Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is live
Speaker 1: from coast to coast with Caroline Hyde in New York
Speaker 1: and ever though in San Francisco.
Speaker 2: This is Bloomberg Tech coming up.
Speaker 3: The US takes nearly ten percent stake in Intel, and
Speaker 3: President Trump's celebrating that he got it for zero. What
Speaker 3: this means for future deals? Plus, the President of South
Speaker 3: Korea heads to the White House with tech leaders from
Speaker 3: Samsung and s k Heinez details on that meeting and
Speaker 3: gaming gets patriotic.
Speaker 2: Why the Esports World Cup.
Speaker 3: Foundation has announced a new bi annual tournament for nations.
Speaker 3: But first, let's check in on these markets. Let's just
Speaker 3: check in on Intel, because that is the stock that's
Speaker 3: on the move. They want to keep an eye out.
Speaker 3: General Benchmark's flat, but Intel up more than two percent.
Speaker 2: We were in the red just for a moment.
Speaker 3: But now we get the real devil in the details
Speaker 3: of what that almost ten percent stake looks like from
Speaker 3: the government and the president seeming to feel that he's
Speaker 3: got it for zero. Let's get into the details. Because
Speaker 3: I'm peace to say Miuch Shepherd is with us, of course,
Speaker 3: who really helps lead our coverage of the intersection of
Speaker 3: technology in Washington and Mike. It is interesting that, of
Speaker 3: course the money comes from that that was already promised
Speaker 3: to Intel. Remind us of the detail of the deal.
Speaker 4: Well, so in the broad strokes, it's a nearly ten
Speaker 4: percent stake totally more than four hundred million shares going
Speaker 4: to the US government in this CARA is an exchange
Speaker 4: for what has not yet been spent out of the
Speaker 4: grant money that was to go to Intel through the
Speaker 4: Chips and Science Act. Remember this is the law that
Speaker 4: was passed under President Joe Biden designed to spur domestic
Speaker 4: chip manufacturing, helping makers like Intel, but others including TSMC
Speaker 4: and Samsung as well get fabs and plants up and
Speaker 4: running here in the US. Now, Donald Trump is talking
Speaker 4: about this as really the US government getting something for nothing,
Speaker 4: although if you think about it, that's almost eight point
Speaker 4: nine billion in unspent Chips Act money, and so there
Speaker 4: is a little bit of something in there. Many are
Speaker 4: looking upon this CARA is really an unprecedented intervention in
Speaker 4: a company, especially when you think about how sacro san
Speaker 4: these principles of the free market have been not only
Speaker 4: for Republicans but for Democrats too. And how it has
Speaker 4: been looked on with really some skepticism Simpson. Last week
Speaker 4: we interviewed former Vice President Mike Pence and former Obama
Speaker 4: former Biden rather economic director Lael Brainerd on successive days
Speaker 4: and each express their own misgivings and skepticism about the
Speaker 4: president of the US government intervening in a company without
Speaker 4: a crisis actually unfolding.
Speaker 3: Many though, would frame it from the administration's side that
Speaker 3: this is a focus on national security, that this is
Speaker 3: a crisis for Intel to be able to be and
Speaker 3: turn it around as a national winner of manufacturing.
Speaker 2: But will government intervention do that?
Speaker 4: Mike, Well, that's a great question, Caro, And really that
Speaker 4: is how they framed it. They didn't quite use the
Speaker 4: crisis word, but they did stress the urgency on the
Speaker 4: national security side of having a US flag company leading
Speaker 4: the way when it comes to chip production. And curiously,
Speaker 4: in the announcement, one thing was missing, and that was
Speaker 4: mentioned of the new plant in Ohio that you and
Speaker 4: I have talked about a lot, and this is the
Speaker 4: one that has been planned by Intel as part of
Speaker 4: its revival, the one that was started under the former
Speaker 4: chief executive officer, Pac Gelsinger and It was really destined
Speaker 4: to be a flagship of that effort, but it has
Speaker 4: since been delayed and this is a massive undertaking. It
Speaker 4: has been pushed back into the next decade, and they
Speaker 4: really need this underway to put Intel really back into
Speaker 4: the running when it comes to making those kinds of
Speaker 4: advanced chips.
Speaker 5: Their biggest challenge.
Speaker 4: Right now, Caro is finding the customers to be able
Speaker 4: to sustain such a massive investment in that Ohio plan,
Speaker 4: and right now they don't quite have enough. And the
Speaker 4: interesting wrinkle in this is that Donald Trump, by taking
Speaker 4: leading the US government into taking the stake in a way,
Speaker 4: positions himself as CEO of everything. And this is a
Speaker 4: role he has liked to play. He has relished pushing
Speaker 4: companies into expanding their investments in the US.
Speaker 6: We've seen it on the tech front, and.
Speaker 4: We start just a few weeks ago with Apple and
Speaker 4: expanding their investments in the US. So will he take
Speaker 4: some sort of a more active role in trying to
Speaker 4: drum up customers to help Intel. And it's CEO Lip
Speaker 4: Bhutan who Trump has met in recent weeks at the
Speaker 4: White House and really was the one who Trump was
Speaker 4: able to persuade to have this exchange of a stake
Speaker 4: in exchange for chips act money.
Speaker 3: Mike Shephard bringing us through what is an unprecedented piece
Speaker 3: of news.
Speaker 2: We thank you now.
Speaker 3: In video potentially could be a future buyer of Intel's
Speaker 3: made chips. But all eyes are on Video more importantly
Speaker 3: for its earnings coming out Wednesday, when the investors seeing
Speaker 3: it is a key test of boarder AI impact on
Speaker 3: demand for more briber Gequity's reporter common Ranicky is here
Speaker 3: with us. It is the bell weather in many ways,
Speaker 3: but analysts in particular have got excited about what the
Speaker 3: revenue could look like coming for this fiscal quarter.
Speaker 6: Yeah, that's really true.
