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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is live

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Speaker 1: from coast to coast with Caroline Hide in New York

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Speaker 1: and ed Lo Lolow in San Francisco.

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Speaker 2: This is Bloomberg Tech coming up.

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Speaker 3: Amazon's cloud unit signs a thirty eight billion dollar deal

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Speaker 3: to supply open Ai.

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Speaker 2: With computing power.

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Speaker 3: Plus how Shaomi's pivot from smartphones to electric vehicles may

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Speaker 3: have come at a human cost, And all eyes on

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Speaker 3: Paneteer posting its earnings results after the closing bell. This

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Speaker 3: is defense tech spending is ramping up. But first we

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Speaker 3: check on the markets.

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Speaker 2: Also ramping up.

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Speaker 3: Not quite at a record high for the Nasdaq one hundred,

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Speaker 3: but we are up some four tenths of percent for

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Speaker 3: the big Tech benchmark as we focus in once again

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Speaker 3: on earnings and.

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Speaker 2: The never ending desire for AI compute.

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Speaker 3: Let's go there, because the key points drivers on this

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Speaker 3: particular benchmark are two stocks. We shine a light on Amazon,

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Speaker 3: pushing on four point five percent higher after significant gains

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Speaker 3: on Friday after its earnings.

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Speaker 2: This is a company that is of.

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Speaker 3: Course shrinking its workforce but focusing in on AWS growth,

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Speaker 3: and it manages to sign open Ai as that new

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Speaker 3: client thirty eight billion dollar deal will dig into it

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Speaker 3: in video. Well, they're the GPUs that go inside all

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Speaker 3: these data centers. It too climbs in terms of a

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Speaker 3: market capitalization up another two point seven percent. I just

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Speaker 3: want to go to the top story that is Amazon

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Speaker 3: and open Ai as they sign a thirty eight billion

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Speaker 3: dollar deal for further cloud compute. And it's been likest

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Speaker 3: Seth Figeman that we turned to Seth in.

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Speaker 2: The grand scheme of Things. Scheme of things.

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Speaker 3: It's not three hundred billion dollars of Oracle Cloud that

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Speaker 3: we saw before, but it is notable that open Ai

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Speaker 3: turns to more and more cloud providers at this moment.

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Speaker 4: That's right. It really is telling about this moment for

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Speaker 4: both companies. Open Ai just tapping every possible resource that

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Speaker 4: can to meet its cloud computing needs, and Amazon, which

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Speaker 4: had previously been investigating Anthropic, is also trying to have

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Speaker 4: a piece of open Ai and possibly other players down

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Speaker 4: the road. So it contributes to that incestuous where we

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Speaker 4: keep talk about everyone long is backing everyone else.

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Speaker 3: And of course we've seen a deal to offer open

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Speaker 3: a eyes opens large language models into the.

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Speaker 2: Overall bedrock offering of AWS. But this is different.

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Speaker 3: This is a seven year deal, it goes out, but

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Speaker 3: actually by end of twenty twenty six, we're going to

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Speaker 3: see the amount of computer or any necessary for open

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Speaker 3: Ai to go on to a.

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Speaker 4: A bit more near term than some other deals we've

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Speaker 4: see Opening Eye Broker and Opennie Eyes leaving the door

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Speaker 4: open to expanding with more investment down the road. I

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Speaker 4: do think it's telling though, that this is Amazon providing

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Speaker 4: in video chips, not Tramium not as so. On the

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Speaker 4: one hand, it's a testament to Amazon's ability to build

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Speaker 4: up cloud computing infrastructure at scale to meet Open Eyes needs.

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Speaker 4: But you have to wonder what that means about the

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Speaker 4: quality of Amazon's own chips.

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Speaker 3: We go into that for us because they talk about

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Speaker 3: the tens of thousands of video chips that are going

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Speaker 3: to be used, but they then talk about the millions

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Speaker 3: of potential CPUs that they might eventually help using. Is

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Speaker 3: that where Aws's own vertical integration comes from.

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Speaker 4: You know it's possible because I think the larger industr

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Speaker 4: is also thinking more about investments in inference as opposed

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Speaker 4: to training. So with training, you want those GPUs the

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Speaker 4: best possible, But with inference CPUs and some maybe second

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Speaker 4: tier GPU type chips could meet the needs. So maybe

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Speaker 4: that's where we see them play more.

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Speaker 3: And then take us to how AWS continues to therefore

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Speaker 3: show this twenty percent growth that we saw on the Friday.

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Speaker 2: Is it going to be more.

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Speaker 3: Deals coming from open Ai? How much farther can they sprawl?

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Speaker 3: Or is it more about individual enterprises or sovereign AI

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Speaker 3: for example.

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Speaker 4: I think it's a little bit of all those. And

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Speaker 4: I think what we're seeing with OpenAI in particular is

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Speaker 4: that now that the exclusivity arrangement with Microsoft is kind

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Speaker 4: of a done deal, they can tap everyone. They already

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Speaker 4: have Google as a partner, they have Amazon, They've been

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Speaker 4: video brought them everyone, and I think Amazon's ready to

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Speaker 4: play ball in that category.

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Speaker 3: Well, Soethig, I've been playing ball with us this morning.

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Speaker 3: We really appreciate it. Meanwhile, in video, of course, as

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Speaker 3: we just talked about it, the GPU supply, it made

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Speaker 3: history last week with the first company to ever hit

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Speaker 3: a five trillion dollar market cap according to Luke Capital Markets,

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Speaker 3: so the company could add trillions more. As in video

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Speaker 3: leads the quote golden wave of Genai adoption. Let's get

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Speaker 3: out to really most round Plastelica, because all paths lead

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Speaker 3: back to in video when we talk about any of

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Speaker 3: these compute deals right now, Ryan.

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Speaker 5: Yeah, absolutely, it certainly feels that way. This is the

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Speaker 5: latest in a series of street high price targets that

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Speaker 5: we've seen on in VideA. Before Loop, we had HSBC,

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Speaker 5: which forecasts I think seventy or eighty percent upside. Before

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Speaker 5: that we had an additional loop street high price targets.

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Speaker 5: People keep sort of outdoing each other trying to estimate

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Speaker 5: how high up this stock is going to go. So

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Speaker 5: right now, the latest s men points to about eight

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Speaker 5: point five trillion market capitalization. Like you said, it just

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Speaker 5: hit five trillions, so that points to still a lot

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Speaker 5: more potential upside from here. And the story hasn't really changed.

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Speaker 5: People continue to see a lot of long term demand

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Speaker 5: for all kinds of AI related hardware and infrastructure, and

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Speaker 5: certainly it will expand out a little bit. And Vidia

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Speaker 5: has a very important software business for example. But in general,

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Speaker 5: this is all about the GPUs that have been driving

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Speaker 5: the AI trade really for the past couple of years now.

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Speaker 3: And look, their GPUs are also part of the Microsoft

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Speaker 3: Iron deal that we're talking of today. A nine point

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Speaker 3: seven billion dollar look for compute Microsoft using yet another neocloud,

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Speaker 3: this time in Australian one. We've also got in the

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Speaker 3: news how Alphabet's selling this huge amount of debt to

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Speaker 3: be able to finance the overall AI trade and compute purchase.

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Speaker 3: But Ryan, you've got a great story and just showing

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Speaker 3: how last week, if we reflect a bit, we started

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Speaker 3: to be discerning about which companies we're going to celebrate

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Speaker 3: AI investment and ones that we're not going to Yeah.

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Speaker 5: Absolutely so. Really the poster child on the other end

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Speaker 5: of this trade is Meadow That stockfel quite sharply last

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Speaker 5: week after it came out, really talked about its expense growth,

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Speaker 5: it's campex growth, it's talking about taking write offs in

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Speaker 5: all of this. There, I think there is more skepticism.

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Speaker 5: People want to see that all of this spending is

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Speaker 5: being done in a diligent and disciplined kind of way,

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Speaker 5: and that this is really going to lead to some

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Speaker 5: kind of pronounced return on all this investment. Now, I

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Speaker 5: think there's still a lot of support for AI related

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Speaker 5: strategies overall, especially yet companies like Amazon and Alphabet, which

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Speaker 5: are showing a pretty direct link between all of this

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Speaker 5: spending and improved performance in their cloud computing businesses. But

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Speaker 5: for someone like Meta, which doesn't have an equivalent cloud

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Speaker 5: type business, the story is getting a little bit trickier

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Speaker 5: for them. People are getting a little bit more discerning,

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Speaker 5: and like you said, we did see this dot come

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Speaker 5: down last week, as I think people just are maybe

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Speaker 5: getting a little bit of cold feet.

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Speaker 3: What's interesting, Ryan, is also you shine a light on

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Speaker 3: how we've had a bit of dispersion outside of the

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Speaker 3: key well, mag seven and then some names Brawd, Common

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Speaker 3: others thrown in. We've got some of the suppliers to

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Speaker 3: the data centers or suppliers to some of these compute

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Speaker 3: powers that are also winning. I mean, Micron's another key

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Speaker 3: winner on the day, but you shine light and other

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Speaker 3: companies that out performed.

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Speaker 6: Yeah, certainly.

