WEBVTT - Trump Advances Plans for TikTok US Deal 0:00:02.520 --> 0:00:13.360 Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive 0:00:13.400 --> 0:00:17.200 from coast to coast with Caroline Hide in New York 0:00:17.520 --> 0:00:19.479 and Eva Low in sentences go. 0:00:22.800 --> 0:00:24.439 This is Bloomberg Tech coming up. 0:00:24.480 --> 0:00:28.600 President Trump advances plans for American investors to buy TikTok's 0:00:28.720 --> 0:00:33.559 US operations, with a potential value of fourteen billion dollars. 0:00:33.720 --> 0:00:36.000 As we discussed the later day I bubble warning, hedge 0:00:36.000 --> 0:00:39.320 fund manager David Einhorn cautions that huge spending on AI 0:00:39.440 --> 0:00:42.280 infrastructure may destroy vast amounts of capital. 0:00:43.200 --> 0:00:46.320 And our conversation with Qualcom CEO and the changing chip 0:00:46.440 --> 0:00:49.479 landscape in the wake of Nvidia's Intel deal, and. 0:00:49.440 --> 0:00:52.320 A lot more, a lot more, including the market look 0:00:52.360 --> 0:00:54.800 over the last five days, we have seen pressure on 0:00:55.000 --> 0:00:58.160 tech stocks more broadly. You're putting in the macro perspective 0:00:58.400 --> 0:01:01.200 of maybe we lean away from just the Federal Reserve 0:01:01.280 --> 0:01:03.920 being the key function tactic here, and indeed we start 0:01:03.960 --> 0:01:06.080 to question valuations more broadly. We're off more than a 0:01:06.080 --> 0:01:09.160 percentage point on the NASDAK not significant moves, the biggest 0:01:09.240 --> 0:01:11.080 drop in the five day basis that we've seen since 0:01:11.080 --> 0:01:14.480 the beginning of August, but still notable in terms of sentiment. 0:01:14.840 --> 0:01:18.120 Where sentiment has really changed is Crypto's strategy were formerly 0:01:18.160 --> 0:01:20.480 known as MicroStrategy, the worst performer on the week, and 0:01:20.480 --> 0:01:23.280 I'm looking at Bitcoin off by five point six percent 0:01:23.640 --> 0:01:26.040 key day for options expiring today, ED, what are you 0:01:26.120 --> 0:01:26.880 looking at? 0:01:27.200 --> 0:01:30.160 Okay, this is a story that's moving tech and moving markets. 0:01:30.240 --> 0:01:33.880 Intel and Global Foundaries are both up significantly. The Wall 0:01:33.880 --> 0:01:37.520 Street journals reporting that the Trump administration is looking at 0:01:37.560 --> 0:01:41.360 a policy where it will require US chip makers on 0:01:41.400 --> 0:01:44.080 a one for one basis to have the equivalent number 0:01:44.080 --> 0:01:46.880 of chips manufactured in the US as they do their 0:01:46.880 --> 0:01:49.760 customers import from overseas. We'll try and match that, but 0:01:49.840 --> 0:01:53.080 it's moving markets. Then there's Oracle, so Oracle on a 0:01:53.120 --> 0:01:56.280 five day basis on track for its biggest weekly drop 0:01:56.600 --> 0:01:59.880 since April. We know more about the structure of a 0:02:00.080 --> 0:02:03.120 deal for US TikTok, the breaking news in the last 0:02:03.160 --> 0:02:08.640 hour Bloomberg reporting citing sources that even in the event 0:02:08.720 --> 0:02:12.079 that this deal is done and completed, China and byte 0:02:12.120 --> 0:02:15.240 Dance will still take more than half the profits from 0:02:15.440 --> 0:02:18.720 US operations of TikTok. Let's get all the details with 0:02:18.800 --> 0:02:21.359 Bloombo's Alex Levine, who covers social media and has been 0:02:21.400 --> 0:02:24.840 all over this story. Let's start with what happened out 0:02:24.840 --> 0:02:27.680 in the White House last night. The President, the Treasury 0:02:27.760 --> 0:02:30.840 Secretary all explaining to us, along with the Vice President 0:02:30.840 --> 0:02:33.560 Alex the structure of this deal, what is new and 0:02:33.600 --> 0:02:34.160 what do we know? 0:02:35.320 --> 0:02:37.680 Well, I think what we know about the deal so 0:02:37.800 --> 0:02:40.239 far is that Oracle is set to play a huge 0:02:40.320 --> 0:02:45.040 role in helping the new US TikTok entity secure user data, 0:02:45.080 --> 0:02:47.359 