Speaker 7: I mean it's something that we see actually kind of
Speaker 7: cyclically around earnings that analysts boost sort of their price
Speaker 7: targets for companies ahead of the results. We sort of
Speaker 7: rally up to them and everything kind of resets, And
Speaker 7: in the last week we had at least nine analysts
Speaker 7: increase their price targets for Nvidia. So they see upside
Speaker 7: at least over the next twelve months. They're excited going
Speaker 7: into this report, and you're right, I mean, revenue growth
Speaker 7: is the thing that everybody is always watching within Vidia.
Speaker 6: They put up incredible numbers.
Speaker 7: I think this quarter, analysts are expecting revenue to jump
Speaker 7: forty eight percent from last year forty six billion dollars.
Speaker 7: That is just, you know, it's not something that we
Speaker 7: see every day.
Speaker 3: Certainly for a four trillion dollar company exact, and you're
Speaker 3: expecting more than fifty percent growth in earnings per share.
Speaker 3: Many though, would question China as the area of concern. Look,
Speaker 3: we're just talking about President Trump having unprecedented impact on businesses,
Speaker 3: and that deal to sell eight twenties is unprecedented, and
Speaker 3: we're warned about.
Speaker 7: Demand totally, and I think that's something that analysts are
Speaker 7: and investors are really going to be listening to on
Speaker 7: the call what Jensen says about China demand, what total
Speaker 7: market they're forecasting that they're.
Speaker 6: Going to be able to see.
Speaker 7: I think people hadn't they hadn't factored in China revenue
Speaker 7: maybe in the next few quarters. Right, we know that
Speaker 7: things are sort of up in the air there, But
Speaker 7: going through fiscal twenty twenty seven twenty twenty eight for Nvidia,
Speaker 7: that's something that everybody hoped was going to come back online.
Speaker 6: And so even though it's not a.
Speaker 7: Huge part of their overall revenue. I think it's about
Speaker 7: fifteen percent, maybe a little bit less. It's going to matter.
Speaker 7: You know that it's a big market, and I mean
Speaker 7: if it goes to zero, you know, that's a considerable.
Speaker 3: Hit, and it's going to matter as we question AI
Speaker 3: valuations more broadly across the space.
Speaker 2: It's great to have come and ran unicate. We thank you.
Speaker 2: It's a very well read piece.
Speaker 3: Today, let's get broader, investor take bringing Erin Brown, managing
Speaker 3: director and portfolio manager at Pimco, and just bring us
Speaker 3: the context of last week prior of course to Jackson
Speaker 3: Hole and euphoria, or on Friday, we were worried about
Speaker 3: overall frothy valuations in the area of AI.
Speaker 2: Is in video going to be a key test on that?
Speaker 2: I think it is.
Speaker 8: I mean, I think that really is keeping the market
Speaker 8: right now with respect to the AI trade on pause,
Speaker 8: waiting for more news from the video to see what
Speaker 8: earning bears and really to see if they've been able
Speaker 8: to continue to grow into what are really lofty growth numbers.
Speaker 8: You certainly seen AI come under pressure as the market's
Speaker 8: been rallying to new highs but broadening out outside of AI,
Speaker 8: and so Navidia, I think is front and center for this,
Speaker 8: at least for the market this week with respect to
Speaker 8: the AI trade.
Speaker 3: Have you questioned anything fundamentally though that changed in the
Speaker 3: last week when we suddenly were awash with concerns about
Speaker 3: MIT writings or whether Sam Altman's soula bubble or not.
Speaker 9: Yeah.
Speaker 8: I think the MIT research note really lay bare the
Speaker 8: fact that right now implementation and adoption is really critical
Speaker 8: in terms of enterprise integration, being able to appropriately adopt
Speaker 8: these models into the enterprise environment. And so with the
Speaker 8: I think the MIT paper was a little bit misunderstood
Speaker 8: in that yes, they're saying that only five percent are productive,
Speaker 8: but where they see the real hindrance is not with
Speaker 8: the models themselves, but rather with enterprises being able to
Speaker 8: implement effectively those models into their software environments. And so
Speaker 8: what I think is really key for the next leg
Speaker 8: for AI adoption and growth is going to be the
Speaker 8: software companies and the implementers that are able to take
Speaker 8: these effective CHAT, GBT or other models and enter and
Speaker 8: integrate them into the business environment. And so software companies
Speaker 8: that can do that effectively are really going to be
Speaker 8: the winners I think in the next leg of this
Speaker 8: AI trade.
Speaker 3: We got worried about into it or workday earnings. At
Speaker 3: the end of last week, we've been worried about some
Speaker 3: of the European players. SAP has been under pressure and
Speaker 3: others as we worried about software.
Speaker 2: Sort being eaten by AI.
Speaker 3: But then on the flip side, a Palenteer, ultimately a
Speaker 3: software company, has been the best performing company of the year.
Speaker 2: Even with some of the recent selloff.
Speaker 3: Do you generally think that software is getting beaten up
Speaker 3: too much or do you think companies are able to
Speaker 3: embrace and pivot with AI.
Speaker 8: I think right now we're really seeing the winners and
Speaker 8: the losers, and the bifurcation of the winners and losers
Speaker 8: in the software environment. Companies that are like Palenteer, that
Speaker 8: have been really effectively able to deploy AI, use it
Speaker 8: and then deliver it effectively to their customers are the
Speaker 8: winners right now in this environment, and I think are
Speaker 8: going to persist to be the win I think the
Speaker 8: companies that are being left behind and the laggards right
Speaker 8: now are the companies where Palenteer is sort of eating
Speaker 8: their lunch and taking you know, business from them, and
Speaker 8: so you know there's going to be winners and losers
Speaker 8: in any environment when you see these disruptions occur. But
Speaker 8: right now we're really seeing sort of the fight of it.
Speaker 8: But I think broadly speaking, as a as an industry group,
Speaker 8: software should be the ones that are implementing AI into
Speaker 8: enterprise environments and being able to grow into what I
Speaker 8: think is a greater demand environment going forward.
Speaker 6: We're moved on from just the picks and.
Speaker 8: Shovels of AI and now really looking to the deployment
Speaker 8: stage and the monetization stage, and that's where software should
Speaker 8: really shine.
Speaker 3: And video is the picks and shovels. It's the key
Speaker 3: tests this week in terms of earnings. What are you
Speaker 3: hearing in terms of well, the depreciation of the assets
Speaker 3: that ultimately in video is selling to all of these
Speaker 3: hyper scale it's whether demand goes, but how long are.
