Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is a
Speaker 1: live from Coast to coast with Carolline Hide in New
Speaker 1: York and v Lovelow in Sentrancsco.
Speaker 2: This is Bloomberg Tech coming up.
Speaker 3: Bloomberg reports the US Commerce Department has drafted regulations restricting
Speaker 3: AI chip shipments anywhere in the world without American approval.
Speaker 4: Plus Oracle plans to cut thousands of jobs as it
Speaker 4: handles a cash crunch from a massive AI data center
Speaker 4: expansion effort.
Speaker 3: And the Pentagon has officially notified lawmakers that it has
Speaker 3: determined Anthropic and its products pose a risk to the
Speaker 3: US supply chain.
Speaker 4: Some extraordinary news on the private sector and indeed on
Speaker 4: the public markets right now. And we're seeing ourselves, what
Speaker 4: by about three quarters percent on the NASAK one hundred,
Speaker 4: coming off of our lows.
Speaker 5: But we're down on the week, the S and P
Speaker 5: five hundred having.
Speaker 4: Its worst week. It's October of last year, and in March.
Speaker 4: Part it's because there was lots happening to oil prices,
Speaker 4: and we're in a sixth day of conflict with the
Speaker 4: Middle East with Iran, and we're seeing ail up six
Speaker 4: percent at one point. We're now, of course, eclipsing ninety
Speaker 4: one dollars on the BNT on the global contract. All
Speaker 4: of this adding to inflation pressure when we're seeing weakness
Speaker 4: in the labor market, non farm payrolls are surprise loss
Speaker 4: in jobs, no additions. We're also seeing, therefore, money coming
Speaker 4: out of some of those risk assets. Bitcoin off by
Speaker 4: three point six percent today, ED, what are.
Speaker 5: You looking at?
Speaker 2: Yeah, chip stocks are under pressure.
Speaker 3: The Philadelphia Semiconductor indexes down in this session, down on
Speaker 3: the week, and headed to two straight weeks of declines
Speaker 3: for the first time since November. Bloomberg News is reporting
Speaker 3: that the Commerce Department has drafted new rules that would
Speaker 3: restrict US shipments of AI chips worldwide, giving Washington broad
Speaker 3: authority over whether other countries can build facilities to train
Speaker 3: and run our official intelligence models.
Speaker 2: That's all according to sources.
Speaker 3: Bloomberg Tech and Industrial Policy Report of Maggie Eastland joins
Speaker 3: us with the let's get into the content of those
Speaker 3: draft rules and what Bloomberg's reported.
Speaker 2: What do we need to know?
Speaker 6: Of course, so as we've reported, there is a license
Speaker 6: requirement for AI chips sent almost anywhere in the world. Now,
Speaker 6: whether or not these licenses will be handed out. Depends
Speaker 6: a lot on how many chips, as compared to a
Speaker 6: Blackwell and video black Well, how many of those chips
Speaker 6: each does each end user want to purchase, And now
Speaker 6: on the higher end, for end users wanting to purchase
Speaker 6: up to two hundred thousand, that may actually require and
Speaker 6: the US may ask nations to invest in AI within
Speaker 6: US borders. So this opens up an opportunity for chip
Speaker 6: licenses to become a factor in global trade talks.
Speaker 4: Something that I'm sure many a country of Bristol at, Maggie.
Speaker 4: What's interesting is that the Commas Department has responded and
Speaker 4: they say the draft rule isn't meant to function as
Speaker 4: an Nvidia export band. Can you just give us the
Speaker 4: nuance of how the government has responded.
Speaker 5: You're reporting right.
Speaker 6: So this response shows and tries to emphasize that this
Speaker 6: is not the same as the Biden administration and.
Speaker 5: Their diffusion rule.
Speaker 6: It's one thing is it is not based on countries. However,
Speaker 6: there is a big role here that the government is
Speaker 6: playing as a gatekeeper, and whether or not this is
Speaker 6: more restrictive is ultimately going to depend on how the
Speaker 6: US decides to dole out these licenses, and it does
Speaker 6: have the leeway to be more or less.
Speaker 5: Strict with that.
Speaker 7: Maggie.
Speaker 3: An important point here is it doesn't necessarily change US
Speaker 3: policy with regards to China right now. You outline that,
Speaker 3: But there seems to be like this tiered response if
Speaker 3: it's a small batch of chips for a small data
Speaker 3: center project lighter review. But at the other end of
Speaker 3: the extreme in our reporting, it seems to indicate that
Speaker 3: you have a nation state country to country negotiation. If
Speaker 3: the US is going to allow the export of cutting
Speaker 3: edge AI accelerators.
Speaker 6: Exactly as you say, for any shipments over two hundred
Speaker 6: thousand Blackwell equivalents, there will have to be a nation
Speaker 6: to nation negotiation, and it is sort of a tiered response.
Speaker 6: If it's under a thousand chips, that's going to be
Speaker 6: a lot easier to get approval. But again, as you
Speaker 6: work up the chain and want more and more ships,
Speaker 6: the US is going to be asking for more in return.
Speaker 4: Maggie Eastlan on what the US we understand is currently considering.
Speaker 4: We so appreciate it. Now, let's stick with Global Tech News.
Speaker 4: Ted Mordenson is with US. He's bed managing director. He
Speaker 4: oversees technology research. Boy, is there are a lot to
Speaker 4: be trying to digest as someone who analyzes tech. Right now,
Speaker 4: just focus in on what potentially the US could be
Speaker 4: thinking about here and overseeing of basically how in video
Speaker 4: and AMD export to the rest of the world.
Speaker 8: Your reaction, I think it's a broader focus. It also,
Speaker 8: let's face facts.
Speaker 9: I mean, the Trump administration is providing a broad blanket
Speaker 9: not only on energy policy, Look what we've done in Venezuela,
Speaker 9: look what we're doing in our own right.
Speaker 8: Now, but also on rare earth.
Speaker 9: This all feeds together in one big ecosystem, and I
Speaker 9: think they just want control of what's happening on our
Speaker 9: next generation silicon at that three and two nanimeter node.
