WEBVTT - Anthropic Disables AI Access for Foreign Nationals 0:00:02.480 --> 0:00:21.600 Bloomberg Audio Studios, podcasts, radio news. 0:00:24.000 --> 0:00:27.080 This is Bloomberg Tech coming up the biggest AI export 0:00:27.160 --> 0:00:30.920 restriction yet and Tropic disables access to its most advanced 0:00:30.920 --> 0:00:34.600 models for all foreign nationals. The US concern jail breaks 0:00:34.600 --> 0:00:36.720 in the code in video, is seeking to raise at 0:00:36.760 --> 0:00:39.320 least twenty billion dollars from its first corporate bond sales 0:00:39.320 --> 0:00:42.720 since twenty twenty one. We'll have the details. And SpaceX 0:00:42.720 --> 0:00:45.600 shares throttle up on day to trading, adding to a 0:00:45.640 --> 0:00:49.920 blockbuster public market's debut on Friday. And this is what 0:00:50.240 --> 0:00:54.640 markets look like. Hello, Welcome to Bloomberg Tech Monday, June fifteenth. 0:00:55.120 --> 0:00:58.280 There is a big focus on what is happening between 0:00:58.280 --> 0:01:00.000 the US and Iran Later in the show. We'll get 0:00:59.960 --> 0:01:02.480 to that. But SpaceX in its second day of trading 0:01:02.760 --> 0:01:05.480 up eight percent and it's putting a big spotlight on 0:01:05.560 --> 0:01:08.480 the AI trade, on AI infrastructure. Then aw's that one 0:01:08.560 --> 0:01:11.800 hundred's off session highs, but we're again close to records, 0:01:11.840 --> 0:01:14.280 and the narrative is that there is feel good in 0:01:14.319 --> 0:01:16.720 this equity market. Let's get to our top story. A 0:01:16.800 --> 0:01:20.919 major escalation in Washington's approach to AI. The US government 0:01:20.959 --> 0:01:24.560 has ordered Anthropic to block foreign access to its most 0:01:24.640 --> 0:01:28.320 advanced models after officials flagged security vulnerabilities and it's new 0:01:28.360 --> 0:01:31.640 to released Fable five system and Mephos five to two. 0:01:32.000 --> 0:01:35.800 Talks r underway between Anthropic and the Trump administration joining 0:01:35.840 --> 0:01:38.640 us now our AI editor Bloomberg, Seth Figman and in 0:01:38.760 --> 0:01:41.280 DC Bloomberg's Mike Shepard and Shepp I want to start 0:01:41.319 --> 0:01:44.480 with you. This came from the Commerce Department. Explain the 0:01:44.480 --> 0:01:47.600 export restriction and what the government asked of Anthropic. 0:01:49.240 --> 0:01:52.240 Well, this all dropped right as everyone was still so 0:01:52.440 --> 0:01:56.800 focused on the SpaceX ip IPO. Five twenty one pm 0:01:56.880 --> 0:02:00.800 on a Friday, a letter a directive to Anthropic saying, look, 0:02:01.360 --> 0:02:04.560 we are concerned about foreign nationals having access to two 0:02:04.640 --> 0:02:07.760 of your most advanced models, essentially the key products that 0:02:07.800 --> 0:02:10.440 the company would want to pitch as it's heading into 0:02:10.480 --> 0:02:14.240 this nearly trillion dollar IPO. And this really marked a 0:02:14.320 --> 0:02:17.440 huge shot across the bow once again for this AI 0:02:17.560 --> 0:02:21.080 developer from the Trump administration, and in essence it forced 0:02:21.120 --> 0:02:24.959 the company's hand and Thropic had to deny access worldwide 0:02:25.000 --> 0:02:28.280 to these two products Fable five and Mythos five in 0:02:28.400 --> 0:02:31.679 response to the government's move. Now, this in a way 0:02:31.760 --> 0:02:36.359 It really marked not only an unprecedented step for any administration, 0:02:36.680 --> 0:02:39.320 it really marked a break from what the Trump administration 0:02:39.480 --> 0:02:41.840 had laid out just a little more than a week 0:02:41.880 --> 0:02:46.120 ago with that order, that executive order, the President Donald 0:02:46.120 --> 0:02:49.480 Trump sign that was aimed at cybersecurity and AI and 0:02:49.520 --> 0:02:53.200 that it included language that said this does not should 0:02:53.280 --> 0:02:57.560 not be interpreted as establishing a licensing regime. Yet an effect, 0:02:57.600 --> 0:02:59.840 what we are seeing is that the government is blocking 0:03:00.160 --> 0:03:03.519 the release of these models over the kinds of safety concerns, 0:03:03.560 --> 0:03:06.240 in essence, the vetting that the government had wanted to 0:03:06.240 --> 0:03:08.920 see done on a voluntary basis, and yet it is 0:03:08.960 --> 0:03:12.840 setting its foot down now over security concerns and essentially 0:03:13.080 --> 0:03:15.399 holding off the release of these two products. 