eric Bailey, Executive Managing director 0:08:44.800 --> 0:08:46.839 of the Bailey Group at Stewart Partners, joins us now 0:08:46.880 --> 0:08:50.160 and fun Fear uncertainty, doubt is that what is ripping through. 0:08:50.040 --> 0:08:54.719 The markets clearly, Yeah, yesterday was certainly eye opening with 0:08:54.800 --> 0:08:58.319 the action and the markets, and it shows investors are nervous. 0:08:58.360 --> 0:09:01.480 We've seen it pretty much this whole month, and then 0:09:01.559 --> 0:09:05.840 yesterday really really was clear that this sell off has 0:09:05.920 --> 0:09:09.000 more legs and big parts of the market are in 0:09:09.000 --> 0:09:13.559 a correction. In Nvidia now down seventeen percent from its high. 0:09:14.040 --> 0:09:16.760 You were talking earlier about Oracle that's down forty percent, 0:09:17.559 --> 0:09:20.240 and you're seeing investors are getting more defensive. You're seeing 0:09:20.280 --> 0:09:26.440 sectors like utilities, pharmaceuticals outperforming the growth parts of the market, 0:09:26.520 --> 0:09:30.840 and so this could continue. Right as we get through 0:09:30.920 --> 0:09:34.640 the end of the year. You do see rebalancing, tax selling, 0:09:35.200 --> 0:09:38.240 and that could continue as we need a little more clarity, 0:09:38.240 --> 0:09:40.599 a little more confidence to come into the market to 0:09:41.760 --> 0:09:44.199 get the growth trade back back heading up. 0:09:44.600 --> 0:09:47.040 What more clarity could you wish for? 0:09:47.360 --> 0:09:49.679 We got a retotive amount of clarity coming from the 0:09:49.720 --> 0:09:53.000 world's most valuable company, Jensen Wong doing his best to 0:09:53.040 --> 0:09:55.400 try and make clear the our line of sight he 0:09:55.480 --> 0:09:58.880 has on future revenues. People questioning maybe the inventory build 0:09:58.960 --> 0:10:01.400 up now. But we did get a lot of tangible 0:10:01.440 --> 0:10:05.040 evidence there. We had people such as Michael Burry saying 0:10:05.080 --> 0:10:07.120 who are the auditors on open AI? And yes, there 0:10:07.200 --> 0:10:09.240 was a lot of anxiety in the private markets, but 0:10:09.559 --> 0:10:11.680 many have pushed back on that sort of concern. 0:10:11.920 --> 0:10:13.400 What charentage do you want to see? 0:10:13.520 --> 0:10:13.720 Eric? 0:10:15.240 --> 0:10:17.960 Yeah, no, you bring up great points. I think, right 0:10:18.080 --> 0:10:22.080 it's a valuation issue and right now investors are weighing 0:10:22.200 --> 0:10:25.920 what's the value of these names. They're not clearly sold 0:10:26.080 --> 0:10:28.920 that the growth can continue, even though you look at 0:10:28.920 --> 0:10:31.800 the analyst community, you look at Nvidia, the average price 0:10:31.840 --> 0:10:35.040 target is two hundred and fifty. That's a thirty plus 0:10:35.080 --> 0:10:37.920 percent move from these levels, so you would think at 0:10:37.920 --> 0:10:43.800 these prices it's pretty attractive. So a lot of this is, again, 0:10:43.920 --> 0:10:46.800 you know, just market reaction going through kind of a 0:10:46.840 --> 0:10:49.960 correction phase. And I think the buyers will come back in. 0:10:50.040 --> 0:10:53.240 It's always unclear when and what levels, but I do 0:10:53.320 --> 0:10:55.600 see the buying coming back into the markets. 0:10:55.320 --> 0:10:58.080 Is an element of catch affording life. But is the 0:10:58.120 --> 0:11:01.400 FED the key question? So are indeed cut in December? 0:11:02.840 --> 0:11:03.080 Yeah? 0:11:03.480 --> 0:11:06.679 The FED adds a level of confidence to investors, and 0:11:06.760 --> 0:11:11.120 investors clearly want to see the FED is taking action 0:11:11.960 --> 0:11:14.560 that's positive for the economy, and that right now is 0:11:14.600 --> 0:11:17.120 clearly with rate cuts, and so a rate cut would 0:11:17.400 --> 0:11:20.160 in my view, bringing confidence to the markets and should 0:11:20.160 --> 0:11:24.520 help equities, especially growth equities. Growth equities typically do well 0:11:25.080 --> 0:11:27.960 as rates come down, and so that would be a 0:11:27.960 --> 0:11:29.440 big boost next month. 