and also the algorithm that is going to be leased 0:02:47.360 --> 0:02:49.560 from byte Dance for the United States to use and 0:02:49.600 --> 0:02:53.160 retrain using all US user data. What we saw from 0:02:53.160 --> 0:02:55.720 the White House yesterday at the Executive Order signing, there 0:02:55.760 --> 0:02:57.960 was actually not that much new in terms of what 0:02:58.080 --> 0:03:02.240 we know as far as China where China stands on this. 0:03:02.440 --> 0:03:05.240 There are a lot of questions from reporters about what 0:03:05.360 --> 0:03:07.919 sorts of nod or what sorts of approval the Chinese 0:03:07.919 --> 0:03:10.880 president has given to Trump, and it seems that Trump 0:03:10.960 --> 0:03:13.880 has been sending some mixed messaging on exactly where China stands. 0:03:13.960 --> 0:03:15.880 But I do think that one thing that is becoming 0:03:15.919 --> 0:03:18.360 clear is that as we begin to learn more about 0:03:18.639 --> 0:03:21.520 the structure of the deal and what by Dance will 0:03:21.560 --> 0:03:23.760 get from it. There are more and more questions, and 0:03:24.040 --> 0:03:26.680 I think some more scrutiny and even criticism from members 0:03:26.720 --> 0:03:30.160 of Trump's own party over what the eventual what the 0:03:30.200 --> 0:03:31.280 eventual outcome will be. 0:03:32.240 --> 0:03:35.440 I think exactly that the Chinese embassy has made the 0:03:35.480 --> 0:03:37.960 latest statements say the US side needs to provide an 0:03:38.000 --> 0:03:41.400 open fare and non discriminatory environment for Chinese investors. 0:03:41.640 --> 0:03:43.120 So no, yes, go for it. 0:03:43.200 --> 0:03:46.320 You can take this part of TikTok and start reworking 0:03:46.320 --> 0:03:49.600 in the underlying algorithm. For me, the question is is 0:03:49.640 --> 0:03:53.160 Oracle the right person to be overseeing the algorithm changes? 0:03:53.640 --> 0:03:56.320 And more broadly, how on earth are they going to 0:03:56.320 --> 0:04:00.760 separate the US version? And more broadly, what about the 0:04:00.840 --> 0:04:04.720 latest voyce is reporting that we're seeing that maybe byte docetells. 0:04:04.400 --> 0:04:07.080 End up still controlling operations with that in any way 0:04:07.120 --> 0:04:08.920 satisfied national security. 0:04:08.440 --> 0:04:10.800 Issues hit well, I think it depends how you ask 0:04:10.880 --> 0:04:12.680 on this first question that you had, which is is 0:04:12.720 --> 0:04:14.720 Oracle the right partner for this? If you asked the 0:04:14.760 --> 0:04:18.120 Trump administration, you asked the White House. Absolutely, they said 0:04:18.160 --> 0:04:21.280 yesterday that Oracle has been partnering with TikTok for several 0:04:21.360 --> 0:04:23.960 years already on trying to cordon off US user data 0:04:24.040 --> 0:04:28.000 from bye Edance's global operations in China. But I think 0:04:28.160 --> 0:04:30.120 one thing that's very top of mind for me is 0:04:30.160 --> 0:04:32.839 that TikTok and Oracle have been working together on this 0:04:32.880 --> 0:04:35.560 for years, and it has been an imperfect solution. This 0:04:35.720 --> 0:04:38.960 was proposed as a solution to the Biden administration back 0:04:39.000 --> 0:04:41.880 in twenty twenty two, and after years of negotiations with 0:04:41.960 --> 0:04:44.800 a framework that looked almost identical to what we're now 0:04:44.800 --> 0:04:47.880 talking about with TikTok and Oracle today, the Biden administration 0:04:48.200 --> 0:04:51.719 was not comfortable that this would adequately solve national security concerns. 0:04:51.760 --> 0:04:55.160 So you're starting to hear from lawmakers and others in 0:04:55.680 --> 0:04:59.880 across Washington that this might just be a new version 0:04:59.880 --> 0:05:02.320 of that, and if so, that that's just not going. 