Speaker 1: Bloomberg Audio Studios, podcasts, radio news from the heart of
Speaker 1: where innovation, money and power collide in Silicon Valley and beyond.
Speaker 1: This is Bloomberg Technology with Caroline Hyde and Ed Ludlow.
Speaker 2: Live from New York and Caroline Hyde and this is
Speaker 2: Bimberg Technology. Coming up. The Nasdaq whip soaring ahead of
Speaker 2: President Trump's tarifs. This week will discuss the global tech impact.
Speaker 2: Plus Elil Musk admits his role with those is taxing
Speaker 2: him and impacting his job as CEO of Tesla and SpaceX,
Speaker 2: and a crew of four passengers are set to embark
Speaker 2: on a journey around Earth's poles, so first time humans
Speaker 2: have flown such a mission. But first a check in
Speaker 2: on these markets, which are under pressure once again in
Speaker 2: sell off mode. As you see, we're off by one
Speaker 2: point six percent off of our lowers for the day
Speaker 2: on the Nasdaq one hundred from a points perspective, though
Speaker 2: it is the Magnificent seven that drag us the most.
Speaker 2: Apple is one name in the green, but otherwise it's
Speaker 2: in video, Microsoft, Amazon, Tesla, as well as Meta and Alphabet.
Speaker 2: Drill into the individual moves that push us a little
Speaker 2: bit lower, and we've got to shine a light on
Speaker 2: what's happening with Tesla. Once again, analysts really shining a
Speaker 2: light on the fact that this is politically entwined in
Speaker 2: many ways. The consumer reaction to one Elon Musk, we're
Speaker 2: off by five and a half percent. Again, they had
Speaker 2: outperformed when we first got those hints of auto tariffs.
Speaker 2: No how evs in particular, Tesla might be hurt less
Speaker 2: than competitors. But once again today in risk of sentiment,
Speaker 2: it's off by five and a half percent. And actually
Speaker 2: his Elon Musk over the weekend speaking at a town
Speaker 2: hall in Wisconsin about the dose impact on Tesla's share price.
Speaker 3: It's costing me a lot to be in this job.
Speaker 3: What they're trying to do is put massive pressure on me,
Speaker 3: and I guess to to you know, I don't stop
Speaker 3: stop doing this. But you know, my Teslis stock and
Speaker 3: the stock of everyone who Holst Tess has gone went
Speaker 3: roughly in half. I mean, it's a big deal.
Speaker 2: Let's get you analysis in Meg's Max Chafkin joins us
Speaker 2: now host of elon Ing podcast and just intertwined with
Speaker 2: his movements. And it was interesting that at a political
Speaker 2: rally he's admitting some of the knock on effects here.
Speaker 4: Yeah, I mean, well, it's been pretty dramatic. We've seen
Speaker 4: these huge drops in sales in Europe, where of course
Speaker 4: Elon Musk has also been uh been stirring the pop politically,
Speaker 4: to say the least. And we've seen sales declines going
Speaker 4: on for some time now, and that and those declines
Speaker 4: are colliding with a business that also has all these
Speaker 4: other struggles, so you throw, you know, Elon Musk's kind
Speaker 4: of controversial branding, these these kind of provocations that he's
Speaker 4: been doing almost on the daily with actual struggles with
Speaker 4: the business as well as you know, all the uncertainty
Speaker 4: around tariffs and the economy in general. And it's it's
Speaker 4: really like a perfect storm. It's a bunch of things
Speaker 4: that are all kind of working together to hurt what
Speaker 4: had been just a company that had been soaring, you know,
Speaker 4: even a couple of months ago.
Speaker 2: Soaring on vibes. Many would say often this stock is
Speaker 2: not related to fundamentals of the business. Even when earnings disappoints,
Speaker 2: sales disappoint we've actually seen sale shares push higher. Can
Speaker 2: he restore vibes or do we start to look at
Speaker 2: the fundamental issues of the business. Well, that's the thing.
Speaker 4: I mean, the vibes were based on this idea that
Speaker 4: Elon Musk is this kind of amazing business superhero. He
Speaker 4: can do things that nobody else can do. And so
Speaker 4: much of that brand was built on Elon Musk as
Speaker 4: an innovator, as somebody who invents new products, particularly new
Speaker 4: products that are you know, involved with alternative energy, and
Speaker 4: that kind of flatter the sensibilities of a certain kind
Speaker 4: of consumer. Now, what we've seen over the last couple
Speaker 4: of years, and in a much more intense way over
Speaker 4: the past couple of months, is just Elon Musk subverting
Speaker 4: that brand, taking that brand and essentially throwing it out
Speaker 4: the window and presenting a new brand, which is Elon
Speaker 4: Musk as a you know, cost cutter, as this vehicle
Speaker 4: of trolling austerity. It is very, very different from the
Speaker 4: story that he had been telling before, and I think
Speaker 4: that is going to make it harder to write the ship.
Speaker 2: But does that give a new source of demand for
Speaker 2: those that loathe the new version? Many love it. Many
Speaker 2: like the fact that there's a rebalancing in austerity, that
Speaker 2: perhaps there's a new source of buyer who wants to
Speaker 2: get out there in Tesla who hadn't automatically looks in
Speaker 2: it from an evy environmental perspective.
Speaker 4: Well, this is something we've heard from some people who
Speaker 4: have sort of defended some of these moves as well
Speaker 4: as you know, if you kind of squint, you could
Speaker 4: see while he's trying to sell pickup trucks. So maybe
Speaker 4: it makes sense to signal more to the right. What
Speaker 4: we've seen from Elon Musk, I'd say goes way beyond
Speaker 4: signaling to the right. I mean, he's you know, you know,
Speaker 4: saying things that are racially tinged. He's making gestures that
Speaker 4: to many people look like, you know, he's saluting Hitler
Speaker 4: at a Trump rally. These are not things that even Republicans,
Speaker 4: even a whi of Trump supporters, are not necessarily going
Speaker 4: to be comfortable with these moves. So I think that's
Speaker 4: one issue. The other issue is the cyber truck has
Speaker 4: just not performed as a pickup. It is not competing
Speaker 4: well with you know, the likes of the Ford f
Speaker 4: one fifty. I think sales have really disappointed. It's become
Speaker 4: a great way to signal your support of Donald Trump,
Speaker 4: not necessarily winning fans in the kind of truck driving class.