Speaker 2: They sticking around? Have you managed to sort of model
Speaker 2: that out?
Speaker 8: No, I mean not explicitly in terms of modeling it out,
Speaker 8: but I think right now we're still in very early
Speaker 8: stages of this, and so I think there still is
Speaker 8: quite a long runway for the video chips. But you
Speaker 8: are seeing that, you know, with we're seeing you know,
Speaker 8: good scale adoption. But we're also seeing a lot of
Speaker 8: innovation and that should really just keep demand, you know,
Speaker 8: pretty robust for the picks and shovels as we continue
Speaker 8: to innovate, you know those, you know, the the entry
Speaker 8: trips into the AI space.
Speaker 3: Amon Brown, really great context, digging deep in tech. We
Speaker 3: so appreciate it for any manager over at PIMCO.
Speaker 2: Thank you.
Speaker 3: Meanwhile, we've had some breaking news and it all surrounds
Speaker 3: big players in AI and it's in fact Enal Muskus
Speaker 3: suing Apple and open Ai over an alleged arrangement on
Speaker 3: its iPhone. Of course, open Ai has been in some
Speaker 3: ways integrated within Apple offerings.
Speaker 2: Elon Musk taking issue with that.
Speaker 3: He took his fight to X last week, concerned about
Speaker 3: the rankings on Apple App Store of certain generator of
Speaker 3: AI products and feeling that X doesn't get enough love there.
Speaker 3: We'll dig deep on that story. We're still out four
Speaker 3: tenser percent on Apple. Coming up, though, we're going to
Speaker 3: be talking more trade, joined.
Speaker 2: By Gano Globals Eliza Tobin and what.
Speaker 3: To expect from a meeting between Donald Trump and President
Speaker 3: of South Korea and it's tech giants.
Speaker 2: This is Bloomberg Tech.
Speaker 3: South Korean President nij Mung is said to read with
Speaker 3: President Trump at the White House today. In focus will
Speaker 3: be South Korea's three hundred and fifty billion dollar pledge
Speaker 3: for projects in the United States, announced a month ago,
Speaker 3: but pretty few details on what actually is known. Meanwhile,
Speaker 3: several Korean firms already have existing US investment plans. Samsung
Speaker 3: planning for a multi billion dollar semiconductive plant in Texas,
Speaker 3: or hi nd I when it's twenty one billion dollar
Speaker 3: pledge to expand future industries and ev charging production, or
Speaker 3: even TSMC when this one hundred billion dollar investment in
Speaker 3: US chip manufacturing operations present LYE will be joined by
Speaker 3: the leaders of some of those companies in today's meeting.
Speaker 3: That's bringing in e Lisotobin, imagined, director of Ghano Global,
Speaker 3: who can help break down ultimately what these sorts of
Speaker 3: negotiations look like and what perhaps if you're an equity
Speaker 3: holder in a Samsung or in a TSMC, what future
Speaker 3: deals could look like.
Speaker 6: Caroline is great to be on with you.
Speaker 3: Yeah, Li said, to talk us through as to what
Speaker 3: we anticipate. Will there be semiconductor tariffs coming this direction
Speaker 3: for certain of these companies, Will they get a carve
Speaker 3: out because they're investing so much. Will we hear anything
Speaker 3: about equity stakes being taken by leaders like the President
Speaker 3: of the United States and the US government in sentences
Speaker 3: semi conductor companies.
Speaker 10: Yeah, Caroline, you've really put your finger on it. This
Speaker 10: is what everyone is wondering. This is what we're all
Speaker 10: waiting to see. What is going to be this shape
Speaker 10: the semiconductor terriffs. These Section two thirty two tariff investigations
Speaker 10: that Commerce has been doing for months, and they keep
Speaker 10: kicking the can down the road. What's really complicating things
Speaker 10: is that these are now being kind of merged and
Speaker 10: mixed up with the ongoing trade negotiations that the United
Speaker 10: States is having with South Korea, Japan, the EU and
Speaker 10: all these other partners. And so these countries are racing
Speaker 10: to get exemptions or some kind of guarantee.
Speaker 6: Of a lower rate of tariffs.
Speaker 10: But nothing really is certain until you see that deal,
Speaker 10: that handshake in the Oval Office between Donald Trump and
Speaker 10: his South Korean counterpart.
Speaker 6: So really, looking forward.
Speaker 10: What I'm waiting to see with all the dust settling
Speaker 10: with semiconductor tariffs is how is it all going to
Speaker 10: net out? Are we going to see a distinction between
Speaker 10: China on the one side, and US trusted allies and
Speaker 10: partners on the other hand, which are trusted appliers and
Speaker 10: key parts of the semiconductor supply chain players like Samsung
Speaker 10: and s k Heinex.
Speaker 2: I'm just.
Speaker 3: I like the idea that you're calling them trusted partners
Speaker 3: and allies. And then we get the latest post from
Speaker 3: President Trump sent to seemingly the president of South Korea
Speaker 3: ahead of the meeting.
Speaker 2: What is going on in South Korea? Question mark?
Speaker 3: Seems like a purge or a revolution. We can't have
Speaker 3: that and do business there. How, leaders of countries meant
Speaker 3: to navigate what they thought as allyship when they're about
Speaker 3: to go into a meeting and receive sort of slightly
Speaker 3: confusing statements such as this.
Speaker 10: Yeah, this is not really a great sign for the
Speaker 10: upcoming talks that we're about to see. For a long time,
Speaker 10: you know, even dating back to his first term, President
Speaker 10: Trump was putting pressure on allies like the Koreans and
Speaker 10: the Japanese in particular on at least two fronts, so
Speaker 10: both trade and defense spending. He would always want to
Speaker 10: know how much are these allies paying for their own defense?
Speaker 6: As well? As what is the trade balance.