0:05:02.200 --> 0:05:05.240 To cut it, very similar to Project Texas from your 0:05:05.279 --> 0:05:08.400 own reporting, Alex Lavigne, thanks for breaking that down. Still 0:05:08.440 --> 0:05:11.280 so many questions to answer, but let's just talk about 0:05:11.279 --> 0:05:14.080 the advertising side of all of this. I'm beginning Rachel 0:05:14.120 --> 0:05:18.440 Tipograph found our CEO of analytics platform, Mickmac with all 0:05:18.480 --> 0:05:23.280 these questions remaining about how on Earth the algorithm continues 0:05:23.360 --> 0:05:25.559 and whether we all remain one hundred and seventy million 0:05:25.680 --> 0:05:26.960 US users. 0:05:27.000 --> 0:05:27.880 Using it as much. 0:05:28.160 --> 0:05:30.880 What are advertising decisions being made right now? 0:05:32.360 --> 0:05:35.680 Advertisers in a weight and C mode. Right now, it 0:05:35.760 --> 0:05:40.080 is still commonplace for TikTok, and we're actually seeing all 0:05:40.120 --> 0:05:44.720 time high traffic in September from first twenty percent of 0:05:44.760 --> 0:05:48.640 total traffic from advertisers was allocated to TikTok. If we 0:05:48.760 --> 0:05:52.400 date back to Q one, it was ten percent. So 0:05:52.920 --> 0:05:55.920 people still see TikTok as a place to build brand 0:05:55.920 --> 0:06:00.200 and drive performance all at once. That being said, major 0:06:00.279 --> 0:06:05.680 advertisers have contingency plants. The moment that TikTok America is created, 0:06:06.279 --> 0:06:08.600 I don't think we're going to see traffic at twenty percent. 0:06:09.400 --> 0:06:12.960 These major advertisers are going to wait to see if 0:06:12.960 --> 0:06:15.920 the user base is still there, if the engagement is 0:06:15.960 --> 0:06:18.960 still there, and if the ad performance results are still there. 0:06:19.520 --> 0:06:22.880 If those things are to be true, then absolutely you'll 0:06:22.880 --> 0:06:26.520 see dollars move into TikTok America. But in the meantime, 0:06:26.800 --> 0:06:29.800 you're going to probably see a short term boom to 0:06:30.040 --> 0:06:34.000 environments like meta and alphabet where there are other places 0:06:34.040 --> 0:06:36.440 to invest your short form video ad dollars. 0:06:37.040 --> 0:06:40.840 How is this going to impact efficiencies for brands? Because 0:06:40.839 --> 0:06:43.560 at the moment you can go to one platform and 0:06:43.680 --> 0:06:44.919 have global reach. 0:06:45.360 --> 0:06:47.120 That's going to be really important. 0:06:46.720 --> 0:06:48.720 For some of these global companies if they have to 0:06:49.040 --> 0:06:53.000 silo off a US targeted ad versus global. 0:06:54.320 --> 0:06:57.160 Absolutely, there's a domino effect here. A lot of these 0:06:57.200 --> 0:07:00.919 major advertisers, they have these global joint business plans in 0:07:00.960 --> 0:07:06.680 place where they're guaranteeing ad dollars across multiple geographies. Advertisers 0:07:06.720 --> 0:07:09.159 have major question marks. Are those agreements going to be 0:07:09.160 --> 0:07:13.240 thrown out the window? And then from the actual operating standpoint, 0:07:13.360 --> 0:07:17.160 there has been a single platform to do buying, measurement 0:07:17.440 --> 0:07:21.440 and optimizations. It is unclear now if advertisers are going 0:07:21.480 --> 0:07:24.640 to have to log into multiple platforms and then Carolyn 0:07:24.680 --> 0:07:27.560 Prer point, what are the results going to be? Which 0:07:27.600 --> 0:07:30.720 is why major advertisers they have choices they can go 0:07:30.800 --> 0:07:34.440 invest dollars in other places. It's the sm B businesses 0:07:34.760 --> 0:07:38.560 that have been heavily reliant on an environment like TikTok 0:07:38.680 --> 0:07:41.760 or Amazon where they might go all in, but if 0:07:41.760 --> 0:07:44.080 they don't see those results, I promise you you're going 0:07:44.160 --> 0:07:47.080 to see dollars move out of that environment back into 0:07:47.160 --> 0:07:48.480 places like Meta and Google. 0:07:50.400 --> 0:07:50.800 Rachel. 