Speaker 1: From Marhard where Innovation of Money and Power Collie in
Speaker 1: Silicon Valley, NBN.
Speaker 2: This is Bloomberg Technology with Caroline Hyde and Ed.
Speaker 3: Lud Love.
Speaker 4: Live from New York and San Francisco. This is Bloomberg
Speaker 4: Technology coming up the DOJ's in video investigation. It heats up?
Speaker 4: Is it anti competitive? We discuss after yesterday's historic selloff.
Speaker 3: And in markets tech whitsaws is investors question whether the
Speaker 3: AI euphoria has gone too far.
Speaker 4: And Intel's frustration about accessing money from the Chips Act.
Speaker 4: We have the Bloomberg exclusive reporting, but first we check
Speaker 4: in on these markets. After a historic sell off, I
Speaker 4: shine a light on what is the Semiconductor index the
Speaker 4: socks indexes. It's colloquially known. It had its worst sell
Speaker 4: off since March twenty twenty. Yesterday we bounced back, but
Speaker 4: only some and we're still off by six point three percent.
Speaker 4: But Ed, the nitty gritty was pretty amazing.
Speaker 3: Yeah, one of the biggest contributing factors is in Vidia.
Speaker 3: I go straight to the bigger picture. The stock is
Speaker 3: now in the moment at a session high one point
Speaker 3: six percent. It had been down as much as almost
Speaker 3: three and a half percent in the session, So whipsaw
Speaker 3: is the right word. Yesterday it's biggest dropped since April
Speaker 3: of this year, but at times in the session its
Speaker 3: biggest drop since March of twenty twenty, as you alluded to,
Speaker 3: and it shed the most market cap in a single
Speaker 3: session in the S and P five hundreds history.
Speaker 5: But it's weird.
Speaker 3: Markets are weird, and they're kind of saguine sanguine. The
Speaker 3: news reporting is key here, Caroline.
Speaker 5: It is.
Speaker 4: Let's get into the micro, particularly when it comes to Nvidia.
Speaker 4: It receives subpoenas from the US Department of Justice along
Speaker 4: with other companies as part of an escalating anti trust investigation.
Speaker 4: Let's bring in Bloomberg's Ian King, Ian you along with
Speaker 4: colleagues reporting about this investigation since June. What has changed now?
Speaker 4: How is it ramped up?
Speaker 1: Yeah, it's the subpoena element of this that makes it
Speaker 1: more significant. Basically, these are legally binding requests to companies
Speaker 1: for information that may be doermaine in an anti trust investigation.
Speaker 1: And really what that signals to everybody is that we
Speaker 1: are getting perhaps closer to a formal complaint if that's
Speaker 1: what the DOJ feels it has evidence for.
Speaker 3: So sources tell us that in Vidia received a subpoena,
Speaker 3: and others in that industry receive subpoenas.
Speaker 5: I'm assuming to ask them what they think about in Vidia.
Speaker 3: What I don't understand is what is the accusation from
Speaker 3: an anti trust perspective against Nvidia. Anti trust basically means
Speaker 3: you have an abuse of market power or monopoly.
Speaker 5: But in what sense?
Speaker 1: Yeah, I mean, that's a good question, and we won't
Speaker 1: know that until we see if and when we see
Speaker 1: a formal complaint. But our reporting says that what the
Speaker 1: DOJ is looking at is the idea of bundling. As
Speaker 1: you know, in video makes networking, it makes software, it
Speaker 1: sells models, services, and of course the chips. If you
Speaker 1: just want its chips and you don't want the rest,
Speaker 1: maybe you don't get the right amount of supply that
Speaker 1: you want, maybe you get a higher price. That kind
Speaker 1: of thing is what we believe that they've been looking at.
Speaker 4: We're going to get a nuanced tape, particularly on what
Speaker 4: is anti competitive, what isn't ian. But from your perspective,
Speaker 4: this comes at possibly the worst time in terms of
Speaker 4: market dynamics for Nvidio and its share price. What do
Speaker 4: you think internally they're thinking right now, I.
Speaker 1: Mean, all we can go upon is their statement. And
Speaker 1: their statement was fairly strong, wasn't it. It was like, look,
Speaker 1: we make the best stuff. That's why people buy it.
Speaker 1: If they don't like it, they can go on by
Speaker 1: other stuff. It's got nothing to do with anything else
Speaker 1: that's going on. So they are clearly not happy with
Speaker 1: this investigation and don't believe that it has merits.
Speaker 3: And that there is the Nvidia's statement that was issued
Speaker 3: to bloom their boom Masie King, Thank you very much.
Speaker 3: There is more to understand about an antitrust room view
Speaker 3: of Nvidia. Joining us now is Rebecca Allensworth, an anti
Speaker 3: trust professor at Vanderbilt Law School. Elements Worth's research has
Speaker 3: been cited by the Supreme Court and in White House
Speaker 3: and congressional reports. And I guess procedurally, good morning to you.
Speaker 3: What is the significance of the Justice Department issuing subpoenas
Speaker 3: to Nvidia but also their peers in industry.
Speaker 6: Yeah, thanks for having me today. So the procedure here
Speaker 6: is that the dj is getting more serious about their investigation.
Speaker 6: They're looking to hear from Nvidia about their sales practices,
Speaker 6: about their industry, and they're probably looking at their peers,
Speaker 6: not because their peers are in trouble, but more because
Speaker 6: they want to hear about their experience in competing with
Speaker 6: and buying from Nvidia. And this is all, you know,
Speaker 6: a ramp up to a potential lawsuit, I think is
Speaker 6: the idea behind these subpoenas.
Speaker 4: Can you go into precedence, Rebecca, of making it hard
Speaker 4: to switch suppliers or perhaps pushing customers for exclusive deals.
Speaker 4: Is that just part of the course of doing business
Speaker 4: if you've got someone wanting to remain with you vertically,
Speaker 4: or is that ever deemed anti competitive?
Speaker 6: It can be deemed anti competitive? Excuse me, you know,
Speaker 6: this is not that different from some of the accusations
Speaker 6: in the Microsoft case, which is one of the biggest
Speaker 6: anti trust cases of the last twenty years twenty five years.