Speaker 10: So I think this is an unfortunate signal that Korea
Speaker 10: is going to be under pressure on both fronts. And again,
Speaker 10: I think when we see the dust settle of both
Speaker 10: the administration's trade negotiations as well as the semiconductor tariffs,
Speaker 10: are we going to see a distinction between China, which
Speaker 10: I think there's a bipart is in consensus that they're
Speaker 10: a threat and an adversary versus these other countries that
Speaker 10: are part of the semiconductor ecosystem that we depend on
Speaker 10: from Europe to Asia. So is there going to be
Speaker 10: a distinction or is there going to be a generally
Speaker 10: lower teror freight on the allies and partners than there
Speaker 10: is for China. I don't think anyone knows for sure,
Speaker 10: and we won't know until the Commerce Department comes out
Speaker 10: with the results of the investigation.
Speaker 3: And as I put it into the context of what
Speaker 3: did just happen officially on Friday, we've known and thought
Speaker 3: it was coming for a while. The ten percent equity
Speaker 3: stake can Intel by basically taking money already promise them
Speaker 3: by the Chips and Science Ackedlaza. This ultimately is meant
Speaker 3: to make the US less dependent on a TSMC and
Speaker 3: on a Samsung, but still in the interim we want
Speaker 3: them to build manufacturing here.
Speaker 10: Yeah, the Intel deal is really interesting, So I like
Speaker 10: to kind of zoom out and think about why does
Speaker 10: the US government care about the fate of Intel either Anyway,
Speaker 10: you know, this isn't just a normal business deal. We
Speaker 10: have to remember that the government is not a business
Speaker 10: and so we should be evaluating what's going on here
Speaker 10: not just as a business deal, but it's really more
Speaker 10: like an insurance policy. What the US government has been doing,
Speaker 10: even since the Biden administration to try to rescue Intel.
Speaker 10: So your audience will be well aware of the United
Speaker 10: States is almost entirely dependent on Taiwan on TSMC for
Speaker 10: the supply of advanced semiconductors, and that's a real problem.
Speaker 6: If we ever lost.
Speaker 10: Access to the chips, it would be economic catastrophe. So
Speaker 10: the US government sort of stepping into intervene. I think
Speaker 10: it is rational to see this as dealing with an
Speaker 10: economic emergency, so extraordinary intervention by the government is in
Speaker 10: fact required. The question I'm thinking of is, you know,
Speaker 10: is this the right kind of government intervention? And what
Speaker 10: you know in the history of industrial strategy. You know,
Speaker 10: an equity deal might not be the right play. What
Speaker 10: these firms that are kind of in strategic sectors that
Speaker 10: we can't allow to fail often need is a long term,
Speaker 10: reliable source of demand, and that's where the US government
Speaker 10: can can sometimes step in more effectively. I will just
Speaker 10: remind the audience why Intel is special. Under the CHIPSAC program,
Speaker 10: they became the steward of something called the Secure Enclave
Speaker 10: program that was set up to have kind of a
Speaker 10: minimum viable number of chips being produced here in the
Speaker 10: United States for needs like defense and national security. So
Speaker 10: it's not realistic to think we're going to rea shure
Speaker 10: the entire semiconductor supply chain, but having this goal of
Speaker 10: kind of an insurance policy to make sure we can
Speaker 10: produce at least some chips in the event of a
Speaker 10: contingency is really important.
Speaker 3: Great context Isotobin, Thank you so much, Managing director he
Speaker 3: Ghano Global el muss doing Apple and open Ai over
Speaker 3: an alleged arrangement on its iPhones, using the two companies
Speaker 3: of unfairly favoring open Ai on its smartphones and thwarting
Speaker 3: competition such as Musk's Clock. Blomberg Consumer Tech managing editor
Speaker 3: is with us Mark German, who knows the thing we'll
Speaker 3: do about Apple. I mean a threatened this earlier this
Speaker 3: month on x and now has gone through with that threat.
Speaker 2: Ultimately, couldn't do anything to the relationship.
Speaker 3: That open ai does have with Apple and vice versa.
Speaker 11: I don't see so, I mean, if they consider this
Speaker 11: an antitrust violation, that being the cord or the government
Speaker 11: or what have you. What Apple would have to do
Speaker 11: is open up what they call extensions within series. So
Speaker 11: right now, the open ai relationship is what's called an
Speaker 11: extension in Siri. If it doesn't understand one of your commands,
Speaker 11: or it doesn't have the knowledge to answer one of
Speaker 11: your commands, it uses open aist GPT as a fallback option. Now,
Speaker 11: when Apple introduced this functionality, it's said that they would
Speaker 11: have other available AI services, right and so they said
Speaker 11: that Gemini would be there. Gemini never actually came to
Speaker 11: fruition there. There's a lot more behind the scenes with
Speaker 11: the Search Engine lawsuit, working with Gemini on other facets
Speaker 11: that have gotten the way of that. But it's possible
Speaker 11: if they open this up to third parties. Allow XAI,
Speaker 11: allowed Brock, allow Claud allow different AI services in there,
Speaker 11: and that would certainly solve the issue. And Elon is right,
Speaker 11: they do give pretty hot promotion to some of the
Speaker 11: other AI companies in the app Store. They haven't done
Speaker 11: a lot of that promotion for a grock and so
Speaker 11: maybe we'll see more of that from Apple. But all
Speaker 11: in all, I find this lawsuit to be frivolous. I
Speaker 11: don't personally consider it an antitrust situation, but it's obviously
Speaker 11: not up to me to decide, and it is a
Speaker 11: little surprising that Elon Musk actually went through with this.
Speaker 3: Go to the context, of course that you put forward
Speaker 3: in a story on Friday, that the relationship between Gemini
Speaker 3: AI and Apple does look like it might get closer.
Speaker 11: So Apple's building a new version of Siri for next spring,
Speaker 11: and it's obviously much needed for reasons that I don't
Speaker 11: have to spend an hour listing now.
Speaker 9: But they basically have two paths.
Speaker 11: They can go completely in house with the new version
Speaker 11: of Siri, and by in house I mean self developed
Speaker 11: large language models to power it, or they could use
Speaker 11: a third party to help out in terms of building
Speaker 11: the new sery. So they've been talking to a bunch
Speaker 11: of possible partners to see if they're willing to power
Speaker 11: aspects of that new series. So they've been talking very
Speaker 11: much to Claude from Anthropic, and I believe eventually they'll
Speaker 11: reach some sort of agreement. But more recently they started
Speaker 11: negotiations with Google about Google building a model based on
Speaker 11: its Gemini technology for Apple as well. So we'll see
Speaker 11: where they ultimately land in a few months.