0:07:50.880 --> 0:07:53.720 What we do know from the reporting is that there 0:07:53.760 --> 0:07:58.480 will be a retraining or even from the ground up 0:07:59.400 --> 0:08:04.000 rebuild of the algorithm. How worried are people in your 0:08:04.040 --> 0:08:11.440 community and your network that that basically removes what makes 0:08:11.520 --> 0:08:14.800 TikTok good for them, that the algorithm is not as 0:08:14.880 --> 0:08:18.320 effective as it currently is when Oracle has been able 0:08:18.360 --> 0:08:19.640 to review it and change it. 0:08:20.960 --> 0:08:24.560 Yeah, it's less about the algorithm, and it's more about 0:08:24.920 --> 0:08:29.560 will user engagement still hold? And will the effectiveness of 0:08:29.600 --> 0:08:32.840 the ads, meaning the cost per impression or the cost 0:08:32.880 --> 0:08:34.840 per click or the cost per sale. 0:08:35.360 --> 0:08:36.280 Will those hold. 0:08:36.880 --> 0:08:40.400 If those things don't hold, you will see dollars move out. 0:08:40.679 --> 0:08:43.839 So the algorithm is a mechanism to make those things true. 0:08:44.120 --> 0:08:47.560 But what advertisers are really concerned about is results. 0:08:49.440 --> 0:08:52.960 What Bloomberg has reported is that byte Dance is still 0:08:53.000 --> 0:08:55.560 going to get fifty percent of the profits from a 0:08:55.679 --> 0:09:01.040 US TikTok, and that MGX, a state backed investment vehicle 0:09:01.120 --> 0:09:04.719 of UAE, is one of the anchor investors. If you're 0:09:04.720 --> 0:09:08.440 a content creator on TikTok, or you're an advertiser on TikTok, 0:09:08.760 --> 0:09:11.880 do you care about either of those considerations. 0:09:13.880 --> 0:09:16.959 If you're an advertiser in TikTok and you're a global brand. 0:09:17.000 --> 0:09:20.880 I'm talking Fortune one thousand brands. You care about two things. 0:09:21.080 --> 0:09:23.560 You care about performance, but then you also care about 0:09:23.600 --> 0:09:26.720 brand safety. And so if they don't feel that their 0:09:26.720 --> 0:09:30.960 concerns are being addressed by this new ownership structure around 0:09:30.960 --> 0:09:34.520 brand safety, then yes they will care. If they believe 0:09:34.559 --> 0:09:39.840 it's being addressed, then it's irrelevant to that creators. Creators 0:09:40.000 --> 0:09:43.520 care more about the culture and the community. Will the 0:09:43.600 --> 0:09:47.400 community still stay in TikTok? Will the vibe still be 0:09:47.520 --> 0:09:50.600 the same? They don't really care about the ownership structure 0:09:50.880 --> 0:09:53.040 as long as the community engagement is there. 0:09:54.000 --> 0:09:56.600 Let's talk about a name that you said that maybe 0:09:56.600 --> 0:09:58.760 you will be benefiting amid all of this, and is 0:09:58.800 --> 0:10:01.600 meta and the move to Instagram in this moment by 0:10:01.679 --> 0:10:04.800 advertising dollars. But what's happening in Europe at the moment 0:10:04.880 --> 0:10:07.320 is interesting with meta as well and the UK and 0:10:07.400 --> 0:10:10.840 being forced to basically add a subscription offer rather than 0:10:11.000 --> 0:10:14.800 offering just advertising. How advertisers looking at that, how much 0:10:14.840 --> 0:10:17.720 do they anticipate people will go for an ad free 0:10:18.000 --> 0:10:20.160 version of Instagram. 0:10:20.720 --> 0:10:22.679 I love what's happening right now because we can look 0:10:22.679 --> 0:10:27.320 at mcmac's data globally, we do operate globally, and it's 0:10:27.360 --> 0:10:31.360 really interesting. The laws that are taking place in the 0:10:31.360 --> 0:10:35.360 EU and UK when it comes to advertising is way 0:10:35.440 --> 0:10:39.400 more stricter than the US, and as a result, platforms 0:10:39.440 --> 0:10:42.800 like Meta have struggled in recent years in those environments. 