Speaker 6: Some of the ideas behind this, the theory of this case,
Speaker 6: which of course we don't really know what the theory of
Speaker 6: this case is, but some of the ideas behind this.
Speaker 6: The complaints so far have been similar to those from Microsoft.
Speaker 6: Exclusive dealing was the problem in the Google case that
Speaker 6: Google just lost. So these things can be anti competitive.
Speaker 6: The question is a you know, are they undertaken by
Speaker 6: a monopolist.
Speaker 5: So plenty of.
Speaker 6: Things that you do that are perfectly fine if you're
Speaker 6: not a monopolist become unlawful if you're a monopolist. And
Speaker 6: then the other question is are they instead providing some
Speaker 6: value to their consumers? Is there some pro competitive reason
Speaker 6: to provide your your goods in this way?
Speaker 3: Rebecca, I wondered if I might ask you a somewhat
Speaker 3: I guess, academic question or indeed a policy question that
Speaker 3: in Nvidia would tell you they are America's darling. They're
Speaker 3: an American company, they follow American laws, and they are
Speaker 3: putting America first in terms of their leadership of an industry.
Speaker 3: Why would the Justice Department go after them in that respect?
Speaker 2: Yeah?
Speaker 6: So, why would we kill our golden goose?
Speaker 5: You know, like exactly so.
Speaker 7: Yeah.
Speaker 6: So part of the point here is that we're not
Speaker 6: trying to kill anything. We are trying to make this market,
Speaker 6: which is obviously crucial for the AI race, it's crucial
Speaker 6: for America's sort of you know, financial world leader status.
Speaker 6: We're trying to make it competitive because competitive markets work best,
Speaker 6: and you know, this president, even just a couple of
Speaker 6: years ago, for the agencies going after in Vidia for
Speaker 6: doing something they perceive as anti competitive, and they stopped it.
Speaker 6: This was an acquisition from twenty two and in Nvidia
Speaker 6: went on to do all that it's done over the
Speaker 6: last two years. I think that's the idea. It's it's
Speaker 6: that we want. We can't expect companies to self regulate.
Speaker 6: We want them to be innovative, we want them to
Speaker 6: work hard. And yes, we love the success that in
Speaker 6: Vidia has had go out and do more, but we
Speaker 6: have to create the competitive environment for those incentives to
Speaker 6: work properly.
Speaker 4: And I'm sure AMD Intel would love to feel that
Speaker 4: they can be and also run a little bit more
Speaker 4: than they're currently deemed by the market. But Rebecca, when
Speaker 4: this sort of policy action, if we do get a
Speaker 4: form of investigation, at the moment, we understand it's just supeneas,
Speaker 4: it's just the grounds work. If something does occur, how
Speaker 4: much of a destruction does it end up being for
Speaker 4: businesses At the moment, we have a problem of demand
Speaker 4: outstripping supply.
Speaker 6: So that's true, and you know, legal stuff is definitely
Speaker 6: a distraction. It's something that Meta and Google have been
Speaker 6: used to do for much longer. They have larger infrastructure,
Speaker 6: larger sets of lawyers than in Vidia does. So you know,
Speaker 6: there's a cost to this, and there's the uncertain and
Speaker 6: there's the what happened to the market. You know, this regulation,
Speaker 6: this sort of enforcement is not totally costless. At the
Speaker 6: same time, it's really the payoff I think is really significant,
Speaker 6: and I think there not being enough chips out there
Speaker 6: is part of the problem. So what we want is
Speaker 6: a competitive market because that maximizes output, that creates the
Speaker 6: most chips for the most people. And so that is
Speaker 6: actually what's at stake here. You know, and Video is
Speaker 6: going to say no if you come after us, that
Speaker 6: means even fewer chips for the market. But I don't
Speaker 6: think it's a zero sum game in that way.
Speaker 4: We want to thank you Rebecca Adamsworth, professor at Vanderbilt
Speaker 4: Law School, with a deep dive on what is anti
Speaker 4: competitive and competitive. We must check in on the slight
Speaker 4: market recovery after an extraordinary sell off. Yesterday we saw
Speaker 4: the worst chip set off in four years.
Speaker 2: We get so many details.
Speaker 4: Will Boom makes Emily graffeo and extraordinary it was March
Speaker 4: twenty twenty was the worst day since we can go
Speaker 4: back to for the silks do what were you hearing
Speaker 4: from Macapa disiplins.
Speaker 8: Well, it's interesting that earlier this morning it did seem
Speaker 8: like the micro was still moving the market, that news
Speaker 8: about the subpoena over at in video seem to be
Speaker 8: driving the market lower, and now we're seeing that the
Speaker 8: macro is more important, at least for the last hour.
Speaker 8: After we saw the labor market data, the Joel's data
Speaker 8: coming out weaker than expected, bond yields moving lower, stocks
Speaker 8: moving higher. That idea here that stocks are still focused
Speaker 8: on the idea of a rate cut and any data
Speaker 8: that they get that's going to signal that the feed
Speaker 8: is going to be more dubbish is still bullish for stocks.
Speaker 8: But really, the fact that stocks have run up so
Speaker 8: much this year means that it's a delicate balance, Caroline.
Speaker 8: We can't have data showing that the economy is too weak,
Speaker 8: but we also can't have data showing that the economy
Speaker 8: is too hot. So really, now market participants are watching
Speaker 8: for Friday, that's when we'll get the payrolls. Before we've
Speaker 8: already seen how stocks reacted to the Juelz data. We'll
Speaker 8: have to see if that continues on Friday.
Speaker 3: So Emily, here's the thing, right, irrespective of whether the
Speaker 3: driver in a given session is macro or micro tech,
Speaker 3: concentration is a massive focus and factor for all participants.
Speaker 3: That seems to be something reflected in our market's coverage
Speaker 3: daily at the moment.