Speaker 9: This is one of the reasons why we've built eight
Speaker 9: fabs at TSM and Arizona. We have to control that technology,
Speaker 9: specifically at that two nanimeter node, because that's where all
Speaker 9: the AI chip development is going. So I think they're
Speaker 9: just trying to get their arms around the whole situation
Speaker 9: that the US is in more of a power solution
Speaker 9: verse being ripped off globally a.
Speaker 5: Power solution first.
Speaker 4: I mean, at the moment, we're seeing a negative reaction
Speaker 4: to the stocks in the back of that story. In fact,
Speaker 4: very few stocks are in the green today and maybe
Speaker 4: Marvel and broad Com out perform because of numbers we
Speaker 4: see defense tech outperformed.
Speaker 2: TED.
Speaker 4: What do you do in this current geopolitical moment of tension?
Speaker 9: So I'm on with some very big clients, you know, constantly,
Speaker 9: whether it be during the day or even at night
Speaker 9: lately during earnings, and I think what people are doing
Speaker 9: is we're kind of post last Saturday, and there's not
Speaker 9: a lot of cycle experience. I mean, I'm old, so
Speaker 9: I've seen pretty much all this. It doesn't really surprise
Speaker 9: me that much. But we're now in this I would
Speaker 9: call it a capital preservation phase, where when you don't
Speaker 9: have a you know, a clear picture of what could happen,
Speaker 9: whether it be on the commodity side the raid environment,
Speaker 9: you tend to go to a capital preservation mode. And
Speaker 9: what I mean by that is there's a lot of
Speaker 9: d risking going on in tech portfolios, and there's been
Speaker 9: some very violent moves between software and also semiconductors, and
Speaker 9: I think there's also some pms that are quite frankly
Speaker 9: just moving to other sectors that are a little bit
Speaker 9: more defensive.
Speaker 3: So you know, Caroline outlined right at the top of
Speaker 3: the show, the sort of the trajectory of the Nasdaq
Speaker 3: one hundred, right, I think, on track for its worst
Speaker 3: week since October. Then I said, chips are following a
Speaker 3: similar pattern, back to back weekly declines for the first
Speaker 3: time since November. It seems a strange question, But what
Speaker 3: is the main catalyst in this market right now? What
Speaker 3: is it that your clients are saying is driving their
Speaker 3: psychology when you're on the phone with them.
Speaker 8: They need clarity. You know, everybody's looking at the tenure.
Speaker 9: I mean it revers down to the four to twelve
Speaker 9: range earlier in the day, now it's back last time
Speaker 9: I checked out of the four seventeen range. They're worried
Speaker 9: about a potential spike in rakes. There's inflation everywhere in tech.
Speaker 9: Every single conference call I'm on and I listened to
Speaker 9: over seventy during earning season, everybody is passing on price.
Speaker 9: So I think the institutional investor is looking at locking
Speaker 9: in gains on some really leadership stocks, building some more
Speaker 9: cash levels just to be more nimble. Buying from the
Speaker 9: fearful selling to the needy is a discussion I have
Speaker 9: almost every single conversation. And then the other things that
Speaker 9: portfolio managers are doing is they're upgrading their portfolio. And
Speaker 9: this is a great opportunity when the markets are down
Speaker 9: to really look at these A companies with unbelievable management teams,
Speaker 9: product cycles that move into AGENTIIC and free cash LOWI
Speaker 9: is king and if you do a screen on those names,
Speaker 9: there's a bunch of tech companies that are way off
Speaker 9: their highs and that's where that's where we're doing most
Speaker 9: of the work.
Speaker 3: It's actually the S and P five hundred I think
Speaker 3: that's having the rough week relatives in AWE. That one
Speaker 3: hundred one name that is having a very good week
Speaker 3: is Palenteer.
Speaker 2: You up almost thirteen.
Speaker 3: Percent, and that's like logical, right, Like Caroline was making
Speaker 3: the point, I think it was Monday, maybe Tuesday that
Speaker 3: with everything that's happening with the war in Iran and
Speaker 3: indeed the back and forth between the Department of Defense,
Speaker 3: the Pentagon and AI Providers, that you'd expect that name
Speaker 3: to be higher, you know, you'd expect it to be
Speaker 3: in the spotlight right now.
Speaker 9: It truly is one of these next generation companies that
Speaker 9: has been put in pretty much every single agency. They
Speaker 9: started with the army, but they've gone to the Space Force,
Speaker 9: the Navy, pretty much every single industry. And if you
Speaker 9: just connect the dots on our success in Iran is
Speaker 9: based upon Pallanteer being embedded in the IDEF, the Israeli
Speaker 9: Defense Force as well as.
Speaker 8: Pretty much I.
Speaker 9: Would assume all of our agencies in relationship to our
Speaker 9: Department of War.
Speaker 8: This gives the warfighter.
Speaker 9: And you know, I flew for you know a lot
Speaker 9: of years and I feel so antiquated on what my
Speaker 9: new naval aviators have at their disposal. They can see
Speaker 9: around corners, they can see the battlefield in real time,
Speaker 9: and that's that's really because of a lot of the
Speaker 9: Paneteer software and their ability to really take on an
Speaker 9: immense amount of data and make sense of it.
Speaker 4: I love hearing about that history and that understanding you
Speaker 4: have ted. Can you therefore opine a little bit on
Speaker 4: how difficult it might be for them to unentwine themselves.
Speaker 5: That's even a word with anthropic, because Panta has had
Speaker 5: a partnership with them. If we are seeing them forced out,
Speaker 5: is that going to be an issue for the business.
Speaker 9: I think it's I think it's a really political I
Speaker 9: think at some point of the Defense Department, and you know,
Speaker 9: the government will need and tropic and they'll still find
Speaker 9: a way of somewhere in the middle. Same thing with
Speaker 9: open eye, open AI. If you go back in the
Speaker 9: way back machine. I mean, this has happened at Amazon,
Speaker 9: it's happened at Google, it's happened at Microsoft.
Speaker 8: We'll get there somehow.
Speaker 9: What I think your viewers need to understand is the
Speaker 9: US government, specifically the Defense Department, needs the best technology,
Speaker 9: and I think what we're using is kind of a
Speaker 9: strong arm tactic to get them back at the table
Speaker 9: and to get to some middle.