Speaker 3: And before that, we've got more hardware to Carme and
Speaker 3: Mark Gooman. You've been writing about that throughout the weekend
Speaker 3: on Poweron. I urge everyone to go and take a
Speaker 3: read and then listen. We thank you so much for
Speaker 3: joining us. Welcome back to Bloomberg Tech. Let's check in
Speaker 3: on a couple of stocks, because more broadly the benchmarks
Speaker 3: are flat.
Speaker 2: But I'm looking at PDD up more than one.
Speaker 3: Point two percent. Let's now call it. This is the
Speaker 3: owner of tim who, of course actually reported slightly better
Speaker 3: than anticipated numbers. Revenue pushed up seven percent. Look, it
Speaker 3: is the slowest pace of expansion in the years for
Speaker 3: the Chinese e commerce giant. However, it did manage to
Speaker 3: beat some pretty low expectations of analysts. Net income that
Speaker 3: was on the downside. But really this is coming from
Speaker 3: galvanizing consumers. They're trying to offset this economic fallout from
Speaker 3: US tarras and a little bit of a relief today,
Speaker 3: Intel up one and a half percent. This is the
Speaker 3: US government does take that ten percent. State does have
Speaker 3: President Trump saying they got it the zero, but he
Speaker 3: does want to show support. And this is all about
Speaker 3: having a domestic champion here in the United States when
Speaker 3: it comes to chip manufacturing. But that's all about the
Speaker 3: store of AI, isn't it. And let's talk about AI startup.
Speaker 3: Perplexity set to allow publishers the opportunity to actually share
Speaker 3: in revenue their articles generate. The move comes as the
Speaker 3: company faces pretty mounting criticism and legal action from media
Speaker 3: outlets over its use of their content promote showing Gafari
Speaker 3: and places to say, it's still here in New York
Speaker 3: and I'm thrilled about it. What are we seeing in
Speaker 3: terms of Perplexity trying to fend off issues. This is
Speaker 3: all about comment. This is all about well, the actual
Speaker 3: new product that they're offering and trying to share revenue there.
Speaker 12: That's right, So Perplexity as well as other AI companies,
Speaker 12: But they've really been one of the quickest is making
Speaker 12: a big push into an AI browser, right, so having
Speaker 12: all the AI tools actually embedded into your web search
Speaker 12: and being able to sort of understand what you're seeing
Speaker 12: on the web and everything you're doing on your computer.
Speaker 12: At the same time, they want to be able to
Speaker 12: have high quality information right for people when are searching
Speaker 12: through different tabs. So they're integrating this new kind of
Speaker 12: premium tier of subscription that will allow you to actually
Speaker 12: get some more high quality news sources into your AI
Speaker 12: browser assistant and give five percent of that revenue share
Speaker 12: two publishers who partner with them.
Speaker 3: Okay, so they're able to charge more and therefore allow
Speaker 3: some money to go to them, but that must be
Speaker 3: a fraction thus far of the actual use of publishers
Speaker 3: and what they're working on. And many have been fighting
Speaker 3: back at Perplexity for that.
Speaker 12: That's right, And by the way, I misspoke, it's actually
Speaker 12: eighty percent of revenue share, which is high, and what
Speaker 12: I meant was it's five dollars a month for the subscription.
Speaker 2: And yes it comes at a time. I mean, this
Speaker 2: company has had.
Speaker 12: Some fights with media companies in the past and continues
Speaker 12: to write they have had accusations of plagiarism that they've denied.
Speaker 12: They have also more recently just sort of been facing
Speaker 12: copyright infringement lawsuits. They're not the only ones, right, Almost
Speaker 12: every major AI company.
Speaker 6: Is facing these kinds of leak battles.
Speaker 12: But Perplexity in particular has sort of faced some criticism
Speaker 12: over that, and I think now they're trying to show
Speaker 12: that they can.
Speaker 2: Work with publishers.
Speaker 12: They have done some similar sharing of their revenue in
Speaker 12: the past, but that's been on ads, and this is
Speaker 12: one of the first to be on subscriptions.
Speaker 2: And it's different, isn't it from me?
Speaker 3: Just mega deals that we see Open ai or maybe
Speaker 3: even Google, of which, of course Perplexity has thrown their
Speaker 3: hat in the ring for a Chrome browser.
Speaker 2: What they've just been giving.
Speaker 3: Lump sums in some way to some of these publishing companies.
Speaker 5: That's right.
Speaker 2: So Perplexity says.
Speaker 12: They don't want to do these big one off deals,
Speaker 12: but they actually think that it's more sustainable to do
Speaker 12: these long term partnership or you know, more structural sort
Speaker 12: of percentage partnerships of the actual subscription revenue or the
Speaker 12: ad revenue.
Speaker 3: Sharan Gafari, We thank you for being in the house
Speaker 3: in New York. Now elsewhere in AI. Palenteer down once
Speaker 3: again as investors question returns on AI investments and valuations concerns,
Speaker 3: which you've been hitting Palenteer for at least two weeks.
Speaker 2: Now, that's bring in Jeffrey's.
Speaker 3: Analyst Brentville is one of the most bearish analysts with
Speaker 3: a sixty dollars price target and an underperformed rating. And
Speaker 3: you just thought the valuation got totally out of whack.
Speaker 3: Has the full rectified anything for you?
Speaker 2: Thus?
Speaker 13: Well, no, I mean it's still seventy times revenue. We've
Speaker 13: ever seen a software coming trade of this multiple. So,
Speaker 13: as we've said, you can touch multiples like this, but
Speaker 13: you can never sustain or live. It's like living on
Speaker 13: the top of mine ever, so you can get there,
Speaker 13: but you can't stay there. So again, the fundamentals of
Speaker 13: this company are blowing any anyone's expectation, including ours away.