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Speaker 5: I mean it's not purely an a or an mbidious

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Speaker 5: story anymore by any stretch of the imagination, anything that

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Speaker 5: is involved in any kind of components here. I mean,

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Speaker 5: we've certainly seen Broadcom another major winner, Micron, storage companies

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Speaker 5: like Steagate and Western Digital, these have been some of

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Speaker 5: the biggest performers of the year, and they're a little

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Speaker 5: bit less high profile, but They are certainly seeing very

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Speaker 5: strong growth inflections because they are just part of the

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Speaker 5: overall ecosystem that is required to build out all these

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Speaker 5: data centers, power all the data centers, do storage memory,

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Speaker 5: all the stuff that is involved with AI and having

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Speaker 5: it produce the you know, the material that people are using.

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Speaker 5: It's a much bigger trade than it was, you know,

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Speaker 5: a couple of years ago, for sure.

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Speaker 2: Rand Vastelica always with the must reads. We thank you.

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Speaker 3: Let's get more on this AI compute trend that's never ending.

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Speaker 3: Tony answer us tro Price Science and Technology from Portfolio Manager.

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Speaker 3: Your top holding is in video and all Parsley back,

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Speaker 3: but Microsoft's a big one, Broadcom, Alphabet really all of

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Speaker 3: the big winners. Is this playing out as you anticipated?

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Speaker 6: Yeah?

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Speaker 7: Well, I think that, you know, AI is a huge

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Speaker 7: productivity driver in my opinion, and I think that these

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Speaker 7: companies are really well positioned to essentially capture that and

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Speaker 7: would be the platforms for I think growth in the economy,

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Speaker 7: and you know I'm looking for and going forward is

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Speaker 7: like you know, the new use cases really come through,

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Speaker 7: like agentic AI for example.

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Speaker 6: I think it's to fill this capacity.

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Speaker 7: It can't just be you and me using chat to

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Speaker 7: et it's got to be you know, thousands of agents

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Speaker 7: for each company, like making decisions and executing and unlocking.

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Speaker 7: I think labor essentially is what I'm looking for, and

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Speaker 7: that's what's exciting going forward.

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Speaker 3: It's exciting when you see in video's name reference in

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Speaker 3: about three of the compute deals just on this Monday alone.

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Speaker 3: But take us to perhaps the one that you don't

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Speaker 3: hone interestingly, you don't have exposure to Amazon and AWS,

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Speaker 3: but it signs it's deal with open AI.

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Speaker 2: Hasn't been methodology.

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Speaker 3: Around that about its own cloud prowess or perhaps worries

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Speaker 3: about the lack of growth that we've seen in previous quarters.

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Speaker 3: Bar from the previous numbers they just reported Friday.

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Speaker 7: Hey, well, I think that they had a nice earnings report,

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Speaker 7: and I do think that there seems to be a

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Speaker 7: lot more momentum now, you know, you talk about the

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Speaker 7: deal that they just did today and just say like

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Speaker 7: rolling out a lot more compute and accelerating a w

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Speaker 7: S I think is really good for the business. I

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Speaker 7: think they they're well positioned to essentially leverage AI and

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Speaker 7: their e commerce business as well as being an infrastructure provider.

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Speaker 7: So I don't think you can count them out at all,

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Speaker 7: and uh, you know, it's good to see them, you know, outperforming.

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Speaker 3: What's interesting is someone who got beaten up as in

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Speaker 3: the portfolio, which is Meta. And I'm interested on your

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Speaker 3: take of how we're deciding who we reward of capital

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Speaker 3: expenditure and who we don't.

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Speaker 7: Yeah, well, I think that uh, you know, AI is

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Speaker 7: a long term investment for Meta, and I think that

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Speaker 7: the market is probably digesting the you know, high end

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Speaker 7: level of cappex and the depreciation that's coming through the

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Speaker 7: P and L. But I think that's a little bit

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Speaker 7: too short term to view it, and you look past that.

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Speaker 7: You know, the returns are there and these are going

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Speaker 7: to be great investments. And you know, Meta definitely has

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Speaker 7: the digital formats to leverage you know, AI and tremendous

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Speaker 7: scale across customers, and so I think it's exciting what

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Speaker 7: they're doing in the SMB segment as well.

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Speaker 6: If it lost a lot of ability for.

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Speaker 7: Companies to essentially like reach customers with just a credit

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Speaker 7: card and.

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Speaker 6: Asking for the ROI from ad campaigns.

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Speaker 3: I just want to go to what President and Microsoft

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Speaker 3: was telling our network a little bit earlier today about

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Speaker 3: the risks of underinvesting.

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Speaker 2: Really here we spoke with Brad Smith. Just take are listen, Tony.

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Speaker 8: Our biggest challenge is not a risk of getting ahead

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Speaker 8: of demand, it's actually keeping pace with demand. And what

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Speaker 8: we are finding is that our customers, you know, whether

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Speaker 8: they be enterprises across the economy or governments, are nonprofits,

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Speaker 8: they are looking to us to build out this capacity.

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Speaker 8: They want to use this computer. So for us, if

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Speaker 8: we build it, it will be put to use. As

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Speaker 8: it's put to use, there will be a return to

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Speaker 8: our shareholders.

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Speaker 3: You, of course have exposure to Microsoft, Tony, Brad really

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Speaker 3: talking about how they're expanding more geographically as well and

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Speaker 3: investing over in the Middle East, not just taking money

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Speaker 3: from the Middle East. And I'm interested in what you

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Speaker 3: think about Microsoft's need to depend on neoclouds. We saw

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Speaker 3: them strike a deal with an Australian neocloud provider for

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Speaker 3: Texas data centers. Is that something you like to see,

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Speaker 3: that use of their money and capital expenditure on neocloud

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Speaker 3: as well as their own Yeah.

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Speaker 6: I think it allows them to be flexible and nimble.

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Speaker 7: I think that standing up these data centers is no

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Speaker 7: small feet and a lot of times, it requires various players,

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Speaker 7: it requires the data center capacity, the power, and so

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Speaker 7: I think it's encouragency Microsoft collaborating with the ecosystem and

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Speaker 7: plug in partners and so to.

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Speaker 6: Me, I think it makes sense.

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Speaker 7: I think it's also a testament to the demand signals

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Speaker 7: they're seeing and kind of the workloads.

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Speaker 6: Really take off. And you know, I think AI is

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Speaker 6: really hard new.

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Speaker 7: Not every company that is trying to do it is successful,

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Speaker 7: but I think the ones that are finding success are

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Speaker 7: you know, seeing tremendous promise, and so I think that's

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Speaker 7: what essentially it gives people confidence to invest.

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Speaker 2: Here, confidence to keep adding.

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Speaker 3: When we've seen runaway performance not just of Nvidio at

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Speaker 3: five trillion, but another one of our holdings, Micron for example,

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Speaker 3: I mean significant outperformance, when do you decide that you

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Speaker 3: want to cash in profit take.

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Speaker 7: Yeah, we're all constantly managing position sizes in the portfolio.

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Speaker 7: But you know, in my opinion, I think that you

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Speaker 7: want to be invested in the areas where there is

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Speaker 7: essentially a bottleneck, there's scarcity, and that performance depends on it.

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Speaker 7: So I think that HPM memory, you know HGDS and

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Speaker 7: now you know nand there's there's becoming more of a

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Speaker 7: shortage and so to me, the industry is getting better

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Speaker 7: and it's a critical component. So you know, from my perspective,

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Speaker 7: there is opportunity for these companies to compound value over time.

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Speaker 3: You are, of course equity focused, but when we have

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Speaker 3: ours bets selling debt in Europe and the US, any

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Speaker 3: of that financing of this AI spend give you pause.

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Speaker 6: Yeah, well, I think it's novel.

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Speaker 7: But you know, you look at the cash generation of

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Speaker 7: a lot of these companies. They're really blue chip and

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Speaker 7: you know, to me, I think that this investment is smart,

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Speaker 7: and to do some appropriate level of.

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Speaker 6: Debt financing I think can make sense.

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Speaker 7: In addition, I think that the infrastructure, you know, there's

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Speaker 7: a lot of debate of like the useful life of this.

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Speaker 7: I know that Invidia comes out with a new generation

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Speaker 7: every year, but I think that these are longer lived

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Speaker 7: assets than people appreciate potentially, and they're not just like

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Speaker 7: three years obsolescence, but probably more like five or six.

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Speaker 7: And so you know, in terms of the appetite to

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Speaker 7: leap against it, I think that in three or four years,

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Speaker 7: it's going to be more commonly accepted. I think we're

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Speaker 7: probably on the path there because these are really, like

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Speaker 7: I think, you know, revenue generating assets and there's a

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Speaker 7: lot of protivity coming off of them.

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Speaker 3: And Tony that productivity, as you started the conversation is

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Speaker 3: about how we use deploy general to AI.

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Speaker 2: Impalent is one.

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Speaker 3: That really has but how do they fight also the

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Speaker 3: macroheadwinds the government shutdown? Do you have any concerns at

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Speaker 3: the valuations that some of these companies trade at.

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Speaker 7: Hey, absolutely, I mean these are you know, very elevated multiples,

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Speaker 7: and so they need to keep delivering the growth here.

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Speaker 7: You know, Paltier is definitely I think at the tip

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Speaker 7: of the sphere in terms of implementing AI.

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Speaker 6: I mean they started doing that and.

