Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along
Speaker 2: with Lisa Bromwitz and Amrie Hordernt. Join us each day
Speaker 2: for insight from the best in markets, economics, and geopolitics
Speaker 2: from our global headquarters in New York City. We are
Speaker 2: live on Bloomberg Television weekday mornings from six to nine
Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or
Speaker 2: anywhere else you listen, and as always on the Bloomberg
Speaker 2: Terminal and the Bloomberg Business app. We begin this out
Speaker 2: with the IPO pipeline heating cup at Semi staging a comeback.
Speaker 2: Jack Caffrey of JP Morgan Asset Management calling it a
Speaker 2: moderation Monday bounce, writing this one was even more likely
Speaker 2: given the sharpness of the sell off. Jack joins us
Speaker 2: now for more. Jack and Mornick, Good morning. He's still
Speaker 2: constructive on the secretary market chain. I'm still constructed on
Speaker 2: the mort What makes you constructive?
Speaker 3: Earnings? This is really, I think in earnings driven story.
Speaker 3: We came into through last year with a mid teen's
Speaker 3: earnings gain, several years into an economic expansion. Now we're
Speaker 3: looking at twenty two plus percent earnings growth for this
Speaker 3: year and looking to next year, we think that turns
Speaker 3: into still another mid teen sort of earnings gain.
Speaker 2: The biggest pushback we've had so far to earnings is
Speaker 2: technicals just feel very stretched. Friday in the minds of
Speaker 2: some was inevitable, and they'll be further follow through. Mak.
Speaker 3: I think that the issue is one of if you
Speaker 3: ask me what's going to happen in the next fifteen minutes,
Speaker 3: I have no particular insights. If you ask me what
Speaker 3: happens over fifteen to twenty four months, I'm going to
Speaker 3: come back to the interplay between earnings and expectations, where
Speaker 3: expectations a bit high. Ya look at the collapse in
Speaker 3: the vicks, look at how tight credit spreads are, but
Speaker 3: they're certainly telling you not a lot to be worried
Speaker 3: about here. So I'll come back to if we continue
Speaker 3: seeing positive earnings revisions, there are still legs to the story.
Speaker 3: Will we have bounces along the way, will we have
Speaker 3: some setbacks, will we find something new like, oh, I
Speaker 3: hadn't thought about that inevitably? And I think that lends
Speaker 3: it to a situation where the pullbacks will be short,
Speaker 3: but they will be sharp.
Speaker 4: You have tech and tech adjacent sectors, and of course
Speaker 4: the earning season was super for a lot of those.
Speaker 4: What about everyone else, What about the ones that aren't
Speaker 4: getting the benefit of the tech build out?
Speaker 3: Well, I think you have to when we think about
Speaker 3: the scale seven hundred and eight hundred nine, a couple
Speaker 3: of trillion dollars in capital spending over the next few years,
Speaker 3: in all likelihood, not all of that actually winds up
Speaker 3: going into semiconductors. You start off by having to build
Speaker 3: a shell. Then you have to build an ATRAX system
Speaker 3: in place, and you actually have to consume a lot
Speaker 3: of copper in order to actually tie that data center
Speaker 3: to the grid. You have to build the grid. You know,
Speaker 3: we have electric demand growing for the first time since
Speaker 3: the seventies, are materially growing since the seventies, and so
Speaker 3: I do think that there is maybe not trickle down
Speaker 3: that's a different part of the economy, but a trickle through.
Speaker 3: And I think it's important to consider the interplay between
Speaker 3: what people say and what people do, and when we
Speaker 3: think about the scale of backlog growth, it would suggest
Speaker 3: things are actually a little bit more than just asking
Speaker 3: people are you happy?
Speaker 4: So that filters through to the top line. Does it
Speaker 4: filter through to the bottom line as well with an
Speaker 4: hour of increased expenses for all these companies.