Speaker 2: Always great to catch up with Max Chafkin, go listen
Speaker 2: to all things elon K as well. Meanwhile, let's stick
Speaker 2: with enel Musk, his artificial intelligence startup Xai, when it's
Speaker 2: just purchased the social media platform X and an all
Speaker 2: stock deal, the values of combined businesses at one hundred
Speaker 2: million dollars. For more, let's bringing Kurt Wagner enol Musk,
Speaker 2: very busy man and one of his startups buying another one.
Speaker 2: And there's a big well boying for the X shareholders
Speaker 2: ecty or debt in many ways, I.
Speaker 5: Think so I think they're the biggest winners in this
Speaker 5: whole thing, right, I mean, because you think about what
Speaker 5: happened over the last two and a half years since
Speaker 5: Elon walked in in the Twitter offices with that sync, right,
Speaker 5: there's been a ton of uncertainty. We've seen advertisers flee,
Speaker 5: we've seen users flee, We've seen the value of that company,
Speaker 5: by some measures, basically cut in half, if not more.
Speaker 5: And so if you are an ex investor today, a
Speaker 5: week ago, you were owning shares in this very struggling
Speaker 5: social networking business with a small advertising arm. Now you
Speaker 5: own shares in an AI startup that's worth double the
Speaker 5: price and growing, and so I think this is a
Speaker 5: big win for them, more so than pretty much anybody else.
Speaker 2: There were initial analyst reactions saying this makes sense. Will Research,
Speaker 2: for example, immediately putting out feeling that the combination makes
Speaker 2: strategic sense, but many also questioning why they needed to
Speaker 2: do it at all. Already Grock was deeply infused with
Speaker 2: in X, Why do they need to make the tie up?
Speaker 2: And other more questions and answers In many.
Speaker 5: Ways, Yeah, I mean, this is my biggest question here
Speaker 5: is that on paper, yes, this makes sense, right, an
Speaker 5: AI company buying a social network like X, getting you know,
Speaker 5: exclusive access to that proprietary data, getting the distribution of
Speaker 5: a GROC to millions of people via X, right, Like
Speaker 5: all those things make sense on paper.
Speaker 6: But the difference here is that.
Speaker 5: Elon already owns both companies, right, So there was no
Speaker 5: fear that X was going to go out and strike
Speaker 5: some exclusive deal with a competitor. You know, they were
Speaker 5: already using X's data to train GROC and work on
Speaker 5: their AI models, so like they had the relationship sort
Speaker 5: of already. And so that's why I don't really understand
Speaker 5: why they needed to spend you know, thirty three billion
Speaker 5: or forty five billion including debt to buy this company
Speaker 5: that they pretty much had all of what they needed
Speaker 5: from it already.
Speaker 2: A key question mark for me as well, Kat not
Speaker 2: only who leads x going forward and what Linda aki
Speaker 2: Yakarino's future looks like, but is how he got an
Speaker 2: eighty billion dollar valuation on Xai. There was no new
Speaker 2: funding here. It seems to be a number that was
Speaker 2: kind of plucked out of the air exactly.
Speaker 5: And so the last time Xai had a funding round
Speaker 5: was in November. I believe it was valued right around
Speaker 5: fifty billion at that time. There's been no new rays
Speaker 5: for Xai since then until this deal, and suddenly Xai
Speaker 5: is worth eighty billion, right, And so this is what happens, Caroline,
Speaker 5: when you have two privately held companies. They're owned by
Speaker 5: the same person, they're represented by the same bank, right,
Speaker 5: Like he is able to essentially, you know, make up
Speaker 5: these valuations and say, you know, I think x is
Speaker 5: worth this, and that means that Xai is now worth
Speaker 5: that and boil that's done, right as long as shareholders
Speaker 5: are not you know, essentially revolting at these these decisions.
Speaker 5: I think Elon has a lot of sort of latitudes
Speaker 5: here to you know, value these things where he wants
Speaker 5: them to be valued.
Speaker 2: Number go up, Kat Wagner, thanks so much joining us.
Speaker 2: Coming up preparing for Trump's reciprocal tariffs. More on the
Speaker 2: global tariff impact on a tech sector. That's next as
Speaker 2: a blombg technology markets. They are in cell off mode
Speaker 2: ahead of President Trump's reciprocal tariff set to begin at
Speaker 2: this Wednesday. Now this is course is he says he's
Speaker 2: prepared to enact secondary tariffs on buyers of Russian oil
Speaker 2: if Putin refuses to cease far US with the Ukraine.
Speaker 2: For more, Bloomberg's Kaylee lines joins us with a macro focus,
Speaker 2: and we want to whickle it a bit more down
Speaker 2: to technology. But Kayley, there's a lot of angst quite
Speaker 2: evidently so today.
Speaker 7: Yeah, a lot of anks because there's a lot of uncertainty,
Speaker 7: Caroline Frankly, at this point, two days ahead of this
Speaker 7: so called Liberation Day announcement the President is planning to make,
Speaker 7: there is a real lack of clarity as to what
Speaker 7: exactly these reciprocal tariffs are going to look like. What
Speaker 7: the rates will be, who will be placed on, and
Speaker 7: whether or not there will be any exemptions, and what
Speaker 7: it will take to get those exemptions. The President over
Speaker 7: the weekend told reporters that this will initially start out
Speaker 7: with our country. That does throw a little bit of
Speaker 7: cold water on the idea that he may have made
Speaker 7: some exceptions right from the jump, that he also is
Speaker 7: suggesting that it's not so much about ten or fifteen countries.
Speaker 7: He said he hadn't heard that rum or, even though
Speaker 7: that it's actually something that was floated by his very
Speaker 7: own Treasury Secretary Scott Bessen, who suggested there is a
Speaker 7: dirty fifteen and according to Bloomberg Economics analyst analysis of
Speaker 7: what those fifteen countries actually are, nine of them that
Speaker 7: have the largest trade deficits with the US are in Asia.
Speaker 7: A lot of components like semiconductors, for example, could be impacted,
Speaker 7: and that is just keeping in mind that whatever reciprocal
Speaker 7: levies are put on, there is always the chance that
Speaker 7: even more tariffs are layered on top of that. The
Speaker 7: President has floated semiconductor specific tariffs at some point in
Speaker 7: the future, as well as on things like pharmaceuticals. Is
Speaker 7: just unclear what exactly that timeline will be and how
Speaker 7: all of these work in conjunction.