Speaker 3: Grown Ted Wordenson of Bed with a very close view
Speaker 3: of what's happening between technology and the world, the state
Speaker 3: of the world.
Speaker 2: Right now, I really appreciate it.
Speaker 3: Now coming up in the program, Oracle plans to act
Speaker 3: thousands of roles as soon as this month. We're going
Speaker 3: to discuss what is behind that move and the Bloomberg reporting.
Speaker 2: This is Bloomberg Tech.
Speaker 3: Oracle is planning to cut thousands of jobs as it
Speaker 3: looks to manage a cash crunch driven by AI spending.
Speaker 3: According to sources, Let's get the details of Bloomberg's Brady Ford,
Speaker 3: who broke the story. Lots of detail in the report,
Speaker 3: the size, the scope, the when, what do we need
Speaker 3: to know?
Speaker 10: It costs a lot of money to build data centers.
Speaker 11: Right, Oracle is betting its company on the fact that
Speaker 11: it will be an AI infrastructure provider, and over the
Speaker 11: next couple of years that means negative cash flow. It's
Speaker 11: feeling a crunch, and so it's responding, right, it's planning
Speaker 11: what appears to be one of the largest layoffs on
Speaker 11: record for the company. Thousands of workers impacted as soon
Speaker 11: as this month. And yeah, I mean it is certainly
Speaker 11: a rough market out there for jobs in the tech industry,
Speaker 11: and this is just one more data point.
Speaker 5: For that, Brady.
Speaker 4: It needs money for AI and the infrastructure of it.
Speaker 4: It needs less people because of AI. And you say
Speaker 4: that the job cuts are going to be coming to
Speaker 4: those where I assume the latest greatest AI agent is
Speaker 4: going to be able to perform for them.
Speaker 10: Exactly.
Speaker 7: Yeah.
Speaker 10: I think every management team right now, everybody who has.
Speaker 11: A P and L is being asked, Hey, when you're
Speaker 11: doing your headcom planning, let's think about what roles we
Speaker 11: need less of. We all know these AI and tools
Speaker 11: aren't quite there in terms of replacing people, but in
Speaker 11: terms of time saving, in terms of hey, maybe if
Speaker 11: you had a team of ten people, can we do
Speaker 11: it with eight people.
Speaker 10: From what we are hearing.
Speaker 11: From sources, that is certainly a factor in this layoff.
Speaker 10: Though at the end of the day, it's cost cutting.
Speaker 10: I think that's the big story rather than it.
Speaker 11: Being a you know, AI is so amazing that we
Speaker 11: can replace people.
Speaker 4: Yeah, then you want some whether it's AI washing or not, continues.
Speaker 4: It's proty forward. Thank you so much for joining us
Speaker 4: on that story. Look, another tech leader has been acknowledging
Speaker 4: the impact of AI on jobs Page a Duty CEO
Speaker 4: Jennifer tahadah I spoke with her at Bloomberg's New Voices
Speaker 4: event earlier this week, where she said AI's impact from
Speaker 4: productivity is changing the way her company fills vacant positions.
Speaker 5: Yeah, we've tried.
Speaker 12: I moved the word backfill from our vocabulary because that
Speaker 12: sort of infers that you need something exactly like what
Speaker 12: you have before, and the market is moving so fast
Speaker 12: that by the time one person exit the role, you
Speaker 12: actually need to think completely differently about what the opportunity
Speaker 12: is to add capacity to your team in a new way.
Speaker 4: So are you seeing few of people working at Patrigg
Speaker 4: and how does that perhaps.
Speaker 5: Change the conversation you're having with employees.
Speaker 12: Well, I think employees understand that we're looking for each
Speaker 12: of them to demonstrate not only productivity and efficiency, but
Speaker 12: higher velocity in the innovation. And I stand up at
Speaker 12: town hall almost every month and say, I'm not asking
Speaker 12: you to work more, I'm not asking you to work harder.
Speaker 12: I'm asking to work differently. I'm asking you to embrace
Speaker 12: and leverage AI and service of competitive advantage, but mostly
Speaker 12: in service of our customers. Right, And I think that's
Speaker 12: exciting for most employees.
Speaker 3: That was page Judy CEO Jennifer Tahada. Now, US employers
Speaker 3: did unexpectedly slash ninety two thousand jobs last month, raising
Speaker 3: the unemployment rate to four point four percent. Those cuts
Speaker 3: are being blamed on strikes at major healthcare providers and servers.
Speaker 2: Whether not AI.
Speaker 3: How much longer could it be until AI does impact
Speaker 3: to the labor market market? Gimball, executive director of the
Speaker 3: Yale Budget Lab, has been doing research on AI labor
Speaker 3: market impact and joins us WE every week month and
Speaker 3: quarter wait for the definitive data set that says AI
Speaker 3: is doing something here.
Speaker 2: Have you seen it yet? Will we see it soon?
Speaker 13: I really haven't seen it yet. I think everyone is
Speaker 13: so focused on what the technology can do, because the
Speaker 13: technology is so amazing that they're jumping straight to and
Speaker 13: therefore we're going to really quickly see these labor market impacts.
Speaker 13: I think it's really important to keep in mind there
Speaker 13: are a lot of things that affect deployment of technology.
Speaker 13: It policies, economic pressures, demographic changes, liability concerns, and so
Speaker 13: the question isn't just what can the technology do, but
Speaker 13: how quickly is society going to and companies going to
Speaker 13: rearrange itself around it.
Speaker 3: The news is that, you know, the unexpected cut to
Speaker 3: jobs in February. That's the news. That's what's driving markets today.
Speaker 3: Within the data set, did you see anything? Did you
Speaker 3: go deep and say, Okay, what can I put from
Speaker 3: this into my own model?
Speaker 9: Yeah?
Speaker 13: And when you look at this data, I mean, strikes
Speaker 13: did play a role, so we should see those jobs
Speaker 13: coming back.
Speaker 7: But even if you.