0:03:16.320 --> 0:03:19.840 Seth this was an action directed at the use of 0:03:19.880 --> 0:03:23.920 the models Fable five me PUS five by foreign nationals, 0:03:23.919 --> 0:03:27.600 but Anthropic made the decision to close off access to everyone. 0:03:28.200 --> 0:03:30.680 What was the explanation that the AI Lab gave. 0:03:31.160 --> 0:03:34.240 Yeah, Well, they're saying access to foreign nationals not just 0:03:34.400 --> 0:03:37.520 in other countries, but those residing in the United States. 0:03:37.600 --> 0:03:39.440 And it seems that Acanthropic made the decision that this 0:03:39.600 --> 0:03:42.400 was unworkable to allow this model to remain on the 0:03:42.440 --> 0:03:45.000 market for those restrictions. So they've pulled up while they 0:03:45.040 --> 0:03:48.440 continue to talk with the government. Now there's a certain 0:03:48.520 --> 0:03:51.800 irony here. You know, two days before this move, Anthropics 0:03:51.800 --> 0:03:53.640 and Dario Medea had come out and said, you know, 0:03:53.720 --> 0:03:56.200 he thinks the government should have the ability to ban 0:03:56.360 --> 0:03:59.440 models that pose certain risks. Two days later, the government 0:03:59.440 --> 0:04:01.800 took a step has effectively caused a model or two 0:04:01.840 --> 0:04:04.280 models to be pulled from the market. But in this case, 0:04:04.400 --> 0:04:07.920 you know, Anthropic is saying it's essentially misguided and the 0:04:08.000 --> 0:04:10.640 risks outlined may not be as severe as the government's right. 0:04:10.600 --> 0:04:12.920 I think they are seth and Frobic saying there's a 0:04:12.920 --> 0:04:15.640 misunderstanding here. The issue that the government laid out is 0:04:15.680 --> 0:04:18.200 something called a jail break in the code. It has 0:04:18.279 --> 0:04:20.920 to do with guardrails that are placed on the models themselves. 0:04:20.960 --> 0:04:23.600 Could you explain to the Bloomberg Tech audience what the 0:04:23.720 --> 0:04:24.680 jail break concern? 0:04:24.800 --> 0:04:27.200 Is important to note that at this point we have 0:04:27.279 --> 0:04:31.120 not seen the research that Anthropic and former White House 0:04:31.200 --> 0:04:33.240 or David Stacks have alluded to that implies that there 0:04:33.279 --> 0:04:35.400 is some kind of jail break former ability. What we 0:04:35.480 --> 0:04:38.080 understand is that it seems to be pretty narrow in nature. 0:04:38.080 --> 0:04:42.880 It may actually be something that enables cyber defenders to 0:04:42.960 --> 0:04:46.200 use the technology to spot and protect against flaws. But 0:04:46.240 --> 0:04:48.880 what Anthropic is saying is, if not some universal jail break, 0:04:48.920 --> 0:04:52.000 some wider flaw that could be breached in a potentially 0:04:52.080 --> 0:04:54.200 damaging way. And it seems to believe that the government 0:04:54.320 --> 0:04:57.640 is either overstaving or misunderstanding the nature of the risk. 0:04:57.480 --> 0:05:00.960 Here, Mike, real quick, what's happened behind the scenes. 0:05:02.240 --> 0:05:04.159 Well, that is what we are trying to find out next, 0:05:04.279 --> 0:05:07.040 of course, and we want to first know what remedial 0:05:07.080 --> 0:05:09.839 steps the company could take at the government's behest, what 0:05:10.000 --> 0:05:12.840 those might look like, how long that might take, and 0:05:12.880 --> 0:05:15.400 whether the company really would follow suit. We don't know 0:05:15.440 --> 0:05:18.400 how long this will unfold or if there will even 0:05:18.480 --> 0:05:21.280 be a legal challenge, And also we have to look 0:05:21.440 --> 0:05:25.320 at the politics of this abroad. The President just arrived 0:05:25.320 --> 0:05:28.120 in Geneva for the summit in Evion with other G 0:05:28.240 --> 0:05:30.760 seven leaders. AI is on the agenda, and now it 0:05:30.800 --> 0:05:33.840 will be a more urgent issue, especially as we see 0:05:34.000 --> 0:05:37.880 economies including the European Union, examining the question of tech 0:05:37.960 --> 0:05:41.400 sovereignty and the concern that they have about perhaps over 0:05:41.520 --> 0:05:44.599 reliance in US technology that may be at risk of 0:05:44.640 --> 0:05:47.080 being taken away from them at a moment's notice. 