Speaker 13: For them to put up a rule in ninety which
Speaker 13: is top line and bottom line margin combined equally ninety
Speaker 13: is unheard of. So they are effectively on a different
Speaker 13: planet as it relates to their fundamentals. But the valuation
Speaker 13: is there as well, so I think we've tried to
Speaker 13: separate the two and saying the company is performing extremely well.
Speaker 9: We don't see anything like it in our coverage universe. However,
Speaker 9: we have seen this before.
Speaker 13: You saw a snowflake data on others that trade in
Speaker 13: at those similar multiples. They never sustained and it was
Speaker 13: it was a tough fall. So the minute that revenue
Speaker 13: growth decelerates, and we've had eight quarters of accelerating revenue growth,
Speaker 13: once you see that dcell, the multiple is a concern.
Speaker 3: So do you have a view on when that deceleration
Speaker 3: will actually have because you've you've said in your notes,
Speaker 3: so you've got limited visibility, lumpiness and quarterly bookings. I mean,
Speaker 3: and this is actually going to start showing up and
Speaker 3: convincing the retail investor that has helped drive it up
Speaker 3: into the right Yeah, I.
Speaker 9: Mean, it's a good point.
Speaker 13: So the majority, a huge part of the investor bases retail.
Speaker 9: It's about forty percent.
Speaker 13: And so our clients are institutions, and I don't speak
Speaker 13: to a lot of clients and volunteer because our institutions
Speaker 13: have basically valuation thresholds that they can't break through. And
Speaker 13: we've they've all seen this movie before in the last
Speaker 13: twenty years in our group. So from a retail perspective,
Speaker 13: it can keep working. When does it break? We don't
Speaker 13: see a break down on the fundamentals. I think the
Speaker 13: question becomes, you know, the comps are going to start.
Speaker 9: Getting harder and can they sustain that level of growth?
Speaker 13: And doctor Karp, the CEO, has said this that they
Speaker 13: expect headcount to actually shrink and they can grow revenue
Speaker 13: ten x on a shrinking employee workforce at Volunteer, which
Speaker 13: is to me kind of mind blowing because if you
Speaker 13: think about it, you need a lot of talenteer people
Speaker 13: and services people to get the software working. How does
Speaker 13: this happen? Is AI make the software work? There's a
Speaker 13: couple of things that just I think everyone's trying to
Speaker 13: make sense of. That's one comment that how do you
Speaker 13: grow ten x with that tiny of a workforce?
Speaker 3: And Brent, you've outlined the issues of employees, but there
Speaker 3: are upside risks that you also detail that they actually
Speaker 3: do do faster and expected monetization, particularly of the AIP
Speaker 3: or they do get sustained commercial momentum. How long can
Speaker 3: the market remain irrational and others remain Solvent.
Speaker 9: Well, the market can remain rational for a while.
Speaker 13: Again, remember you're dealing with the retail in sol Based,
Speaker 13: you're not dealing within the institutional base, so as a
Speaker 13: pig in the stock.
Speaker 9: So I'd just say that this could continue to go on.
Speaker 13: And this is the area that we've been wrong, which
Speaker 13: is the magnitude of in the duration of how long
Speaker 13: it would sustain.
Speaker 9: I mean, if you take the.
Speaker 13: Next closest multiple in software and this is close to
Speaker 13: seventy times, it's it's cloud Flare at twenty twenty five times,
Speaker 13: and then it falls off a cliff from there in
Speaker 13: terms of the multiples across our coverage.
Speaker 9: So you're just really.
Speaker 13: Dealing with something that is super unique. Their business is
Speaker 13: super unique.
Speaker 9: The execution has.
Speaker 13: Been incredible, so there's been no real reason fundamentally to
Speaker 13: sell a stock other than, hey, the multiple is where
Speaker 13: it's at.
Speaker 9: So I think it's it's hard. It's a hard one
Speaker 9: because again you have to give them credit.
Speaker 13: The product is working, the customers love it, and you
Speaker 13: look at the coal money in the execution.
Speaker 9: Has been it's been next to no one, no one's
Speaker 9: been even close to him.
Speaker 3: Well, they still remain the best performing stock in the
Speaker 3: SP five hundred. Despite the recent for what we see
Speaker 3: how much the momentum carries on brenha It's always so
Speaker 3: great to check in with you, Jeffrey's analyst. Thanks for
Speaker 3: your time. And another defense tech company to watch. This
Speaker 3: one actually part of it not part of the public
Speaker 3: markets yet. In fact it's private and it's called Seronic
Speaker 3: and wants to speed up shipbuilding in the United States
Speaker 3: with the goal of securing US naval dominance.
Speaker 2: According to the CEO.
Speaker 3: We spoke with that CEO, Dino Marucas, about the shift
Speaker 3: that he's seeing in government interest.
Speaker 14: I was in the seal teams for eleven years. My
Speaker 14: last five years were spent on Seal Team six. That
Speaker 14: was from two thousand and four to twenty fifteen. I
Speaker 14: say that to say this, this is the fastest that
Speaker 14: I've seen the military and the government move to adopt
Speaker 14: anything in my life.
Speaker 5: Now.
Speaker 14: That is extremely encouraging from a business and an operational perspective,
Speaker 14: but it should also be concerning when we think about
Speaker 14: why is that happening right? The potential threat with China
Speaker 14: and the South Pacific. We need to move and we
Speaker 14: need to move now. And that's why we're operating so
Speaker 14: quickly here at Teharonic. We're investing private capital to build
Speaker 14: the technology that our warfighters need and get those solutions
Speaker 14: in their hands as fast as possible.
Speaker 2: What else do you need to know?
Speaker 3: You talked about how you're building the infrastructure around the talent,
Speaker 3: But what is it that keeps you up at night,
Speaker 3: that stops and holds you.
Speaker 14: Back when we think about what we need, I break
Speaker 14: it down to talent, customer capital. If you bring those
Speaker 14: three things together, there is a there's magic that is
Speaker 14: happening here at Turonic. What do I mean by that
Speaker 14: is we have a world like, truly world class team.
Speaker 14: Our co founders come from phenomenal companies with phenomenal backgrounds.