Speaker 2: Is he's also.
Speaker 7: Talking about, as you mentioned, Caroline, secondary tariffs on purchasers
Speaker 7: of Russian oil if he doesn't like the way Vladimir
Speaker 7: Putin is conducting seasfire negotiations between the US and of
Speaker 7: course Ukraine, and the big buyers of Russian oil at
Speaker 7: least right now are China and India, both of which,
Speaker 7: of course, in China's case, already have tariffs in place.
Speaker 7: In India could be very threatened given the high levees
Speaker 7: it has on US imports with higher reciprocal terror frates
Speaker 7: as well.
Speaker 2: Kenney, you point us towards the semiconductor effect. We've also
Speaker 2: got to take an account the deadline that comes to
Speaker 2: the end of this week around TikTok as well. Vac
Speaker 2: too embroiled in this geopolitics right now. Yeah, it absolutely is.
Speaker 7: When the President was asked about this last week, Caroline,
Speaker 7: the deadline coming up, he actually suggested that if China
Speaker 7: and the Chinese Communist Party would agree to acquiesce to
Speaker 7: a sale of TikTok's US operations, that that actually could
Speaker 7: result potentially in a lower teriff rate, suggesting once again
Speaker 7: he sees trade policy as a mechanism for negotiating really
Speaker 7: unrelated things. And he also said that if that can't
Speaker 7: be done by Saturday, which of course is the deadline
Speaker 7: April fifth, that he could always just extend it, as
Speaker 7: we saw him do at the very beginning of his term,
Speaker 7: extending at seventy five days, which is why the liners
Speaker 7: this weekend rather than being back in January. But as
Speaker 7: for the actual details of what a deal could look like,
Speaker 7: who that ultimate purchaser could be, and how much control
Speaker 7: they have though, we're not just the operations, but the
Speaker 7: algorithm specifically, very much amadeom question. And we only have
Speaker 7: a few days to go here, Caroline.
Speaker 2: Katie Lions bringing us up to speed, Thank you so much. Meanwhile,
Speaker 2: we've just had some breaking news, as you can see
Speaker 2: across your screens. More ECB European Central Bank officials appear
Speaker 2: ready to accept an April rate pause, basically ending the
Speaker 2: cutting cycle that we have currently seen. It's importantly to
Speaker 2: do with the fears around the fallout from tariffs, the
Speaker 2: inflationary effects. Let's just go more deeply into the global
Speaker 2: tariff impact right now. Ben Harburg's with US, no A
Speaker 2: Capital managing partner and core values Alpha portfolio Manager, No
Speaker 2: A capital. Look, it's a private firm managing over more
Speaker 2: than two billion assets and under management your core values.
Speaker 2: That brings particular exposure to Chinese companies. You're the perfect voice, Ben.
Speaker 2: Are you struggling with a lack of clarity or do
Speaker 2: you feel that you can invest in this moment?
Speaker 8: Well, I think from a Chinese person active, actually the
Speaker 8: country is pretty well positioned. China has been bearing the
Speaker 8: brunt of US tariffs and threats of tariffs for years
Speaker 8: now across both administrations, and so China started much earlier
Speaker 8: than any of other American trade partners and starting to
Speaker 8: think about offshoring, friend shoring, near shoring.
Speaker 9: You know, investors were threatened with sixty percent.
Speaker 8: Tariffs prior to Trump selection, and so actually a lot
Speaker 8: of those kind of very high noise numbers are already
Speaker 8: baked into two people's estimations. And so I think you've
Speaker 8: seen actually the Chinese market outperforming this year relative to
Speaker 8: its US counterparts.
Speaker 2: It's also been outperforming in large part because of the
Speaker 2: Generator AI wave of news. The fact that innovation seems
Speaker 2: to be backfront and center is that something you've been
Speaker 2: betting on to then, innovation was always there.
Speaker 8: I think the issue was that global investors, particularly Western investors,
Speaker 8: didn't price it correctly. That Chinese market was fundamentally undervalued
Speaker 8: for the last few years. You know, Chinese equivalents of
Speaker 8: their American companies valued at many multiples lower. And I
Speaker 8: think some of these more visceral, understandable, concrete actions like
Speaker 8: the Deep Seak kind of Sputnik moment, I think awakened
Speaker 8: global investors to really re evaluating these businesses on their fundamentals,
Speaker 8: and they recognize that actually there was huge amounts of
Speaker 8: innovation going on in China, particularly in the AI.
Speaker 9: Space, where China was always neck and neck with the US.
Speaker 8: And it's not just Deep Seak, it's Alibaba, It's ten Cents.
Speaker 8: So I think people kind of woke up out of
Speaker 8: their sleep and recognize that the market was fundamental innervalue.
Speaker 2: Well, then what about innovation in the United States? As
Speaker 2: we see taris take an impact, is it her?
Speaker 9: I don't think so.
Speaker 8: I mean the American innovative spirit remains intact. Global top
Speaker 8: minds still flocked to the United States and are integrated
Speaker 8: through our universities, into the American workforce, most of them
Speaker 8: becoming Green color holders or US citizens. This same kind
Speaker 8: of query was asked the Chinese when they were kind
Speaker 8: of taking their steps to kind of rein in entrepreneurs
Speaker 8: a couple of years ago. You know, when we saw
Speaker 8: the anti trust measures taken against Ali Baba and Mayitwan,
Speaker 8: it was a similar narrative, was innovation and.
Speaker 9: Entrepreneurship being hurt. So I don't think that's the case.
Speaker 8: And if anything, America is going to put foot on
Speaker 8: the gas on innovation over.
Speaker 9: The Trump era.
Speaker 8: We will see, you know, a lowering of a lot
Speaker 8: of the red tape, the regulatory hindrances, bureaucracy that was
Speaker 8: getting in the way, more tax support, more kind of
Speaker 8: integrated thinking across departments to support innovation. So I expect
Speaker 8: actually a boom in the US innovation, not a decline.