Speaker 13: Take the strikes out, about fifty percent of the job
Speaker 13: loss was in goods producing sectors approached to private service
Speaker 13: providing sectors. So things like manufacturing, manufacturing, construction, mining, and logging,
Speaker 13: those are not sectors that we expect to be affected
Speaker 13: by AI in the same way. And for context, right,
Speaker 13: they were about fifty percent of the cuts, but they're
Speaker 13: only sixteen percent of employment, and so that doesn't suggest
Speaker 13: that this is AI. It suggests that, you know, you
Speaker 13: maybe have impacts of tariffs plus just some general cyclical weakening.
Speaker 4: Martha, Yeah, we saw in information about eleven thousand jobs gone.
Speaker 5: Out of those ninety two thousand.
Speaker 4: Can you tell us what data points we should look
Speaker 4: at then, if it is going to be about productivity gains,
Speaker 4: if it is going to be more about different areas
Speaker 4: that is starting to see the impact of an AI
Speaker 4: agent for example.
Speaker 13: Yeah, one of the things that I've been looking at
Speaker 13: is how quickly the just composition of jobs in our
Speaker 13: economy is changing. Because we gain and lose jobs all
Speaker 13: the time, that's a pretty standard part of an economy.
Speaker 13: And so just because we lose jobs in one month
Speaker 13: doesn't mean that we should immediately assume that it's AI
Speaker 13: related job loss. But if we're losing jobs predominantly in
Speaker 13: one sector or a couple of sectors that are unusual
Speaker 13: that look like AI. That's a signal that maybe this
Speaker 13: is starting to happen. And that's why you know, at
Speaker 13: Budget Lab we've been tracking this measure of occupational distribution
Speaker 13: every month and it still isn't really flashing anything. I
Speaker 13: think it's really important to separate out the vibes on
Speaker 13: AI in the labor market from what's happening in the data.
Speaker 13: And you know, I think you're just seeing broad agreement
Speaker 13: that it's not in the data yet. You just saw
Speaker 13: a report from Anthropic come out yesterday saying, yeah, we're
Speaker 13: really not seeing macroeconomic impacts here yet.
Speaker 4: Vibe is one thing, but Jack Dawcy saying he's cutting
Speaker 4: half of his staff is a data point. And yes,
Speaker 4: we can say whether there's some AI washing within it,
Speaker 4: but still there are executives saying we are not backfilling,
Speaker 4: we are using AI.
Speaker 5: We are cutting half of our.
Speaker 4: Staff because we think AI is at a cusp where
Speaker 4: we can do more with it.
Speaker 5: Martha, when does that start to leach in?
Speaker 13: Do you think tracking CEO statements is not the ideal
Speaker 13: way to look at this for a couple of reasons.
Speaker 8: Right.
Speaker 13: One is there's huge selection and who even makes a
Speaker 13: statement about layoffs. Your hardware store down the street is
Speaker 13: not issuing a statement every time they lay someone off.
Speaker 13: There's selection effects in whose statements get covered, right. The
Speaker 13: statement from Jack Dorsey was you know, very eye catching,
Speaker 13: and so I got picked up. And also, frankly, you know,
Speaker 13: CEOs have incentives to talk about things in a certain way.
Speaker 13: Shareholders want to hear that they're making AI investments and
Speaker 13: driving productivity, and they may not even have a perfect
Speaker 13: sense of what hiring would look like in the absence
Speaker 13: of AI. And so I do think it's a moment
Speaker 13: where you know, yes, we should listen to people about
Speaker 13: what's going on. We should listen to CEOs. But it's
Speaker 13: really important to go back to the data and make
Speaker 13: sure we're taking a really data driven approach here rather
Speaker 13: than you know, following the latest.
Speaker 10: Company announcement.
Speaker 4: And that is why your data approach is so important.
Speaker 4: Some of the research you do is just great, go
Speaker 4: and read it. Labor market a exposure, what do we know?
Speaker 4: For example, Martha Gimmell, executive director and co founder at
Speaker 4: the Yale Budget Lab, we appreciate you now coming up
Speaker 4: soft Bank in search of forty million dollars to fuel.
Speaker 5: Its AI ambitions. More on that next, this is bloombag Tech.
Speaker 5: It's time now for talking tech and first up.
Speaker 4: Robin Hood raised six hundred and fifty eight million dollars for
Speaker 4: its closed end fund designed to give US retail investors
Speaker 4: access to private companies.
Speaker 5: Robinhood, CEO of Latana, joined Open Interest. Just take a listen.
Speaker 14: Robin Adventure is a closed end fund listed on the
Speaker 14: Nicey that invests in private companies. The idea is we
Speaker 14: raise the capital in an IPO and then we invest
Speaker 14: that capital in private companies. And so far we've got
Speaker 14: a portfolio frontier names in their industries. You mentioned Data
Speaker 14: Bricks or a Mercore, Revolute Ramp. Those are just some
Speaker 14: of the companies that are are part of this portfolio.
Speaker 4: Plus uber Well it is posted job listings that suggest
Speaker 4: the right share company is stepping our efforts to test
Speaker 4: a subscription offering for drivers and couriers around the world.
Speaker 4: Now the move underscores a sharper focus on subscriptions as
Speaker 4: emerging competitors load drivers with flat fee models and soft
Speaker 4: bank Well it's seeking up to forty billion dollars from
Speaker 4: banks to help finances investment in Open AI. Now that's
Speaker 4: according to sources, the roughly twelve month bridge loan will
Speaker 4: be unwritten by fall enders including JP Morgan Chase. So
Speaker 4: SoftBank has been unloading assets in fact, including its taken
Speaker 4: VideA to bankroll.
Speaker 5: It's growing better on open AI, but ED is an
Speaker 5: interesting time to be.
Speaker 4: Wanting more banks to be syndicating dead at the moment exposed.
Speaker 3: To AI because credit pressure is building on soft Bank
Speaker 3: in particularly a twelvemonth bridge loan. And remind yourself that
Speaker 3: forty billion dollars is their largest ever US denominated borrowing caroc,
Speaker 3: isn't it.
Speaker 4: Also within that conversation, we're just honing from Vlad Tenorth
Speaker 4: and Robin Hood on one side, people still wanting access
Speaker 4: to private markets. But then we have today the news
Speaker 4: around Blackrock and it's private market credit fund and having
Speaker 4: to say, look, you can't keep taking.
Speaker 5: Money from at the moment. It's really extraordinary moves.
Speaker 3: Yeah, and we've been on top of it all week.