0:10:43.280 --> 0:10:46.880 In twenty twenty three, Meta had to introduce the same 0:10:47.440 --> 0:10:51.560 ad free tier in the EU, and there's been no 0:10:51.679 --> 0:10:55.400 public data whether users have adopted that or not. The 0:10:55.440 --> 0:10:57.920 only thing that we've seen happen is that the price 0:10:57.960 --> 0:11:00.400 per tier come down, which is a signal that maybe 0:11:00.440 --> 0:11:05.440 adoption was initially there. Fast forward, the UK government is 0:11:05.480 --> 0:11:09.960 adopting very similar rules as the EU, where they're putting 0:11:10.400 --> 0:11:13.800 very strict guardrails in place and how platforms can target 0:11:13.920 --> 0:11:17.240 users and essentially you have to opt in one hundred 0:11:17.280 --> 0:11:19.720 percent and if you don't opt in one hundred percent, 0:11:19.760 --> 0:11:22.400 then you have to pay for an ad free tier. 0:11:24.040 --> 0:11:27.880 What's interesting is that right now in the UK, seventy 0:11:27.960 --> 0:11:32.480 five percent of ad investment is happening in Meta. Meanwhile 0:11:32.600 --> 0:11:36.440 in the EU it's closer to thirty six percent, which 0:11:36.480 --> 0:11:40.680 is another signal that if this happens in the UK, 0:11:41.120 --> 0:11:44.960 you're going to start to see ad diversification outside of 0:11:45.040 --> 0:11:49.280 Meta into other platforms. So it's actually the reverse of 0:11:49.320 --> 0:11:50.600 what's happening in the US. 0:11:50.920 --> 0:11:51.880 In the US. 0:11:52.120 --> 0:11:55.880 Opportunity for Meta to grab market share. In the UK, 0:11:56.480 --> 0:11:58.680 they might actually lose market share right. 0:11:58.559 --> 0:12:03.840 Now, Nick mag Ceo, Rachel Tippograph back on Bloomberg Tech, 0:12:03.920 --> 0:12:04.600 Back and forth. 0:12:04.640 --> 0:12:06.880 Great to have you on the show. A story we're tracking. 0:12:07.000 --> 0:12:10.680 Jaomi unveiled a smartphone designed to take on the just 0:12:10.800 --> 0:12:15.800 released iPhone seventeen, underscoring the Chinese company's broader ambitions to 0:12:15.920 --> 0:12:19.880 take on US rivals from Apple to Tesla. The Jaomi seventeen, 0:12:20.160 --> 0:12:22.480 which will be offered in Pro and Promax models just 0:12:22.520 --> 0:12:25.480 like Apple's Marque series, starts at six hundred and thirty 0:12:25.520 --> 0:12:28.200 dollars for the most basic model and rising to about 0:12:28.200 --> 0:12:30.480 eight hundred and forty dollars at the top end, more 0:12:30.480 --> 0:12:34.000 than one hundred dollars cheaper than the base iPhone seventeen. 0:12:34.280 --> 0:12:37.480 Carol, Let's go back to AI now, because coming up 0:12:37.600 --> 0:12:41.720 computing powerhousers that are feeding the AI boom, they're seeing 0:12:41.760 --> 0:12:42.840 explosive growth of their own. 0:12:43.160 --> 0:12:46.440 How will this compute market evolve? One of that next 0:12:46.480 --> 0:12:47.400 This is a Boomberg Tech. 0:12:55.640 --> 0:12:59.480 The AI revolution is fueling explosive growth for companies selling 0:12:59.520 --> 0:13:03.680 computer power. Call Weave, despite forecasting losses this year, is 0:13:03.760 --> 0:13:06.400 valued at over fifty billion dollars, while Oracle's added two 0:13:06.480 --> 0:13:09.520 hundred and fifty billion so its market cap. That surge 0:13:09.840 --> 0:13:13.480 is subject of this weekend's essay by Bloomberg Ideas and 0:13:13.520 --> 0:13:16.280 Culture senior writer Felix Salmon, who joins US now. I 0:13:16.280 --> 0:13:18.880 spoke to the core Weave CEO last night and I 0:13:18.960 --> 0:13:21.400 basically put to him that all of the people in 0:13:21.440 --> 0:13:25.800 this ecosystem are writing checks they can't cash. The demand 0:13:25.880 --> 0:13:29.360 is there, but their ability to pay for it. The 0:13:29.400 --> 0:13:31.560 infrastructure needs to be built, maybe it's not. And you 0:13:31.600 --> 0:13:34.920 make a really smart case on just how wide some 0:13:34.960 --> 0:13:38.320 of the losses are with all the spending as as 0:13:38.400 --> 0:13:40.559 much as they have momentum in what they're doing. 