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Speaker 7: The government and now the commercial businesses growing rapidly, and

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Speaker 7: so you know, I think the government's shutdown, like, I

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Speaker 7: think that's probably a temporary thing. They could get a

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Speaker 7: pass for that just because government's not going to be

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Speaker 7: shut down forever. And you know, you look forward and

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Speaker 7: I think what really matters is that they're driving significant

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Speaker 7: ROI for their customers and they're able to do it

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Speaker 7: in a way that connects their data and I think

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Speaker 7: that's like the change in it services is I think

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Speaker 7: that you need to come with a solution and the

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Speaker 7: engineers to help your customers instead of implementing like a

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Speaker 7: Saaspace off the shelf solution.

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Speaker 6: So I think that's what's exciting. And yeah, we'll see

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Speaker 6: later on today.

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Speaker 3: Tony Wang is always great catching up with you. Another

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Speaker 3: busy week with volunteer after the bowel. We so appreciate

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Speaker 3: your expertise. T ro Price, thank you. Coming up Shaomi's

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Speaker 3: pivot from smartphones to elexit vehicles when it may have

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Speaker 3: come at a very high human cost.

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Speaker 2: We're on that next. This is Blue Mead Tech China Shawmi.

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Speaker 3: It's set a relentless pace the pivot from smartphones to evs,

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Speaker 3: but it may.

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Speaker 2: Have come at a human cost.

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Speaker 3: Blumeag spotlight story this week follows the intense schedule of

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Speaker 3: one page as he transferred Shami's retail network before ultimately

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Speaker 3: collapsing of a heart attack in twenty twenty four. Brim

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Speaker 3: Boxspeter Altrastrom joins us Now it's a deeply reported story

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Speaker 3: through the bravery of a widow who is convinced that

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Speaker 3: it was his work schedule that in many ways contributed

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Speaker 3: to his death At the age of thirty four, Peter.

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Speaker 9: That's right. So Wang was one of the key managers

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Speaker 9: as Shaomi, the company best known for its smartphones, decided

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Speaker 9: that they were going to push into electric vehicles. The

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Speaker 9: founder late June, said this was going to be one

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Speaker 9: of his last strategic plays for the company. He had

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Speaker 9: really earned a fantastic reputation for himself in the smartphone arena,

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Speaker 9: but he wanted to succeed in EV's too. Remember this

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Speaker 9: is something that Apple tried and wasn't able to pull off.

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Speaker 9: Shaomi has actually designed a very good car. They've been

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Speaker 9: able to succeed in the market. They've been able to

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Speaker 9: gain some traction in that space. But Wang was one

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Speaker 9: of the key employees who was responsible for redesigning stores

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Speaker 9: as they were shifting these us from really showcases for

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Speaker 9: smartphones to something that could show you an auto, full

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Speaker 9: size automobile that would have the infrastructure to be able

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Speaker 9: to show that off and demonstrate what kind of cars

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Speaker 9: they actually had. So at one point he was responsible

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Speaker 9: for two hundred and sixty seven stores. He was working

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Speaker 9: almost NonStop hours. His wife told our reporter that he

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Speaker 9: would he would frequently work until the wee hours of

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Speaker 9: the night. We also saw as we chat messages where

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Speaker 9: he was exchanging messages at two thirty in the morning

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Speaker 9: and working on and on and on, and as you mentioned, tragically,

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Speaker 9: at the age of thirty four, he died of a

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Speaker 9: heart attack. And so it's a story really about how

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Speaker 9: this extreme, these extreme hours can take a toll on managers,

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Speaker 9: especially in an area so competitive like technology.

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Speaker 3: Shami has responded in part to our investigation and talking

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Speaker 3: about their sympathies that go to the family. But set

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Speaker 3: this in the context of nine ninety six of what

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Speaker 3: is very much a cultural focus on working extremely hard

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Speaker 3: in China and tech.

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Speaker 9: Right, Yeah, you're referring to nine ninety six. In China,

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Speaker 9: they talk about working from nine am in the morning

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Speaker 9: until nine pm, six days a week, which is extremely

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Speaker 9: long hours. The World Health Organization defines over work as

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Speaker 9: working more than fifty five hours. Now in China they

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Speaker 9: work even harder than the United States. It's about forty

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Speaker 9: nine hours on average for full time workers, compared with

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Speaker 9: forty five in the United States. In the tech industry,

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Speaker 9: it's far beyond those kinds of hours. At Shaomi, the

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Speaker 9: workers in independent surveys showed that they were working eleven

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Speaker 9: and a half hours a day, so you're talking about

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Speaker 9: almost sixty hours a week that they were working, and

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Speaker 9: Wang seemed to be one of the workers who was

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Speaker 9: going even beyond that at this point. So, of course,

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Speaker 9: there's a lot at stake here. They're competing for leadership

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Speaker 9: in AI, in chips, in electric vehicles, et cetera. And

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Speaker 9: there's a lot of money at stake. When you look

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Speaker 9: at the most valuable, the wealthiest people in the world,

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Speaker 9: they're all tech entrepreneurs led by Elon Musk, of course,

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Speaker 9: but you've got Larry Ellison and Jeff Bezos in there too.

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Speaker 9: There's a lot of money at stake. There's also geopolitical advantage,

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Speaker 9: and Shami was pushing very hard to make this pivot

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Speaker 9: into electric vehicles.

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Speaker 3: Peteilstrom, thank you so much. It is an emotive story

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Speaker 3: and I must read we appreciate it. Now, coming up,

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Speaker 3: we'll dig into Apple how it's set for a make

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Speaker 3: or break year on the regulatory front as it gears

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Speaker 3: up to start twenty twenty six with a one hundred

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Speaker 3: and forty billion dollar quarter.

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Speaker 2: This is BLUEBG Tech.

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Speaker 3: Apple when it's set to kick off it's fiftieth year

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Speaker 3: with what's expected to be a nearly one hundred and

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Speaker 3: forty billion dollar quarter. For more, Bloomberg's Consumer Tech Managing

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Speaker 3: editor Mark Gumman has the details on this week's Power

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Speaker 3: On newsletter, hotly read as always Mark and one hundred

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Speaker 3: and forty billion is what the math reads out us

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Speaker 3: of what their.

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Speaker 2: Holiday quarter will look like.

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Speaker 3: Important when April is a fiftieth anniversary.

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Speaker 10: Yeah, it's quite interesting. They normally in the last half

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Speaker 10: a decade or so, since the beginning of COVID, haven't

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Speaker 10: really given guidance, but for this holiday quarter.

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Speaker 6: They're back to that.

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Speaker 10: So they said that the quarter would grow ten to

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Speaker 10: twelve percent. That's the current quarter of the holiday period,

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Speaker 10: and that comes in anywhere between around one hundred and

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Speaker 10: thirty five to one hundred and thirty nine billion. Typically,

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Speaker 10: when they've given guidance in the past, they've been conservative,

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Speaker 10: so they like to sort of smash through that, and

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Speaker 10: so you can imagine that internally they're aiming for something

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Speaker 10: north of one hundred and forty billion, which obviously would

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Speaker 10: be quite impressive given where they've been the last few years.

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Speaker 3: And therefore take us where they're going in the next

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Speaker 3: year or so. Because Power on really outlines the myriad

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Speaker 3: of areas they're trying to leap forward on, not just

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Speaker 3: sory but real hardware and chip updates too.

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Speaker 10: Yeah, there's a lot going on. You're going to see

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Speaker 10: a series of M five related updates to the Mac

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Speaker 10: things like the Macmini, the Mac Studio, the MacBook Air,

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Speaker 10: and the MacBook Pro across the first nine months or

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Speaker 10: so of twenty twenty six. You'll see a foldable iPhone

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Speaker 10: at the end of twenty twenty six, perhaps the introduction

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Speaker 10: of the smart glasses at the end of twenty twenty six.

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Speaker 10: The first three four or five months of twenty twenty

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Speaker 10: six are going to be chalk full of things push

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Speaker 10: into smart home devices, that home pod with a display,

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Speaker 10: the MacBook Pro, and MacBook Air. I mentioned a ton

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Speaker 10: of things on the software side related to Siri. So

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Speaker 10: it's going to be a pretty jam packed year for

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Speaker 10: twenty twenty six. Then you go into twenty twenty seven,

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Speaker 10: where you're going to see even more major leaps and

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Speaker 10: bounds when it comes to hardware and.

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Speaker 2: Want to be the same people at the top.

440
00:21:29,119 --> 00:21:31,439
Speaker 3: How do you see the talent and the focus and

441
00:21:31,440 --> 00:21:35,480
Speaker 3: reworking of Apple continuing a midutes fiftieth anniversary.

442
00:21:37,160 --> 00:21:40,399
Speaker 10: You know, Apple's biggest challenge right now is retaining talent,

443
00:21:40,480 --> 00:21:45,680
Speaker 10: specifically for its AI division, its machine learning folks. They're

444
00:21:45,680 --> 00:21:51,880
Speaker 10: bleeding talent to places like Meta, to Nthropic to Xai.

445
00:21:52,119 --> 00:21:54,600
Speaker 10: It's been very difficult for them to hold on to

446
00:21:54,720 --> 00:21:58,919
Speaker 10: people because Siri, really it has a really bad reputation.