Speaker 3: Yeah, I think on the shorter term, we do have
Speaker 3: the acknowledge we live in a world of pretty interestingly
Speaker 3: high nominal GDP. When you think about you know, the
Speaker 3: Lanta Fed survey and Lanta Fed survey of GDP now
Speaker 3: pointing to four percent growth. You've got the Cleveland Fed
Speaker 3: survey of neartime CPI at four percent. You know, eight percent,
Speaker 3: that's pretty a robust environment. Would have in some sense
Speaker 3: have been thrilled to have in the in a decade ago.
Speaker 3: We are still seeing positive incremental margin expansion as companies
Speaker 3: still have fixed costs that they're absorbing. And so I
Speaker 3: do think that's how you can turn eight percent sort
Speaker 3: of top lines into twenty percent earnings gains in terms
Speaker 3: of companies still making their assets sweat harder and you know,
Speaker 3: perhaps with the threat of aim making their people sweat harder.
Speaker 2: They fed us let this run. Some people might say
Speaker 2: they've encouraged it. They reduced interest rates three times last year,
Speaker 2: three times the year before that. Is the FED about
Speaker 2: to step in and ruin the party.
Speaker 3: I'm really happy I'm not on the FED in terms
Speaker 3: of having to think about balancing between the policy pushes
Speaker 3: and pulls. You've got a very loud cheerleader who's going
Speaker 3: to be very active in social media expressing what policy
Speaker 3: they want, and then you've got a group of equally
Speaker 3: strong minded individuals on the FED board, most of whom
Speaker 3: have been indicating they think the situation requires moderating the
Speaker 3: punch bowl, if not actively taking it away.
Speaker 2: Short This headline might moderate the punch bowl. It just
Speaker 2: crossed on the Bloomberg terminal. Taiwan mullin curbs on ai
Speaker 2: Chipex sports to China to align with the United States.
Speaker 2: As we try and digest that headline as it just
Speaker 2: crosses the Bloomberg terminalor equity features taken just a little
Speaker 2: bit of a dip, We're still positive on the session
Speaker 2: by about a third of one percent on the S
Speaker 2: and P five hundred, that headline crossing just seconds ago.
Speaker 2: Taiwan considering curbs on ai Chipex sports to China to
Speaker 2: align with the United States. Scout at the latest on
Speaker 2: the Bloomberg terminal this morning.
Speaker 1: Yeah, that it.
Speaker 4: Gives you this sense that Taiwan is going to not
Speaker 4: bend over backwards, but make sure it aligns with the
Speaker 4: US in order to get the kind of arms deals
Speaker 4: and fulfill those contracts that had wanted from the United States.
Speaker 4: And we're already seen how President Trump is going to
Speaker 4: make sure that he is going to huge to what
Speaker 4: Hu Jing Pin wants in order to be able to
Speaker 4: move forward with their trading relationship.
Speaker 1: Too.
Speaker 2: With attempt to bring you about details on that stony
Speaker 2: in just a minment features still just a band positive
Speaker 2: on the S and P five hundred. Let's turn back
Speaker 2: to the Federates. Jack, you mentioned the cheerleader at the
Speaker 2: White House. You allD it to that. Does it make
Speaker 2: a difference that the president is calling for more right counts?
Speaker 2: Does not actually change up perception of future FED policy.
Speaker 3: I think that the President is an active user of
Speaker 3: the bullue pulpit, and in terms of whether it's what
Speaker 3: he would like to see in interest rate policy, clearly
Speaker 3: he did not have the impact that he was hoping
Speaker 3: to have in terms of the direction of rates over
Speaker 3: the last several months. He's certainly much more effective in
Speaker 3: terms of what he's doing with the oil market. I
Speaker 3: think certainly seemingly every weekend. When I talked about moderation Monday,
Speaker 3: I also thought maybe you would have called yesterday's step
Speaker 3: back Sunday. In terms of remain calm, oil prices are
Speaker 3: going to be going down any moment now, and effectively
Speaker 3: we're seeing that actually follow through at least right now
Speaker 3: from a trader's perspective.
Speaker 4: So let's bring it back to the equity market, because
Speaker 4: you have pointed out that energy is the most interesting
Speaker 4: sector in equity market because it sits at the intersection
Speaker 4: of so many different dynamics. How are you feeling about
Speaker 4: it right now versus a month ago.