0:13:40.880 --> 0:13:44.360 And what that in financial terms is called is counterparty risk. 0:13:44.440 --> 0:13:47.200 That if you are selling, if you're building data centers, 0:13:47.320 --> 0:13:51.439 and you're expecting trillions of dollars of demand, then what 0:13:51.480 --> 0:13:55.040 you're worried about is that the people who are contracting 0:13:55.040 --> 0:13:57.280 to pay, like you know, Open the Eye has said 0:13:57.280 --> 0:14:00.000 that it's going to pay Ora called three hundred billion dollar, 0:14:00.720 --> 0:14:03.920 that they just won't have that money because they're losing money, 0:14:04.000 --> 0:14:05.920 and where are they going to be able to find it? 0:14:06.000 --> 0:14:08.720 You know, in video can't just throw billions of dollars 0:14:08.760 --> 0:14:12.600 at them forever. And so the big question then comes, 0:14:12.640 --> 0:14:14.600 how are they going to be able to hedge that 0:14:14.800 --> 0:14:18.600 counterparty risk? And the answer to that question is what 0:14:18.800 --> 0:14:22.920 if compute is actually traded as a commodity on markets 0:14:23.400 --> 0:14:26.840 on exchanges. That solves a huge number of problems. 0:14:27.200 --> 0:14:31.239 And people are already walking that line and already building 0:14:31.480 --> 0:14:34.000 that offering. It seems like Felix push us forward as 0:14:34.040 --> 0:14:36.360 to how we could get what you call really these 0:14:37.160 --> 0:14:38.760 combinatorial auctions. 0:14:39.160 --> 0:14:43.320 Combinator yeah, is something called the Milgram assignment auction. And 0:14:44.080 --> 0:14:46.560 all markets are auctions, right. If you think about the 0:14:46.560 --> 0:14:50.560 stock market, people are bidding every microsecond for how much 0:14:50.560 --> 0:14:54.120 they're willing to bid and offer on various stocks. And 0:14:54.120 --> 0:14:56.600 that's a very simple auction. It's just like there's one 0:14:56.920 --> 0:14:59.200 object and you can have a single price of that object. 0:14:59.200 --> 0:15:03.320 It's the share of stock. Other auctions, other commodities have 0:15:03.440 --> 0:15:06.160 more complicated things, like in the oil market, you have 0:15:06.240 --> 0:15:09.000 to invent these standards like ren crude or West Texas 0:15:09.040 --> 0:15:11.760 Intermedia that people can sort of agree on. When you're 0:15:11.800 --> 0:15:15.080 talking about something as complicated as compute, where there are 0:15:15.400 --> 0:15:18.680 hundreds of different variables that people care about, what chips 0:15:18.720 --> 0:15:22.720 you have, how much uptime there is, what time of 0:15:22.800 --> 0:15:25.200 day you're using, all of this kind of stuff. Then 0:15:25.280 --> 0:15:29.200 you need a very sophisticated auction that is powered itself 0:15:29.320 --> 0:15:33.280 by AI. But we have these companies one Kronos and 0:15:33.360 --> 0:15:36.120 Autonomics that are actually building that right now, and really 0:15:36.280 --> 0:15:38.720 it's super necessary. Without it, we aren't going to be 0:15:38.720 --> 0:15:41.520 able to see the level of investment that people are 0:15:41.920 --> 0:15:42.760 sure is coming. 0:15:43.080 --> 0:15:45.400 Food for thought, and that's exactly what job description is. 0:15:45.400 --> 0:15:48.560 Felix Salmon is a great really go dive into it 0:15:48.600 --> 0:15:51.560 this weekend. But for more on AI and the questioning 0:15:51.600 --> 0:15:55.520 of valuations around AI as well, let's talk to Stephanie Aliaga. 0:15:55.680 --> 0:15:58.400 She's global market strategist at JP Morgan. No, we just 0:15:58.440 --> 0:16:01.800 have the latest David Einhorn coming out saying I'm. 0:16:01.680 --> 0:16:05.120 Worried about the shaft scale of AI infrastructure investment to 0:16:05.200 --> 0:16:07.880 the moment that billions is going to be lost in 0:16:07.960 --> 0:16:08.680 terms of capital. 0:16:09.080 --> 0:16:11.640 What are you thinking of these warnings around a bubble. 0:16:11.800 --> 0:16:16.400 Yeah, it's clear we're seeing explosive demand demand growth that 0:16:16.440 --> 0:16:19.440 we've really never seen before. That doesn't mean it's not real, 0:16:19.760 --> 0:16:22.360 but it does mean that we should continue to really 0:16:22.600 --> 0:16:25.560 look at these valuations and perform these sanity checks. 