0:05:47.600 --> 0:05:50.800 Bloombergs Seth Figmann and Bloombergs Mike Shepard in DC, thank 0:05:50.839 --> 0:05:53.680 you very much. The industry weighs in for more in 0:05:53.720 --> 0:05:57.120 the impact across the AI ecosystem. We're joined by Joel Pinot, 0:05:57.520 --> 0:06:00.719 chief AO officer at Cohre, a frontier AI firm focused 0:06:00.760 --> 0:06:04.719 on LMS and AI applications for business customers, and shep 0:06:04.839 --> 0:06:07.719 just set it out pretty clearly. At issue here is 0:06:07.760 --> 0:06:10.200 whether or not the government should be able to say 0:06:10.640 --> 0:06:13.760 you can or you cannot use a particular piece of 0:06:13.800 --> 0:06:16.839 technology because of the concern that was outlined. What is 0:06:16.880 --> 0:06:18.080 Coher's position. 0:06:17.760 --> 0:06:21.320 On that, indeed, And you know co Here's a company 0:06:21.320 --> 0:06:24.440 that's fully focused on developing models and a gentic platform 0:06:24.560 --> 0:06:27.560 for enterprises and government, and so we've been talking to 0:06:28.160 --> 0:06:31.640 that segment of the market for a number of years now. 0:06:32.360 --> 0:06:33.120 What we've been. 0:06:33.040 --> 0:06:37.479 Hearing is that customers want the ability to really control 0:06:37.560 --> 0:06:40.000 their tech stack. They want to make sure that the 0:06:40.080 --> 0:06:43.880 technology runs in a predictable way, that it's stable, that 0:06:43.960 --> 0:06:47.400 it has high guarantees in terms of confidentiality and security, 0:06:48.000 --> 0:06:51.520 so there's a number of companies and governments already who 0:06:51.520 --> 0:06:55.279 are opting for on premise installation where they can control 0:06:55.279 --> 0:06:58.000 the model and they can control all of the software stack. 0:06:59.240 --> 0:07:01.280 Clearly know all the news from the last few days 0:07:01.400 --> 0:07:04.640 is a huge wake up call for others across the industry. 0:07:05.000 --> 0:07:07.640 The fact that models which a few days before were 0:07:07.760 --> 0:07:11.080 presented as some of the most capable in industry suddenly are 0:07:11.120 --> 0:07:15.040 no longer accessible means that there can be a lot 0:07:15.080 --> 0:07:17.840 of volatility in terms of access to the technology, and 0:07:17.880 --> 0:07:20.440 that's got to be a big concern for companies. 0:07:21.280 --> 0:07:24.400 Joelle, This news hit five twenty one pm Eastern Time Friday, 0:07:24.440 --> 0:07:27.520 So I appreciate it's been just a couple of days 0:07:27.560 --> 0:07:31.720 over the weekend, but has Cohed had any inbound right 0:07:32.480 --> 0:07:35.000 If there are entities that can't get access to meet 0:07:35.040 --> 0:07:37.880 those in fable five, maybe they use you. 0:07:39.560 --> 0:07:42.400 I would say, like huge number of inbounds. It's coming 0:07:42.440 --> 0:07:47.119 from business customers who are looking to diversify the set 0:07:47.360 --> 0:07:50.560 of technology that they can rely on, both for the 0:07:50.640 --> 0:07:54.240 core models and we do build our own models and 0:07:54.920 --> 0:07:58.880 for the orchestration and governance platform. A large number of 0:07:58.960 --> 0:08:02.880 inbounds from governments around the world especially outside of US 0:08:03.080 --> 0:08:06.640 and China. Governments are concerned about their own ability to 0:08:06.680 --> 0:08:11.320 access the technology, but also the economic trajectory of companies 0:08:11.320 --> 0:08:15.120 and citizens within their frontiers. And then of course a 0:08:15.160 --> 0:08:17.720 lot of inbound interest from investors who are wondering what 0:08:17.840 --> 0:08:20.400 does that mean. We know there's of course the big 0:08:20.440 --> 0:08:24.120 IPOs coming, a lot of volatility from that point of view, 0:08:24.360 --> 0:08:25.800 and a lot of people who are just trying to 0:08:25.960 --> 0:08:29.800 understand the situation and see what have the news changed 0:08:29.840 --> 0:08:31.840 in terms of what should be their investment strategy. 