Speaker 3: I think that ultimately the one thing I can subbout
Speaker 3: oil prices to start is oil prices are wrong.
Speaker 1: They're wrong.
Speaker 3: They're wrong. They if you look at the future's curve,
Speaker 3: they should be trending lower. I think the question is
Speaker 3: at what rate do they trend lower? At the same time,
Speaker 3: tankers aren't really transitting. We were reminded the blockade this
Speaker 3: morning remains one hundred percent effective, and that means we,
Speaker 3: I think, are not paying enough attention to the actual
Speaker 3: declines in physical inventory, and that even if you start
Speaker 3: actually getting crude flowing tomorrow or forty five days away
Speaker 3: from actual new supplies reaching to demand centers. And so
Speaker 3: in that environment of there's very few barrels to be bought,
Speaker 3: the possibility of very few barrels to be bought, you
Speaker 3: wind up with having these scenarios where oil might go
Speaker 3: not to ninety, not to one hundred, but potentially two
Speaker 3: one hundred and twenty five one hundred and fifty dollars,
Speaker 3: and that has an inflation knock on, and that is
Speaker 3: not something that FED can can easily control through thinking
Speaker 3: about either rates or money supply.
Speaker 4: Who seems to understand this better short term traders or
Speaker 4: long term investors.
Speaker 3: I think that there's probably an interesting time arbitrage between
Speaker 3: the two. Where the short term traders are looking at,
Speaker 3: you know, oil prices easing, they're looking at airline stocks
Speaker 3: making all time new highs. Forces you to scratch your
Speaker 3: head if you think about the possibility of physical shortages
Speaker 3: of someone who's certainly very operationally leveraged to what fuel
Speaker 3: prices wind up being or what they presold their tickets
Speaker 3: as being. And so I think that's where traders are
Speaker 3: responding to them is literally tweet by tweet, truth by
Speaker 3: truth versus investors are saying, interesting, I don't really see
Speaker 3: the path forward. And yet as much as you think
Speaker 3: about an energy dominance theme, large oil companies are at
Speaker 3: least being very slow with increasing their Historically, the rule
Speaker 3: of thumb as high price is secure high prices, and
Speaker 3: yet normally the cure for high prices is actually increasing supply.
Speaker 3: No one's really rushing to increase supply, and I would
Speaker 3: suggest over time oil needs to be higher because I
Speaker 3: think the world has realized that the choke point, which
Speaker 3: is the Strait of Horror Moves, is probably unacceptable for
Speaker 3: the global economy. And so how do you incentivize more
Speaker 3: production out of South America, more production out of Africa?
Speaker 3: Reroute around some of the other choke points, which is
Speaker 3: not just the Strait of horm Moves, but potentially even
Speaker 3: the Suez Canal, depending on what total victory looks like
Speaker 3: in terms of where parties settle out.
Speaker 1: Stay with us.
Speaker 2: More Bloomberg Savanance coming up after this.
Speaker 5: We thought the President was breaking some news on Friday
Speaker 5: when he was gaggling with reporters, including myself on Air
Speaker 5: Force one, and then we get these reports that actually
Speaker 5: it was news to those companies themselves anthropic, opening Eye SpaceX.
Speaker 5: But the direction of travel is clear in terms of
Speaker 5: what this White House wants to do when it comes
Speaker 5: to these AI companies, especially as all of them prepared
Speaker 5: to go to the market. Jennifer Huddleson joins me, now
Speaker 5: Senior Fellow in Technology Policy at the Cato Institute. Jennifer,
Speaker 5: good morning, Thanks for joining me. Good morning, Thanks for
Speaker 5: having me. So you're spending a lot of your time
Speaker 5: right now focused on this. The President talks about concepts
Speaker 5: of ideas in terms of how there could be more
Speaker 5: of a public private partnership when it comes to these
Speaker 5: AI companies. What do you think some of the policy
Speaker 5: proposals this White House maybe Congress could actually land on.