Speaker 8: Yeah, I just wrote about a new ETF filing from Invesco,
Speaker 8: and this is going to be an ETF that tracks
Speaker 8: forty five percent of the companies by weight in the
Speaker 8: Nasdaq one hundred. So if you look at that right now,
Speaker 8: it's going to be an ETF that just owns about
Speaker 8: fifteen companies, you know, the names Apple, Microsoft, Nvidia, Broadcom, Amazon,
Speaker 8: Really speaking to the fact that investors and also issuers
Speaker 8: on the product side are trying to capture that hunger
Speaker 8: to just track just a few names, those megacap technology
Speaker 8: stocks that have really driven the market forward. We're still
Speaker 8: seeing an appetite to bid those names up. The risk though,
Speaker 8: is that when you buy an ETF that's so concentrated
Speaker 8: in a few names, if those names pull back, if
Speaker 8: we see like the trading that we saw this morning
Speaker 8: in Nvidia, that will really drive the fund lower. So
Speaker 8: other investors want more of an equal weighted exposure. But
Speaker 8: we are seeing a ton of filings for these ultra
Speaker 8: concentrated ETFs, particularly in the tech space.
Speaker 3: Bloomberg's Emily Graffeo all over the markets for us here
Speaker 3: on Bloomberg Technology.
Speaker 5: Thank you for more on the markets.
Speaker 3: We've got to epec, Oscar, dish Gaya, Swiss quote senior
Speaker 3: market analysts and strategists, and you have the difficult task, Epek,
Speaker 3: of explaining to me what's happening. You know, I look
Speaker 3: at each index and the biggest points booster is in Nvidia,
Speaker 3: and we say that they witsored in the session, having
Speaker 3: had its biggest drop since April in yesterday's session at
Speaker 3: times the biggest drop since March and twenty twenty, which
Speaker 3: dragged the socks to its biggest drop since March and
Speaker 3: twenty twenty.
Speaker 9: What is happening, Well, there are two major explanations in
Speaker 9: the story. The first one is the AI fatigue. So
Speaker 9: we have seen last week that NVDA reported blow out
Speaker 9: results but investors were not satisfied. That's one part of
Speaker 9: the story. And the second part of the story is
Speaker 9: unal macroeconomic setup where FED is expected to start cutting
Speaker 9: the interest rates from September this year, cuts a few times,
Speaker 9: and that is both seeing a rotation from technology company
Speaker 9: swarden non technology pockets off the market, and because Nvidia
Speaker 9: has been one of the stars of this technology rally,
Speaker 9: and it's normal that investors are going after Nvidia when
Speaker 9: the market conditions are no longer ideal for the company.
Speaker 4: Effect to embrace ourselves for more days like yesterday.
Speaker 5: Yes, we do.
Speaker 9: We do expect to have more volatility moving forward, because, again,
Speaker 9: as I said, right now, the market narrative, the market's
Speaker 9: focus is shifting from the individual corporate news, which remain
Speaker 9: robust by the way, toward ideal macro It can't mix setup,
Speaker 9: which is expected to be a bearish for technology stocks
Speaker 9: and more polish for the cyclical and the non technology
Speaker 9: pockets of of this market. And because IT stocks like
Speaker 9: NVDA have gone well to very lofty evaluation levels, we
Speaker 9: do expect to see a sizable downside correction if investors
Speaker 9: decide to but keep this rotation.
Speaker 3: Going the epect I do think it's important that we
Speaker 3: continue to discuss the big news item, which is Bloomberg's
Speaker 3: reporting that Nvidia received a subpoena from the Department of Justice,
Speaker 3: and I simply look at the market reaction. The stock
Speaker 3: is up near session highs now, having been down almost
Speaker 3: four percent. What does that tell you about the market's
Speaker 3: attitude towards this story in and of itself.
Speaker 9: Well, listen, the OJ allegations. Anti trust investigations are part
Speaker 9: of the daily life of a big technology stuck. They
Speaker 9: come and they go. Sometimes they lead to a deeper investigations,
Speaker 9: sometimes they lead to legal actions that sometimes they lead
Speaker 9: to finds. Yes, yet we have seen that in the
Speaker 9: past decade, and so these investigations or finds or actions
Speaker 9: taken against the big technology companies have not stopped them
Speaker 9: from becoming bigger, bitter, and more influential.
Speaker 10: So I think from an.
Speaker 9: Investor perspective, the dog investigation is not the major issue.
Speaker 9: I think a major issue is rather the rising competition,
Speaker 9: for example, which could naturally start leading into mviga's huge
Speaker 9: profit margins.
Speaker 4: IPEC, You've done a beautiful job of telling us the wise.
Speaker 4: What then, how do investors protect to any more bouts
Speaker 4: of volatility? What is the market telling you is the
Speaker 4: way they're searching to protect on the downside.
Speaker 9: But obviously you do have options, You do have all
Speaker 9: the kind of financial products. But what investors should right
Speaker 9: now really think of it's re shuffling their portfolios in
Speaker 9: a way to adopt them for a period of loosing
Speaker 9: when I tell a policy from the FED and potentially
Speaker 9: further economic slowdown. So this is I think very much important.
Speaker 1: Now.
Speaker 9: Last year or so, we have seen the technology stocks
Speaker 9: as a safe haven, a safe place where investors just
Speaker 9: went and seek refuge from the higher interest phrase, and
Speaker 9: now the opposite scenario is about to happen. So I
Speaker 9: think that in all cases the technology stocks will remain
Speaker 9: under a decent selling pressure. But now it does not
Speaker 9: mean that the AI value is over. It just means
Speaker 9: that we expect to see at least some downside correction
Speaker 9: in technology stocks and the portfolios have to be reshuffled.
Speaker 3: Accordingly, Epek, Let's finish this discussion with the calendar.
Speaker 5: There's still more to come, right.
Speaker 3: Broadcom is top of mind for us on the show
Speaker 3: and then the FED because it's top of mind for everyone.
Speaker 5: What happens next.
Speaker 9: Well, Broadcom is expected to announce strong quarterly results, and
Speaker 9: part of it is due to the growing AI demands
Speaker 9: and part of it due to a rebound that we
Speaker 9: have seen in networking equipment sales life, so a part
Speaker 9: of it is due to the wan Weir's transition from
Speaker 9: a perpetual sales to subscription model. So we do expect
Speaker 9: Broadcom to come up and announce probably better than expected
Speaker 9: to Easels now does, unfortunately not mean that great resolves
Speaker 9: will stop bleeding in Broadcom if the macroeconomic data well
Speaker 9: doesn't support in market mood.