Speaker 2: Then you are close to the administration, we understand that
Speaker 2: when you're trying to give advice to those currently over
Speaker 2: in Washington or any other investor trying to search for
Speaker 2: clarity right now, do help people ultimately eat their vegetables
Speaker 2: with what might longer term be an innovation boost. There
Speaker 2: must be pressure on certain particular parts of innovation when
Speaker 2: it comes to robotics, when it comes to semiconductive access,
Speaker 2: for example.
Speaker 8: Well, so first I think you know, we're things aren't
Speaker 8: as valuats or unpredictable as people think. We're essentially doing
Speaker 8: what the President said he would do. So if you
Speaker 8: want to know where we're going, read what he said.
Speaker 8: Watch what he said. Uh, this is not a huge
Speaker 8: surprise to anyone who was following him over the last
Speaker 8: not not just over the campaign trail, but over the
Speaker 8: last decades.
Speaker 9: And then you know, certainly there is going to be
Speaker 9: short term pain.
Speaker 8: A lot of the key inputs to our supply chain,
Speaker 8: be it automotive, robotics, you know, the rare earth materials
Speaker 8: that come across all kinds of different core inputs. All
Speaker 8: of those are are going to be hit in the
Speaker 8: short term, which will mean some pain. But ultimately we
Speaker 8: have to find a way to wean ourselves off dependence
Speaker 8: on particularly obviously Chinese inputs. We need to either on
Speaker 8: shore those supply chains or near shore friendshore those with
Speaker 8: countries that we know we can rely on for decades
Speaker 8: to come.
Speaker 9: And I think this will ultimately.
Speaker 8: Sell to protect America. America's supply chain and ensure that
Speaker 8: it is not going to be vulnerable to a geopolitical
Speaker 8: adversary over the coming years.
Speaker 2: And what about some of the winners twenty twenty three,
Speaker 2: twenty twenty four in video comes to mind, of course
Speaker 2: some of the key chip makers, which now many are
Speaker 2: worried through regulation won't be able to access some of
Speaker 2: their end demand points. Geopolitics getting in the way of
Speaker 2: that too. Is that the sacrifice it's worth it?
Speaker 9: Well, that's not new again.
Speaker 8: I mean, you know, we were we were already seeing
Speaker 8: chip bands and coming particularly out of the Biden administration
Speaker 8: over the last four years, exporting those chips into China.
Speaker 9: And of course many of the American chip manufacturers and.
Speaker 8: Video side saw thirty to forty percent of all their
Speaker 8: exports going into China. And China's obviously done incredibly well
Speaker 8: building you know, five and ultimately six G hardware mobile handsets,
Speaker 8: and so it is a huge demand market for those
Speaker 8: for those consumers. So what we have to find do
Speaker 8: a way to do is continue to do business with
Speaker 8: China without giving there our most cutting edge chips, so
Speaker 8: ensure that you know, Chinese consumption is still helping to
Speaker 8: understand underlie and fund American art research and development and innovation,
Speaker 8: but make sure we're still ahead on the kind of
Speaker 8: most cutting edge chips. And so that's where these chip
Speaker 8: bands come into effect. And we've got to ensure obviously
Speaker 8: that those aren't being circumvented by third party countries.
Speaker 2: As well, big investor in China, investor in innovation, investor
Speaker 2: in soccer as well, which I think is behind the
Speaker 2: background that we currently see with you at the moment,
Speaker 2: Ben ben Harberg, another capital and anymore, we thank you
Speaker 2: time now for talking tech and first our France has
Speaker 2: fined Apple one hundred and sixty two million dollars over
Speaker 2: iOS data consent rules. Now antitrust regulators say Apple's app
Speaker 2: tracking transparency system does not allow developers to comply with
Speaker 2: Europe's GDPR priphacy rules. Instead, it forces apps to display
Speaker 2: multiple pop ups. Apple said it was disappointed in the decision,
Speaker 2: while similar investigations are actually underway in Germany, Poland, Italy
Speaker 2: and Romania. Plus Nokia and Amazon have settled a global
Speaker 2: patent dispute over its streaming technologies. Nokia had alleged that
Speaker 2: Amazon used its tech in streaming services and devices without authorization.
Speaker 2: The settlement results all patent litigations globally. The terms are
Speaker 2: not disclosed, and Japan is preparing as much as five
Speaker 2: point four billion dollars an additional aid for chip startup
Speaker 2: Rapidness is the latest move by the country to bolster
Speaker 2: its semiconductor industry during heightened US China tensions. Now that
Speaker 2: brings Japan's total public funding of advanced chips to nearly
Speaker 2: eleven and a half billion dollars. And let's just now
Speaker 2: take a look at those US China tentions with a
Speaker 2: focus on Huawei reporting a nine and a half percent
Speaker 2: rise in revenue in the December quarter according to Bloomberg's
Speaker 2: calculations based on annual results. There's also posted a net
Speaker 2: loss and more than forty million dollars due to aggressive
Speaker 2: spending on research into development. Let's talk about it with
Speaker 2: Peter Elstrom. And the point here is China is all
Speaker 2: in on R and D in large part because the
Speaker 2: limitations to access to chips from the US. Yeah, that's
Speaker 2: exactly right.
Speaker 10: This this is a pretty remarkable financial report from Huawei.
Speaker 10: As you mentioned, Huawei's revenue grew almost ten percent to
Speaker 10: about thirty eight billion dollars. The company has been growing
Speaker 10: quite quickly recently. That's largely because of big gains in
Speaker 10: their smartphone business, in particular in their cloud computing business.
Speaker 10: As you may recall, Huawei was largely out of the
Speaker 10: smartphone business because of this US ban on them getting
Speaker 10: the access to the most advanced chips. They weren't able
Speaker 10: to compete with Apple and even their domestic competitors. They've
Speaker 10: now been able to get access to those and the
Speaker 10: smartphone business is growing again.
Speaker 2: Cloud computing is growing again.
Speaker 10: But as you say, really the headline number here is
Speaker 10: the loss that they've got. They haven't lost money in
Speaker 10: a quarter for many years. They're pouring money into R
Speaker 10: and D in particular, Huawei has really become one of
Speaker 10: the leaders, the national champions for China and trying to
Speaker 10: make breakthroughs in these key technologies that are important to
Speaker 10: them strategically. So they've developed their own operating system to
Speaker 10: replace Android, for example, on smartphones, which was very common.