0:08:32.720 --> 0:08:35.240 I had asked Seth to explain the concept of a 0:08:35.320 --> 0:08:38.959 jail break in the code, right, that is the reported 0:08:39.240 --> 0:08:42.920 issue that the US government had with me FOS in 0:08:42.920 --> 0:08:47.400 Fab five. Explain technically how that works and how you'd 0:08:47.400 --> 0:08:51.480 approach I guess explaining it if it was you that 0:08:51.720 --> 0:08:54.400 was dealing with the Commerce Department on a restriction like this. 0:08:55.200 --> 0:08:58.160 Yeah, And so the concept of a jail break can 0:08:58.200 --> 0:09:02.560 be used pretty loosely, but quite specifically. There's a sense 0:09:02.559 --> 0:09:06.520 in which a particular system has some guardrails around the 0:09:06.559 --> 0:09:10.280 intended use of that system, and a jail break happens 0:09:10.320 --> 0:09:14.040 when someone manages to infiltrate the system in ways that 0:09:14.120 --> 0:09:17.520 weren't intended. So in this specific case, we can imagine, 0:09:17.559 --> 0:09:21.160 you know, from Meethos to Fable, anthropic hasts put in 0:09:21.240 --> 0:09:26.200 some guardrails that circumvent that prevent the ability for the 0:09:26.240 --> 0:09:29.040 model to be used to create cybersecurity attacks. So we 0:09:29.080 --> 0:09:32.840 can presume that the specific jail break that was identified 0:09:32.920 --> 0:09:36.240 is the ability to go around these defenses and in 0:09:36.400 --> 0:09:41.400 fact make the model produce outputs that would that would 0:09:41.559 --> 0:09:45.280 leverage some of the cybersecurity capabilities of the model. 0:09:46.679 --> 0:09:49.800 Something the Center of Anthropics response is that many of 0:09:49.800 --> 0:09:53.040 their own staff wouldn't be able to access this technology 0:09:53.160 --> 0:09:55.520 based on the restriction, right because many of their staff 0:09:55.520 --> 0:10:00.400 are foreign nationals. It also highlights a world dependent right 0:10:00.440 --> 0:10:04.199 now on US technology. You're a Canadian company, I get that, 0:10:04.200 --> 0:10:08.559 But what's your thinking on that issue, the concentration of 0:10:09.040 --> 0:10:12.160 leadership in the field of small group of US companies. 0:10:12.160 --> 0:10:13.800 Maybe you dispute. 0:10:13.400 --> 0:10:17.360 That, No, I don't fully dispute in the sense that, 0:10:17.440 --> 0:10:19.520 like where we sit today, there's literally, you know, four 0:10:19.559 --> 0:10:21.560 countries in the world that have the ability to train 0:10:21.640 --> 0:10:26.840 Foundation model US China, France, Canada. Right now, even in 0:10:26.880 --> 0:10:29.319 those companies in the US, there's a large number of 0:10:29.360 --> 0:10:33.520 foreign nationals. The you know, inbound talent into the US 0:10:33.760 --> 0:10:37.719 has been formidable force for the progress of this technology. 0:10:38.040 --> 0:10:40.199 So this is going to be a big challenge. And 0:10:40.559 --> 0:10:43.280 the other thing that's worth mentioning is, in many ways, 0:10:43.280 --> 0:10:45.360 a lot of the developments in AI of the last 0:10:45.720 --> 0:10:49.160 few years, you know, are at this level of ideas 0:10:49.200 --> 0:10:51.959 and concepts. Sure we have the models, but really the 0:10:52.800 --> 0:10:55.720 recipe for training these models sits in the head of 0:10:55.760 --> 0:11:00.000 a relatively small number of people. But there's, you know, 0:11:00.160 --> 0:11:03.559 a large enough amount of circulation between the various companies 0:11:03.559 --> 0:11:06.440 that we can assume that the capabilities to do that exist, 0:11:06.880 --> 0:11:08.080 not just at asan tropic. 