447
00:21:59,880 --> 00:22:02,359
Speaker 10: The big things they're going to be doing for Siri

448
00:22:02,440 --> 00:22:05,760
Speaker 10: to improve it is using a custom model developed by

449
00:22:05,800 --> 00:22:09,040
Speaker 10: Google's Gemini team. It's going to run on Apple servers,

450
00:22:09,080 --> 00:22:12,240
Speaker 10: but Apple's paying Google to develop it, and that's a

451
00:22:12,240 --> 00:22:14,760
Speaker 10: bit of a setback for Apple's internal models team, and

452
00:22:14,800 --> 00:22:18,119
Speaker 10: so they basically for now have split it. Whereas the

453
00:22:18,160 --> 00:22:21,920
Speaker 10: models that run on Apple devices themselves, the ones for

454
00:22:22,119 --> 00:22:25,359
Speaker 10: Apple Intelligence, those are those in house models, which have

455
00:22:25,440 --> 00:22:28,680
Speaker 10: been somewhat problematic depending on who you ask. And then

456
00:22:28,720 --> 00:22:31,920
Speaker 10: for the serie models, they're moving to Gemini to power

457
00:22:32,000 --> 00:22:34,760
Speaker 10: some of it. So it's an interesting dynamic they've created there.

458
00:22:35,119 --> 00:22:36,840
Speaker 2: Our German is always it's a muster read. We so

459
00:22:36,880 --> 00:22:37,480
Speaker 2: appreciate it.

460
00:22:37,600 --> 00:22:40,480
Speaker 3: Let's check in on these markets because well, we're close

461
00:22:40,520 --> 00:22:42,240
Speaker 3: to record highs and then ask that one hundred. We're

462
00:22:42,280 --> 00:22:44,359
Speaker 3: just up by about three tenths of a percent, as

463
00:22:44,560 --> 00:22:46,879
Speaker 3: the wall of warrior when it comes to geopolitics is

464
00:22:46,880 --> 00:22:48,880
Speaker 3: put to one side as we focus more on earnings

465
00:22:48,880 --> 00:22:50,960
Speaker 3: to come after the ball palanteer, of course, and more

466
00:22:51,080 --> 00:22:53,200
Speaker 3: on what the AI trend is. When it comes to compute,

467
00:22:53,240 --> 00:22:55,960
Speaker 3: let's focus in on that the two key points contributors.

468
00:22:55,960 --> 00:22:58,240
Speaker 3: Don't ask that one hundred are these two stocks.

469
00:22:58,320 --> 00:23:00,800
Speaker 2: Amazon up four point six percent, a new record high.

470
00:23:00,800 --> 00:23:03,720
Speaker 3: It's now worth two point seven trillion dollars, But that kind.

471
00:23:03,560 --> 00:23:04,879
Speaker 2: Of pales into significance for me.

472
00:23:04,920 --> 00:23:07,360
Speaker 3: Think with a five trillion that in video is now

473
00:23:07,440 --> 00:23:09,080
Speaker 3: worth and that's because all.

474
00:23:08,920 --> 00:23:10,600
Speaker 2: Roads lead back to in video GPUs.

475
00:23:10,680 --> 00:23:13,919
Speaker 3: This time Amazon striking a deal with open Ai to

476
00:23:13,960 --> 00:23:17,960
Speaker 3: offer many many GPUs in further data centers, a seven

477
00:23:18,000 --> 00:23:20,880
Speaker 3: year relationship with open Ai now as they turn ever

478
00:23:21,000 --> 00:23:24,000
Speaker 3: further into compute and data centers for various places.

479
00:23:24,040 --> 00:23:26,199
Speaker 2: But look, it's not the only wall of news we

480
00:23:26,280 --> 00:23:27,160
Speaker 2: have on compute.

481
00:23:27,160 --> 00:23:29,479
Speaker 3: And Microsoft is another one that's planning to spend more

482
00:23:29,520 --> 00:23:31,919
Speaker 3: than seven point nine billion dollars on data centers, on

483
00:23:31,960 --> 00:23:36,240
Speaker 3: cloud computing and employees all over in the United Arab Emirates.

484
00:23:36,280 --> 00:23:38,760
Speaker 3: And it's over the next four years capitalizing on a

485
00:23:38,880 --> 00:23:42,200
Speaker 3: US government clearance to ship AI chips to the Gulf nation.

486
00:23:42,680 --> 00:23:42,800
Speaker 1: Now.

487
00:23:42,840 --> 00:23:45,280
Speaker 2: Microsoft Vice chair Bradsmith explained.

488
00:23:44,880 --> 00:23:48,320
Speaker 3: Why just during an interview with Bloomberg's Jomano Basecci in

489
00:23:48,359 --> 00:23:49,480
Speaker 3: Abadab earlier today.

490
00:23:50,200 --> 00:23:53,240
Speaker 8: If you look at the UAE, the UAE now literally

491
00:23:53,320 --> 00:23:57,040
Speaker 8: leads the world in the percentage of the population using

492
00:23:57,160 --> 00:24:01,960
Speaker 8: AI fifty nine point four percent. One Singapore about a

493
00:24:02,040 --> 00:24:04,920
Speaker 8: point behind is number two. Well, but what we're seeing

494
00:24:04,920 --> 00:24:08,520
Speaker 8: here in the UAE is across the economy, whether it's

495
00:24:08,560 --> 00:24:11,879
Speaker 8: companies like ADNOC and the energy sector, or the financial

496
00:24:11,920 --> 00:24:15,440
Speaker 8: services or the healthcare sector, all of this is being

497
00:24:15,520 --> 00:24:15,960
Speaker 8: quick to.

498
00:24:15,920 --> 00:24:17,200
Speaker 2: Work discuss all of this.

499
00:24:17,240 --> 00:24:20,359
Speaker 3: Oubrimegs pready for who covers Microsoft for US, And this

500
00:24:20,520 --> 00:24:23,359
Speaker 3: was Brad trying to articulate, we expand in there. We've

501
00:24:23,400 --> 00:24:26,720
Speaker 3: got the ability and the permission. Why do they want

502
00:24:26,760 --> 00:24:28,680
Speaker 3: to be building out and expanding in the Middle East?

503
00:24:28,760 --> 00:24:31,400
Speaker 11: Because they need power? Right, The Golf is a very

504
00:24:31,400 --> 00:24:34,560
Speaker 11: interesting market for data centers because in the US and

505
00:24:34,640 --> 00:24:37,600
Speaker 11: Europe in many ways they're kind of tapped for power.

506
00:24:37,640 --> 00:24:40,560
Speaker 11: Everyone is kind of scrounging for a megawatt here or there,

507
00:24:41,000 --> 00:24:43,720
Speaker 11: and the Golf, you know, they have oil power and

508
00:24:43,800 --> 00:24:46,840
Speaker 11: they are really keen to want to diversify their economies

509
00:24:46,840 --> 00:24:49,240
Speaker 11: and it seems like a pretty natural fit for data

510
00:24:49,280 --> 00:24:53,200
Speaker 11: center companies. So we've seen Microsoft, we've seen Oracle want

511
00:24:53,280 --> 00:24:56,040
Speaker 11: to expand their presence out there, and today is kind

512
00:24:56,040 --> 00:24:58,720
Speaker 11: of the latest example of Microsoft coming out to say,

513
00:24:58,840 --> 00:25:01,440
Speaker 11: look at all the money we're this is a serious

514
00:25:01,480 --> 00:25:02,040
Speaker 11: bet for.

515
00:25:02,000 --> 00:25:05,080
Speaker 3: US and capal expenditure that they did articulate in their

516
00:25:05,080 --> 00:25:08,760
Speaker 3: earnings just last week. But Microsoft's been perhaps more upfront

517
00:25:08,800 --> 00:25:10,840
Speaker 3: than many as to how they're having to use other

518
00:25:10,920 --> 00:25:14,920
Speaker 3: offerings neoclouds in particular, they've been leaning on Nscale and

519
00:25:15,080 --> 00:25:18,200
Speaker 3: Nevia sover in Europe, but here in the US they're

520
00:25:18,240 --> 00:25:21,280
Speaker 3: going ever more into Texas, but with an Australian company.

521
00:25:21,560 --> 00:25:21,879
Speaker 4: Correct.

522
00:25:21,960 --> 00:25:23,920
Speaker 11: Yeah, we saw them make about a ten billion dollar

523
00:25:24,080 --> 00:25:26,960
Speaker 11: deal with an Australian company this morning, and it's funny

524
00:25:27,000 --> 00:25:30,120
Speaker 11: because ten billion sounds huge, but it's really like what

525
00:25:30,280 --> 00:25:32,680
Speaker 11: fifteen percent of what they've announced so far. I mean,

526
00:25:32,680 --> 00:25:35,720
Speaker 11: the spending quantities here are really getting hard to fab

527
00:25:35,760 --> 00:25:39,480
Speaker 11: and Microsoft has committed around sixty billion to a variety

528
00:25:39,480 --> 00:25:41,800
Speaker 11: of providers just to be able to rent these AI

529
00:25:41,920 --> 00:25:42,639
Speaker 11: chips quicker.

530
00:25:42,960 --> 00:25:46,520
Speaker 3: And what's interesting is IRN is one of those sources

531
00:25:46,600 --> 00:25:49,080
Speaker 3: of power and compute that all used to be in

532
00:25:49,160 --> 00:25:52,240
Speaker 3: crypto and another one of those that now suddenly finds

533
00:25:52,280 --> 00:25:55,520
Speaker 3: itself the darling of an AI trade exactly.