Speaker 10: We also are pouring money into semiconductors. In particular, they've
Speaker 10: come out with their own AI chip to compete within
Speaker 10: Vidia in the market. Because in Vidia can't sell its
Speaker 10: highest end chips into the market. Wawei is taking some
Speaker 10: of that business right now, and they're getting the kind
Speaker 10: of practice in business to be able to make some gains.
Speaker 10: In terms of the sophistication. They're still quite always behind Nvidia,
Speaker 10: but they are making progress.
Speaker 2: And briefly, Peter, this feeds into a moment where we're
Speaker 2: thinking generative AI is actually being upended by China because
Speaker 2: they can do more with less and less powerful chips.
Speaker 2: Does that counterrap that a little?
Speaker 10: Right? We've seen the constraints that the US has put
Speaker 10: on China and Chinese companies have actually led to some
Speaker 10: pretty creative innovations. We saw it with deep Seek in particular,
Speaker 10: where they had access to some in Vidia chips but
Speaker 10: not the most advanced, they still made progress. Now Huawei
Speaker 10: is trying to feed into that also by providing some
Speaker 10: chips that are maybe not quite as sophisticated, but at
Speaker 10: least give some of these China startups an opportunity to
Speaker 10: be able to develop AI services.
Speaker 2: It's astrom great to have you on the show as
Speaker 2: always with your Asia focus. We thank you. Welcome back
Speaker 2: to New meg Technology and Caroline Hide in New York.
Speaker 2: A quick check on these markets. We are bouncing off
Speaker 2: our lows when it comes to the Nasdaq one hundred.
Speaker 2: But look, we've been underwater throughout the trading day, and indeed,
Speaker 2: following on from Friday's anxiety too, we're off by one
Speaker 2: point four percent. Your leaders on the downside are the
Speaker 2: who's who are the magnificent seven in video, Microsoft, Amazon, Tesla,
Speaker 2: Meta Alphabet. In fact, it's really only Apple that's in
Speaker 2: the green at the moment. We're seeing the magnificent seven
Speaker 2: off by two point four percent. As I shine a
Speaker 2: light on in video off by another four percent for
Speaker 2: what have been the star performer of twenty twenty three
Speaker 2: and twenty twenty four. I also should just show what's
Speaker 2: happening to corweav after it went public last week. First
Speaker 2: day of trading was Friday. It didn't perform that well
Speaker 2: on Friday, and now I'm below that initial price of
Speaker 2: forty dollars were ath thirty six dollars and a half.
Speaker 2: No wonder in a risk off attitude, but also as
Speaker 2: we continue to question the ultimate need for compute here,
Speaker 2: let's discuss with the startup whose business relapsed with corweave.
Speaker 2: Lambda CEO Stephen Balabana, I'm very pleased to say joins
Speaker 2: us now your business has breadth, and it's not just
Speaker 2: about access to GPUs and data centers. But how do
Speaker 2: you feel the market is currently responding to the need
Speaker 2: for compute in the longer term.
Speaker 11: Well, I think that a lot of the demand for
Speaker 11: compute in the future is already priced in, and what
Speaker 11: we're seeing in the short term is probably just general
Speaker 11: market fluctuations. But what I've been seeing with open Eye's
Speaker 11: new image generation tools is that there's a lot more
Speaker 11: compute demand coming down the pipe.
Speaker 2: I think that was where the tension lied for us,
Speaker 2: particularly on Friday, when everyone's worried about too much exposure
Speaker 2: of a core weave to a few key hyperscalers. But
Speaker 2: then Sam Altman of open ai is saying that his
Speaker 2: GPUs are melting because everyone is so keen to play
Speaker 2: with his updated model. So can you square that for us?
Speaker 2: How much will demand of generalor AI ultimately push forward
Speaker 2: your business? Yeah?
Speaker 11: So Sam's tweeting that they're seeing biblical demand for the
Speaker 11: image generation tools that they've launched recently, and a lot
Speaker 11: of the businesses that are probably traded right now are
Speaker 11: being valued on a forward basis, which is to say
Speaker 11: that the projections that they're management teams and everyone's been
Speaker 11: providing is how they're being valued. And so I think
Speaker 11: that there's a lot of as they say, would to
Speaker 11: chop to get to to those run rates which are
Speaker 11: the basis for the valuations. But these tools, it's a
Speaker 11: lot more than just anime image generations.
Speaker 2: And means it doesn't feel like that when you're actually
Speaker 2: on ex at the moment, but there is more.
Speaker 11: To it, right, And so the biggest leap here is
Speaker 11: that these are the first generation of models that are
Speaker 11: basically perfect text rendering fidelity. And so what you're going
Speaker 11: to start to see a lot more of is instead
Speaker 11: of an AI generated image being in an embed inside
Speaker 11: of a presentation, you're going to start to see the
Speaker 11: entire presentation slide is generated by a neural network. What
Speaker 11: that means is, I think we're getting closer and closer
Speaker 11: and closer to the future where nearly every pixel you
Speaker 11: see on a computer screen is going to be rendered
Speaker 11: by a neural network.
Speaker 2: Therefore, that just means compute goes up and to the
Speaker 2: right as it weaves into our enterprise life, into our
Speaker 2: personal life.
Speaker 11: Every presentation, every piece of sales collateral, every advertisement, every
Speaker 11: video game, you're going to start to see more and
Speaker 11: more AI compute embedded in those things, which means that
Speaker 11: demand is going to continue to grow more than exponentially.
Speaker 2: Have we got the infrastructure ready for that.
Speaker 11: Everybody is working really hard in our industry to keep
Speaker 11: up with the ongoing demand. Even with all the high
Speaker 11: expectations and ambition that open ai has, their servers are
Speaker 11: still on fire, and they still probably have underestimated the
Speaker 11: amount of demand that they are seen.
Speaker 8: Now.
Speaker 2: I mean you're serving developers, of course, the entire AI
Speaker 2: development cycle right now. What is it like at your business?
Speaker 2: So how are you managing to scale to meet that
Speaker 2: level of demand?
Speaker 1: Yeah?