Speaker 6: You know, there's a big difference in kind of the
Speaker 6: idea of a public private partnership and what we're seeing
Speaker 6: in terms of calls for government investors in some of
Speaker 6: these leading companies. One of the real concerns is that
Speaker 6: if we see government investment, if we see significant government involvement,
Speaker 6: that could lead to the government picking winners and losers
Speaker 6: at a time when this industry is incredibly dynamic and
Speaker 6: where we don't necessarily know where the full applications of
Speaker 6: the technology are going or who those leaders are going
Speaker 6: to be when it comes to what consumers actually need
Speaker 6: and want.
Speaker 5: Do you feel that this White House already has done that?
Speaker 1: Though?
Speaker 5: So why would they stop here when you think of
Speaker 5: MP Materials and Intel? Why would they stop at the
Speaker 5: AI companies? Which is also a welcome policy perposal on
Speaker 5: the far left.
Speaker 6: You know, you mentioned there does seem to be this
Speaker 6: odd horseshoe where you have Senator Bernie Sanders proposing a
Speaker 6: sovereign wealth fund to invest in AI companies, and then
Speaker 6: you've had these kind of rumors out of the White
Speaker 6: House of a very similar proposal. You mentioned the past
Speaker 6: actions around for example, Intel, and one of the things
Speaker 6: we can see there is the impact that this can
Speaker 6: have on private investment, on presumptions around how these companies
Speaker 6: are going to develop, And that's something to also consider.
Speaker 6: What does this mean not only for these companies and
Speaker 6: for the AI industry, but what does it also mean
Speaker 6: for the market environment around these companies.
Speaker 5: Jonathan and I have been speaking about this all week,
Speaker 5: and a question he brought up yesterday is do the
Speaker 5: companies want to share in the profits with the US
Speaker 5: government or do you think they want to get involved
Speaker 5: with the US government to potentially protect against the downside?
Speaker 6: One of the big concerns with the kind of government
Speaker 6: investment is a risk of cronyism, a risk that only
Speaker 6: those large companies could be the ones that could potentially
Speaker 6: navigate these things. What does that mean for smaller players
Speaker 6: who might emerge as leaders in the future, and also
Speaker 6: what does that mean for the involvement of the government
Speaker 6: in this technology that's so critical to access to information,
Speaker 6: to the opportunities for many potential innovations and applications. Is
Speaker 6: that the type of thing where you may see a
Speaker 6: politicization of certain policies, of companies not being willing to
Speaker 6: offer certain products because they're worried what government regulators might
Speaker 6: think about that.
Speaker 1: Or how they might find that disfavored.
Speaker 5: Do you think the IPOs are pushing the government to
Speaker 5: act because we're going to see SpaceX go public on Friday,
Speaker 5: then it's going to be open AI and Inthrapic, and
Speaker 5: we're seeing these companies inc valuations that are so not
Speaker 5: normal when it comes to IPOs and going public on
Speaker 5: public markets.
Speaker 6: There's a lot of excitement around AI, around its potential
Speaker 6: both in the markets, as well as in individual businesses
Speaker 6: and their potential applications of AI. I think that we're
Speaker 6: also in a moment where we're still seeing a lot
Speaker 6: of potential fears, a lot of potential concerns around AI,
Speaker 6: and a lot of uncertainty of what that means.
Speaker 1: For jobs or things like that.
Speaker 6: So I don't think that we can say hard and
Speaker 6: fast whether this is a result of interest in IPOs,
Speaker 6: but more just a continuing question of what the US
Speaker 6: approach to AI policy should look like.
Speaker 1: You mentioned this.
Speaker 5: You have Bernie Sanders on the far left. I asked
Speaker 5: Trump about this, and he said that they actually share
Speaker 5: some economic thinking similarities, and that he took some of
Speaker 5: Bernie's voters. Then you have individuals like even Steve Bannon
Speaker 5: on the far right who think Bernie Standers doesn't go
Speaker 5: far enough.
Speaker 1: It does feel like Washington will do something. What do
Speaker 1: you think would be appropriate?
Speaker 6: I think it's really important that we remember why a
Speaker 6: light touched approach to innovation has allowed the US to
Speaker 6: be a leader in the Internet era, and then we
Speaker 6: consider how that might play out in the AI era.