0:11:30.120 --> 0:11:34.120 Some of these particular numbers that I relate to on 0:11:34.160 --> 0:11:36.719 a weekly basis do look really ugly, as I say, 0:11:36.760 --> 0:11:40.480 now's that worst week since April video, worst week since 0:11:40.480 --> 0:11:43.120 about April, and you see a similar thing for Oracle, 0:11:43.160 --> 0:11:44.720 worst week in fact since twenty eighteen. 0:11:44.800 --> 0:11:45.760 But looking at a year to. 0:11:45.840 --> 0:11:48.880 Date basis, we're still in a pretty great spot, right Eric. 0:11:50.000 --> 0:11:52.679 Oh, absolutely yeah. I mean the SMP is still up 0:11:52.720 --> 0:11:56.560 north of ten percent. Overseas markets have had an incredible 0:11:56.640 --> 0:12:00.000 year up you know, across the board, north of twenty percent. 0:12:00.600 --> 0:12:02.880 So investors, right, they have to step back and be 0:12:03.000 --> 0:12:05.280 patient and be calm and actually look at these selloffs 0:12:05.360 --> 0:12:08.839 as an opportunity because this is where you can make 0:12:08.960 --> 0:12:12.760 solid returns right by great companies at lower levels. I mean, 0:12:12.760 --> 0:12:15.920 that's the key to investing and not panicking and not 0:12:16.080 --> 0:12:18.599 selling when everyone else is selling and take losses and 0:12:18.679 --> 0:12:20.080 hurt yourself long term. 0:12:20.480 --> 0:12:24.200 Eric, your thesis with AI do you think it's a 0:12:24.200 --> 0:12:25.880 bubble or do you think this is a sort of 0:12:25.880 --> 0:12:29.440 capital expenditure that's necessary to read the productivity in the future. 0:12:30.920 --> 0:12:34.040 You know, the numbers you're seeing committed to this space 0:12:34.160 --> 0:12:37.000 is certainly eye opening and nervous, and it seems like 0:12:37.040 --> 0:12:39.480 it's a few of the big, you know, massive players 0:12:39.520 --> 0:12:43.880 in that space, and so it does bring concern. On 0:12:43.960 --> 0:12:46.920 the other hand, without a doubt with with these earnings 0:12:47.000 --> 0:12:50.000 results we've seen, you know, just from Nvidia and you 0:12:50.040 --> 0:12:55.480 saw from Alphabet and the strength there clearly AI you 0:12:55.600 --> 0:12:59.560 have to be invested in it a long term. It's 0:12:59.640 --> 0:13:02.559 the growth Benjim. And so if you want growth, AI 0:13:02.720 --> 0:13:03.600 is the place you want to be. 0:13:03.960 --> 0:13:05.600 Alphabet at a new record high today. 0:13:06.120 --> 0:13:08.599 Bailey of the Bailey Group at Steward Partners, thanks for 0:13:08.640 --> 0:13:12.720 your time, Happy weekend. Coming up open AI Well, it's 0:13:12.760 --> 0:13:15.960 partnering up with Honhai also known as Boxcon to design 0:13:16.000 --> 0:13:18.760 AI data sent to hardware in the United States. Details 0:13:18.800 --> 0:13:20.360 next this is Brumberg Tech. 0:13:32.880 --> 0:13:35.000 To keep pushing the frontier. We need to build these 0:13:35.720 --> 0:13:39.000 new types of AI infrastructure hardware at scale, and I'm 0:13:39.000 --> 0:13:40.880 excited for that to happen in the US and with 0:13:40.960 --> 0:13:45.600 Fox con. Fox Cohn's experience building complex infrastructure and hardware 0:13:45.640 --> 0:13:48.320 at massive scale makes them the ideal partner for this, 0:13:48.960 --> 0:13:51.319 and I'm looking forward to exploring together what this can 0:13:51.360 --> 0:13:55.880 look like. We'll share insight into emerging hardware needs across 0:13:55.880 --> 0:13:58.720 the AI industry, and Foxcom will use that to design 0:13:58.760 --> 0:14:01.840 and prototype new equipment that can be manufactured in America. 0:14:02.760 --> 0:14:06.000 Open Ai CEO Sam Altman joining fox Con also known 0:14:06.000 --> 0:14:09.760 as hon Hi Tech Day in Taipei remotely to weigh 0:14:09.800 --> 0:14:12.680 in on the company's partnership with of course fox Gone 0:14:12.800 --> 0:14:15.160 to design AI data center hardware in the United States. 