Speaker 11: I think that one way of looking at land versus
Speaker 11: say Core Weave. COREA has a lot of customer base
Speaker 11: and for example open Ai, and what we're doing is
Speaker 11: servicing kind of everybody. Everybody else, A lot of hyperscalers
Speaker 11: and over one hundred and fifty thousand individual developers use
Speaker 11: Lambda cloud to train their models and inference their models.
Speaker 11: And what we're going to see, especially with these new
Speaker 11: advances in image generation, is that Opening Eye is going
Speaker 11: to have their time in the spotlight run away continue
Speaker 11: to grow their market share and then Open source models
Speaker 11: are going to come in and we're going to start
Speaker 11: to see a lot of that compute demand in clouds
Speaker 11: like the hyper scalers and lambda.
Speaker 2: Will that open source winning come from China? How much
Speaker 2: are we going to see it being US made startup
Speaker 2: and AI models or how much will this be really
Speaker 2: global offer it? I think it's hard to predict.
Speaker 11: I think that my bet would be that we'll probably
Speaker 11: see a high quality Chinese model first, and then the
Speaker 11: rest of the world will continue to publish theirs. I
Speaker 11: am generally bullish of open source internationally, whether it's in
Speaker 11: the United States, China, or elsewhere.
Speaker 2: So for those who are currently aware of the hype cycle,
Speaker 2: seeing the valuations skyrocket and then come back down, and
Speaker 2: still waiting for Generator AI to affect their everyday working world,
Speaker 2: how soon will that come? Do you think? How soon?
Speaker 2: If what every PowerPoint display we make is ultimately a
Speaker 2: neural network.
Speaker 11: I think that what you're starting to see is that
Speaker 11: more and more of the productivity that you do is
Speaker 11: going to be coming from tools like chad GPT, and
Speaker 11: so you might not actually end up seeing it embedded
Speaker 11: inside of PowerPoint. It may actually just be hey, please
Speaker 11: generate this presentation for me, here are the key talking points,
Speaker 11: and it perfectly renders a PDF for you at the
Speaker 11: end of it. I think that that's the big shift
Speaker 11: that's happening, is that neural networks are replacing more and
Speaker 11: more and more of software that we use every day.
Speaker 2: Perhaps not particularly beautiful Moune music for some of these
Speaker 2: publicly traded companies and their products that we so use often.
Speaker 2: Stephen Balavan flown in for uswith so thank him, co
Speaker 2: founder and CEO of Lander. Meanwhile, from AI Data Centers
Speaker 2: to compute for crypto, the Trump family is launching a
Speaker 2: bitcoin mining focus venture with HUT eight called American Bitcoin,
Speaker 2: which will focus on bitcoin mining and quote strategic bitcoin
Speaker 2: reserve development. Eric Trump will serve as American Bitcoin's chief
Speaker 2: strategy officer. Bloomberg's Michael Reagan has been helping edit the
Speaker 2: stories across this world at the moment and ever more,
Speaker 2: the administration and family of the administration becoming intertwined with crypto.
Speaker 6: Yeah, that's right, Carolina. Obviously, this is the latest of
Speaker 6: several Trump family projects in the cryptospace world, Liberty Financial
Speaker 6: being sort of the most high profile. A so called
Speaker 6: DeFi platform launched by Trump and members of his circle.
Speaker 2: This was new news this.
Speaker 6: Morning that we did not know who's coming. But Eric
Speaker 6: Trump and Donald Trump Junior are investors in a company
Speaker 6: that is basically forming a joint venture with HUT eight.
Speaker 6: HUT eight will be the majority owner of an eighty
Speaker 6: percent They are transferring all of their bitcoin mining rigs
Speaker 6: to this new subsidiary and it will be called American Bitcoin. Now, remember,
Speaker 6: on the campaign trail, President Trump made this promise that
Speaker 6: he wanted all bitcoin to be mined in the USA,
Speaker 6: which a lot of people in the industry were skeptical
Speaker 6: that he'd actually be able to fulfill that promise just
Speaker 6: because of the decentralized global nature of bitcoin. And we
Speaker 6: haven't heard much from the President himself about how he
Speaker 6: plans to follow through on that plan. But we do
Speaker 6: know now that the Trump sons are a part of
Speaker 6: this operation, this joint venture with HUT eight to mine
Speaker 6: bitcoin in America.
Speaker 2: And once again, it's all about bitcoin. And you've been
Speaker 2: writing some great stories across your team, but what's up
Speaker 2: with ethereum at the moment? Which is the number two
Speaker 2: players still? But DeFi just not translating in the way
Speaker 2: many had thought.
Speaker 6: Yeah, it's a really interesting story, Carolyne. I mean, Ethereum
Speaker 6: had so much promise, so much potential years ago. I
Speaker 6: think if you look at it from its basic sense,
Speaker 6: there's sort of competition on both sides for Ethereum that
Speaker 6: is pretty fierce above it. If you're just an investor
Speaker 6: who just wants exposure to cryptocurrency, Bitcoin has really proven
Speaker 6: to be the token of choice for that, and I
Speaker 6: think a big part of that reason why is because
Speaker 6: of that famously limited supply of Bitcoin, there will only
Speaker 6: ever be twenty one million bitcoin in existence. Ethereum, on
Speaker 6: the other end, doesn't have a cap on how many
Speaker 6: Ethereum tokens will be issued, and there are already about
Speaker 6: six times as many Ethereum tokens out there. So from
Speaker 6: an investor standpoint, it's clear that you know, people looking
Speaker 6: for long term exposure to the growth and prices a
Speaker 6: bit of crypto are sticking with Bitcoin, and the ETF
Speaker 6: flows have been really you know, off the charts for
Speaker 6: Bitcoin and not so much for Ethereum. But then below Ethereum,
Speaker 6: the other competition on that sort of DeFi space is Salana.
Speaker 6: You know, Ethereum's great innovation was that you could trade
Speaker 6: a lot more than just the ether tokens. You know,
Speaker 6: bitcoin exists, that blockchain exists basically just to trade bitcoin.
Speaker 6: Ethereum opened up the world to the possibilities of NFTs
Speaker 6: and these other smart contracts that could be traded on
Speaker 6: crypto blockchains. Now you can roll your eyes on NFTs,
Speaker 6: but for Wall Street that's hungary to tokenize real world assets.
Speaker 6: That was sort of the proof case.
Speaker 2: Of how that could be done.