Speaker 6: There may be a need for clear policy guardrails around
Speaker 6: some of the issues like government use of AI. But
Speaker 6: when we're thinking about how this technology could potentially evolve
Speaker 6: in its most beneficial ways, we should want consumers and
Speaker 6: innovators in the market to be the ones that decide
Speaker 6: all the potential application, rather than bureaucrats dictating that this
Speaker 6: technology can only evolve in one particular direction.
Speaker 5: Do you think executives are more willing to work with
Speaker 5: the government on this and potentially even give them the
Speaker 5: stake because they know there's going to be public backlash
Speaker 5: When we've seed so much public backlash, especially recently at
Speaker 5: commencement speeches, there's a lot of anxiety. Bernie Standers is
Speaker 5: talking about the fact that AI models run based off
Speaker 5: of all of our collective work as a society.
Speaker 6: There's certainly a lot of discomfort in the public around AI,
Speaker 6: and I think it's important that we remember all the
Speaker 6: benefits of AI and that AI isn't just products like
Speaker 6: chat GPT. We're seeing things like amazing medical research advances,
Speaker 6: We're seeing better predictions for natural disasters. We're seeing a
Speaker 6: lot of applications of AI that the average individual might
Speaker 6: not be aware about or thinking about, and that therefore,
Speaker 6: when we're thinking about AI, we have to think much bigger,
Speaker 6: including when we're thinking about AI policy.
Speaker 5: You're very optimistic on the future of AI. A lot
Speaker 5: of people are nervous that it would mean loss of
Speaker 5: jobs in this country.
Speaker 6: You know, I think it's okay to be nervous on
Speaker 6: an individual level, but we've been there and we've had
Speaker 6: this uncertainty around other automation technologies in the past, whether
Speaker 6: it was questions of what would ATMs do to teller
Speaker 6: jobs or the rise of EXCEL in the financial sector.
Speaker 6: What we find is that typically when these new technologies
Speaker 6: come in, yes, there is some displacement, but there is
Speaker 6: also a lot more opportunities that are created by those efficiencies,
Speaker 6: and there are also opportunities that often lead to more
Speaker 6: enjoyable work and more opportunities in the future as well.
Speaker 5: We talk about what the government is using in terms
Speaker 5: of AI right now. It was a little bit confusing
Speaker 5: because clearly the DoD is still running Anthropic, but they're
Speaker 5: giving them six months. The dd is giving itself six
Speaker 5: months to wind that down and use other partners.
Speaker 1: What does it mean for ANTHROPIC.
Speaker 5: To be used especially methos across other agencies in the
Speaker 5: government but still be a supply chain risk considered a
Speaker 5: supplying chain risk at the Pentagon.
Speaker 6: This is a really complicated question and wine of the
Speaker 6: questions we really need to be discussing when it comes
Speaker 6: to potential guard rails for artificial intelligence. There are certainly
Speaker 6: benefits of the government using artificial intelligence to better service constituents,
Speaker 6: to better service citizens, but there are also unique civil
Speaker 6: rights and civil liberty concerns when it comes to the
Speaker 6: potential use of AI, for concerns related to domestic surveillance
Speaker 6: or autonomous lethal weapons, many of which were at the
Speaker 6: heart of the dispute between the Pentagon and Anthropic.
Speaker 1: A few weeks ago.
Speaker 5: I spoke to Under Secretary of Neil Michael about this
Speaker 5: and he said, there's no talks anymore left between DoD
Speaker 5: and Anthropic, but we have seen the Andthropic CEO have
Speaker 5: meetings in Washington, even with the Chief of Staff Susie Wilds.
Speaker 5: Do you think that's going to get patched up?
Speaker 6: You know, it's a complicated situation, and I think there
Speaker 6: are two factors there. There's the question of the decision
Speaker 6: around the contract, which could be a normal dispute between
Speaker 6: a government contractor and a government agency. But what made
Speaker 6: this so unique was the supply chain designation, and that's
Speaker 6: what raised serious concerns when it comes to questions around
Speaker 6: free speech, around the potential government influence in this very
Speaker 6: important market.