534
00:25:55,560 --> 00:25:58,480
Speaker 11: Yeah, Corey is the classic example this, you know, crypto

535
00:25:58,560 --> 00:26:00,400
Speaker 11: market crash and all of a sudden they said, hey,

536
00:26:00,400 --> 00:26:02,960
Speaker 11: wait a second, AI data centers is the way forward.

537
00:26:03,000 --> 00:26:06,479
Speaker 11: And Microsoft's been the most kind of prominent customer of

538
00:26:06,520 --> 00:26:09,560
Speaker 11: these neo clouds. But you know, we expect over time

539
00:26:09,640 --> 00:26:12,800
Speaker 11: that every major hyperscaler looking for capacity is going to turn.

540
00:26:12,680 --> 00:26:15,760
Speaker 3: To these companies, And when we think about the scale

541
00:26:15,800 --> 00:26:19,679
Speaker 3: and the numbers, it can just become almost arbitrary. But

542
00:26:19,720 --> 00:26:22,240
Speaker 3: I think the three trillion dollar figure that Morvid Stanley's

543
00:26:22,280 --> 00:26:24,240
Speaker 3: wrapped its head around is an important one, right, that

544
00:26:24,520 --> 00:26:26,560
Speaker 3: three trillion of data centers are likely to be built

545
00:26:26,600 --> 00:26:29,200
Speaker 3: out by twenty twenty eight, But actually half of that's going.

546
00:26:29,160 --> 00:26:31,119
Speaker 2: To come from their own money, and then maybe the

547
00:26:31,119 --> 00:26:31,480
Speaker 2: rest is.

548
00:26:31,480 --> 00:26:33,360
Speaker 3: Coming from debt markets in the light, but Microsoft really

549
00:26:33,400 --> 00:26:35,080
Speaker 3: does seem to be talking up how it's leaning on

550
00:26:35,119 --> 00:26:36,480
Speaker 3: its own cash flows.

551
00:26:36,480 --> 00:26:38,600
Speaker 11: Correct its own cash flows. But part of the neo

552
00:26:38,680 --> 00:26:42,480
Speaker 11: cloud stuff that's interesting is that they are leases right,

553
00:26:42,520 --> 00:26:44,520
Speaker 11: you are leasing. If you build a data center, you're

554
00:26:44,520 --> 00:26:46,520
Speaker 11: stuck with it for a good twenty years, right, you

555
00:26:46,640 --> 00:26:50,199
Speaker 11: lease for five years. If the demand environment changes at

556
00:26:50,200 --> 00:26:53,720
Speaker 11: the end, you say, well, thank you, nebis it's been beautiful. Right,

557
00:26:54,560 --> 00:26:56,840
Speaker 11: So it gives them a lot more financial flexibility. I

558
00:26:56,880 --> 00:27:00,000
Speaker 11: think we should see that within the context of hyperscalers

559
00:27:00,040 --> 00:27:03,000
Speaker 11: apping unique financing sources. Even like Google hitting the bond

560
00:27:03,080 --> 00:27:05,000
Speaker 11: market today, you lead.

561
00:27:04,920 --> 00:27:07,880
Speaker 3: Us perfectly to unnecessarily already four we are as one.

562
00:27:07,960 --> 00:27:10,359
Speaker 2: We so appreciate you as always. And meanwhile he said it.

563
00:27:10,440 --> 00:27:12,879
Speaker 3: Alphabet looking to raise about fifteen billion dollars from a

564
00:27:12,920 --> 00:27:14,160
Speaker 3: dollar bond.

565
00:27:13,960 --> 00:27:16,480
Speaker 2: Sale in the United States. According to sources, the dealer

566
00:27:16,520 --> 00:27:16,840
Speaker 2: is being.

567
00:27:16,760 --> 00:27:20,040
Speaker 3: Offered in many as eight parts maturities ranging from three

568
00:27:20,040 --> 00:27:20,720
Speaker 3: to fifty years.

569
00:27:20,760 --> 00:27:22,320
Speaker 2: But the company's also tapping the.

570
00:27:22,240 --> 00:27:25,159
Speaker 3: European market seven and a half billion dollars of notes

571
00:27:25,200 --> 00:27:28,040
Speaker 3: in Europe too. And this all adds to a wave

572
00:27:28,119 --> 00:27:31,440
Speaker 3: of borrowing from tech companies. Remember METUS thirty billion one

573
00:27:31,520 --> 00:27:35,040
Speaker 3: last two week. And it's all about investing aggressively in AI.

574
00:27:35,520 --> 00:27:37,399
Speaker 3: And let's dig into the impact of all of this

575
00:27:37,520 --> 00:27:39,959
Speaker 3: AI financing a little bit further. Anna RATHMNS with us,

576
00:27:39,960 --> 00:27:42,919
Speaker 3: founder and CEO of Grenadilla Advisory. You think this is

577
00:27:43,040 --> 00:27:45,720
Speaker 3: smart the way in which that they're tapping debt markets

578
00:27:45,800 --> 00:27:47,080
Speaker 3: or depending on their own cash flow.

579
00:27:48,400 --> 00:27:49,000
Speaker 12: Good morning.

580
00:27:49,640 --> 00:27:50,760
Speaker 6: I did think it's smart.

581
00:27:50,960 --> 00:27:54,160
Speaker 12: I mean, sometimes cash on hand is the most powerful thing,

582
00:27:54,480 --> 00:27:56,720
Speaker 12: and so it doesn't make sense to spend all of

583
00:27:56,720 --> 00:27:59,479
Speaker 12: your cash and put it into you know, the future

584
00:27:59,560 --> 00:28:02,880
Speaker 12: investment and AI. Sometimes it makes sense to borrow from

585
00:28:02,920 --> 00:28:05,240
Speaker 12: the debt market and to finance it and so that

586
00:28:05,320 --> 00:28:08,199
Speaker 12: you have some leeway and some flexibility in what you

587
00:28:08,240 --> 00:28:10,800
Speaker 12: want to do with the assets that you have.

588
00:28:11,320 --> 00:28:14,560
Speaker 3: And what about even more creative financing such as these

589
00:28:14,600 --> 00:28:16,280
Speaker 3: private credit deals in the way in which we've seen

590
00:28:16,320 --> 00:28:19,680
Speaker 3: blue ol be Meta's partner of choice here, is that

591
00:28:19,720 --> 00:28:22,000
Speaker 3: what you're likely to see more of, not just ever

592
00:28:22,080 --> 00:28:24,840
Speaker 3: more debt being tapped, but just off balance sheet.

593
00:28:26,160 --> 00:28:29,199
Speaker 12: Yeah, I think so. You know, private credit market is

594
00:28:29,240 --> 00:28:32,920
Speaker 12: constantly looking for ways to deploy their capital that they're

595
00:28:32,960 --> 00:28:36,760
Speaker 12: getting from the investors. And right now the investment that

596
00:28:36,840 --> 00:28:40,040
Speaker 12: seems the most exciting seems to be this data center

597
00:28:40,360 --> 00:28:44,280
Speaker 12: and AI play. And if we heard from Microsoft and

598
00:28:44,360 --> 00:28:47,960
Speaker 12: others last week during the earnings call, the demand is

599
00:28:48,160 --> 00:28:50,640
Speaker 12: just out of this world. And they're having a hard

600
00:28:50,680 --> 00:28:55,280
Speaker 12: time supplying that demand and therefore I think you're going

601
00:28:55,360 --> 00:28:57,400
Speaker 12: to see more of it. And by the way, people

602
00:28:57,440 --> 00:29:01,080
Speaker 12: are worried about this off balance sheet financing. In my opinion,

603
00:29:01,640 --> 00:29:04,320
Speaker 12: it's dangerous if you don't know about it. But everyone

604
00:29:04,360 --> 00:29:07,040
Speaker 12: knows about it, so you can definitely put that into

605
00:29:07,080 --> 00:29:10,320
Speaker 12: your calculation for the valuations of these companies.

606
00:29:10,520 --> 00:29:13,560
Speaker 3: Okay, that's really interesting because in many ways Meta has

607
00:29:13,640 --> 00:29:16,160
Speaker 3: led the way in that creativity a messagal b not

608
00:29:16,280 --> 00:29:19,640
Speaker 3: last week because of their capital expenditure, and perhaps it's

609
00:29:19,760 --> 00:29:22,080
Speaker 3: becoming in a more rapid clip than the revenue growth

610
00:29:22,120 --> 00:29:24,840
Speaker 3: that we're seeing. And how do you make the discernment

611
00:29:24,880 --> 00:29:27,240
Speaker 3: that's currently happening among the AI players.