Speaker 6: But the problem now is Salanta is just doing it
Speaker 6: at a cheaper, faster transaction speed and is really providing
Speaker 6: stiff competition for Ethereum.
Speaker 2: Moment of truth for Italic in a moment, Michael Reagan,
Speaker 2: we thank you very much. Indeed, coming up, we're going
Speaker 2: to be joined by Catherine Bracy, CEO the tech advocacy
Speaker 2: group tech Equity on herniebook dissecting the impact of venture
Speaker 2: capital and society at large. It's a bally meg technology
Speaker 2: Alphabets AI based drug discovery unit Isomorphic Labs. It's just
Speaker 2: that it raised six hundred million dollars in its first
Speaker 2: external funding round, was led by Thrive Capital with participation
Speaker 2: from GV and Alphabet. The goal develop its AI drug
Speaker 2: design engine and support drug candidates into clinical testing. Now
Speaker 2: we're going to take a slightly different approach to the
Speaker 2: VC industry, though. A new book says bad practices from
Speaker 2: venture capital are bleeding into all industries and damaging the economy.
Speaker 2: It's called World Eaters, How venture capital is cannibalizing the economy.
Speaker 2: It's author Katherin Bracy, CEO of the advocacy group tech Equity,
Speaker 2: joins us now, and it's the word cannibalizing. I'm really
Speaker 2: interested in within. Can you articulate briefly what the argument
Speaker 2: is here the bad behavior.
Speaker 12: Well, essentially, it's the power of the venture capital has
Speaker 12: been chasing. It's become about chasing financial returns instead of
Speaker 12: chasing new technologies. And since there's so much money chasing
Speaker 12: a very few companies that can actually deliver venture scale returns,
Speaker 12: the money has gone and sought out areas of the
Speaker 12: economy where it really shouldn't be. And that's why the
Speaker 12: book is called World leaders, a play on Read Hoffman's
Speaker 12: essay from twenty eleven, software is eating the world. I
Speaker 12: don't think it's software that's eating the world. I think
Speaker 12: it's venture capital's business models that are eating the world.
Speaker 2: Well, if you look at the latest funding round, the
Speaker 2: record one that's going to be up to forty billion
Speaker 2: dollars in new equity for now a three hundred billion
Speaker 2: dollar valuation. Open ai surely a generative AI, large language
Speaker 2: model that just would not have the money to continue
Speaker 2: unless it looked to VC or private funding. Surely that
Speaker 2: is the right kind of business to get venture capital funding.
Speaker 12: Well maybe, Actually I interviewed Sam Altman for the book,
Speaker 12: and he told me that the technology behind open ai
Speaker 12: is the kind of thing that government should be investing in,
Speaker 12: same with his other big startup in nuclear that government
Speaker 12: isn't doing it, so venture capital has to step in.
Speaker 12: And the reason he's set up open ai as a
Speaker 12: nonprofit was to protect the technology from the mandates of
Speaker 12: venture capital as much as possible. We see how that
Speaker 12: has ended up and what it means for companies who
Speaker 12: are maybe pursuing these breakthroughs that have a lot of
Speaker 12: danger in the world to be really driven by the
Speaker 12: incentives of investors and not really the incentives of what's
Speaker 12: best for our society.
Speaker 2: Is there a way to realign incentives here at the moment,
Speaker 2: because ultimately the US government, for example, is trying to
Speaker 2: pull back on spending turning evermore to the private markets,
Speaker 2: to private capital to fund AI infrastructure. For example, we've
Speaker 2: got money going into at least genitive AI helping with
Speaker 2: health breakthroughs we just reported from Alphabet. How do you
Speaker 2: realign at this moment, Catherine.
Speaker 12: Well, I definitely think there's a role that government can
Speaker 12: play for market crafting, that is, you know, creating the
Speaker 12: incentives for venture capital to seek out the startups that
Speaker 12: aren't getting invested in. I think, you know, what I
Speaker 12: found in my research was that the bigger problem than
Speaker 12: VC investing in some companies is that they weren't investing
Speaker 12: in many others that could create a lot of great value.
Speaker 12: You know, companies that are hitting doubles or triples instead
Speaker 12: of grand slams, and right now there just are not
Speaker 12: capital markets for them. So, you know, I think there's
Speaker 12: a lot that government could do to catalyze money going
Speaker 12: into those areas. But honestly, there's nothing that policy really
Speaker 12: has to change right now for the markets to change.
Speaker 12: Limited partners could decide that, you know, chasing returns through
Speaker 12: venture capital is not always the best outcome, that not
Speaker 12: every VC fund can be Sequoia or Andres and Horowitz
Speaker 12: and not every limited partner is going to get into them,
Speaker 12: So why not take a bet on you know, fund
Speaker 12: managers that are putting their portfolios together around doubles and
Speaker 12: triples instead of chasing the elusive dec acord.
Speaker 2: And what do these doubles and triples need to fix?
Speaker 2: One are the is that you think of being over looked?
Speaker 12: Well, the one I focus on in my book is housing.
Speaker 12: I think the housing market is a very clear opportunity.
Speaker 12: We need innovation there for sure, but we don't. There
Speaker 12: aren't that many software based or venture scale solutions to
Speaker 12: that software or housing is obviously very infrastructure heavy. There
Speaker 12: are long time cycles here, the regulatory burdens are high,
Speaker 12: and so the way that a fund needs to be
Speaker 12: structured to pursue innovation in the housing market is just
Speaker 12: going to be different. And I don't think there are
Speaker 12: that many fund managers thinking outside the box. How might
Speaker 12: you construct an innovation fund in early stage risk capital
Speaker 12: fund to address solutions in the housing market that doesn't
Speaker 12: look like chasing power law returns at at every angle.
Speaker 2: Has embracing so fascinatingly. Thanks for coming on and talking
Speaker 2: about at CEO tech Equity and the autha of the
Speaker 2: book well details. SpaceX and Apple are fighting for space literally.
Speaker 2: According to the Wall Street Journal, the two companies are
Speaker 2: competing for satellite spectrum rights, which are in limited supply now.
Speaker 2: The iPhone maker has been working to expand its satellite
Speaker 2: connectivity services in a direct combetition with SpaceX's Starling. The
Speaker 2: move would allow Apple to provide service in areas where
Speaker 2: regular cell services can't.