Speaker 2: Stay with us multiple IMPEX surveillance coming up. Off to this,
Speaker 2: Let's get to those IPOs. Open AI entering the race
Speaker 2: to go public submitting it's confidential filing for an IPO,
Speaker 2: Gil Loria of DA Davison writing, what open ai does
Speaker 2: not want is for the public market capital to exhaust itself.
Speaker 2: It does not want to be the third and last
Speaker 2: of the large IPOs. Gil joins us now for more
Speaker 2: and Gil, welcome to the program. There might not be
Speaker 2: the only thing to worry about, not just the IPOs,
Speaker 2: but also Alphabet with an upsized capital raise as well
Speaker 2: in the last week. And Gil, as you pointed out,
Speaker 2: before we even got the rumor from the ft on Meta,
Speaker 2: you might see Meta and the others follow. It will
Speaker 2: just frame for us how much equity we could see
Speaker 2: come into this market in the next six months.
Speaker 7: Hundreds of billions of dollars of new equity because Microsoft, Amazon,
Speaker 7: and Meta just took note that Google, that Alphabet just
Speaker 7: had a very successful equity raise. Did the stock held
Speaker 7: up even as they issued for already something billion dollars
Speaker 7: of equity. They're able to raise dead at the same time,
Speaker 7: all at a very low cost of capital. And this
Speaker 7: is a war for capital, so this is where it's at.
Speaker 7: And these companies are filing a secondary so they can
Speaker 7: do that overnight, while the IPOs take time to go through.
Speaker 7: So the big companies that are all ready public are
Speaker 7: going to the capital markets and draining them before many
Speaker 7: of these IPOs are happening. SpaceX will hopefully happen this Friday,
Speaker 7: but open AI and Anthropic may get to a market
Speaker 7: that's somewhat depleted.
Speaker 1: Now.
Speaker 7: The demand for those IPOs is going to be so
Speaker 7: great that they'll do fine, but the market is finite,
Speaker 7: and we've already seen some volatile days where investors have
Speaker 7: been selling stock to free up capacity to participate in
Speaker 7: these offerings and IPOs, So it's getting crowded out there.
Speaker 2: Gill, how much tolerance is there at say a METSA
Speaker 2: to ready stomach the pushback. What was intriguing about Friday
Speaker 2: was just how quickly that stuff rolled over, just on
Speaker 2: the mere report in the ft that maybe they'd follow
Speaker 2: Alphabet and do something similar it's that something they can stomach.
Speaker 2: Are we underestimating that tolerance for that?
Speaker 7: Well, mister Zuckerberg has controlling interest, and he's shown that
Speaker 7: his perspective is always long term. He rarely tries to
Speaker 7: satisfy investors in the short term. If he feels like
Speaker 7: this is the time to go out and get the capital,
Speaker 7: he'll do so. He'd rather do it at a higher price.
Speaker 7: But he's shown through his spending and through being very
Speaker 7: clear about the fact that he's investing ahead of demand,
Speaker 7: that he has tolerance for that. And if he thinks
Speaker 7: capital is the key to compete right now, he'll go
Speaker 7: out and get capital regardless of where the stock is.
Speaker 4: Gil you said the market is finite. Where is the
Speaker 4: market finite? It's not for the big aiipos that we're
Speaker 4: talking about here, whether it's SpaceX, Anthropic and eventually Open AI.
Speaker 4: It's not for Alphabet's equity raised and upsize equity raise
Speaker 4: at that. Potentially it might be for Meta or at
Speaker 4: least a hint of it. But where do you see
Speaker 4: that really the rubber hitting the road.
Speaker 7: Yeah, it's all the public companies, especially in technology, could
Speaker 7: sell off as we get this supply of capital. Including
Speaker 7: the largest companies, right, so they're they're trying to get out.
Speaker 7: That's why Google was ahead of the curve. They guide
Speaker 7: out while well at a peak, and the other ones
Speaker 7: may not get that benefit all. Meta, Microsoft and Amazon
Speaker 7: are already off their peaks, so there's going to be
Speaker 7: selling in those selling and a lot of other technology stocks.