Speaker 4: As in video just learned impact oscar Desk. We thank
Speaker 4: you so much, Swiss Cote, senior analyst. Coming up what
Speaker 4: we joined by Ahmit Wallia, CEO of Informatica to discuss
Speaker 4: the impact of generative AI on business and how they're working.
Speaker 4: Within video two, this is really meg technology. Now for
Speaker 4: today's AI in Action segment, let's bring in Ahmet Waalia,
Speaker 4: CEO of AI powered cloud data management provider Informatica. Basically,
Speaker 4: you're in the business of managing processing data, cleaning it
Speaker 4: up for your clients so that they can then harness
Speaker 4: the power of general to AI. For many we are
Speaker 4: questioning the hype on a generally VAI. How are your
Speaker 4: clients using it?
Speaker 2: Well, Calin, thanks for hosting me today.
Speaker 11: Well, I think we're in that phase where we just
Speaker 11: heard so much news about AI where everybody's ready for
Speaker 11: AI accept their data, and that's where we come in.
Speaker 11: We're helping customers truly convert all of that messy data
Speaker 11: estate to clean it up, put it to some structure
Speaker 11: govern it so it can go into an LM to
Speaker 11: actually then give output that they can actually use, So
Speaker 11: turn that data chaos into something actionable.
Speaker 3: You have a relationship with NVIDEA, right, which is that
Speaker 3: your enterprise data management offering is improved or powered by
Speaker 3: Vidious Accelerated computing offering. How does that relationship work?
Speaker 5: What's it like?
Speaker 11: Well, look, I think for GPUs or that estate to
Speaker 11: be actually put to use by our customers are doing.
Speaker 11: Is that helping our customers take all of that data
Speaker 11: state and think of customers like SSM Health where they're
Speaker 11: basically looking at their orthopedic professionals and making sure they
Speaker 11: can get the right professionals at the right place to
Speaker 11: manage their end patients.
Speaker 2: That drive seaside that drives care.
Speaker 11: Or insurance companies to do claim processing a lot.
Speaker 2: Faster and more efficiently. So those are the kind of use.
Speaker 11: Cases we are powering that ultimately allows customers to use
Speaker 11: the underlying infrastructure powered by the Hyperscalers or Invidia to
Speaker 11: actually put to use and drive what I call ROI
Speaker 11: and productivity.
Speaker 4: Just talking of that infrastructure when you offer data integration
Speaker 4: engines you use in video GPS, you're talking to clients.
Speaker 4: How much are they seeing in video as the only
Speaker 4: game in town? How much do you think that everyone
Speaker 4: just depends on them a little too much?
Speaker 2: Well, I mean, I think you should step back. I cannot.
Speaker 11: I said that a couple of times, even yesterday I
Speaker 11: was talking to a bunch of customers. JENNYI it's tremendously
Speaker 11: overhyped in the short term, but at the same time
Speaker 11: tremendously underestimated in the long term. So we are very
Speaker 11: much in the early stages of value creation.
Speaker 2: The buildout has.
Speaker 11: Happened, We've been talking about that one, but when it
Speaker 11: actually comes to converting that build out to applications or
Speaker 11: productive use cases, that's where.
Speaker 2: Our customers are doing the work right now.
Speaker 4: Yeah, but now are they depending on video for that infrastructure?
Speaker 2: Look, they depending upon a lot of infrastucture providers.
Speaker 11: In Vidia has obviously got a huge leg up, no
Speaker 11: doubt about that. With the Hyperscalers or the other ones.
Speaker 11: The llms, the vector databases, all of those are their powers,
Speaker 11: so needless to say. But now the work is being
Speaker 11: done to say, okay, how do I build that best
Speaker 11: in class customer sentiment analysis application to truly grow revenue.
Speaker 11: That's where the productivity comes into play, or ROI comes
Speaker 11: into play. And I see that experiments happening right now,
Speaker 11: first productions going towards the fall or early next year.
Speaker 11: And I see that in the next two years is
Speaker 11: when operationalization will happen.
Speaker 2: At more scale.
Speaker 11: So the buildout will be converted to use. We just
Speaker 11: have to give it some productive time.
Speaker 3: You use the word expe and you said that the
Speaker 3: value creations in the early innings, and this is the
Speaker 3: whole story.
Speaker 5: We see all the.
Speaker 3: Dollars go to cap X, we don't see the dollars
Speaker 3: yet coming out. Are you seeing something tangible in terms
Speaker 3: of value creation for all the investment in AI.
Speaker 11: I think that's where we see our customers putting the
Speaker 11: work in. Like I said at the beginning, everybody's ready
Speaker 11: for AI. The buildout has happened, the roads have been built,
Speaker 11: except your data. So I talked about customers like Westcom,
Speaker 11: Credit Union NRMA, or owners or SSM Health.
Speaker 2: They are all doing the work to.
Speaker 11: Either figure out how do you serve your customers better,
Speaker 11: how do you make sure the insurance claims are a
Speaker 11: lot faster and they are much more cleaner. How do
Speaker 11: you make sure that when a customer call comes in
Speaker 11: that you can actually take the call with a lot
Speaker 11: faster and a lot more informed opinion.
Speaker 2: Of a customer. Customers are doing the work, but that
Speaker 2: takes a little bit of time. So we're seeing.
Speaker 11: If you took a baseball analogy, I think we're at
Speaker 11: best bottom of the first for a very long game,
Speaker 11: and I do see the next twelve eighteen months to
Speaker 11: be the ones where you will actually see the live.
Speaker 2: Use cases come out at scale.
Speaker 11: I see that, I see the usage of our clear
Speaker 11: GPT product, customers using it.
Speaker 2: We see the.
Speaker 11: Tracking of where the data is going, and I see
Speaker 11: those things scaling up, which the next twelve months will
Speaker 11: be extremely exciting.
Speaker 4: Will the productivity gains be enough to vindicate the hundreds
Speaker 4: of billions being spent?