Speaker 3: That credit story is not going away.
Speaker 2: Okay.
Speaker 3: Coming up, we're going to discuss the data center threats
Speaker 3: in the Middle East with sand Winter Levy of the
Speaker 3: Carnegie Endowment for International Peace. That's next it's halftime. This
Speaker 3: is Bloomberg Tech. Welcome back to Bloomberg Tech. This is
Speaker 3: what markets look like on Friday to end the week.
Speaker 3: There's a lot going on in the context of Bloomberg's
Speaker 3: reporting on the tech sector and the war in Iran.
Speaker 3: And as that one hundred is off session lows but
Speaker 3: down eight tens of percent, and bonds have kind of
Speaker 3: been wavering. You see the US tenure yield at four
Speaker 3: point four one four percent. Interestingly, like a lot of
Speaker 3: pressure on the Nasdaq one hundred in the moment is
Speaker 3: coming from some of the megacap names. I was talking
Speaker 3: with the team Caro on the equities desk, like what's
Speaker 3: going on. There is some kind of stabilization in memory pricing,
Speaker 3: for example. We know that there's a recalculation in recent
Speaker 3: days of capital expenditures that impact some of the hyperscalers.
Speaker 3: But you look at Apple, Meta, Tesla, Amazon, those are
Speaker 3: on a points basis the biggest drags right now, and
Speaker 3: not that much in the news flow beyond. It's just,
Speaker 3: I guess a volatile week politically speaking, and as we
Speaker 3: went through a ted there's a lot that the market
Speaker 3: needs clarity on.
Speaker 4: Yeah, let's talk about one of those stories. Politically speaking,
Speaker 4: Anthropic it's fouled to legally contest a Pentagon decision that
Speaker 4: declared the company a US supply chain threat, a designation
Speaker 4: typically reserved for foreign anversaries. Capping off a very turbulent
Speaker 4: week in the AI race, Blue most Shrinkafari joins us
Speaker 4: now for more on the unfolding AI saga that you
Speaker 4: have been at the forefront of reporting with for at
Speaker 4: least a week now. It was last week when we
Speaker 4: first saw the explosive conversation around being deemed a supply
Speaker 4: chain risk, and now it's come in writing.
Speaker 2: That's right, and you know.
Speaker 15: Dario m and A, the CEO of Aanthropic, also put
Speaker 15: out a memo yesterday saying that he believes that the
Speaker 15: order is narrow in scope to the effect that it
Speaker 15: won't actually impact hopefully business with customers who are not
Speaker 15: at the government or working directly with the Pentagon. I
Speaker 15: think it's going to take a while to figure out
Speaker 15: exactly how customers react to this.
Speaker 3: A few places that we've looked over recent days interesting
Speaker 3: there's the Censor Tower data on uninstalls and downloads, and
Speaker 3: there's the app stores and like it's part of the
Speaker 3: Q and AI newsletter. Right, we're going to look at
Speaker 3: this idea that there have been changes in chat, GPT
Speaker 3: open aies tool in terms of downloads and DOUN stores, and
Speaker 3: then Claude Anthropics what are you seeing.
Speaker 15: Yeah, So it's really interesting because Anthropics claud business has
Speaker 15: historically been more enterprise, especially in the past year, and
Speaker 15: now we're seeing this shift the sort of consumer bump
Speaker 15: for the Claud app, and a lot of that is
Speaker 15: because some users agree with the company stands on pushing
Speaker 15: for restrictions on surveillance and autonomous weaponry in their negotiations
Speaker 15: with the Department of War.
Speaker 10: So now those.
Speaker 15: Gains are up to a million downloads a day. Yesterday
Speaker 15: the company was saying that. Being said, Chatchapt by far
Speaker 15: has a large majority of the market share here. It's
Speaker 15: going to take a lot of sustain growth at that
Speaker 15: level for Anthropic to even come close to Chatchapt on
Speaker 15: the consumer side. But consumer support, any kind of support,
Speaker 15: is much needed for Anthropic right now.
Speaker 10: So that is an interesting bump.
Speaker 4: In terms of just where they stand and consume penetration.
Speaker 4: It is much smaller than Opening Eye. More broadly, how
Speaker 4: much of a concern is it to Anthropic that the
Speaker 4: enterprise part of the business could be impacted if they
Speaker 4: are asked on install As you said, there is clarification
Speaker 4: that really a wouldn't extend too many parts of the
Speaker 4: other companies that use clawed only with Pentagon contracts.
Speaker 7: That's right.
Speaker 15: This is the million billion, multi billion dollar question, right.
Speaker 15: Anthropic has grown very rapidly in the past year. It's
Speaker 15: now at a reported nineteen billion in run rate revenue. However,
Speaker 15: a majority of that does come from enterprise contracts. So
Speaker 15: if they are our enterprise business, so if they are
Speaker 15: losing marquee customers over this, who may also have dealing
Speaker 15: themselves with the Pentagon and are worried about the implications
Speaker 15: of the supplier risk designation, that could be devastating to Anthropics.
Speaker 15: So that is a big question is how why does
Speaker 15: the supplier risk designation really? Will Anthropics end up legally
Speaker 15: challenging it? And is this issue resolved? I think that's
Speaker 15: going to be the question to watch for customers.
Speaker 3: Bloombo Sharen Gafari, Thank you very much. And as tensions
Speaker 3: rise between Washington and leading AI firms, the global stakes
Speaker 3: are growing as well. Data centers, the backbone of artificial
Speaker 3: intelligence have now merged as potential targets in the escalating
Speaker 3: conflict in the Middle East. Let's bring in Sam winter Levy,
Speaker 3: Carnegie Endowment for International Peace Fellow. Twenty four hours ago,
Speaker 3: we went to our correspondent in the emir region and
Speaker 3: went through the specific sites that have been targeted, the
Speaker 3: reason why, and just for the audience, Amazon owns and
Speaker 3: operates some of those facilities. You've had time to do
Speaker 3: your own research and study of the data. How does
Speaker 3: this fit in this idea that data centers are a
Speaker 3: target in the context of a war in Iran and
Speaker 3: a conflict between the United States and Iran.