0:16:25.920 --> 0:16:26.800 And what gives me. 0:16:26.760 --> 0:16:30.200 Some confidence when I'm performing my sanity check is that 0:16:30.480 --> 0:16:35.040 this infrastructure wave, as significant as it is, is powered 0:16:35.040 --> 0:16:37.520 by real demand growth that is already showing up in 0:16:37.560 --> 0:16:40.360 the numbers. It's funded by real cash flows, and even 0:16:40.400 --> 0:16:43.400 after all of this enormous spending the four major hyperscalers, 0:16:43.400 --> 0:16:46.480 they're still free cash flow positive, and so there's a 0:16:46.480 --> 0:16:50.360 lot of demand, and still the supply constraint on infrastructure 0:16:50.440 --> 0:16:54.120 is there. So there's no house of cards underneath this 0:16:54.200 --> 0:16:58.600 AI infrastructure wave, I'd say. But still I think the 0:16:58.680 --> 0:17:01.320 AI theme is it's a lot term. One deep seek 0:17:01.440 --> 0:17:03.440 was one upset that we had earlier this year. There 0:17:03.440 --> 0:17:05.760 will surely be others, and right now we're in this 0:17:05.840 --> 0:17:08.199 kind of period of digestion. But I think we're just 0:17:08.240 --> 0:17:11.119 waiting for that next piece of like bullish commentary and data, 0:17:11.480 --> 0:17:14.200 and then we're going to appreciate the fundamentals once more. 0:17:15.400 --> 0:17:18.160 Stephanie, every phone call I get at the moment about 0:17:18.200 --> 0:17:23.640 specific infrastructure deal there's an element of debt involved. How 0:17:23.680 --> 0:17:26.920 closely are you tracking that and are you worried about it? 0:17:27.720 --> 0:17:31.680 So the infrastructure spending boom is beyond just those four 0:17:31.720 --> 0:17:34.560 major hyperscalers right that fifth in line, as you know, 0:17:34.680 --> 0:17:36.200 came out with a bond deal this week. 0:17:36.400 --> 0:17:37.040 So we are. 0:17:36.920 --> 0:17:38.880 Seeing that AI is going to cost a lot of money, 0:17:38.920 --> 0:17:41.359 and you know, the debt markets are coming in to 0:17:41.400 --> 0:17:44.399 help fund some of those gaps and spending. I'm not 0:17:44.920 --> 0:17:48.360 incredibly worried about that just yet. I mean, the bargain 0:17:48.400 --> 0:17:51.200 that bond investors are making is that there will ultimately 0:17:51.200 --> 0:17:54.320 be enough revenue generated from this to pay back the bonds. 0:17:54.600 --> 0:17:57.600 That's maybe a more conservative bet than what equity markets 0:17:57.640 --> 0:18:00.720 are making by putting more money into these lead megacaps 0:18:00.720 --> 0:18:05.439 that already have sky high valuations. But more broadly, I 0:18:05.440 --> 0:18:08.240 think it just shows that, you know, this infrastructure wave 0:18:08.359 --> 0:18:12.120 has a lot of urgency behind it, and it's beginning 0:18:12.160 --> 0:18:15.760 to touch many other corners of the market. The corporate 0:18:15.760 --> 0:18:18.160 bond market is one of them, but we're also seeing 0:18:18.160 --> 0:18:21.119 it in utilities and infrastructure and public and private and 0:18:21.119 --> 0:18:21.639 so forth. 0:18:22.000 --> 0:18:24.800 I mean, a forty year bond with what was it 0:18:24.920 --> 0:18:27.280 ended up a yield of just about one point sixty 0:18:27.280 --> 0:18:28.200 five percentage points. 0:18:28.200 --> 0:18:30.520 So for treasuries feels. 0:18:30.280 --> 0:18:32.399 Like, I mean, relatively little to have to pay for 0:18:32.440 --> 0:18:34.879 the price of that longer term debt, but there is belief. 0:18:34.920 --> 0:18:36.520 I want to go back to the comment you made, 0:18:36.600 --> 0:18:38.520 this isn't a house of cards. How do you feel 0:18:38.560 --> 0:18:39.280 though about some of. 0:18:39.240 --> 0:18:41.680 The circularity arguments that are going on that basically it's 0:18:41.680 --> 0:18:44.200 the same people are buying, basically giving money in equity 0:18:44.400 --> 0:18:46.080 for promise of buying their GPUs later. 0:18:46.160 --> 0:18:50.240 Absolutely, markets have been rewarding large capital spending commitments, and 0:18:50.280 --> 0:18:53.520 we should not be rewarding redundant capital spending commitments. And 0:18:53.560 --> 0:18:56.639 I think that is one of the I guess the 0:18:56.640 --> 0:18:58.560 sanity checks that we've all performed this week is okay. 0:18:58.560 --> 0:19:00.520 It seems like capital slashing from one balance sheet to 0:19:00.600 --> 0:19:02.720 another balance sheet. But a lot of the comparisons that 0:19:02.760 --> 0:19:05.040 are being made to the dot com bubble of companies 0:19:05.119 --> 0:19:07.920 selling bannerats to one another trying to juice up their valuations. 