High AI Capex Demand a 'Multi-Year' Cycle

Summary

Bloomberg Businessweek Podcast Summary
Episode: High AI Capex Demand a 'Multi-Year' Cycle
Date: July 6, 2026
Hosts: Carol Massar, Tim Stenovec (plus Emily and Ed Ludlow)
Notable Guests: Mark Gurman (Bloomberg), Rudina Cesare (Glasswing Ventures), Dr. Ellen Wald (Transversal Consulting), Eric Roston (Bloomberg Green)

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Overview

This episode dives into three central, interconnected themes shaping global business and technology:

1. The multi-year cycle of AI infrastructure (CapEx) investment, with a spotlight on Apple and Broadcom's expanded partnership in the AI era.
2. The evolving AI value chain and startup landscape, including competition and sustainability in AI-driven business models.
3. Recent developments in global oil markets and the economic realities of climate risk, including surprising, volatile weather patterns.

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1. Apple & Broadcom: A New Chapter in AI Hardware

[02:02 – 10:51]

Main Discussion Points:

• Apple and Broadcom’s Expanded Partnership:
  Mark Gurman (Bloomberg Global Consumer Tech Managing Editor) reveals details of an expanded Apple-Broadcom deal running through 2031, focusing on so-called "ASIC" chips central to AI servers.

• Why ASICs Matter:

  • ASIC = application-specific integrated circuit; optimized for single-purpose computation, key for AI workloads in data centers.
  • Quote (Mark Gurman, 03:27):
    “If you consider an Apple Intelligence and Apple AI server to be a product, then fine. But what I'm telling you is, that's what it is.”

• Apple’s Dual Strategy in AI Compute:

  • On-device AI runs models locally using Apple custom silicon.
  • Cloud-based AI uses server-side hardware—currently the M2 Ultra, soon Apple's forthcoming 'Baltra' server chip (with Broadcom).
  • Future servers (2027–2028) plan "four times the power" of top-end Mac chips (05:34).

• Industry Implications and Vendor Dynamics:

  • Apple’s historic supply-chain dominance is waning amid fierce AI infrastructure competition:
    “Apple just does not have that clout or credibility that they once had. They're just one of the guys now. They're not...at the front of the line.” (Mark Gurman, 07:27)

• Looking Ahead – New Product Frontiers:
  Gurman teases upcoming Apple smart glasses (“Project N50”) as the next potential disruption akin to the Apple Watch's effect on traditional timepieces (09:05–10:51).

Memorable Moment – Product Time Capsule Insight:

• Gurman lampoons the idea of an iPhone surviving in a time capsule for 250 years:
  “You know that phone’s gonna explode, right? Like having a lithium ion battery in a very warm enclosed space for the next 250 years.” (Mark Gurman, 08:10)

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2. The Multi-Year AI Capex Cycle & Startup Moats

[13:37 – 24:27]

Key Themes:

• Wall Street’s Renewed Focus on 'Hyperscalers':
  Market strategists (HSBC, Morgan Stanley) discuss oscillating investor sentiment between chipmakers and cloud giants, with an eye toward persistent AI infrastructure demand (14:03–14:34).

• Capex Reality Check:
  Venture investor Rudina Cesare declares,
  “I don't know that we're out of the CapEx demand. I think that's a multi, multi cycle, multi year level of demand.” (Rudina Cesare, 16:29)

  • Demand for AI hardware and supporting infrastructure (from fabricating chips to running foundation models) is robust and evolving.

• AI Revenue and Productization:

  • The early-stage AI application sector shows acceleration, sometimes scaling from zero to hundreds of millions in revenue in months.
  • "Is the revenue sustainable or is it a leaky bucket?" —Rudina Cesare, 17:40
  • Corporate adoption is moving from experimentation to deep integration into business models.

• Startups vs. Hyperscalers:

  • Debate on defensibility (“moat”): Specialized/vertical applications with unique, narrow data sets can fend off large cloud providers offering general-purpose AI.
  • Notable Quote (Rudina Cesare, 18:53):
    “If Microsoft or Anthropic or OpenAI are going to that level of specificity, we have something to worry about...But the value doesn't necessarily lie in the models. It actually lies in the highly specific, albeit not as broad data sets which then...deliver much, you know, superior outputs.”