Speaker 16: Sure, yeah, so, thanks so much having me. Datata centers
Speaker 16: are becoming increasingly central to a very broad range of
Speaker 16: economic life, national security activities, and they are fundamentally soft targets.
Speaker 16: So for the Onians looking for targets, so they could
Speaker 16: they could cause disruption, could try to broaden the conflict,
Speaker 16: could bring the conflict home to the United States. Targeting
Speaker 16: a data center that is operated by a US company
Speaker 16: that's a symbol or of US Gulf cooperation, it becomes
Speaker 16: quite an appealing target given how easy they are to
Speaker 16: hit with a drone with a barage and missile strikes.
Speaker 16: Given how fragile and vulnerable these facilities.
Speaker 3: Are vulnerable, how do you protect a data center.
Speaker 2: In this In this case, sure so it's hard.
Speaker 16: So fundamentally, these data centers are filled with GPUs, they're
Speaker 16: very fragile. It's quite easy to take out a chiller,
Speaker 16: which are these things that keep the data centers cool,
Speaker 16: keep the servers cool, or to take out a generator
Speaker 16: or the transformers that provide electricity to the data center.
Speaker 16: There are things you can do. You can use more
Speaker 16: reinforced concrete, you can try to harden the facilities. You
Speaker 16: can use air defense systems, anti own devices, jamming systems,
Speaker 16: an anti anti missile systems. But all of this drives
Speaker 16: up the costs of building a data center, and none
Speaker 16: of this will guarantee security against a kind of swarm
Speaker 16: of cheap drones. And it's very very expensive to protect
Speaker 16: against these sorts of cheap strikes. So there are things
Speaker 16: you can do to protect them. I think historically these
Speaker 16: companies and the governments be much more focused on protecting
Speaker 16: data centers from cyber attacks, protecting them from trespasses, but
Speaker 16: much less focused on strikes from drones or from missiles,
Speaker 16: which you know is an inevitable risk, I think to
Speaker 16: building expensive infrastructure in a region where drones and missile
Speaker 16: strikes are unfortunately a real risk to worry about.
Speaker 5: And you saw this risk.
Speaker 4: You wrote about it in July in an opinion column,
Speaker 4: really saying that the Golf is not a place to
Speaker 4: be building out these data centers, Sam, but also the
Speaker 4: Golf is the place longer term with more abundant energy,
Speaker 4: and the Golf is the place that also needs AI
Speaker 4: for its own citizens. So what do they do?
Speaker 16: Yeah, So the Golf has huge ambitions in the AI race,
Speaker 16: and they're very appealing partners for the United States for
Speaker 16: many reasons, energy capital or the things you mentioned. So
Speaker 16: I think it's inevitable that the data centers are going
Speaker 16: to be built out in the region. I think this
Speaker 16: underscores the risks of building the biggest computing clusters there
Speaker 16: the most critical infrastructure. I think that the United States
Speaker 16: should have been very carefully about where it wants to
Speaker 16: cite that sort of infrastructure. But some degree of data
Speaker 16: center construction is inevitable in the growth. But I think
Speaker 16: governments need to think. Governments and the companies that operate.
Speaker 16: The data centers need to think much more carefully about
Speaker 16: their resilience plans, their redundancy plans, how to protect them
Speaker 16: from these sorts of physical risks, because as you know,
Speaker 16: as you said, this was a foreseeable risk.
Speaker 7: These targets are soft.
Speaker 16: The more they become symbols of technological might, the more
Speaker 16: they become central to economic life, the more appealing they
Speaker 16: become as targets for nonstate actors or for hostile states
Speaker 16: that want to cause disruption.
Speaker 4: Okay, there is a lot that goes into a decision
Speaker 4: as to where to put a data center, not only
Speaker 4: about the power that's accessible or the water, but the
Speaker 4: people and the labor and the costs. SAM Therefore, though
Speaker 4: with your Carnegie in talment intational international.
Speaker 5: Piece hat on where should these be built?
Speaker 16: From a US perspective, so, I think these data centers
Speaker 16: are going to be built all over the world.
Speaker 7: I think we should be building them all over the world.
Speaker 16: I think for the biggest, most important, most critical computing clusters,
Speaker 16: the United States should be thinking carefully about siding them
Speaker 16: in close US allies, NAO states, within the United States itself,
Speaker 16: areas where they can be kind of protective from attacks
Speaker 16: or whether it can be more easily protected from attacks.
Speaker 7: That's not to say that we shouldn't.
Speaker 16: Be building data facilities in the Gulf too, but probably
Speaker 16: not our most critical computing clusters. And I would I
Speaker 16: would also say that these strone strikes are also underscore.
Speaker 16: The data centers all over the world could be a threat.
Speaker 16: So even a data center in Europe could well be
Speaker 16: targeted by Russian sabotage for example. You know, these these
Speaker 16: are fragile sites wherever they're saved.
Speaker 3: You know, the argument the Gulf is not the place
Speaker 3: to build the world's AI infrastructure. The reality is that
Speaker 3: is exactly where they're building the world's AI infrastructure, and
Speaker 3: it's where the capital is coming from, and it's where
Speaker 3: in VIDEO and AMD have deals to send their chips,
Speaker 3: and you have capital flowing from the Gulf into the
Speaker 3: United States to fund infrastructure products projects.
Speaker 2: In the United States.
Speaker 3: I mean, I welcome any response to that reality that
Speaker 3: you have.
Speaker 16: Yeah, so I think, you know, as I said, I
Speaker 16: think that is the reality to some extent, the customer
Speaker 16: is toward extent we go forward with these types of projects.
Speaker 16: You know, it remains to be seen what this will
Speaker 16: look like after this conflict. Because it'sertainly going to drive
Speaker 16: up insurance premiums. It may make it harder to attract
Speaker 16: engineering talent to build out these dead des centers. I
Speaker 16: think this will't make video AE or cider Adia rethink
Speaker 16: their plans to any great extent, but I think it
Speaker 16: will complicate those plans. I think, you know, it should
Speaker 16: make the US government much more cautious about where it's
Speaker 16: like its most critical data centers. But again, as I said,
Speaker 16: data centers are going to be built everywhere. I think
Speaker 16: this attack should be a wake up called that all
Speaker 16: of these data centers need to think much more seriously
Speaker 16: about physical attacks and not just cyber attacks.