0:14:15.240 --> 0:14:15.400 Look. 0:14:15.440 --> 0:14:18.920 Under the partnership, fots GONE will co design and develop 0:14:19.040 --> 0:14:21.760 data center server racks with open AI and work to 0:14:21.840 --> 0:14:24.920 ensure such racks can be manufactured across the United States 0:14:25.040 --> 0:14:27.880 look blomeg Texts and Animel Drowders. She caught up with 0:14:28.000 --> 0:14:31.120 Honhaigh chairman Jong Nu to discuss the plan and his 0:14:31.200 --> 0:14:33.480 goal for scaling up compute capacity. 0:14:33.640 --> 0:14:37.720 Take a listen, the giga wand per week will be 0:14:37.840 --> 0:14:38.080 the goal. 0:14:38.720 --> 0:14:41.359 Okay, one giga wa per week. 0:14:41.240 --> 0:14:43.840 That would be SINS goal. But we can start with 0:14:43.960 --> 0:14:45.960 one giga wand per. 0:14:45.920 --> 0:14:49.120 Month, So you think you can add one gigawat per 0:14:49.240 --> 0:14:50.200 month next. 0:14:50.560 --> 0:14:55.320 Yeah, studying next the second half of the year. 0:14:55.400 --> 0:14:57.120 Second half of the year, So you think you can 0:14:57.160 --> 0:14:59.200 add six gigawats next year? 0:15:00.120 --> 0:15:03.520 Sure, it really depends on our starting on our new 0:15:03.760 --> 0:15:07.920 way of doing things. It takes time, but eventually we're 0:15:08.000 --> 0:15:08.640 going to get there. 0:15:08.840 --> 0:15:11.840 Let's talk about then, this opportunity in the US, because 0:15:11.880 --> 0:15:14.720 as you said, the part of this is about making America. 0:15:14.880 --> 0:15:19.120 It is very ambitious. What's the capex that you need 0:15:19.160 --> 0:15:21.320 to also dedicate to the States. 0:15:21.680 --> 0:15:28.000 The kpex wise is in maybe one to five billion 0:15:28.080 --> 0:15:31.840 to star wars to build the factories, to build on 0:15:32.000 --> 0:15:37.880 these centers, but to build the working capital required to 0:15:38.080 --> 0:15:44.560 build the data center, that's totally different. That requires a 0:15:44.760 --> 0:15:48.640 huge amount of money. Yeah, and with that we are 0:15:48.720 --> 0:15:51.360 going to work with sol Bank. 0:15:51.680 --> 0:15:54.320 What are the biggest challenges with scaling up. 0:15:54.240 --> 0:15:54.840 In the US? 0:15:56.120 --> 0:16:01.000 Shortage of labor, as I mentioned, is not labor. Cast 0:16:01.120 --> 0:16:02.480 is a charge donation labor. 0:16:03.240 --> 0:16:04.240 How do you get around that? 0:16:04.440 --> 0:16:07.280 What are the conversations like and what are the biggest 0:16:07.320 --> 0:16:08.680 shortfalls that you see? 0:16:09.080 --> 0:16:09.280 Now? 0:16:09.280 --> 0:16:13.600 We had to work closely with schools and the government, 0:16:14.040 --> 0:16:18.760 which we were very familiar When we build our factories, 0:16:19.560 --> 0:16:22.760 all over the world. We had to work with local 0:16:23.280 --> 0:16:29.400 agencies or local government to get their people ready for 0:16:29.520 --> 0:16:31.640 the kind of a job that we we require. 0:16:34.080 --> 0:16:37.280 Hon High Chairman Young New there with our own Annabelle Drulers, 0:16:37.680 --> 0:16:41.800 let's break down that agreement between open AI and Honhai 0:16:42.000 --> 0:16:45.000 Neuberg's AI. Sir Seth Fiegermann is here. It's interesting timing 0:16:45.160 --> 0:16:49.120 giving the anxiety around capital expenditure, and we're hearing about 0:16:49.120 --> 0:16:51.400 how Honhaig is using SoftBank perhaps for some of that 0:16:51.440 --> 0:16:52.760 capital expenditure and investment. 0:16:52.800 --> 0:16:53.920 Seth, but there. 0:16:53.760 --> 0:16:56.240 Doesn't seem to be any purchase agreements here, right. 