• Changing Venture Dynamics:

  • Early-stage deals now sometimes involve “access checks”—small stakes in huge rounds just to gain exposure:
    "We write, you know, small one to $2 million access checks in these gigantic rounds to have a seat at the table, to have a seat to the ecosystem..." (Cesare, 22:32)

• The X/Ai (Elon Musk) Factor:

  • X.ai is gaining ground with its cursor tool acquisition, but rapid iteration persists: “...the next generation saying we've bypassed cursor, so things are moving so very fast.” (Rudina Cesare, 24:12)

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3. Oil Markets & Climate Surprises

A. Saudi Oil Price Cuts – Short-Term Relief or Structural Shift?

[28:09 – 35:56]

Dr. Ellen Wald’s Analysis:

• Saudi Aramco’s Price Cut:

  • For the first time since 2020, Saudi Arabia is discounting its crude oil for Asia due to a storage and logistics backlog (tankers, storage tanks).
  • “So what we're really seeing here, I think, is a very temporary situation in which there's a lot of crude oil that needs to move out of the Persian Gulf basically to get things unplugged and get things moving again.” (Dr. Ellen Wald, 29:57)

• Broader Implications:

  • The move impacts global prices but is likely a “temporary thing just to get that market...unplugged.”
  • Saudi Aramco’s power endures, but its priority is market stability and consistent outbound volumes, not sustained high prices.

• How Fast Does the Oil Flow Reset?

  • Logistical normalcy could take “several months...the market is incredibly resilient, but it also depends on a lot of factors...” (Dr. Wald, 34:21)
  • China’s appetite and risk tolerance will be decisive.

• China’s Oil Demand and Energy Independence:

  • Despite big import cuts, “I don't think the answer is because of green improvements.” (Dr. Ellen Wald, 35:56)

---

B. Climate Change: The Era of Surprises

[39:10 – 47:45]

Key Reporting by Eric Roston, Bloomberg News Sustainability Editor:

• From Projections to Lived Reality:

  • Scientists have long anticipated global warming, but its unpredictable, regional extremes are proving surprising even to experts.
  • “Now that conversation is, ‘How am I going to get everything out of my basement?’”
    (Roston on how climate change feels far more direct and personal, 42:15).

• Surprise as the New Normal:

  • Weather “whiplash”—swinging from record cold to record heat within days—has become common.
  • “There's just increasing metastasizing lack of stability in systems that we've relied on for a long time. And so crazy things are happening back to back.” (Roston, 43:18)

• Why Models Are Struggling:

  • Traditional climate models are accurate at global scales over decades, but break down at local, shorter intervals.
  • Notable Quote (from climate pioneer Wallace Broeker, cited by Roston, 45:41):
    “The climate is an ornery beast and if you poke it a little bit, you're going to get an outsized reaction.”

• Private Sector Impact:

  • “Parts of the country are going to become increasingly uninsurable.” (Roston, 43:01)
  • Conversation has moved beyond science into banking, insurance, and corporate risk.

• Energy Volatility Driving Change:

  • “Colleagues have done a ton of phenomenal reporting...about how the war in Iran and the subsequent energy price volatility has just like convinced country after country and company after company they don't want this fossil fuel volatility anymore and they're finding clean energy.” (Roston, 47:22)
  • Echoes of earlier oil/energy discussion, reinforcing the connection between market shifts and climate adaptation.

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Timestamps for Key Segments

• Apple–Broadcom AI Partnership & CapEx Trends: 02:02 – 10:51
• Hyperscalers, VC Perspective, and Startup Moats: 13:37 – 24:27
• Saudi Oil Price Cuts Explained: 28:09 – 35:56
• Climate Surprises & Economic Impact: 39:10 – 47:45

---

Noteworthy Quotes

• “Apple just does not have that clout or credibility that they once had. They're just one of the guys now. They're not...at the front of the line.”
  — Mark Gurman (07:27)

• “Is the revenue sustainable or is it a leaky bucket?”
  — Rudina Cesare (17:40)

• “If you poke [the climate] a little bit, you're going to get an outsized reaction.”
  — Wallace Broeker, quoted by Eric Roston (45:41)

• “There's just increasing metastasizing lack of stability in systems that we've relied on for a long time.”
  — Eric Roston (43:18)

---

Summary & Takeaways

• AI Infrastructure Spending Is a Long Game:
  Deepening technology partnerships (Apple–Broadcom) and ongoing investment cycles are set to reshape hardware and cloud landscapes for years.