Speaker 7: Digitalis are natural disasters.
Speaker 5: I wake up.
Speaker 16: Cool.
Speaker 4: You've been trying to give for at least six months now,
Speaker 4: sam Win to Levy, we appreciate your time of Carnegie
Speaker 4: and Dowmon for international peace. Coming up, How are supply
Speaker 4: chain risks impacting the world's largest automotive supply. I'm a
Speaker 4: justly going to hear from the BOSH CEO now, Stephan Herton,
Speaker 4: that's next to the Bloomberg Tech.
Speaker 3: The conflict in the Middle East is in its seventh
Speaker 3: day and with President Trump insisting on unconditional surrender from Iran.
Speaker 3: Concerns about the impact on global supply chains arising. I
Speaker 3: spoke with BOSH CEO Stephan Horton about what that's meant
Speaker 3: for the automotive industry.
Speaker 17: So far, we've seen that evs have heard the first wave,
Speaker 17: and that was not as big as we all expected,
Speaker 17: especially in the US. We saw a less demand than
Speaker 17: we actually were hoping for. So now a second wave
Speaker 17: comes in with but also pluck in hybrid vehicles or
Speaker 17: range extended vehicles. That's a very interesting technology which you
Speaker 17: also see in China. So very much all work is
Speaker 17: now focused on this combination of electric vehicle technology and
Speaker 17: engine technology, and this engine technology is a modern engine
Speaker 17: technology with a differentiated engine. So BOSH is doing this
Speaker 17: work because we have kept our capability in engine work,
Speaker 17: I sees and we can combine these two and do
Speaker 17: the plug and hybrid vehicles very important. So I expect
Speaker 17: actually demand for these kind of vehicles to be rising
Speaker 17: quickly because they are more fuel efficient and same time
Speaker 17: they have range, which you want to have and you
Speaker 17: can still pull a boat or have a heavy vehicle,
Speaker 17: which is practically of use for many people.
Speaker 3: But the situation with the war in Iran has any
Speaker 3: impact or bearing on that.
Speaker 17: Well, I think people will be sensitive always now a
Speaker 17: bit more on what gas prices are, how much they
Speaker 17: have to spend for the vehicle, what's the vehicle used,
Speaker 17: and probably this pluck in hybrid vas or hybrid vehicles
Speaker 17: in total with a certain electrical range, which is really useful,
Speaker 17: So you can drive electrically for a certain range and
Speaker 17: then you'll have to we will switch over to gasoline.
Speaker 17: This is something which is for the market the optimal
Speaker 17: solution as of now it looks like it. And obviously
Speaker 17: people becoming more sensitive about gasoline prices means they will
Speaker 17: tend more or not go from a pure ic because
Speaker 17: more to a combined so hybrid vehicle or even a
Speaker 17: full electric vehicle, that's for sure.
Speaker 3: We started this conversation with semiconductors. You talked about the
Speaker 3: situation with the start of the year, but also some
Speaker 3: parallels with the COVID era and the chip shock, the
Speaker 3: chip crisis.
Speaker 2: Is this war in Iran different?
Speaker 3: Do you see there being a similar level of impact
Speaker 3: on semiconductor supply or bottleneck and where are you most
Speaker 3: focused within the realm of silicon silicon.
Speaker 17: I'm more watching the AI build up because the I
Speaker 17: build up, for example, demands high amount of ramps, right, So,
Speaker 17: and I also observe that because the same time we
Speaker 17: are looking at the ship supply for all applications we do,
Speaker 17: but at the same time we're also applying AI in
Speaker 17: a massive volume, So that's a very important thing to monitor.
Speaker 17: These chips are used in AI data centers to build
Speaker 17: the we need to implement solutions like accident prevention in cars,
Speaker 17: and that's the business cases which also AI need. So yes,
Speaker 17: it is a balance, and yes, there will be probably
Speaker 17: a shortage in certain components because the ramp up of
Speaker 17: AI infrastructure is massive. On the other hand, these infrastructure
Speaker 17: is used also on product we make, so it's used
Speaker 17: in Hossald appliances, empower tools in cars, and that's an
Speaker 17: important story to go forward.
Speaker 3: Is there some panic right now in trying to secure
Speaker 3: memory in particular?
Speaker 17: No, I wouldn't say there is panic.
Speaker 2: It's something we know.
Speaker 17: We have seen more severe chip crisis some years ago, right,
Speaker 17: But it's something obviously you need to look at because
Speaker 17: you also want the functionality, right, you want the I functionality,
Speaker 17: You want the better automational vehicles. You want the better
Speaker 17: assisted driving because that's safer, it's better than just human driving.
Speaker 17: So also in the automation you see probably both. You
Speaker 17: see the full automation like in the EV, the full
Speaker 17: y V, right, but you see also the hybrid, which
Speaker 17: is the massive assisted automation making a driver just the
Speaker 17: better driver. And that's based on AI.
Speaker 5: Bosh THEO there Se van hearton coming up.
Speaker 4: A massive boom in AI data centers is driving demand
Speaker 4: for housing and amenities in remote parts of the country.
Speaker 4: We'll talk about the state that's on demand, simulating golf.
Speaker 5: This is Blueberg tech.
Speaker 3: Construction of data centers has led to increase competition for
Speaker 3: workers in areas with limited housing and amenities q the
Speaker 3: rise of so called AI man camps take a listen.
Speaker 2: To power the boom and data center building companies are
Speaker 2: heading far outside of Silicon Valley and cities in general.