Speaker 11: Well, look, I think I can give you some examples
Speaker 11: of our customers. So we looked at this insurance claim
Speaker 11: provider and the claim processing that Caroline took months was
Speaker 11: converted to a week. So yes, yes, Now what we
Speaker 11: need to also be careful is that when you take
Speaker 11: that experiment and operationalize that, you also have to think
Speaker 11: about governance and compliance.
Speaker 2: Of those cases.
Speaker 11: So I think there is productivity in that, there's absolutely
Speaker 11: we see that, but we have to give it some
Speaker 11: time because when you put it out in scale, especially
Speaker 11: in the regulated industries, it will take some phasing. And
Speaker 11: I think that's a good thing, because we just don't
Speaker 11: want will be completely the wild West in this and include.
Speaker 2: A bigger to shoot in front.
Speaker 3: Of usm it Weally, a CEO of Informatica, thank you
Speaker 3: very much.
Speaker 4: Welcome back to Bloomberg Technology. I'm Caroline Hyde in.
Speaker 5: New York and I'm Ed Ludlow in San Francisco.
Speaker 3: The markets are moving in real time and changing direction.
Speaker 3: We're probably off this kind of high of the session
Speaker 3: rebound when it comes to the indices or indexes, as
Speaker 3: we say at Bloomberg and.
Speaker 5: A's that one hundred basically flat.
Speaker 3: The socks recovering up eight tens and one percent, having
Speaker 3: had its biggest drop yesterday since March of twenty twenty.
Speaker 3: There are some specific single name stories behind that. In
Speaker 3: video is top of mind for everyone right now. Just
Speaker 3: go to the Bloomberg's website or the terminal and you're
Speaker 3: seeing video just so much coverage. But the reporting on
Speaker 3: the DOJ, according to sources issuing subpoenas to that name,
Speaker 3: the market seems pretty calm about it. Intel a slight
Speaker 3: different story. It continues to lag down one point seven percent.
Speaker 3: It's had a choppy session. Why some Bloomberg reporting is
Speaker 3: a part of it. The Biden Harris Administration's big bet
Speaker 3: on Intel to lead a US chip making renaissance is
Speaker 3: in trouble with the company's mounting financial struggles.
Speaker 5: This could create a.
Speaker 3: Potential damaging setback for the country's most ambitious industry policy
Speaker 3: in decades. Bloomberg's Mackenzie Hawkins is here with the reporting,
Speaker 3: and I think in simple terms, Mackenzie sources tell us
Speaker 3: Intel's frustrated because it wants access to the money it
Speaker 3: was granted through the Chips Act. On the government side,
Speaker 3: the White House and Commis Department are frustrated because Intel
Speaker 3: is not doing what they need to in order to
Speaker 3: get access to that money.
Speaker 5: Explain what you've learned.
Speaker 7: So thirty thousand foot perspective here, the US set aside
Speaker 7: thirty nine billion dollars in grants to bring chip making
Speaker 7: back to the United States to revitalize domestic production of
Speaker 7: these critical electronic components. Intel is supposed to be the
Speaker 7: biggest from that program. President Joe Biden traveled to the
Speaker 7: company's facility in Chandler, Arizona, earlier this year, said eight
Speaker 7: and a half billion dollars in grants eleven billion dollars
Speaker 7: in loans. Intel's also in line for tens of billions
Speaker 7: more in tax credits if it fully builds out this
Speaker 7: one hundred billion dollar US manufacturing promise. But the company
Speaker 7: has been in dire financial straits for some time and
Speaker 7: posted a pretty disastrous earnings report at the beginning of
Speaker 7: last month. So now, while the chip maker says we
Speaker 7: need access to this money faster, the Biden administration is
Speaker 7: maintaining the stance it has the entire time, which is
Speaker 7: that that's a preliminary agreement. It requires significant due diligence
Speaker 7: to get to a final term sheet, and even then
Speaker 7: Intel has to hit key milestones on all four of
Speaker 7: its US projects before receiving the money.
Speaker 4: We are anticipating hearing from Pat Gelsing and the CEO
Speaker 4: of Intel later today at a city event. He's already said,
Speaker 4: We've been working hard to address certain issues as he's
Speaker 4: drawn criticism. What is Intel likely to do next to
Speaker 4: come together and decide whether they build, whether they don't,
Speaker 4: what they need to get in place to get the money.
Speaker 7: So Intel has a board meeting in mid September, and
Speaker 7: that's when you'll see company executives considering a range of
Speaker 7: potential ops options, including possibly spinning off their manufacturing division
Speaker 7: or potentially pausing or scaling back some of their global
Speaker 7: factory projects.
Speaker 1: Too early to.
Speaker 7: Say whether that could include any of their US facilities,
Speaker 7: the biggest of which are an expansion of their Arizona
Speaker 7: foundry project and also this greenfield site in Ohio that
Speaker 7: Biden has called a quote unquote field of dreams. But
Speaker 7: it's pretty safe to say that if Intel were to
Speaker 7: pair back it's US manufacturing ambitions, it's chips act ward
Speaker 7: would changed to match.
Speaker 3: There are some details in you're reporting, McKenzie, again citing
Speaker 3: sources that the commerce department is key here, and one
Speaker 3: of the things the commicce department tried to do was
Speaker 3: convince other chip names to go for Intel and their
Speaker 3: manufacturing business, and that that was not something that the
Speaker 3: industry was open to.
Speaker 5: Who the name's involved here.
Speaker 7: So one of the biggest metrics for the Biden administration
Speaker 7: is figuring out if these plants are going to be
Speaker 7: commercially viable, which requires customers. And Taiwan's TSMC is unambiguously
Speaker 7: the world leader in the types of chips that Intel
Speaker 7: is hoping to make in the US, including AI chips
Speaker 7: from companies like Nvidia and AMD. Commerce Secretary Gena Raimondo
Speaker 7: reached out to executives at both of those companies and
Speaker 7: asked them to consider manufacturing it Intel's Ohio plant. Neither
Speaker 7: of them currently plans to do so, and the other
Speaker 7: major customers that Intel has announced for its global manufacturing operations,
Speaker 7: which include Broadcom, Media Tech and Microsoft, haven't gone into
Speaker 7: full production yet either.