0:16:57.040 --> 0:16:59.240 That's right, We really don't have any numbers here. I 0:16:59.240 --> 0:17:01.360 mean it is a testament to the scale of a 0:17:01.440 --> 0:17:05.240 Bonnie's ambition in particular on the infrastructure front, as well 0:17:05.280 --> 0:17:08.520 as fox CON's desire to diversify away from its reliance 0:17:08.560 --> 0:17:12.119 on Apple and really gain momentum on the AI. But 0:17:12.200 --> 0:17:14.560 I think stepping back from it, the really important to 0:17:14.560 --> 0:17:16.280 take away, apart from a lot of the record around 0:17:16.280 --> 0:17:18.480 what it means for US manufacturing, is what it means 0:17:18.480 --> 0:17:21.040 for open AI as it tries to not just move 0:17:21.119 --> 0:17:23.359 faster on the infrastructure front, even in the face of 0:17:23.440 --> 0:17:25.760 anxiety about AI spending, but also begin to build more 0:17:25.760 --> 0:17:29.560 of remote or competitive advantage on the infrastructure side. We 0:17:29.600 --> 0:17:31.719 talk a lot on the show and elsewhere about you know, 0:17:31.760 --> 0:17:35.440 how much and how quickly am models are being commodetized, 0:17:35.480 --> 0:17:37.480 and whether the compective advantage there. But I think what 0:17:37.520 --> 0:17:40.120 you've seen all Menualpennie I do is try to get 0:17:40.160 --> 0:17:43.080 certain more ownership over the supply chain for data center 0:17:43.119 --> 0:17:44.840 build out and chips in a way they could give 0:17:44.880 --> 0:17:47.760 it a different kind of competitive advantage and lower costs 0:17:47.800 --> 0:17:49.160 in the long term. 0:17:49.280 --> 0:17:52.679 Again, it's a foreign company investing in the United States. 0:17:52.680 --> 0:17:55.280 One to five billion dollars is what they're thinking is 0:17:55.280 --> 0:17:58.760 spending to grow fox CON's US manufacturing footprint. But here 0:17:58.800 --> 0:18:01.920 this seems to be about the understanding of inefficiencies within 0:18:02.000 --> 0:18:04.440 data centers, right, what can go wrong, and how open 0:18:04.520 --> 0:18:07.439 AI can lend a hand on telling them that that's right. 0:18:07.480 --> 0:18:09.560 I mean, look, most people are probably more consumed by 0:18:09.560 --> 0:18:11.920 thinking about the models that we use in the chatbots, 0:18:11.960 --> 0:18:14.200 but they're talking about a lot of the key components 0:18:14.200 --> 0:18:18.080 that go into setting up and operating data centers, from 0:18:18.119 --> 0:18:21.000 the data center server racks, to cooling and power equipment 0:18:21.119 --> 0:18:24.119 to the cabling. These are not the sexiest things, but 0:18:24.119 --> 0:18:26.679 they're essential as trying to build out a massive scale 0:18:26.720 --> 0:18:28.200 of data centers here and abroad. 0:18:29.040 --> 0:18:31.800 Meanwhile, open Ai is trying to field a ton of 0:18:31.880 --> 0:18:35.160 questions right now. They are of course under some duress 0:18:35.320 --> 0:18:38.240 about how they're raising funds in and of themselves to 0:18:38.280 --> 0:18:40.480 spend on all the data center build out. You had 0:18:40.520 --> 0:18:43.440 Michael Burry like questioning auditors, and it seems as though 0:18:43.440 --> 0:18:45.760 they've got some clarity from that and ft reporting set 0:18:45.840 --> 0:18:49.280 But how much pressure is Sam Altman and team feeling. 0:18:49.000 --> 0:18:49.560 At this moment. 0:18:50.560 --> 0:18:52.600 Immense And we're gonna given mentioning what they feel from 0:18:52.680 --> 0:18:54.480 Google now, which seems to have built a model though 0:18:54.480 --> 0:18:58.280 either rivals or outcompetes anything. They're opening eye paralize on 0:18:58.320 --> 0:19:00.159 the market, which gets back to again, they want have 0:19:00.160 --> 0:19:02.560 a competitive advantage not just on the model side, but 0:19:02.640 --> 0:19:05.520 on the infrastructure that supports it. And increasingly they're tying 0:19:05.560 --> 0:19:07.680 themselves to all different corners of the market and all 0:19:07.720 --> 0:19:10.160 different key players and tech to make it they're too 0:19:10.200 --> 0:19:10.840 big to fail. 0:19:11.640 --> 0:19:15.359 Seth Figerman. Yeah, great context, thanks for bringing it. Happy 0:19:15.400 --> 0:19:24.760 weekend shares of Ubisoft. They're climbing today in Paris as 0:19:24.840 --> 0:19:27.679