612
00:29:28,480 --> 00:29:31,440
Speaker 12: Yeah, with regards to Meta, I think there are a

613
00:29:31,440 --> 00:29:33,800
Speaker 12: lot of things that were idiosyncratic. I mean, if we

614
00:29:33,800 --> 00:29:37,360
Speaker 12: were to think about the cat stack, if debt is issued,

615
00:29:37,640 --> 00:29:40,480
Speaker 12: equity investors don't like it, right, But if you look

616
00:29:40,480 --> 00:29:42,640
Speaker 12: at the debt market, a lot of investors in the

617
00:29:42,680 --> 00:29:44,720
Speaker 12: debt market actually liked it, and there was a lot

618
00:29:44,720 --> 00:29:47,400
Speaker 12: of demand for it. But there was also the deal

619
00:29:47,480 --> 00:29:51,520
Speaker 12: about Meta not being a hyperscaler, investors wondering where all

620
00:29:51,520 --> 00:29:53,560
Speaker 12: of the investments are going and they're going to invest

621
00:29:53,600 --> 00:29:56,920
Speaker 12: more of it, So that's meta. But everyone else, I

622
00:29:56,960 --> 00:30:00,160
Speaker 12: think there is a race here and there's a bit

623
00:30:00,200 --> 00:30:03,040
Speaker 12: of a fomo in all of the AI players, and

624
00:30:03,320 --> 00:30:07,120
Speaker 12: there's a higher risk to missing out than to spend

625
00:30:07,160 --> 00:30:10,160
Speaker 12: today and to see where we are tomorrow, because I

626
00:30:10,200 --> 00:30:12,360
Speaker 12: think the demand is still going to be high tomorrow.

627
00:30:12,640 --> 00:30:17,240
Speaker 3: But is that fomo leaching into the investment community and

628
00:30:17,400 --> 00:30:19,680
Speaker 3: is that a good way in which to invest one's money?

629
00:30:21,320 --> 00:30:21,520
Speaker 7: Right?

630
00:30:22,200 --> 00:30:24,800
Speaker 12: So here here are a few things I think people

631
00:30:24,920 --> 00:30:28,440
Speaker 12: thinking about valuations, and that's myself included. It's very very

632
00:30:28,520 --> 00:30:32,160
Speaker 12: high compared to historical norms. It's nerve wracking, but it's

633
00:30:32,200 --> 00:30:35,720
Speaker 12: a short term sentiment driven play. Data is subject to

634
00:30:35,840 --> 00:30:39,160
Speaker 12: a lot of noise and it's going to happen. There

635
00:30:39,160 --> 00:30:42,600
Speaker 12: may be a correction or people are going to get nervous. However,

636
00:30:42,640 --> 00:30:44,880
Speaker 12: if you're a long term investor, like a lot of

637
00:30:44,920 --> 00:30:47,280
Speaker 12: our clients are, you're going to take a look at

638
00:30:47,320 --> 00:30:51,400
Speaker 12: the fundamental value add of these data center buildouts and

639
00:30:51,480 --> 00:30:54,280
Speaker 12: AI moves, and I do think that there is something there.

640
00:30:54,360 --> 00:30:56,360
Speaker 12: If you look at the S and P five hundred

641
00:30:56,400 --> 00:31:00,000
Speaker 12: index and the companies in there, how many can actually

642
00:31:00,880 --> 00:31:04,280
Speaker 12: do the AI play. How many have them have the expertise,

643
00:31:04,400 --> 00:31:07,520
Speaker 12: the vision, the balance sheet capacity to do all of this,

644
00:31:07,920 --> 00:31:09,520
Speaker 12: and they are just a few. And that's one of

645
00:31:09,560 --> 00:31:12,440
Speaker 12: the reasons why investors who want to put capital into

646
00:31:12,480 --> 00:31:14,640
Speaker 12: the AI play had no choice but to go into

647
00:31:14,640 --> 00:31:15,760
Speaker 12: it in the public markets.

648
00:31:15,840 --> 00:31:16,000
Speaker 7: Right.

649
00:31:16,040 --> 00:31:19,440
Speaker 12: So, I think the valuations, although they are high, they're

650
00:31:19,480 --> 00:31:22,800
Speaker 12: telling us something about the future growth of these companies

651
00:31:22,840 --> 00:31:23,720
Speaker 12: and AI in.

652
00:31:23,680 --> 00:31:27,200
Speaker 3: General, and that can withstand what has been a torrid

653
00:31:27,280 --> 00:31:29,880
Speaker 3: time of geopolitics of angst of trade.

654
00:31:30,040 --> 00:31:32,560
Speaker 2: And I think it's interesting that you said it's noisy.

655
00:31:32,760 --> 00:31:35,600
Speaker 3: It's been really noisy in other players, like rare earth stocks,

656
00:31:35,600 --> 00:31:39,520
Speaker 3: for example, tumbling today because well maybe China will continue

657
00:31:39,520 --> 00:31:42,160
Speaker 3: to export and many had run up MP materials and

658
00:31:42,200 --> 00:31:44,400
Speaker 3: other players thinking that we would be cut off more

659
00:31:44,440 --> 00:31:47,520
Speaker 3: significantly from rare earth materials that were necessary for this

660
00:31:47,720 --> 00:31:49,800
Speaker 3: whole AI trade. What do you make of some of

661
00:31:49,800 --> 00:31:53,400
Speaker 3: the highs and the lows in ultimately a geopolitical war.

662
00:31:54,800 --> 00:31:57,600
Speaker 12: Yeah, you know, if we think back to the sheet

663
00:31:57,680 --> 00:32:01,040
Speaker 12: Trump meeting from last week, in my mind, I think

664
00:32:01,200 --> 00:32:04,800
Speaker 12: saying that it's a one year truce is a little

665
00:32:04,800 --> 00:32:07,720
Speaker 12: bit misleading, right, So it might not be fully one year.

666
00:32:08,160 --> 00:32:09,960
Speaker 12: We might have a surprise even next month.

667
00:32:10,000 --> 00:32:10,480
Speaker 6: Who knows.

668
00:32:10,880 --> 00:32:14,200
Speaker 12: And the truth part is also misleading because what I

669
00:32:14,240 --> 00:32:16,640
Speaker 12: think is we just de escalated. We just went back

670
00:32:16,680 --> 00:32:19,520
Speaker 12: to where we were about two months ago. So it

671
00:32:19,600 --> 00:32:21,880
Speaker 12: means that we're going to continue to negotiate, but behind

672
00:32:21,920 --> 00:32:24,719
Speaker 12: the scenes, we're going to continue to push this forward

673
00:32:24,760 --> 00:32:28,000
Speaker 12: in terms of actually racing each other. What happened after

674
00:32:28,080 --> 00:32:30,400
Speaker 12: that meeting was that mister Trump came back to the

675
00:32:30,520 --> 00:32:34,160
Speaker 12: United States, but mister she stayed and talked about having

676
00:32:34,360 --> 00:32:38,400
Speaker 12: like an international body that governs AI. There is a

677
00:32:38,560 --> 00:32:43,320
Speaker 12: lot of push here to having more power in AI

678
00:32:43,560 --> 00:32:46,400
Speaker 12: and also in national security. This is just going to

679
00:32:46,400 --> 00:32:49,320
Speaker 12: get more heated as we turn into twenty twenty six.

680
00:32:50,040 --> 00:32:53,320
Speaker 3: Wow, good place to leave it and a good food

681
00:32:53,360 --> 00:32:55,560
Speaker 3: for thought for the investor base and Rathman, we appreciate it.

682
00:32:55,600 --> 00:32:57,880
Speaker 3: Founder and CEO of going to did our advisory. The

683
00:32:57,960 --> 00:33:00,440
Speaker 3: final day is in a closely watched campaign here and

684
00:33:01,120 --> 00:33:03,760
Speaker 3: you know, perhaps not the local elections you're thinking of.

685
00:33:03,840 --> 00:33:04,920
Speaker 2: We're talking about will.

686
00:33:04,800 --> 00:33:08,479
Speaker 3: Shareholders vote to approve a trillion dollar package for Eno

687
00:33:08,600 --> 00:33:09,480
Speaker 3: Musk Well.

688
00:33:09,360 --> 00:33:11,680
Speaker 2: Of course that decision is about more than just money.

689
00:33:11,880 --> 00:33:14,960
Speaker 3: Control of the company shareholder value, corporate governance issues, they're

690
00:33:14,960 --> 00:33:15,640
Speaker 3: all at play here.

691
00:33:16,080 --> 00:33:17,360
Speaker 2: Let's speak with the University of.

692
00:33:17,400 --> 00:33:20,800
Speaker 3: Arkansas law professor Rob Anderson about all of this. You

693
00:33:20,840 --> 00:33:23,600
Speaker 3: are a retail investor in Tesla, and you're very active

694
00:33:23,680 --> 00:33:28,240
Speaker 3: within the ex community of teserati or tezl retail investors

695
00:33:28,280 --> 00:33:31,160
Speaker 3: more broadly, Professor Anderson, but just lay it out for

696
00:33:31,240 --> 00:33:34,640
Speaker 3: us as an active investor. Talk to us about the goals,

697
00:33:34,680 --> 00:33:37,880
Speaker 3: the milestones, how you interpret them as well as being

698
00:33:37,880 --> 00:33:41,000
Speaker 3: a professor in corporate governance, Are they that hard to

699
00:33:41,040 --> 00:33:43,800
Speaker 3: achieve for En Musk to get what could be up

700
00:33:43,800 --> 00:33:46,880
Speaker 3: to a trillion dollars in pay.