• The AI Startup Gold Rush & Hyperscaler Tensions:
  As market titans and startups jostle for niches, defensible data and vertical use-cases become critical for smaller entrants. Moats are less about models, more about specialized data and applications.

• Oil & Energy Instability:
  Temporary price moves reflect supply chain and political shocks, not a decaying oil industry, but reinforce how energy volatility is encouraging a global search for cleaner and more stable alternatives.

• Climate Change Becomes Personal – and Economic:
  Extreme, unpredictable weather is now the standard, undermining old models and placing macroeconomic pressure on insurance, banking, and energy.

This episode offers a panoramic view of the tech, energy, and climate forces reshaping global markets, while spotlighting the uncertainty and opportunity within each sector.

Transcript

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[Carolyn]

All right, so let's get to certainly a story that we've been talking about a lot and it feels like two companies got together and they said let's do more for longer. Bloomberg's Mark Gurman found out that Broadcom and Apple will extend their tie up in an expanded partnership to 2031 on products that will find their way into, quote, multiple generations of Apple products. So let's get to it. He is here in studio, made his way to the East Coast. He is Mark Gurman, of course, Bloomberg News managing editor for Global Consumer Tech. Good to have you here.

[Mark Gurman]

Thanks for having me on the East Coast.

[Carolyn]

Yeah, it's great. And there's stuff going on. What is going on? These guys have been working together for a while.

[Mark Gurman]

Yeah. Well, speaking of phones, Broadcom, they make chips, all sorts of chips. And Apple and Broadcom have worked together for decades at this point on wireless components. So for a long time, to get your phone to connect to Wi Fi or to connect to Bluetooth, you were using what's called a combined WI Fi plus Bluetooth chip made by Broadcom. And Apple was the biggest buyer of this chip. It was the biggest revenue source for Broadcom. But a few years ago, Apple decided it's going to go on its own path. They're going to develop their own Wi Fi plus a Bluetooth module. It's called the N1. It's now in the latest iPhones, latest iPads, latest Macs. They're going to bring it to more devices. And so Broadcom got designed out of the iPhone. But starting in 2023, in order to keep Broadcom around, they created a technology. It's called an RF filter. It's a component that works with the cellular modem. Because as you also know, Apple has Dr. Qualcomm for the most part and is now building their own modem. So they're there for this small filter component. But now the partnership is expanding again to something really timely and really important. That's ASIC chips. Now, ASIC chips is a type of circuit, a type of silicon that's really geared towards a single purpose. Now, what is a big piece of machinery that you need that has a single purpose? An AI server. It's all about AI. And so they didn't come out and say this in their press release. They said this is for multiple new generations of Apple products. If you consider an Apple Intelligence and Apple AI server to be a product, then fine. But what I'm telling you is that's what it is.

[Carolyn]

Wait, so are they now all of a sudden, Apple going to be spending a lot of money and kind of building out their, like, help me understand what this means.

[Mark Gurman]

So for Apple Intelligence, there's really two ways that this AI processes. There is on device AI models and there's cloud models. Now, the cloud model has now been split up starting later this year as part of the new series. You have the Apple cloud, which they call private cloud compute. These are Mac chips, the M2 Ultra chips that they really released in 2023. Those chips are running in servers to power the AI features in the cloud. The more advanced AI features, as an aside, they're splitting that. So you're gonna have the Apple servers, then you've got Google, you've got Nvidia, et cetera, et cetera. But just think of it this way. There's on device and there's cloud for cloud, the chips are starting to get a little dated. The M2 is from three years ago. Apple's now working on a new server chip. It's called Baltra.

[Fidelity Announcer]

Right.

[Mark Gurman]

They name all these chips internally after Islands, maybe the island Tim is at. And they are working on this new chip. They're going to deploy it 2027, 2028 and the ASIC technology in there has been developed by Broadcom and they have multiple generations of these new AI servers planned. And what's unique about these AI servers is that the current version is the same as that top end Mac chip that you have in the Mac studio. That's their most powerful desktop. The one they're going to be deploying at the end of 2027 has four times the power of the M5 Ultra, which is coming to the Mac desktop later this year. And Broadcom is going to help power that. And Apple's got a long roadmap ahead of subsequent servers. So they are still doing a lot on device for AI. But Apple knows that the real goods are what's powered by the cloud and so that's why you need that new technology.

[Emily]

Okay, so this was Apple needed Broadcom's help or Broadcom needed a new partnership with Apple.