Speaker 4: It's all so extraordinary because you would have thought the hunger,
Speaker 4: the desire for AI related chips as such that Intel
Speaker 4: would manage to be there. Now. On the flip side,
Speaker 4: we clearly see that hunger and need for infrastructure when
Speaker 4: it comes to AI.
Speaker 2: You've got a great.
Speaker 4: Piece out we've sharing KAfari talking about how Sam Altman
Speaker 4: is also talking to the US government to come together
Speaker 4: with an infrastructure build out request. How is that project going?
Speaker 7: So, this big tens of billions of dollar vision by
Speaker 7: open AI's Altman has been in the works for months now,
Speaker 7: and we're just starting to see some details take shape
Speaker 7: in what Altman pictures as some kind of a compliment
Speaker 7: actually to the chip sect building out data centers, energy infrastructure,
Speaker 7: and other US projects with a global alliance of investors
Speaker 7: to sort of leverage the resources needed to make AI possible.
Speaker 7: If you think about the chips that Intel and TSMC make,
Speaker 7: those are kind of the inputs for artificial intelligence, and
Speaker 7: part of the plan involves receiving investment from investors in
Speaker 7: countries including Japan, South Korea, Canada, the US, and the
Speaker 7: United Arab Emirates, which has been a major national security
Speaker 7: focus for the United States recently, as the administration wants
Speaker 7: to partner more with countries in the Golf and throughout
Speaker 7: the Global South to encourage investors there to invest in
Speaker 7: American firms than Chinese ones, but is also worried about
Speaker 7: the risks of technology sharing and other national security concerns
Speaker 7: in the region.
Speaker 3: We've been tracking this one for some time as you said,
Speaker 3: and the new parts is also that it's gone beyond
Speaker 3: just semiconductors. I think Sam and his team thinking a
Speaker 3: lot about energy as well. What are the other areas
Speaker 3: they're trying to flesh out.
Speaker 7: So energy, I think is a really big one, and
Speaker 7: that's a concern for the chips ac ROLD as well.
Speaker 7: These fabs and data centers require massive, massive amounts of
Speaker 7: energy on the scale of like multiple nuclear reactors to
Speaker 7: power just a couple of chip making facilities, and so
Speaker 7: Altman's team is thinking about things like transmission lines, whether
Speaker 7: we can get clean energy resources devoted to these projects,
Speaker 7: and also building out data centers likely to include some
Speaker 7: of their existing major corporate partners to actually run and
Speaker 7: house these operations on American soil. The plans span several
Speaker 7: US states and would start here first and then potentially
Speaker 7: expand to a more global vision.
Speaker 4: Mackenzie Hawkins across all the elements of AI infrastructure for
Speaker 4: US today, Thank you now. Also out of Washington, the
Speaker 4: Justice Department says it won't pressure social media companies to
Speaker 4: remove or block content when the government shares information about
Speaker 4: foreign threats to national security or elections. Now, of course,
Speaker 4: that follows a recent letter from two Congress from CEO
Speaker 4: of Meta, Mark Zuckerberg, which alleges that Facebook was in
Speaker 4: fact pressioned by the Biden administration to censor COVID related content. Now,
Speaker 4: of course, the idea here ed was that Meta took
Speaker 4: its own decisions around certain content and decided to pull back,
Speaker 4: but Mark Zuckerberg saying he regretted some of the action
Speaker 4: being taken. Is this being the next answer to that
Speaker 4: from the DOJ?
Speaker 5: It seems?
Speaker 3: You know what's so interesting is, you know, it wasn't
Speaker 3: that long ago that Meta's position was it shouldn't end
Speaker 3: with us, It shouldn't be our decision. We need to
Speaker 3: like oversight, and oversight is still something that I don't
Speaker 3: think anyone's really come up with a framework for.
Speaker 4: Meanwhile, we look at what's happening in terms of oversight
Speaker 4: of those that don't do any content administration or very
Speaker 4: little like Telegram and the CEO currently held up in France.
Speaker 4: Now coming up, we're going to be discussing AI in
Speaker 4: many other ways. We're joined by Richard Socher, CEO and
Speaker 4: founder of you dot Com to discuss the company's brand
Speaker 4: new funding around that's next as a blue big technology
Speaker 4: time now for Talking tech first up Lift, It plans
Speaker 4: to sell some of its bike and scuter business and
Speaker 4: cut one percent of its workforce as the ride hailing
Speaker 4: company still focuses on turning profitable. Plus, Ali Baba will
Speaker 4: finally let shoppers check out via ten cents we Chat pay,
Speaker 4: and in one of the biggest barriers between the Chinese
Speaker 4: tech chants, it will allow hundreds of millions of shoppers
Speaker 4: to select we Chat pay. As the Chinese economy struggles
Speaker 4: with a downturn and the billion dollar venture capital John
Speaker 4: andrewsen Horowitz ditching Miami just two years after opening an
Speaker 4: office in that city. A sixteen z left the space
Speaker 4: in May. We understand because employees just weren't using it enough.
Speaker 4: It's acording to people familiar with the matter.
Speaker 3: Ed Okay a piece of news in startups and bench capital.
Speaker 3: U dot Com, which makes an AI powered search engine
Speaker 3: and productivity tools, has raised fifty million dollars in a
Speaker 3: new funding round that includes backing from Nvidia and Duck
Speaker 3: dot Go, among others. Here for more in the news
Speaker 3: is You dot Com CEO Richard Socher himself, I have
Speaker 3: to go straight to Nvidia, you know, sizeable contribution in
Speaker 3: the round. What do you think in Video's interest in
Speaker 3: backing you dot Com.
Speaker 10: Is thanks for having me ed. Yeah, we're very excited
Speaker 10: about this round. Led by Georgia and Videos, our second
Speaker 10: largest investor. They have seen that the future usually first
Speaker 10: comes on you dot Com, and then a lot of
Speaker 10: other folks follow. We've been the first to connect LM's
Speaker 10: to the web. We've been the first to make LA
Speaker 10: be multimodeal and have more than just text as outputs,
Speaker 10: like if you asked for stock price, you see a
Speaker 10: stock ticker. Because as much as I love natural language
Speaker 10: processing in LMS, that's not.
Speaker 3: Always loving terminal of course, if anything, market stats are related,
Speaker 3: but please continue.