701
00:33:46,960 --> 00:33:48,760
Speaker 13: Yeah, well, thank you for having me on. I mean,

702
00:33:48,800 --> 00:33:52,960
Speaker 13: there's been a lot of talk about how large potential

703
00:33:53,000 --> 00:33:55,480
Speaker 13: awards are here, but I think there hasn't been enough

704
00:33:55,520 --> 00:34:00,440
Speaker 13: talk about how ambitious this plan actually is. Requiring Elon

705
00:34:00,520 --> 00:34:04,480
Speaker 13: Musk to throw this company to eight point five trillion

706
00:34:04,640 --> 00:34:09,319
Speaker 13: in market capitalization and four hundred billion in ebit DA,

707
00:34:09,840 --> 00:34:13,040
Speaker 13: So I think, you know, this is ultimately a question

708
00:34:13,080 --> 00:34:16,240
Speaker 13: of what will this company be able to retain Elon Musk,

709
00:34:16,760 --> 00:34:19,359
Speaker 13: who I think it's fair to say his value has

710
00:34:19,400 --> 00:34:24,279
Speaker 13: been priced into the shares already quite significantly, And it's

711
00:34:24,320 --> 00:34:27,279
Speaker 13: more than just, in my opinion, more than just a

712
00:34:27,320 --> 00:34:31,120
Speaker 13: good idea to approve this pay package. It's actually essential

713
00:34:31,239 --> 00:34:33,840
Speaker 13: for this company to transition to that the next stage

714
00:34:33,880 --> 00:34:36,160
Speaker 13: that's contemplated by the award.

715
00:34:37,160 --> 00:34:38,840
Speaker 3: You talk about the eight and a half trillion that

716
00:34:38,920 --> 00:34:40,800
Speaker 3: they need to reach in terms of market cap, but

717
00:34:40,840 --> 00:34:43,640
Speaker 3: there's also the milestones. Twenty million cars, how many in MFSD.

718
00:34:43,800 --> 00:34:46,719
Speaker 3: You've got to see what million robots out there?

719
00:34:46,719 --> 00:34:48,080
Speaker 2: An army that he calls them.

720
00:34:48,080 --> 00:34:51,799
Speaker 3: But Professor, what's interesting is Summer pointed out potential caveats here.

721
00:34:51,800 --> 00:34:54,160
Speaker 3: They've talked about the board potentially being able to award

722
00:34:54,239 --> 00:34:57,960
Speaker 3: him perhaps the first three tranches of the money promised

723
00:34:58,600 --> 00:35:02,919
Speaker 3: if perhacks. There's the milestones were interfered with in some way.

724
00:35:02,960 --> 00:35:05,600
Speaker 3: Maybe it's disaster's war, maybe it's inferenced by government, but

725
00:35:05,680 --> 00:35:08,680
Speaker 3: also just other unspecified circumstances.

726
00:35:08,760 --> 00:35:10,840
Speaker 2: So does that give you any pause from a corporate

727
00:35:10,840 --> 00:35:12,239
Speaker 2: governance perspective.

728
00:35:13,040 --> 00:35:16,200
Speaker 13: Well, I mean not not really. I mean it's normal

729
00:35:16,239 --> 00:35:19,840
Speaker 13: for force masure type consideration to be taken into account.

730
00:35:19,960 --> 00:35:26,520
Speaker 13: I mean, somewhat somewhat ironically, when ISS recommended a vote

731
00:35:26,600 --> 00:35:29,880
Speaker 13: against it, it you know, took into account that it

732
00:35:30,560 --> 00:35:34,239
Speaker 13: specified that there was a lack of precision in some

733
00:35:34,320 --> 00:35:38,160
Speaker 13: of the milestones, but also simultaneously said that the milestones

734
00:35:38,200 --> 00:35:40,640
Speaker 13: didn't give the board enough discretion in the future to

735
00:35:40,719 --> 00:35:43,080
Speaker 13: adjust it. So, you know, I think there's it's a

736
00:35:43,120 --> 00:35:46,040
Speaker 13: no win situation in terms of writing a plan like this,

737
00:35:46,200 --> 00:35:50,920
Speaker 13: because obviously unexpected events can occur that you can't fully

738
00:35:50,960 --> 00:35:53,680
Speaker 13: anticipate in writing the plan. So I don't think I

739
00:35:53,719 --> 00:35:57,000
Speaker 13: don't I don't think those are particularly problematic. I mean,

740
00:35:57,880 --> 00:36:01,399
Speaker 13: you know, I think probably the most common criticism I've

741
00:36:01,440 --> 00:36:04,279
Speaker 13: heard is that the initial the first step of a

742
00:36:04,320 --> 00:36:08,799
Speaker 13: milestone at two trillion dollar market cap, people would say

743
00:36:08,880 --> 00:36:12,319
Speaker 13: have said it's too easy to achieve. But I think

744
00:36:12,400 --> 00:36:15,320
Speaker 13: what that doesn't fails to appreciate is that the market

745
00:36:15,400 --> 00:36:18,399
Speaker 13: is already priced in the fact that it believes this

746
00:36:18,440 --> 00:36:22,080
Speaker 13: pay package will pass and that Elon will be retained

747
00:36:22,120 --> 00:36:24,080
Speaker 13: for at least some period of time. So it's priced

748
00:36:24,120 --> 00:36:27,160
Speaker 13: in his value already, and it's a situation where he's

749
00:36:27,280 --> 00:36:30,719
Speaker 13: kind of cursed by his own success of you know,

750
00:36:30,760 --> 00:36:33,960
Speaker 13: making the milestones easier to achieve because it's already priced

751
00:36:34,000 --> 00:36:37,360
Speaker 13: in the value of his contribution. So you know, I

752
00:36:38,120 --> 00:36:40,480
Speaker 13: sort of feel like some of the criticisms have been

753
00:36:40,520 --> 00:36:42,000
Speaker 13: a bit unfair in that regard.

754
00:36:42,160 --> 00:36:45,000
Speaker 3: Well, some of the criticisms more broadly have been almost

755
00:36:45,000 --> 00:36:47,560
Speaker 3: reminiscent of what happened in twenty eighteen, and the idea

756
00:36:47,640 --> 00:36:49,960
Speaker 3: that basically corporate governance is lacking is a lot of

757
00:36:50,000 --> 00:36:52,120
Speaker 3: people on the border too close to him. How do

758
00:36:52,160 --> 00:36:54,279
Speaker 3: you think that this pay package in twenty twenty five

759
00:36:54,360 --> 00:36:54,880
Speaker 3: arenswered that?

760
00:36:56,480 --> 00:36:59,400
Speaker 13: So, I mean the pay package now had the benefit,

761
00:36:59,600 --> 00:37:01,640
Speaker 13: if you want to call it, that of a completely

762
00:37:01,640 --> 00:37:06,880
Speaker 13: adjudicated Delaware opinion on that twenty eighteen pay package. So

763
00:37:06,920 --> 00:37:10,920
Speaker 13: they were able to address just about everything that the

764
00:37:11,120 --> 00:37:15,759
Speaker 13: Chancellor identified in that including a totally different having a

765
00:37:15,760 --> 00:37:20,440
Speaker 13: special committee this time with totally different composition, addressing all

766
00:37:20,520 --> 00:37:25,080
Speaker 13: the procedural aspects that the Chancellor took issue with in

767
00:37:25,560 --> 00:37:30,120
Speaker 13: the court opinion, as well as producing an extensive report

768
00:37:30,960 --> 00:37:33,880
Speaker 13: that is more extensive than anything that I recall seeing

769
00:37:34,120 --> 00:37:38,680
Speaker 13: in recent memory to try to address all those concerns.

770
00:37:38,960 --> 00:37:41,960
Speaker 13: In addition to of course the shareholder vote.

771
00:37:42,760 --> 00:37:45,200
Speaker 3: You are, of course a shareholder. Musk himself is a

772
00:37:45,200 --> 00:37:47,319
Speaker 3: significant shareholder. He wants to be more of a significant one.

773
00:37:47,360 --> 00:37:49,359
Speaker 3: He's got about fifteen percent that he could put weight

774
00:37:49,440 --> 00:37:51,960
Speaker 3: behind he in Texas is allowed to vote for his

775
00:37:51,960 --> 00:37:54,760
Speaker 3: own pay package in this respect, So many say, actually,

776
00:37:54,760 --> 00:37:57,200
Speaker 3: this is just going to pass, but it's more idea

777
00:37:57,280 --> 00:37:59,879
Speaker 3: of the court of public opinion. They need to pass

778
00:38:00,080 --> 00:38:02,680
Speaker 3: with such a majority to prove that this is born

779
00:38:02,719 --> 00:38:03,240
Speaker 3: out right.

780
00:38:03,560 --> 00:38:04,960
Speaker 2: What do you make of that role? Do you think

781
00:38:04,960 --> 00:38:07,640
Speaker 2: that it's it's will pass with.

782
00:38:07,680 --> 00:38:10,080
Speaker 3: Flying colors in that respect and enough to stop the

783
00:38:10,080 --> 00:38:11,200
Speaker 3: criticism continuing.

784
00:38:12,400 --> 00:38:13,120
Speaker 6: I think it will.