0:11:09.240 --> 0:11:12.199 Joelle Pinot of Cohre, thank you very much for your time. 0:11:12.400 --> 0:11:14.800 What is our top story today? Now coming up, in 0:11:14.960 --> 0:11:17.840 Vidia heads back to the bomb market after a five 0:11:17.920 --> 0:11:20.440 year absence. Why is the AI giant looking to raise 0:11:20.559 --> 0:11:23.920 billions of dollars while it's sitting on a mountain of cash. 0:11:24.080 --> 0:11:26.560 That's what the stock picture looks like. Be right back. 0:11:26.600 --> 0:11:35.000 This is Blimberg Tech. Today's big number twenty billion dollars. 0:11:35.040 --> 0:11:37.400 In Vidia is looking to raise at least that in 0:11:37.440 --> 0:11:40.560 its first bond sales since twenty twenty one. According to 0:11:40.600 --> 0:11:44.480 sources seven trenches maturities from two to thirty years. The 0:11:44.559 --> 0:11:48.800 proceeds will be used for general corporate purposes, including refinancing 0:11:48.920 --> 0:11:51.880 existing debt as in Vidia joins other AI leaders like 0:11:51.920 --> 0:11:55.440 Amazon and Alphabet in raising large amounts of capital to 0:11:55.520 --> 0:11:58.920 fund AI related infrastructure. But why does a company so 0:11:59.080 --> 0:12:03.520 flush with cash need to borrow more? Bloomberg Intelligence reckons 0:12:03.559 --> 0:12:07.040 that it's to focus on funding partners, b I Senior 0:12:07.080 --> 0:12:09.840 Credit and List. Robert Schiffman joins us, Now, when you 0:12:09.920 --> 0:12:11.920 publish the react, that's the bit that jumps out of 0:12:11.960 --> 0:12:15.600 me off the page, right, Why would they do that? Well, 0:12:15.720 --> 0:12:18.760 they have a track record of investing in the kinds 0:12:18.760 --> 0:12:22.520 of startups that rely on their technology. Extrapolate on that thesis. 0:12:22.760 --> 0:12:25.800 Yeah, well, listen, you can never be too rich. It's 0:12:25.840 --> 0:12:28.960 a good problem to have. Quite frankly, in Video does 0:12:29.080 --> 0:12:31.200 have a cash problem. They have too much of it. 0:12:31.440 --> 0:12:33.600 So people are scratching their heads this morning thinking why 0:12:33.600 --> 0:12:36.880 are they raising more? Listen, you take money down when 0:12:36.880 --> 0:12:40.720 it's available. There is so much money chasing after this 0:12:40.840 --> 0:12:42.839 AI build out. They're going to put in the highest 0:12:42.880 --> 0:12:45.280 quality names that they can, and I think in Video 0:12:45.360 --> 0:12:49.400 is just taking opportunity here to basically borrow at effectively 0:12:49.440 --> 0:12:52.040 a zero rate, at least from a whack perspective, to 0:12:52.040 --> 0:12:54.640 give them more financial flexibility. I think they're likely to 0:12:54.640 --> 0:12:58.640 pour money, probably back into street strategic partners like open Ai, 0:12:58.920 --> 0:13:01.960 like Anthropic, and who knows, maybe a SpaceX, which is 0:13:02.040 --> 0:13:04.040 likely to do their own bond deal might come to 0:13:04.559 --> 0:13:07.120 in Vidia for some financing down the line as well. 0:13:08.120 --> 0:13:10.640 There's like the smart cost of capital angle to this. 0:13:10.840 --> 0:13:15.600 The shareholder return story has changed recently with Nvidia. You know, 0:13:16.400 --> 0:13:18.680 I'm a student of your work, right, It's not that 0:13:18.880 --> 0:13:21.880 unusual for companies flush or cash to just say, like, okay, 0:13:22.080 --> 0:13:24.360 this is an interesting thing for the finance or with 0:13:24.440 --> 0:13:26.959 the treasury team to do. Explain the kind of nitty 0:13:26.960 --> 0:13:27.560 gritty of that. 0:13:27.880 --> 0:13:30.560 Well, listen, you know, the weighted average cost of capital 0:13:30.600 --> 0:13:32.960 is what they're looking at. The weighted average cost of 0:13:32.960 --> 0:13:35.680 debt when you have a five trillion dollar equity market 0:13:35.760 --> 0:13:39.760 cap is basically zero. So you could take money, borrow 0:13:39.800 --> 0:13:42.920 it from from bondholders, and use it for equity or 0:13:42.960 --> 0:13:46.680 equity style investments at a little or no cost. I 0:13:46.679 --> 0:13:47.959 think you're going to see more of this. You sell 0:13:48.000 --> 0:13:50.920 a lot of this from Apple over the years. 