Speaker 14: We have over eight hundred employees now across the country
Speaker 14: and actually across the world. We've opened locations in Australia
Speaker 14: and the UK as well. Capital we have some of
Speaker 14: the world largest invest investors eight VC, Andrees and Horowitz
Speaker 14: and the list goes on.
Speaker 3: And you call commercial customers as well, just to round
Speaker 3: things out. How big is could that be in terms
Speaker 3: of demand?
Speaker 14: I mean that we look at the commercial sector as
Speaker 14: absolutely critical. I mean one hundred billion dollars plus commercial
Speaker 14: maritime market. And here's here's the thing that I point
Speaker 14: out to people when you're focussing about on defense, it's
Speaker 14: you need a strong commercial industry to have a strong
Speaker 14: defense industry. We build all of our products for dual
Speaker 14: use defense and commercial.
Speaker 5: What that let us what's that?
Speaker 14: What that lets us do is diversify our revenue base.
Speaker 14: Invest more dollars into R and D to build better
Speaker 14: solutions for the government, Build robust and reliable supply chains
Speaker 14: that can scale, take advantage of economies of scale like
Speaker 14: you have to build for commercial use cases as well.
Speaker 14: The days of building one off, bespoke solutions for the
Speaker 14: government are just over. We need to be building ships
Speaker 14: by the hundreds and boats by the thousands.
Speaker 9: And that's what we're doing at Soeronic.
Speaker 3: And you've been able to make your supply chain work
Speaker 3: to fit that at the moment, because with tariffs coming
Speaker 3: in and changing the rules around metals and supplies, how
Speaker 3: has that been for you to navigate?
Speaker 14: We spend a lot a lot of time on supply chain.
Speaker 14: We have two dozen people that focus on nothing but
Speaker 14: supply chain. But here's the beauty of what we've been
Speaker 14: able to do at Seronic, we're completely vertically integrated from
Speaker 14: start to finish. When I say we're building our own
Speaker 14: boats and ship, we're building our own boats and ships
Speaker 14: right We're contracting the aluminum and the fiberglass. We're bringing
Speaker 14: in every single component that is integrated onto our platforms.
Speaker 14: We're doing final assembly, and we have the capital and
Speaker 14: the team to bring things in house when we find
Speaker 14: bottlenecks in that supply chain. That's very rare and very
Speaker 14: unique and a very very strong differentiator when you talk
Speaker 14: about what it takes to actually get to scale.
Speaker 5: Sour on X.
Speaker 3: CEO Dino Mavrucus with us earlier well later last week. Now,
Speaker 3: the SpaceX delayed the test flight of its Starship rocket
Speaker 3: on Sunday, just half an hour before its schedules lift off,
Speaker 3: due to a liquid oxygen leak.
Speaker 2: Now it marks another.
Speaker 3: Blow to SpaceX's launch record, after two earlier flights this
Speaker 3: year it's ended up in explosions. Now the company is
Speaker 3: aiming for another launch later tonight. Coming up the world
Speaker 3: of esports and looks to gain a wider fan base
Speaker 3: and housing a new tournament.
Speaker 2: More on that next.
Speaker 3: While watching some outperformers in the world are gaming EA roadblocks,
Speaker 3: both trading higher significantly outperforming, for example on roadblocks more
Speaker 3: than after last week's sell off.
Speaker 2: This is blue Bag Tech.
Speaker 3: The Esports World Cup Foundation when it's announced a new
Speaker 3: bi annual tournament called the Esport's Nations Cup, bringing together
Speaker 3: the world's best players in an attempt to elevate esports
Speaker 3: to a new cultural and patriotic movement. The tournament is
Speaker 3: set to debut in twenty twenty six. In read, joining
Speaker 3: US now Sports World Cup CEO Ralph Ria Reichert, there
Speaker 3: we are, Ralph, give me a sense of why representing
Speaker 3: countries matters here.
Speaker 15: So when we look at what happened this year this
Speaker 15: wayear was the second iteration of the Esports World Cup.
Speaker 15: Was the first time that all the games industry comes
Speaker 15: together and competes across twenty four different games. And this
Speaker 15: is a unique moment because esports has been very segregated
Speaker 15: into different disciplines and now there's one place where this
Speaker 15: all happens together. And we've proven that it a can
Speaker 15: happen on this scale and b be successful with seven
Speaker 15: hundred million viewers across the world three million people visiting
Speaker 15: Riat for it, which is, you know, as much as
Speaker 15: that Vegas has visitors in.
Speaker 9: Four weeks, So that was the proof point.
Speaker 15: Now we want to bring it to the next level
Speaker 15: because Esports has been build out of clubs, which are
Speaker 15: super important and the origin of it, but for my
Speaker 15: mom to care to take it for the next step
Speaker 15: and really make it mainstream. We believe that Nations is
Speaker 15: a very logical step. And by building this platform and
Speaker 15: the model of the Esports Work Cup, we the foundation
Speaker 15: now have the means and the trust of the publisher,
Speaker 15: the community, and the fans and the players most importantly
Speaker 15: to do this, and that's why we announced it on Saturday,
Speaker 15: and we're incredibly excited about it.
Speaker 3: Why in the Middle East, what has we had been
Speaker 3: so quick to adopt this?
Speaker 5: So I think there's a few reasons.
Speaker 15: I mean, number one, there is out of the population
Speaker 15: of Saudi Arabia, sixty three percent are below thirty five
Speaker 15: and seventy percent of the population in Saudi Arabia identifies
Speaker 15: as gamers, so it's a huge home for gaming. And
Speaker 15: then the Crown Prince himself is the thirty eight years
Speaker 15: and now whold right, so he's endemically has grown up
Speaker 15: with gamings and a lot of people in the government actually,
Speaker 15: so I think it's the first woman that's out there
Speaker 15: where you know, it's consisting of people who really understand
Speaker 15: gaming from the inside out rather than looking out of it.
Speaker 15: And number three, Saudi Arabi has publicly said this multiple
Speaker 15: times since diversifying their economy and tourism is a big one,
Speaker 15: but gaming as well of this diversification and the largest
Speaker 15: e sports event in the world is a no brainer.
Speaker 9: To achieve that.