Speaker 18: We're starting to see some pushback from cities where residents
Speaker 18: are kind of concerned about what living near a data
Speaker 18: center might mean for their property values and for their
Speaker 18: way of life. We're seeing projects push out further into
Speaker 18: rural stretches of places like Texas and Louisiana because you
Speaker 18: can get much cheaper land out there, and you can
Speaker 18: also find municipalities that are more willing to work with
Speaker 18: you when you need to negotiate things like power arrangements
Speaker 18: or zoning changes. While the AI companies are dooking it
Speaker 18: out to figure out whose model will win, there are
Speaker 18: these other companies that see opportunity just in the build
Speaker 18: out itself. There is a huge demand to build data
Speaker 18: centers as quickly as they can, so housing becomes a
Speaker 18: big bottleneck. Most of these places that these projects are
Speaker 18: getting built now just do not have the infrastructure and
Speaker 18: that they need for this. Hotels fill right up, our
Speaker 18: V parks are completely full with workers. All of a sudden,
Speaker 18: there's a line at the grocery store or at the
Speaker 18: gas pump. We have a lot of these sort of
Speaker 18: single lane county roads and they're not built for rows
Speaker 18: and rows of heavy duty trucks driving on them all day,
Speaker 18: and so you get roads kind of deteriorating. People are
Speaker 18: paying thousands of dollars a month just to rent r
Speaker 18: V spaces near construction sites. We're seeing a wide range
Speaker 18: of companies get into this, all the way from Wiley
Speaker 18: locals that pitch together a little bit of land and
Speaker 18: sell the RV spots all the way up to major
Speaker 18: publicly traded corporations helping house workers. They've helped with oil
Speaker 18: and gas in the shale boom. If you look at
Speaker 18: it from above, it looks like an XL spreadsheet cut
Speaker 18: out of the middle of farmland. You get this paved
Speaker 18: surface where you have rows and rows of gray roofs
Speaker 18: and temporary housing. They'll have their own toilet or they'll
Speaker 18: have their own sink. They always have Wi Fi so
Speaker 18: that you can make video calls to family back home,
Speaker 18: and then there'll be a shared communal kind of dining setup.
Speaker 18: They place so much empass on the food, not only
Speaker 18: because these guys are working so hard all day that
Speaker 18: they need the calories, but also because it's an easy
Speaker 18: way to attract workers when there's such competition for them.
Speaker 18: We'll also see a lot of amenity space. These are
Speaker 18: workers that are spending fifteen sixteen hours a day doing
Speaker 18: manual labor. You know, I figured when they got home
Speaker 18: they'd want to go to sleep, but apparently there are
Speaker 18: often gyms so they can get workouts in.
Speaker 5: And you can see the.
Speaker 4: Rest of the full story from Blomberg Originals on our website,
Speaker 4: on YouTube or the terminal, and we want to get
Speaker 4: more on this story now, the driving force and the
Speaker 4: impact of these data center camps. Bloomberg's Joe Reporter Bloomberg's reporter,
Speaker 4: Show Love and we were just seeing you there in
Speaker 4: the original's piece and Joe talk to us about some
Speaker 4: of the companies that are actually going to be thriving
Speaker 4: in this moment, the ones that are actually doing the
Speaker 4: building of because people, there's a great quote in your story,
Speaker 4: people don't want to be spasically sleeping in their trailer.
Speaker 2: That's right, Thank you for having me.
Speaker 18: Well, we're seeing companies ranging all the way from smaller
Speaker 18: local companies that have been working on you know, oil
Speaker 18: fields all the way up to publicly traded corporation where
Speaker 18: they're using the same assets that they were for immigration
Speaker 18: facilities or for major drilling projects during the sale boom,
Speaker 18: and they're using these assets now to build out these
Speaker 18: man camps. And so these are companies like Target Hospitality
Speaker 18: or Civio, and what they're able to do is reallocate
Speaker 18: their resources. You know, until recently, oil was not priced
Speaker 18: very very lucatively, so drilling had kind of declined. So
Speaker 18: this presented a new opportunity with all of these projects,
Speaker 18: especially as they're pushing out further into rural Texas, rural Louisiana,
Speaker 18: places that just you know, you show up in a
Speaker 18: place like Dickens County, which I wrote about in the story,
Speaker 18: you know, you'll find a couple of restaurants, you might
Speaker 18: find a motel, but it's just not nearly enough for
Speaker 18: a fifteen hundred man workforce that's being brought in to
Speaker 18: build these Darta centers.
Speaker 2: At a more macro level, the date is quite compelling.
Speaker 3: What the story is here, right, jobs growth and the
Speaker 3: data center build out? Well, zoom out a bit, you
Speaker 3: know what what is direction is this heading in at scale?
Speaker 18: Right, We've seen a state like Texas for example. I mean,
Speaker 18: if you talk to the leaders, if you talk to
Speaker 18: the hyperscalers, they're very bullish on the opportunity for building
Speaker 18: data centers in Texas. There's abundant land here, there's abundant energy,
Speaker 18: and Texas leaders see this as an opportunity to overtake
Speaker 18: Virginia even in the data center space. So you know,
Speaker 18: Bloomberg Intelligence estimates that there's seven hundred billion dollars worth
Speaker 18: of projects that are just in the planning stage right now.
Speaker 18: And I don't need to tell you artificial intelligence it's
Speaker 18: growing at a pace that really is hard to keep,
Speaker 18: you know, keep tabs on. So these companies that I've
Speaker 18: spoken with, you know, they see a very, very high
Speaker 18: ceiling for where this buildout can go.
Speaker 4: I mean, the number of Bloomberg Intelligent is saying seven
Speaker 4: hundred billion dollars worth of projects in the planning stage,
Speaker 4: one hundred and sixty billion already underway. But Joe, the
Speaker 4: word camps kind of says it all in that these
Speaker 4: aren't permanent housing.
Speaker 5: Briefly, it's not long term jobs.
Speaker 2: That's right.
Speaker 18: And when you speak with local officials, even in a
Speaker 18: place like Dickens County that has not seen a project
Speaker 18: nearly of this scale, they're aware that these jobs are
Speaker 18: not going to stick around forever and that while you
Speaker 18: might have some people that stick around to work on
Speaker 18: the data center once it's built, most of them are
Speaker 18: going to have to get out of town. So you know,
Speaker 18: it's temporary.
Speaker 3: Bloomberg, Jo Lovenger, great reporting in video, imprint.
Speaker 2: Great to have you on the program.
Speaker 4: Charroc, Yeah, that does it for an extraordinary week on
Speaker 4: Bloomberg chech Head.
Speaker 3: Yeah, a lot to recap. Do it on the podcast.
Speaker 3: You know where to find it. It's all on the
Speaker 3: screen there but Spotify, iHeart and Apple.
Speaker 2: This is Bloomberg Tech