0:13:50.440 --> 0:13:52.000 We're not used to. 0:13:52.000 --> 0:13:53.880 It now though, because most of these other companies have 0:13:53.960 --> 0:13:56.520 now turned free cashual negative and they need it for 0:13:56.600 --> 0:14:00.000 funding for their AI investments. That's not what Nvidia needs. 0:14:00.040 --> 0:14:02.040 And Video is probably going to generate a couple hundred 0:14:02.080 --> 0:14:04.560 billion dollars of free cashrow over the next year, so 0:14:04.600 --> 0:14:07.240 they're swimming in the money. But again, when people are 0:14:07.240 --> 0:14:09.319 willing to give it away for next to nothing, you're 0:14:09.360 --> 0:14:11.360 going to take it and you're going to give yourself 0:14:11.360 --> 0:14:12.520 that financial flexibility. 0:14:13.600 --> 0:14:16.280 Robert Schiffman, who leads our credit research of Bloomberg Intelligence, 0:14:16.320 --> 0:14:19.280 thank you so much. Let's turn to SpaceX, who shares 0:14:19.360 --> 0:14:22.920 our extending gains for their second day of trading following 0:14:23.200 --> 0:14:28.040 the company's blockbuster public market's debut Friday. The trading offers 0:14:28.080 --> 0:14:32.360 this other glimpse into investors demand for what was one 0:14:32.400 --> 0:14:34.400 of the world's most private companies. And then they did 0:14:34.400 --> 0:14:37.120 the biggest IPO in history. There are some mechanics to 0:14:37.160 --> 0:14:40.080 what's happening in the market next joining us as Stephanie Aliaga, 0:14:40.200 --> 0:14:43.800 JP Morgan Asset Management, Global market strategist. You know, the 0:14:43.800 --> 0:14:46.800 big anxiety in the days leading up to the IPO 0:14:47.560 --> 0:14:51.880 was this great rebalancing of the passive funds. Because nasdak 0:14:52.160 --> 0:14:57.400 Russell Indicas fast tracks SpaceX's inclusion, it's day two. Shares 0:14:57.400 --> 0:15:00.560 are still higher. But how much does the market need 0:15:00.640 --> 0:15:04.280 time to digest before it has to undertake that rebalancing. 0:15:04.840 --> 0:15:07.480 It's a great question, and that's exactly the point. You know, 0:15:07.600 --> 0:15:10.000 this issue of all of this issue and sitting the 0:15:10.040 --> 0:15:13.040 market doesn't happen all at once. You know, relative to 0:15:13.120 --> 0:15:16.680 the size of how much supply of SpaceX there will 0:15:16.720 --> 0:15:18.360 be in the market right now, we're just looking at 0:15:18.400 --> 0:15:20.960 a small fraction of it. Right four and a half 0:15:20.960 --> 0:15:23.960 percent was that first day's volume, and that's going. 0:15:23.880 --> 0:15:25.040 To ramp up over time. 0:15:25.160 --> 0:15:27.320 We think that six month mark is really going to 0:15:27.360 --> 0:15:30.680 be the point where you might see more volatility just 0:15:30.680 --> 0:15:33.920 to give in a greater supply in the markets, and 0:15:33.960 --> 0:15:36.600 then that increasing over time gradually over the over the 0:15:36.600 --> 0:15:38.680 course of the year, particularly given the S and P 0:15:39.200 --> 0:15:42.800 taking a more temperate pace there, but given that longer 0:15:42.880 --> 0:15:45.040 term horizon, I mean, that's key here. You know, this 0:15:45.080 --> 0:15:49.560 is a market where we are looking at a large 0:15:50.080 --> 0:15:53.240 bump in terms of IPO issuance this year. This year 0:15:53.320 --> 0:15:56.800 projected around two hundred and sixty billion dollars, but for 0:15:56.880 --> 0:16:02.280 a market the size of sixty five trillion dollars that 0:16:02.440 --> 0:16:05.680 is less than one percent of the overall market cap 0:16:05.760 --> 0:16:08.240 of the market, a market that is also fifty five 0:16:08.320 --> 0:16:11.680 percent greater than it was in twenty twenty one. So 0:16:12.120 --> 0:16:14.720 we think so long as the market continues to trunk 0:16:14.720 --> 0:16:17.960 along here with robust fundamentals, we just had a really 0:16:18.000 --> 0:16:22.160 solid earning season. This AI capex boom continues to funnel 0:16:22.400 --> 0:16:26.120 earnings growth and revenue growth across the market, and households 0:16:26.120 --> 0:16:29.760 remain in pretty strong buyers retail activity is strong. We 0:16:29.880 --> 0:16:32.520 think that this is a market that can digest this 0:16:32.640 --> 0:16:35.120 increase in issuance and its issuance that we have really 0:16:35.160 --> 0:16:37.880 been strapped for for a number of years. 