Speaker 7: As we get these ideas, it doesn't it can happen anytime.
Speaker 7: It happened the day before, and it can happen weeks before.
Speaker 7: But investors do have to free up capacity. Investors are
Speaker 7: mostly invested at this point. There's been not as much
Speaker 7: cash on the sidelines as usual, and so they're going
Speaker 7: to have to Investors are going to have to free
Speaker 7: up capital from all their public company holdings, especially in
Speaker 7: technology and including the largest ones, in order to fund
Speaker 7: their investment in these ips. These floats are pretty decent sized.
Speaker 7: We're talking about SpaceX doing at least seventy five billion
Speaker 7: on Friday. Open Ai and Anthropic may be at the
Speaker 7: same scale. They all need the capital, they're all losing money.
Speaker 7: They all need to fund their compute and their buildouts.
Speaker 7: So they're going to go out with pretty big floats,
Speaker 7: and the capital has to come from somewhere.
Speaker 1: The capital has to come from somewhere.
Speaker 4: You mentioned it might mean people lightening up on some
Speaker 4: of their holdings in big tech. But what other parts
Speaker 4: of the tech universe are most vulnerable?
Speaker 7: Yeah, I mean the AI trade in some parts of
Speaker 7: it has gone up quite a bit, right because investors
Speaker 7: haven't been able to invest in open AI and anthropic
Speaker 7: yet they've been investing in increasingly remote parts of the
Speaker 7: AI trade, some smaller semis companies, optical companies, nuclear companies,
Speaker 7: all of these have been played on AI because you
Speaker 7: couldn't buy open I and anthropic. Those with the higher
Speaker 7: valuations and those tangential parts of the AI trade are
Speaker 7: most at risk. I'd say that some of the core
Speaker 7: AI trades are actually not that expensive. If you look
Speaker 7: at Nvidia and Micron and Microsoft, these are companies that
Speaker 7: are critical for deployment of AI, their multiples are still low.
Speaker 7: But as you start getting further away from that, with
Speaker 7: AMB and Intel and optical and again even nuclear or quantum,
Speaker 7: you're starting to get really high valuations. Those are the
Speaker 7: most vulnerable.
Speaker 1: Good.
Speaker 2: I just wanted to finish off on a lot of
Speaker 2: questioning that skin opened up a little bit earlier on
Speaker 2: this morning on open AI and why they're still private,
Speaker 2: and when they seem to be dragging their feet a
Speaker 2: little bit as well, why they're choosing ultimately to be
Speaker 2: lost one of the benefits of them staying private at
Speaker 2: the moment, why do you think they're somewhat hesitant.
Speaker 7: There's a lot of gamesmanship Opening happening between Open AI
Speaker 7: and Anthropic. Whoever goes first gets to drive the narrative
Speaker 7: for what metrics are important, how to report their numbers,
Speaker 7: and you don't want to be second because of the
Speaker 7: conversation we just had about capital. So the reason Opening
Speaker 7: I rushed for a confidential filing is to make sure
Speaker 7: they have an opportunity either to either before Anthropic or
Speaker 7: soon after and continue to drive the narrative. Otherwise they
Speaker 7: let Anthropic do that.
Speaker 1: Now.
Speaker 7: As they did that, Sam Altman communicated that he'd rather
Speaker 7: stay private, And the reason he'd rather stay private is
Speaker 7: he's losing quite a bit of money and he can
Speaker 7: as a private company only disclose the metrics he wants,
Speaker 7: so he'd rather stay private. But he also doesn't want
Speaker 7: to go after Anthropic. That's the gamesmanship that's happening right now.
Speaker 2: This is the Bloomberg Sevendents podcast, bringing you the best
Speaker 2: in markets, economics, an gie politics. You can watch the
Speaker 2: show live on Bloomberg TV weekday mornings from six am
Speaker 2: to nine am Eastern. Subscribe to the podcast on Apple, Spotify,
Speaker 2: or anywhere else you listen, and, as always, on the
Speaker 2: Bloomberg Terminal and the Bloomberg Business app.