[Mark Gurman]

It's, I mean Apple needed Broadcom, right, to get this up and running. But Broadcom certainly for that, for its bottom line, probably needed a new relationship with Apple because they, Apple was their biggest, you know, growth driver and revenue source and they had been designed out for WI Fi and Bluetooth and so kudos to Broadcom and good for their shareholders and investors and what have you that they were able to figure out a way to get back Apple's business for something that's really pertinent right now.

[Carolyn]

Mark, what does it mean in terms of the Apple AI story too?

[Mark Gurman]

Well, what you're seeing right now is a shift more to cloud based processing versus the on device. Processing on device is great for processing, but it's not so great for functionality. Cloud is much more performant.

[Carolyn]

Okay, does that mean also then Apple's going to be spending more in terms of.

[Mark Gurman]

I believe that Apple will be spending more on AI. I believe Apple will be spending considerably more on AI, but nowhere near what these hyperscalers and the metas and Googles of the world are spending because they do have that split and a lot of it is going to be relying on outside vendors and outside parties. So they do a lot of in house server infrastructure and they do a lot of licensing or paying other data farms for this Is it safe to

[Carolyn]

say that when Apple says I need, you know, outside data forms or whatever, they're going to get it? Well, or tradition competing with everybody.

[Mark Gurman]

They're competing. Yeah, right. Traditionally, Apple has had extreme amounts of pricing power. They've had extreme amounts of power over the supply chain and different partners. And what you've seen from the memory shortage is that Apple just does not have that clout or credibility that they once had. They're just one of the guys now. They're not the, the at the front of the line.

[Carolyn]

It's pretty remarkable.

[Emily]

Let's talk about product. Before the show started, I had mentioned that I saw there was an iPhone that was added to the America 250 time capsule, which is just so pertinent and telling about kind of, you know, the influence that Apple has. But if this were maybe three years from now, what products would they be putting in? That's my segue here into first thing

[Mark Gurman]

I will say, what are they planning? What would they say? I will tell you, but the first thing I will say, you know that phone's gonna explode, right? Like having a lithium ion battery in a very warm enclosed space for the next 250 years.

[Emily]

Yeah, you can't even have it in a checked bag in an airplane.

[Mark Gurman]

Fair, fair. But that phone's gonna explode, I would guess within two decades, three decades.

[Carolyn]

So somebody didn't think this through. Maybe it doesn't have a battery in it.

[Emily]

Maybe they protect it.

[Mark Gurman]

I don't know. Maybe they took. No, it does because they said, I read the document for it that Apple put together. They said, we've preloaded the Notes app with a bunch of information about Apple's history and whatnot. So let's say it doesn't explode, which it will. The technology is going to be so different in 250 years that I don't know, are there going to be outlets in 250 years? Is it going to be the same USB C is not going to be a thing one way or another. This thing is not turning on and they'll be lucky if it doesn't destroy everything else in the box that it's in anyways. If they were going to be packing this thing in three years, perhaps we would see smart glasses in there, which is Apple's biggest priority right now. It's a program code named N50. These are in house, in house design, in house branded, supposedly fashionable smart glasses with oval shaped, vertically oval shaped cameras, a computer vision camera, a standard camera. They're looking to compete with Meta for something they believe internally is higher quality, better made, better battery, better components. They think it looks nicer. I don't know how they're going to beat the ability to partner with brands like Prada and Ray Ban, all the SLR exotica brands that Metta has in its back pocket. But the Apple brand is still very strong. And the goal there isn't just to release smart glasses. It's to do to the glasses market what the Apple watch did to the watch market 10 years ago. The watch market basically had, I would say three tiers, right? You had the bottom tier of watches where you can buy watches between I don't know, 20 bucks and 100 bucks. Mid tier watches where you can buy watches between 200 and $800. Then you have the super high tier, the Rolexes, the Pateks, the APs, the world, tens of thousands, hundreds of thousands of dollars north of that. That market actually got hotter as we know through Covid, right? The $20 to $80 watch market really wasn't impacted like the low end time X's of the world, but that mid tier market, right, those all got absolutely crushed. People don't go out and buy watches under $1,000 anymore that are not smartwatches. And so what Apple wants to do is take do the same thing to glasses.

[Carolyn]

We shall see. I tell you, I ended up like everybody bought an Apple. Not everybody but well, I would expect. Well, here's Mark Gurman. He's Bloomberg News Managing Editor for Global Consumer Tech. Check him out on the Bloomberg Stay with us. More from Bloomberg businessweek Daily coming up after this.