785
00:38:13,239 --> 00:38:16,200
Speaker 13: Yeah, I think the I think the shareholders other than

786
00:38:16,680 --> 00:38:21,240
Speaker 13: Musk and Kimball will vote very substantially in favor of it. Frankly,

787
00:38:21,840 --> 00:38:24,879
Speaker 13: the main criticism I here are certainly not coming from

788
00:38:24,880 --> 00:38:30,360
Speaker 13: the retail shareholders, who overwhelmingly are not just supported, but

789
00:38:30,440 --> 00:38:33,480
Speaker 13: I think are are nervous that it won't pass by

790
00:38:33,800 --> 00:38:37,480
Speaker 13: by enough. And I think you know the value that

791
00:38:37,719 --> 00:38:43,480
Speaker 13: Musk brings this company. It's it's undeniable. If if if

792
00:38:43,520 --> 00:38:46,839
Speaker 13: he left tomorrow, you can imagine what would happen to

793
00:38:46,920 --> 00:38:50,560
Speaker 13: the stock price. And so I think it's unfair not

794
00:38:50,680 --> 00:38:52,959
Speaker 13: to give him the benefit of that of the fact

795
00:38:52,960 --> 00:38:55,120
Speaker 13: that the stock price has gone up. By looking at

796
00:38:55,120 --> 00:38:58,879
Speaker 13: it now at one hundred and thirty thirty dollars. Since

797
00:38:58,920 --> 00:39:05,040
Speaker 13: this pay package is even announced right, so the market

798
00:39:05,080 --> 00:39:08,799
Speaker 13: loves it. I don't see any criticism there. Really, it's

799
00:39:08,920 --> 00:39:13,640
Speaker 13: just the sort of rigid voting restrictions of the proxy

800
00:39:13,680 --> 00:39:16,560
Speaker 13: advisors that are going to be the obstacle here. It's

801
00:39:16,560 --> 00:39:19,200
Speaker 13: the cookie cutter approach they have to apply because they

802
00:39:19,239 --> 00:39:22,000
Speaker 13: have to try to treat Tesla like every other company

803
00:39:22,080 --> 00:39:26,160
Speaker 13: when it's it's not similar to a hired CEO who's

804
00:39:26,200 --> 00:39:29,120
Speaker 13: come in from the outside to manage a mature company.

805
00:39:29,160 --> 00:39:31,840
Speaker 13: This is a founder led company.

806
00:39:32,280 --> 00:39:35,359
Speaker 3: Anwance approach from Professor Rob Anderson. We appreciate it from

807
00:39:35,360 --> 00:39:38,000
Speaker 3: the University of Arkansas. Thanks for joining us and a

808
00:39:38,040 --> 00:39:41,239
Speaker 3: retail investor in Tesla. Now coming up Palentier shoes there

809
00:39:41,280 --> 00:39:42,600
Speaker 3: are up ahead of companies earnings.

810
00:39:42,680 --> 00:39:45,320
Speaker 2: Later today, we'll discuss what to expect next. It's a

811
00:39:45,320 --> 00:39:54,040
Speaker 2: brute BG Tech earning season.

812
00:39:54,040 --> 00:39:55,960
Speaker 3: It rolls on an AI balls where they're going to

813
00:39:55,960 --> 00:39:57,480
Speaker 3: be watching Palenteer closely.

814
00:39:57,600 --> 00:39:58,640
Speaker 2: It reports after the bell.

815
00:39:58,880 --> 00:40:01,480
Speaker 3: The stock's already is you can see one hundred and

816
00:40:01,480 --> 00:40:04,359
Speaker 3: seventy percent let's call it on AI enthusiasm. But most

817
00:40:04,400 --> 00:40:07,799
Speaker 3: Lazett Chapman joins us now and there are high expectations

818
00:40:07,840 --> 00:40:11,120
Speaker 3: fifty percent increase in revenue. Just talk us through what's

819
00:40:11,160 --> 00:40:14,080
Speaker 3: going to fuel that growth, lizet right.

820
00:40:14,160 --> 00:40:17,080
Speaker 14: So, like you said, there is a lot of built

821
00:40:17,080 --> 00:40:20,160
Speaker 14: in anticipation eagerness around this. We're going to be see

822
00:40:20,160 --> 00:40:23,040
Speaker 14: they've beat the last four consecutive quarters. We're going to

823
00:40:23,040 --> 00:40:24,879
Speaker 14: see if they're going to beat that again or maybe

824
00:40:24,920 --> 00:40:26,880
Speaker 14: they're going to fall short. What we're going to be

825
00:40:26,920 --> 00:40:31,160
Speaker 14: looking for is whether they're able to translate these small,

826
00:40:31,680 --> 00:40:34,960
Speaker 14: smaller customer deals, these one million dollar deals into ones

827
00:40:34,960 --> 00:40:38,839
Speaker 14: that expand into you know, ones that that really drive

828
00:40:38,880 --> 00:40:41,920
Speaker 14: the US commercial deals as well as international that's on

829
00:40:41,960 --> 00:40:44,600
Speaker 14: the commercial side. On the government side, we're going to

830
00:40:44,600 --> 00:40:47,120
Speaker 14: be looking at how things are going here domestically as

831
00:40:47,120 --> 00:40:50,799
Speaker 14: well as internationally with the boost that they've seen that

832
00:40:50,840 --> 00:40:53,440
Speaker 14: they've invested in the UK and a lot of NATO

833
00:40:54,440 --> 00:40:56,959
Speaker 14: expansion efforts as well. So we're going to be looking

834
00:40:56,960 --> 00:40:59,880
Speaker 14: to see whether they've been able to you know, continue

835
00:40:59,880 --> 00:41:02,440
Speaker 14: to to expand the sizes of those deals.

836
00:41:02,480 --> 00:41:05,040
Speaker 3: I mean, government spending for them in defense in particular

837
00:41:05,080 --> 00:41:07,640
Speaker 3: has been such a tailwind. But we're also amid a

838
00:41:07,680 --> 00:41:10,520
Speaker 3: government shutdown. Is it is that any sort of headwind.

839
00:41:12,560 --> 00:41:15,920
Speaker 14: The people that we've spoken to indicate that is unlikely

840
00:41:16,000 --> 00:41:19,480
Speaker 14: because of the lumpiness and long term nature of these contracts,

841
00:41:20,360 --> 00:41:23,080
Speaker 14: that doesn't seem to be a major factor that we

842
00:41:23,280 --> 00:41:26,400
Speaker 14: have anticipated so far. And what we will be looking

843
00:41:26,440 --> 00:41:29,600
Speaker 14: at going forward though, is again like, you know, will

844
00:41:29,640 --> 00:41:33,040
Speaker 14: they be and then where and how? And traditionally international

845
00:41:33,360 --> 00:41:37,239
Speaker 14: sales have been much softer than the US ones, and

846
00:41:37,600 --> 00:41:40,880
Speaker 14: you know, CEO Alex Karp has repeatedly said, you know,

847
00:41:40,880 --> 00:41:44,000
Speaker 14: it's US commercial growth driving this, So we'll see if

848
00:41:44,040 --> 00:41:46,400
Speaker 14: that continues to be the case or whether they've been

849
00:41:46,440 --> 00:41:49,000
Speaker 14: able to boost their strength abroad.

850
00:41:49,560 --> 00:41:53,480
Speaker 3: I mean, really analyst calling out the uncharacteristically large beats

851
00:41:53,520 --> 00:41:57,239
Speaker 3: and raises that we've had prior quarters from Alex Carp

852
00:41:57,320 --> 00:41:57,719
Speaker 3: and team.

853
00:41:58,239 --> 00:41:59,640
Speaker 2: Is that what he needs to do?

854
00:41:59,680 --> 00:42:02,680
Speaker 3: The the narrative, because boy is he good at driving narratives.

855
00:42:03,800 --> 00:42:04,719
Speaker 2: Yeah, I think that is.

856
00:42:04,680 --> 00:42:07,520
Speaker 14: A great question, and I think the markets are going

857
00:42:07,560 --> 00:42:08,279
Speaker 14: to tell us right.

858
00:42:08,320 --> 00:42:09,560
Speaker 2: You know, he has a.

859
00:42:09,840 --> 00:42:17,279
Speaker 14: Famously very antagonistic relationship with Wall Street. He considers financial

860
00:42:17,360 --> 00:42:24,960
Speaker 14: results of vulgar and inadequate way to judge a company success,

861
00:42:25,080 --> 00:42:29,160
Speaker 14: and he's consistently married the financial results with what he

862
00:42:29,239 --> 00:42:36,400
Speaker 14: considers is a philosophical mandate to create AI software for

863
00:42:36,520 --> 00:42:41,319
Speaker 14: the use of the US defense forces and allies, and

864
00:42:41,440 --> 00:42:43,880
Speaker 14: so that's going to be what he's driving towards. So

865
00:42:43,920 --> 00:42:46,360
Speaker 14: there is not just the focus on profit, but also

866
00:42:46,400 --> 00:42:50,600
Speaker 14: there's there's some philosophical support that he may get or

867
00:42:50,960 --> 00:42:51,239
Speaker 14: may not.

868
00:42:51,960 --> 00:42:54,600
Speaker 3: We'll get to that philosophy after the bows that Chapman,

869
00:42:54,760 --> 00:42:55,880
Speaker 3: it's always great to have you on.

870
00:42:56,040 --> 00:42:58,400
Speaker 2: Thank you so much. That does it. But as addition

871
00:42:58,440 --> 00:43:00,720
Speaker 2: to bring the tech, don't forget to check out our podcast.

872
00:43:00,760 --> 00:43:02,200
Speaker 3: You can find it on the terminal as well as

873
00:43:02,200 --> 00:43:03,440
Speaker 3: online on Apple, Spotify.

874
00:43:03,680 --> 00:43:06,719
Speaker 2: An I heart from New York. It's a brittybag tech.

875
00:43:08,800 --> 00:43:09,320
Speaker 3: Mm hmmm

876
00:43:11,360 --> 00:43:11,480
Speaker 13: Hm