0:19:08.240 --> 0:19:10.720 What's different this time around is the spending is grounded 0:19:10.800 --> 0:19:14.679 in real infrastructure, real chip spending, real data centers, and 0:19:14.760 --> 0:19:17.000 so that gives me a bit more confidence on that. 0:19:17.040 --> 0:19:20.360 But we know absolutely should not be rewarding companies for 0:19:20.760 --> 0:19:22.480 redundant capital spending commitments. 0:19:22.640 --> 0:19:25.919 Stephanie, really quick, can the global energy sector. 0:19:27.119 --> 0:19:28.399 Meet the demand? 0:19:29.320 --> 0:19:31.920 That's the million dollar question, right, billion trillion dollar question. 0:19:31.960 --> 0:19:35.760 I guess The reality is it's going to take all 0:19:35.800 --> 0:19:38.560 hands on deck. And while a lot of data center 0:19:38.640 --> 0:19:42.160 power commitments have been made in fact this year enough 0:19:42.200 --> 0:19:46.200 to power New York, Chicago and LA for a year. 0:19:46.400 --> 0:19:49.359 That's the degree of power commitments that have been made. 0:19:49.800 --> 0:19:52.280 A lot of that's in the pipeline. The reality is 0:19:52.440 --> 0:19:57.439 we are confronting in very aged infrastructure grid. It's going 0:19:57.480 --> 0:19:59.920 to take time until the twenty thirties at minimum, until 0:20:00.040 --> 0:20:02.919 nuclear power, even new natural gas power is going to 0:20:02.920 --> 0:20:05.440 be there. In the meantime, there's hope that we can 0:20:05.480 --> 0:20:08.720 get a lot more efficient and that the demand is 0:20:08.960 --> 0:20:11.920 it's tracking up, but it's also tracking up gradually, right, 0:20:12.040 --> 0:20:15.040 so we're not too worried about that real I think 0:20:15.240 --> 0:20:19.000 bottleneck moment happening, it seems a few years into the future. 0:20:19.320 --> 0:20:21.760 Until then maybe we see more efficiency gains or the 0:20:21.800 --> 0:20:24.159 costs of compute have come down ninety eight percent already. 0:20:24.920 --> 0:20:28.639 Stephaniely Aliaga, global market strategist at JP Morgan Asset Management, 0:20:28.760 --> 0:20:31.360 thank you very much. Now coming up, Bloomberg Tech Asias 0:20:31.400 --> 0:20:34.479 sat down with Holton Nu from bay Too Apollo, China's 0:20:34.560 --> 0:20:37.679 biggest robotaxi operator at conversations. 0:20:37.720 --> 0:20:39.359 The next this is Blenberg. 0:20:39.000 --> 0:20:49.119 Tech the race that bring driverist taxis to the world. 0:20:49.200 --> 0:20:51.320 It is on and while the likes of Weimo have 0:20:51.359 --> 0:20:56.399 focused on establishing domestic strongholds, Chinese companies are aggressively expanding internationally. 0:20:56.760 --> 0:20:59.520 Here is by do Apollos, Global manager of overseas Business. 0:21:00.040 --> 0:21:02.800 You speaking with Blumberg Tech Asia, Aldreders. 0:21:03.880 --> 0:21:07.879 I think both Waymo and Bido Apollo, we are the 0:21:07.920 --> 0:21:12.560 only two companies who provide over one thousand cars in 0:21:12.640 --> 0:21:13.440 all the cities. 0:21:13.600 --> 0:21:16.959 What does your expansion plan and your and your scale 0:21:17.040 --> 0:21:17.600 up look like. 0:21:18.320 --> 0:21:21.960 We have already signed several legally binding contract with different 0:21:22.040 --> 0:21:28.119 partners globally. Any single one of them is regarding one 0:21:28.160 --> 0:21:32.320 thousands level of robotaxis deployment. I believe once we remove 0:21:32.359 --> 0:21:35.240 the safety driver from the car, you know, the numbers 0:21:35.280 --> 0:21:40.719 of deployment can can raise gigantically right, since what we 0:21:40.760 --> 0:21:44.600 are aiming for is uh is the real AUTI of 0:21:44.600 --> 0:21:46.120 striving is without safety driver. 0:21:46.400 --> 0:21:49.399