Speaker 3: I mean, they had Ronaldo of course giving away prizes
Speaker 3: at the recent festival, and he lives over there playing
Speaker 3: as well.
Speaker 2: I'm interested in Ralph just about how much money has
Speaker 2: managed to be built through this.
Speaker 3: What sort of sponsorship are you're seeing, because the number
Speaker 3: is the viewership, the eyeballs are extraordinary.
Speaker 15: Yes, So I mean, as you said right, Ronaldo is
Speaker 15: our global ambassador. So I was on stage with him
Speaker 15: the other day presenting the trophy to Team Falcons, who
Speaker 15: have won a very quickly, second Team Liquid, an American
Speaker 15: European crossover, and last but not least, Team Vitality, which
Speaker 15: is the European club. But we have more than twenty
Speaker 15: two sponsors with many international names like Sony, Amazon, Pepsi,
Speaker 15: Hillton and Nasacard. So the lineup is incredible. It's well
Speaker 15: over a nine figure sponsorship income. But to be honest,
Speaker 15: the industry is still early. So without host city fees
Speaker 15: and country hosting fees like we have gotten through Saudi
Speaker 15: Arabia at this scale, this wouldn't be possible. And we've
Speaker 15: seen this a little bit in the last few years,
Speaker 15: that the monetization is not where it's in traditional sports.
Speaker 15: And I think one of the things we always miss
Speaker 15: is traditional sports is heavily subsidized by governments as well
Speaker 15: by public money, being it in the college system or
Speaker 15: an amateur system, or in when the biggest sports events
Speaker 15: come to countries right where it's a big marketing and
Speaker 15: financial support. And I think what we're seeing with the
Speaker 15: Esports World Cup and now with the Esport's Nations Cup
Speaker 15: is for the first time that governments really at scale,
Speaker 15: invest into it, believe in it, and use it as
Speaker 15: a cultural tool like they do with traditional sports.
Speaker 3: It's been great seeing some of the numbers, seeing some
Speaker 3: of the celebrations, talking about in the next tournament, rav
Speaker 3: Racket of Esports World Cup. Great speaking with you, Thank you,
Speaker 3: Federal Trade Commission, is urging tech companies to resist what
Speaker 3: they see as pressure from foreign governments. Two weekend data
Speaker 3: privacy and free speech protections for US consumers now, FGC
Speaker 3: Chairman Andrew Ferguson spoke to us about the agency's concerns
Speaker 3: what he wants to hear from US tech companies in.
Speaker 16: The United Kingdom, in Europe and elsewhere. American tech companies
Speaker 16: that do business, you know, in the United States and
Speaker 16: elsewhere are coming under pressure, sometimes through direct legislation, to
Speaker 16: potentially censor speech in Europe, maybe even in the United States.
Speaker 5: Of course, the Brazilian Supreme Court Justice.
Speaker 16: Is of the view that American tech companies need to
Speaker 16: censor speech everywhere because it's the nature of the Internet.
Speaker 16: And it was really important to me, as an American
Speaker 16: law enforcer to make it clear to American companies, you
Speaker 16: don't get to take a free shot at American consumers
Speaker 16: because of something that governments in other parts of the.
Speaker 5: World are asking you to do.
Speaker 16: We've got laws here in the United States that protect
Speaker 16: the relationship between American consumers and American tech firms, and
Speaker 16: so no one should think that you just sort of
Speaker 16: get to do to Americans whatever you want. In order
Speaker 16: to comply with the demands of foreign governments, and that
Speaker 16: you know, American laws, particularly the Federal Trade Commission Act
Speaker 16: that I enforce, don't allow American tech companies to hurt
Speaker 16: American consumers just because of foreign government is demanding it.
Speaker 16: And I just wanted to make sure that everyone, consumers
Speaker 16: and the tech firms understood this is how I see
Speaker 16: the law. And I want you to come to explain
Speaker 16: to me how you are planning to protect American consumers
Speaker 16: notwithstanding the demands of these foreign governments, and if they aren't,
Speaker 16: then I'm going to enforce the law against them.
Speaker 3: Thus far, we have seen action taken in particular by
Speaker 3: Apple pushing back in requirements by the United Kingdom for
Speaker 3: a so called backdoor into data that they hold rypto data.
Speaker 3: I'm interested as to how you felt that unfolded in
Speaker 3: the UK and with a Apple played by the play
Speaker 3: that you wanted to see.
Speaker 16: Yeah, I mean look, and I think a lot of
Speaker 16: credit here needs to go to the Vice President who
Speaker 16: sort of personally managed trying to protect Americans from these
Speaker 16: demands of a foreign government. But yeah, I mean, look,
Speaker 16: I want American tech firms to understand you have legal
Speaker 16: obligations in your home country and the country that made
Speaker 16: it possible for you to become what you have become
Speaker 16: to protect American consumers and not basically to give Americans
Speaker 16: the short shrift because it would be easier to comply
Speaker 16: with the demands of a foreign government. And so I'm
Speaker 16: glad that because of pressure from the United States and
Speaker 16: particularly from the Vice President, that we were able to
Speaker 16: achieve this outcome or protect consumers from Apple.
Speaker 5: But this isn't going away.
Speaker 16: Europe has passed these laws that promote censorship, Britain has
Speaker 16: these laws. We're seeing this sort of thing happening in Brazil,
Speaker 16: and it's very important that American tech companies understand you
Speaker 16: cannot just sort of take it out on Americans in
Speaker 16: order to comply with these other foreign governments.
Speaker 5: You have to protect Americans first.
Speaker 3: FTC Chair Andrew Ferguson Go to online and see the
Speaker 3: full interview.
Speaker 2: But that does it. From this edition of Bloomberg.
Speaker 3: Tech has check in on Intel shares, a historic time
Speaker 3: for a company when ten percent of its secuity is
Speaker 3: now held by the US government. They don't want governance role.
Speaker 3: But President Trump earlier today taking to truth social and
Speaker 3: now at a press conference discussing the upside for America.
Speaker 2: Don't forget to check out our podcast. You can find
Speaker 2: it on the terminal as well as online on
Speaker 3: Apple, Spotify, and iHeart From New York, this is Bloomberg
Speaker 3: Tech