0:16:38.080 --> 0:16:39.840 I want to go back to something we show them the 0:16:39.840 --> 0:16:41.640 screen a minute ago, and it's basically more of an 0:16:41.720 --> 0:16:44.720 fyi that in the end, they sold more than the 0:16:44.720 --> 0:16:47.400 five hundred and fifty five point six million shares and 0:16:47.480 --> 0:16:49.920 raised more than seventy five billion dollars. Right, this is 0:16:50.200 --> 0:16:53.640 basically an instant exercising of the green shoe, eighty three 0:16:53.640 --> 0:16:56.800 point three million shares raising proceeds of eighty five point 0:16:56.840 --> 0:16:59.960 seven billion. This has been a story that started to 0:17:00.000 --> 0:17:03.440 about a race to IPO, SpaceX and now likely anthropic 0:17:03.480 --> 0:17:06.720 and open AI, and it quickly changed to a story 0:17:06.760 --> 0:17:10.320 about race to capital. Alphabet came in massive equity offering 0:17:10.480 --> 0:17:14.480 in Nvidia, tapping the corporate bond market. Do you see 0:17:14.480 --> 0:17:15.400 a race to capital? 0:17:16.440 --> 0:17:21.320 I think the economics around the AI boom continue to mount. Now, 0:17:21.359 --> 0:17:24.240 obviously these companies are all in different pieces of this 0:17:24.359 --> 0:17:27.359 value chain in are raising capital variety of different reasons, 0:17:27.680 --> 0:17:29.560 but it is something that investors are going to have 0:17:29.640 --> 0:17:32.040 to get used to. I think, you know, we as 0:17:32.080 --> 0:17:35.440 great as the balance sheets of some of these companies are. 0:17:36.040 --> 0:17:38.560 This AI wave is just getting to be that much 0:17:38.600 --> 0:17:43.080 more expensive, and all of the revenues around AI will 0:17:43.080 --> 0:17:46.360 eventually come, but this is going to be a multi 0:17:46.520 --> 0:17:50.280 year phenomenon, and right now we are ramping up to 0:17:50.440 --> 0:17:54.359 spend significantly more around AI infrastructure and all of these 0:17:54.400 --> 0:17:57.159 different pieces of the value chain. I think that points 0:17:57.200 --> 0:18:00.200 to the need for selectivity. Not all that glitters is gold. 0:18:00.240 --> 0:18:03.480 These companies do vary in their financials. We think at large, 0:18:03.800 --> 0:18:06.760 the fundamentals of this market and of the companies you know, 0:18:06.840 --> 0:18:10.960 spending the most and raising issuance in various markets is 0:18:11.000 --> 0:18:13.880 still robust, but you want to make sure in your 0:18:13.920 --> 0:18:17.960 portfolios that you have some proper diversification, just given that 0:18:18.080 --> 0:18:20.760 you know, the leverage and the economics around this AI 0:18:20.800 --> 0:18:22.840 wave are definitely beginning to diverge. 0:18:23.720 --> 0:18:26.320 Stephanie, we've just got thirty seconds. But how closely are 0:18:26.359 --> 0:18:29.760 you tracking private markets because there are competing stories right 0:18:29.840 --> 0:18:32.760 There is also the staying private for longer because you 0:18:32.840 --> 0:18:34.840 can like, how much do you track that? 0:18:35.480 --> 0:18:37.639 Yeah, well, we think that that theme is still very 0:18:37.760 --> 0:18:40.040 much alive and well, I mean, you are going to 0:18:40.040 --> 0:18:43.720 get likely some big, high profile AI names, but the 0:18:43.760 --> 0:18:47.000 IPO markets are still going to be very selective. And 0:18:47.280 --> 0:18:50.960 a lot of the companies building in this AI race, 0:18:51.000 --> 0:18:55.800 whether it is robotics or even semis, but also particularly 0:18:55.880 --> 0:19:00.560 the application layer and building AI for healthcare, AI for logistics, 0:19:00.920 --> 0:19:03.240 all of those companies are in private markets right now. 0:19:03.480 --> 0:19:05.760 And of course not all that glitters is gold. I mean, 0:19:05.880 --> 0:19:08.800 market returns there can be quite volatile too, But when 0:19:08.840 --> 0:19:11.439 these companies eventually reach public markets, a lot of that 0:19:11.480 --> 0:19:14.040 growth has already happened, and that is a reason for 0:19:14.080 --> 0:19:16.840 investors to make sure they're looking beyond just public markets 0:19:16.840 --> 0:19:17.760 and their portfolios. 