Speaker 11: Now.
Speaker 2: In response, SpaceX has pushed for federal regulators to stall
Speaker 2: Apple funded satellite expansion efforts. And let's just stick with
Speaker 2: SpaceX because the company is preparing to launch four passengers
Speaker 2: around Earth's poles in a first of its kind mission.
Speaker 2: For more, let's bring in Bloomberg's Sana Prashanka and joining
Speaker 2: us for more. The crew of four passengers are doing
Speaker 2: what has never been done before and going around the
Speaker 2: Earth's poles. Right, yes, yes, exactly.
Speaker 13: So it's the first human space flight to fly over
Speaker 13: the Earth's polar regions, which is pretty interesting. So they'll
Speaker 13: take off from Florida and fly in a ninety degree
Speaker 13: circular orbit around the Earth.
Speaker 2: Finance by a crypto billionaire. Why is he and the
Speaker 2: three that he has selected? So keen on the polls. Yeah.
Speaker 13: So they had a press conference last Friday. The FRAM
Speaker 13: two mission. FRAM two is based off a Norwegian polar expeditionship,
Speaker 13: and what Chun Wang, who is a cryptocurrency investor, said
Speaker 13: was that he had always as a kid, always looked
Speaker 13: at the Earth's map and saw this white spot at
Speaker 13: the bottom of the pole and always wondered what was
Speaker 13: out there. So he's excited to view that from space,
Speaker 13: and he's very into visiting different countries, being an explorer
Speaker 13: and going on different adventures, is what he said.
Speaker 2: It's taking an extraordinary group with him of other Pole
Speaker 2: focused explorers, but they're offering their own bodies up to
Speaker 2: research here. They're taking on a lot of risk Altimnisana.
Speaker 13: Yes, yes, definitely, And actually one of the things that
Speaker 13: they're doing on their mission is conducting research on the
Speaker 13: impacts of spaceplight on human health. So they're also teaching
Speaker 13: other people about what it's like to be up there
Speaker 13: while they're putting their own bodies at risks. And one
Speaker 13: of their projects will be capturing the first X ray
Speaker 13: image of a human in space, which will be definitely
Speaker 13: very interesting for the research community in the science community.
Speaker 2: And they lift off Florida. Is this evening, Yes, it's
Speaker 2: this evening.
Speaker 13: They're targeting around nine pm, but there's a couple different
Speaker 13: launch windows if the nine pm one doesn't work out,
Speaker 13: But for now, I think it's around nine thirty pm.
Speaker 2: Sana Pashanka, thanks for following up for us. We appreciate it.
Speaker 2: Also happening today right here on Earth in Vegas at least,
Speaker 2: Intel is holding its two day Intel Vision event. It's
Speaker 2: a conference which kind of showcases Intel's technologies and how
Speaker 2: they're being used to enable new solutions and drive business success,
Speaker 2: so they say, in the AI era. But of course
Speaker 2: that success is all hinges on this guy, Intel's new
Speaker 2: CEO Lit butam he's gonna be speaking for the first
Speaker 2: time this Afternoons's taking on the top job. Let's ask
Speaker 2: man deep seeing from real meg Intelligence what we think
Speaker 2: might be articulated Because he's been out there talking to investors,
Speaker 2: writing letters of course also to his own workforce cuts,
Speaker 2: it seems yeah.
Speaker 14: I mean, look, they've already peered back from the nand
Speaker 14: business so you can see, you know, the focus is
Speaker 14: shifting towards AI hopefully, and that was one of the
Speaker 14: things that I think Pat Gelsinger didn't do very well.
Speaker 14: Was really hone in on AI, which is the growth market.
Speaker 14: I mean, when we look at all the hyperscalers increasing
Speaker 14: their tapics by fifty percent, you would expect is something
Speaker 14: would trickle down to Intel in terms of, you know,
Speaker 14: driving some revenue upside. And I'm hoping, you know, that's
Speaker 14: the vision he articulates when he talks to investors, is
Speaker 14: how Intel is really focused on AI. And look the
Speaker 14: foundry side. I mean, the government seems to be supportive
Speaker 14: to Intel, you know, to bring manufacturing on shore, but
Speaker 14: that is a lengthier turnaround because one of the concerns
Speaker 14: for investors in Intel stock is the cash burn. Yes,
Speaker 14: you don't want to see cash burn. And the message
Speaker 14: here is we're really focused on AI opportunity and they
Speaker 14: somehow have to find a way to compete with Nvidia.
Speaker 2: Well, they got Goudie. That is the offering, right. Do
Speaker 2: they need to change up the talent they have? They've
Speaker 2: certainly been changing up the board talent at least it
Speaker 2: seems well.
Speaker 14: I think there's a lot of that they need to
Speaker 14: change at the product level. Clearly, the product didn't resonate
Speaker 14: very well with the market when it comes to the
Speaker 14: training and influencing opportunity on the AI side. But look,
Speaker 14: this guy is coming from Cadence, so he has that
Speaker 14: software angle in terms of, you know, thinking about what
Speaker 14: is it that Intel can do in terms of both
Speaker 14: the chip side as well as the software side. And
Speaker 14: I hope he articulates that vision.
Speaker 2: It's got to be smoptimism in there too. Right, this
Speaker 2: is a stock that has been wiped out over the
Speaker 2: past year or so.
Speaker 14: Yeah, I mean, if you look at the valuation, this
Speaker 14: is like every pessimistic scenario is baked in the stock
Speaker 14: right now. So any hint of good news around a
Speaker 14: from a vision perspective, and then he lays out clear markers.
Speaker 14: I think it's going to resonate with investors.
Speaker 2: Mandate it's saying, going to be attuned to that talk
Speaker 2: coming from Vegas senior Bloomberg Intelligence analyst. Also, he's busy
Speaker 2: helping organize well as Bloomberg Intelligence's fourth Generator AI conference.
Speaker 2: It's happening on Wednesday, featuring some leading figures in the industry.
Speaker 2: I'm lucky enough to be talking to a few of them. Meanwhile,
Speaker 2: that does it for this edition of Bloomberg Technology. Don't
Speaker 2: forget to check out our podcast. You can find it
Speaker 2: on the terminal as well as online on Apple, Spotify,
Speaker 2: and iHeart from New York. This is Bloomberg Technology.