Speaker 10: That's right, and so they want to partner with the
Speaker 10: folks that bring the future, bring LMS into new markets,
Speaker 10: and we're of course very excited to partner with them
Speaker 10: to also see and use their technology that's moving up
Speaker 10: to stack away from just GPUs.
Speaker 4: You've pivoted a little. When we first welcomed you on
Speaker 4: the show, Richard, we were all about AI search. Now
Speaker 4: there's some other key players getting in on AI search.
Speaker 4: I think a perplexity in the private side. You think
Speaker 4: of Google getting it backed together in the public side,
Speaker 4: what else are you trying to add into your business
Speaker 4: model so that you're not so crunched here.
Speaker 10: Yeah, people can still use you dot Com as Google replacement,
Speaker 10: so it's not quite a pivot. But what we've realized
Speaker 10: is that when you really want to look for a
Speaker 10: tenex better experience, it's hard when people make very simple queries,
Speaker 10: you know, when you just ask like how old is Obama?
Speaker 5: Or what's the weather tomorrow?
Speaker 10: It's hard to do ten x better than a Google
Speaker 10: on those kinds of queries. But where we have seen
Speaker 10: a lot of traction is when companies actually start using
Speaker 10: you dot Com to be more productive for an account
Speaker 10: executive to go in and get the company brief and
Speaker 10: hence have an AI agent that then writes that brief
Speaker 10: for her or him. That's where we've seen tenx improvements,
Speaker 10: and that's where we're seeing a lot of customer traction
Speaker 10: with big companies and small startups all relying on you
Speaker 10: dot Com store. We're leaning into that enterprise space and
Speaker 10: that productivity engine.
Speaker 3: Bloomberg's piles Very, who leads interviews on the show here,
Speaker 3: wrote up the details of the report, and I was
Speaker 3: reading it and then listening to what you're saying just then,
Speaker 3: and what I'm hearing is business model.
Speaker 5: I think is that fair? Richie?
Speaker 3: You kind of looked at sir and said, I think
Speaker 3: we've got to work out what our business model is
Speaker 3: long term here?
Speaker 5: Would you just explain that a bit?
Speaker 10: Yeah, So we looked at how can we really differentiate
Speaker 10: from a pretty busy space, and number one is accuracy,
Speaker 10: but number two is actually looking at the customer's success
Speaker 10: that's possible, and then hearing from a lot of companies
Speaker 10: they bought some large seat licenses from some of the
Speaker 10: large vendors, or they even build their own prototypes, but
Speaker 10: then they don't see the adoption within their organization, and
Speaker 10: so we wanted to align incentives. And now actually for
Speaker 10: our larger enterprise customers do a consumption based model rather
Speaker 10: than a per seat license model, and we're helping them
Speaker 10: actually adjust all their workflows to this new GENI world.
Speaker 4: I have to say, it makes me think of your
Speaker 4: old employer, Richard. You achieve scientist and EVP over at Salesforce.
Speaker 4: Salesforce also simply trying to work out the revenue generation
Speaker 4: from AI and they're going all in on agents well,
Speaker 4: that's kind of exactly where you're going all in on
Speaker 4: as well. So are you working alongside Salesforce?
Speaker 2: Are you working for Salesforce?
Speaker 4: Will ultimately there'll be some sort of purchase.
Speaker 10: We're very excited to be partnering with Salesforce also on
Speaker 10: this round.
Speaker 5: They're also an investor.
Speaker 10: We combine external data from the Internet together with company
Speaker 10: internal data that can be in a lot of different places,
Speaker 10: and then make that useful for knowledge workers. So if
Speaker 10: you want to build a company brief, or you want
Speaker 10: to start in your marketing campaign, or you want to
Speaker 10: research on a protein as a biotech engineer or a
Speaker 10: hedge fund manager, you can do all of those things
Speaker 10: on you dot com. And then the agents essentially help
Speaker 10: you automate certain kinds of workflows that you'd otherwise manually do,
Speaker 10: And in those cases we end up actually replacing ten
Speaker 10: types of Google searches and hence provide a ten ex
Speaker 10: better experience and work that used to take you an
Speaker 10: hour or two will now take you minutes.
Speaker 3: Richard, I want to go back to your answer on
Speaker 3: the relationship with Nvidia. You said you wanted to work
Speaker 3: with them up the stat not just with GPUs and
Speaker 3: the big story today is bloombog reporting on doj issuing
Speaker 3: subpoenas to video. But our reporter and king and explaining
Speaker 3: what's going on reflected on something that I spoke to
Speaker 3: Jensen one about last week. They don't want to just
Speaker 3: sell GPUs. They want to be the systems vendor that
Speaker 3: includes Envy link, Ethernet and now the software. Could you
Speaker 3: just explain on the other side of the table how
Speaker 3: that works. You know, you buy a big package from
Speaker 3: video they gifted to you through the investment, what was
Speaker 3: the mechanics.
Speaker 10: So at a very high level, you can kind of
Speaker 10: think of Jevins paradox here where a lot of things
Speaker 10: are getting more efficient. But as things get more efficient,
Speaker 10: as was invented with steam engines, but now it's with intelligence,
Speaker 10: you might think we use less of that. But actually
Speaker 10: I think as intelligence gets cheaper and cheaper, we will
Speaker 10: actually be using more intelligence and we'll realize that we
Speaker 10: can automate even more workflows. And so from video it's
Speaker 10: just a natural evolution to move up the stack from
Speaker 10: GPUs to also offer more and more capabilities on top
Speaker 10: of that, and we as a startup who are using
Speaker 10: a lot of GPUs, are very excited to partner with
Speaker 10: them on developing these kinds.
Speaker 3: Of technologies you don't come see Richis Searcher, Thank you
Speaker 3: very much.
Speaker 4: In video shares, they're fluctuating this morning, coming off of
Speaker 4: its biggest one day decline in market cap on record.
Speaker 4: It shared more than two hundred and fifty billion dollars,
Speaker 4: more than now megs ABAGAIL do little. Take us through
Speaker 4: what's happening now?