0:19:18.280 --> 0:19:21.960 Stephanie eliagro JP Organizet Management. Thank you very much. A 0:19:22.000 --> 0:19:24.439 quick update on the Anthropic story. A US official has 0:19:24.560 --> 0:19:27.680 just confirmed that unpropping executives will be meeting at the 0:19:27.680 --> 0:19:31.000 Commerce Department today. Will follow the story as it develops 0:19:31.000 --> 0:19:33.359 and bring you the latest. Now coming up, Fox has 0:19:33.400 --> 0:19:36.240 agreed to buy device and streaming company Roku in a 0:19:36.320 --> 0:19:38.600 deal that would create a new TV juggernaut. We've got 0:19:38.640 --> 0:19:45.320 those details. Next, this is Bloomberg Tech. Fox has agreed 0:19:45.359 --> 0:19:47.840 by Roku in a deal that values the streamer at 0:19:47.840 --> 0:19:50.760 twenty two billion dollars including debt. The tie up will 0:19:50.760 --> 0:19:53.960 create the third largest player in the US television market 0:19:53.960 --> 0:19:57.560 by viewership. Bloomberg Deals. Michelle Davis joins us with the deats. 0:19:58.160 --> 0:20:00.920 Interesting one. I've got a Roku TV somewhere in my house. 0:20:01.240 --> 0:20:04.399 What's this about. What's the strategic play from Fox? Yeah, 0:20:04.440 --> 0:20:04.840 this is a. 0:20:04.760 --> 0:20:08.640 Really interesting deal because Roku is seen as kind of 0:20:08.680 --> 0:20:12.280 the last big aggregator out there that everyone was wondering 0:20:12.359 --> 0:20:15.760 when it would get taken over. The founder for years 0:20:16.600 --> 0:20:19.040 has controlled the company and there's always a question as 0:20:19.040 --> 0:20:21.840 to does it make more sense to aggregate content and 0:20:21.880 --> 0:20:24.679 be the platform on top of which you know, content streams, 0:20:24.760 --> 0:20:26.760 or does it make sense to be a really big 0:20:26.800 --> 0:20:29.880 streamer that generates most of its revenue that way? And 0:20:30.480 --> 0:20:33.440 by buying Roku, Fox is basically saying we want to 0:20:33.440 --> 0:20:36.479 make sure we are that neutral third party platform. Roku 0:20:36.800 --> 0:20:39.399 makes most of its money on advertising, which is an 0:20:39.440 --> 0:20:42.760 area that Fox had kind of fallen behind its competitors 0:20:42.800 --> 0:20:46.600 on in this you know, new streaming central environment, and 0:20:46.720 --> 0:20:49.119 so that's a lot of what the value is going 0:20:49.200 --> 0:20:51.800 to be coming from here for them twenty. 0:20:51.640 --> 0:20:54.560 First century folks down significantly take me into the terms 0:20:54.640 --> 0:20:55.960 like where we're at in the process. 0:20:56.480 --> 0:21:00.040 So the deal, it's a cash and stock deal that 0:21:00.320 --> 0:21:02.800 the shares are down on the news of course, because 0:21:02.840 --> 0:21:05.480 you know, investors don't always love to see a stock deal. 0:21:05.920 --> 0:21:08.199 At this point, the deal values rocud about twenty two 0:21:08.240 --> 0:21:11.720 billion dollars enterprise value, so that's including debt. Of course, 0:21:11.760 --> 0:21:16.280 if Fox shares continue to decline up until the deal closes, 0:21:16.560 --> 0:21:19.479 that will mean that some of the overall value for 0:21:19.600 --> 0:21:22.000 the deal will be a little bit lower than twenty 0:21:22.000 --> 0:21:24.640 two billion dollars. But this really caps off a multi 0:21:24.800 --> 0:21:30.720 month process where Roku had been exploring strategic alternatives. The founder, 0:21:30.760 --> 0:21:32.439 Anthony Wood as if we were just talking about had 0:21:32.480 --> 0:21:36.080 been thinking about, you know, what's next, succession planning and 0:21:36.160 --> 0:21:39.320 Roku and Fox actually have a long history. Fox had 0:21:39.359 --> 0:21:43.000 invested in Roku years ago before the IPO. They sold 0:21:43.000 --> 0:21:45.320 out of their stake at the time that they bought 0:21:45.480 --> 0:21:49.080 to be but by buying Roku, they're kind of the 0:21:49.080 --> 0:21:51.800