Speaker 12: Yeah, the volatility is really pretty interesting today we have
Speaker 12: had this stack. It opened sharply lower, well sharply as
Speaker 12: relative for the shares of in video because yesterday, of
Speaker 12: course down almost about ten percent, so today's earlier two
Speaker 12: to three percent decline not so much, but then higher.
Speaker 12: Let's take a look at the last five days though,
Speaker 12: because you can see a pretty steep decline here Dan
Speaker 12: fifteen point nine percent.
Speaker 5: These are the worst five.
Speaker 12: Days for Video going all the way back to September
Speaker 12: of twenty twenty two.
Speaker 5: And what's interesting.
Speaker 12: About this, They of course reported earnings last week.
Speaker 5: Yes, yes they boosted, but.
Speaker 12: It was a lot less than what it might normally
Speaker 12: be a bit of a disappointment for a stock that
Speaker 12: at one point year to date this year was up
Speaker 12: more than one hundred and eighty percent. That's a way
Speaker 12: of saying too far, too fast. So this week, especially yesterday,
Speaker 12: there's that big decline about ten percent, the big market
Speaker 12: cap shed that you were just talking about, Caroline. In fact,
Speaker 12: let's put that into context. And one thing I will
Speaker 12: say here it is on a split adjusted basis, yesterday
Speaker 12: was the worst, say since April. So if we had
Speaker 12: not had the I think it was a ten for
Speaker 12: one split back in June, this market cap loss would
Speaker 12: not have been as great. But the split did happen,
Speaker 12: so it is as great. Take a look at that decline,
Speaker 12: two hundred and seventy nine billion dollars worth of market
Speaker 12: cap loss yesterday alone. We put that into the perspective,
Speaker 12: that is more than the value of Chevron today. That
Speaker 12: is more than the value of Adobe today. And if
Speaker 12: you think about Boeing that has a market cap now
Speaker 12: around one hundred billion dollars, it's more than two Boeings.
Speaker 12: That is a big, big decline on yesterday's trading session.
Speaker 5: For in video.
Speaker 12: The question is whether or not this selling is done.
Speaker 5: I suspect not.
Speaker 12: If we take a look at the technicals, this chart
Speaker 12: is a little bit wonky. But some people are talking
Speaker 12: about whether or not in video is going to go
Speaker 12: sub one hundred or hit one hundred. I would say
Speaker 12: one hundred's generous based on this chart. This is a
Speaker 12: one year chart. You can see last year the stock
Speaker 12: had been on a split adjusted basis closer to forty.
Speaker 12: We are now seeing a bit of reversal here. This
Speaker 12: entire area. Caroline likely to take this stock down closer
Speaker 12: to seventy, possibly even forty ed That would be quite declined,
Speaker 12: something to stay tuned for if it does happen.
Speaker 3: Bin Bag exact, bigail do little with some of the
Speaker 3: best size and scope I've seen out there for a
Speaker 3: long time. Another big story, Elon must satellite internet provider
Speaker 3: Starling reverse course and said it would comply with an
Speaker 3: order by Brazil's top court to block access to X,
Speaker 3: the billionaire's social network Bloombus. Kirt Wagner has no shortage
Speaker 3: of things to write about. He's already written the book.
Speaker 3: On Twitter you track it daily. But you know this
Speaker 3: is a concession by Elon Inc. In the country of Brazil.
Speaker 13: Absolutely, I mean, this is his internet service provider choosing
Speaker 13: to block you know, his social network. Right, So one
Speaker 13: part of his empire is sort of working against another,
Speaker 13: and that is because of the pressure applied by you know,
Speaker 13: Brazilian regulators and the judge there to block those bank accounts.
Speaker 13: So we're seeing the leverage that they used on Starlink
Speaker 13: actually impact x here.
Speaker 4: I like the way you call it Musk's constellation of businesses,
Speaker 4: and it can in many ways be deeply advantageous and
Speaker 4: in others make it far.
Speaker 2: More complex to do business in certain countries.
Speaker 13: Absolutely, I mean, I think the benefits right. We've seen
Speaker 13: investors flock towards anything Elon does in hopes of perhaps
Speaker 13: you know, getting on board with the spacexipo that will
Speaker 13: eventually come. We've seen him share resources among these companies.
Speaker 7: Right.
Speaker 13: The fact he has all these businesses has helped him
Speaker 13: to become the rich, powerful person that he is. At
Speaker 13: the same time, we're seeing right now live in Brazil.
Speaker 13: The downside of this, right, which is that a company
Speaker 13: or excuse me, a country or regulators can apply pressure
Speaker 13: on one part of his empire to get to another, right,
Speaker 13: And I don't think Brazil is the only country where
Speaker 13: certainly this could happen. And now that we're seeing it
Speaker 13: play out and sort of work a little bit. It's
Speaker 13: the kind of thing that I could see happening more
Speaker 13: regularly going forward.
Speaker 3: You right in the piece that basically the more companies
Speaker 3: you must associated with, almost the more vulnerable he is,
Speaker 3: and they have different points of entry. I just go
Speaker 3: further with that, explain it.
Speaker 13: Yeah, Well, I mean good example would be, you know
Speaker 13: Tesla in China, for example, X does not operate in
Speaker 13: China right now, but you could imagine a world in
Speaker 13: which the Chinese government, you know, trying to get to
Speaker 13: X or another part of Elon's business is going after Tesla, right. So,
Speaker 13: just the more touch points he has, the more ways
Speaker 13: people can get after him.
Speaker 4: Now, Court Wadna, we appreciate it so much. Thank you
Speaker 4: on all things X. But meanwhile, that does it for
Speaker 4: this edition of Bloomberg Technology. CO follow us on X
Speaker 4: and plenty of other ways.
Speaker 2: Ed Is.
Speaker 4: The story continues on video.
Speaker 3: Yeah for a short week because of the US holiday Monday.
Speaker 3: It is astonishingly pat with news. Recap all of that
Speaker 3: on the podcast Apple, Spotify, iHeart wherever you get your
Speaker 3: podcasts of course, on the Bloomberg platforms as well. From
Speaker 3: New York City and here in San Francisco, Happy Wednesday,
Speaker 3: Keep it going.
Speaker 5: This is Bloomberg Technology.