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[Carolyn]

Well, it feels like folks are homing in again on the hyperscalers. Feels that way, at least based on some of the Wall street chatter. Just this morning, two voices on Bloomberg Surveillance weighing in on why it might be time for the hyperscalers to shine again. Here's Max Kettner. He's chief multiasset strategist over at HSBC Holdings. On Bloomberg TV surveillance again this morning, Mike Wilson, who leads Morgan Stanley's team of strategists, he also joined the surveillance team again this morning.

[Fidelity Announcer]

Given that drawdown in the hyperscalers, the expectations now are much, much lower. We're starting from a much, much lower base. I do worry that people once again are too neutral, a little bit too much on the sidelines, too worried about things going wrong. And actually we are getting a bit of a summer melt up into into July and August.

[Ed Ludlow]

I expect the hyperscalers now to stabilize. That's what's going on the last couple of weeks. And the semiconductor stocks are going to

[Mark Gurman]

are going to correct.

[Ed Ludlow]

That's a good that's a good development.

[Mark Gurman]

That doesn't mean the capex cycle is

[Eric Roston]

over, but that ebbing and flowing between

[Mark Gurman]

the two is a natural kind of

[Ed Ludlow]

governing factor Just some of the things

[Carolyn]

that make this market so interesting that Max Kettner over at hsbc, Mike Wilson of Morgan Stanley again earlier on Bloomberg TV surveillance, everyone watching the run up in chips. We just talked about Ludlow, SK, Hynix getting ready for its US Listing on Friday. We want to get into though, what we feel like is the evolving AI story. Ed is here with us in studio. And then we want to bring in longtime investor Rudina Cesare. She's founder and managing partner at glassweek Ventures. She invests in companies where AI is the core architectural foundation. And so she's been thinking about the next generation of winners. She joins us from Boston. Hey, great to have you here, Rudina, with Emily and of course with Ed. I'm curious about, you know, how this conversation around AI continues to evolve. We are now talking so much about the memory names. How do you see it?

[Rudina Cesare]

Oh, hello Carolyn. Good to see everyone. I think fundamentally we are seeing the overall demand for AI related infrastructure and all the way up to the application layer continue to be strong. And in my view, the shifts that we are seeing in the market sort of reflect the scarcity or overestimation of scarcity along the value chain. So on the point around Nvidia and others, are we seeing the correction because we expected more scarcity, while on the hyperscalers are the valuations coming back because it's becoming a lot easier to track the sources of revenue that displays will have. And oh, by the way, we think of the hyperscalers as that sort of fundamental layer at the software infrastructure layer, but each of them are much more vertically integrated with their own chips. So in many ways we're seeing the market move toward vertically integrated players from the chip layer all the way to the foundation models, rather than just the CapEx spend. I don't know that we're out of the CapEx demand. I think that's a multi, multi cycle, multi year level of demand. I do think that perhaps we're correcting a bit for the overestimation of scarcity.

[Emily]

You mentioned revenue and I'm curious, Rudina, if you can talk a little bit more about just how critical it is for investors like you to be able to pinpoint whether the spending on AI is actually translating into tangible revenue and whether we've seen that yet.

[Rudina Cesare]

Thank you, Emily. I think it's interesting because I'm a very early stage investor, so I often say I back to brilliant researchers out of the lab and we build out a monetization plan. If anything, I would bifurcate between the next gen application layer AI companies where not only are we seeing revenue revenue, but the scale from zero to multimillion hundreds of million millions is a matter of months rather than a matter of years. So if anything we are seeing acceleration. Now beneath that, two fundamental questions. Why is it? Because especially on the enterprise side and even consumers, we are all experimenting and trying a lot of things. Thus is the revenue sustainable or is it a leaky bucket? Second question though is really pertaining to the adoption of AI more systematic. So having moved beyond the I'm going to experiment with this in house build tool or with the, you know, chat function of Claude or GPT to something more serious. In that case, we're seeing a demand for AI products to become much more of a important component not just to the tech stack of enterprises but to their actually business models and go to markets.

[Interviewer Ed]

You know Rudina, what's interesting about what you and the team at Glasswing are looking at, it's so timely for today with this Morgan Stanley hyperscaler story. So you are looking at AI, native SaaS, various layers of the software stack. Every time I speak to one of the CEOs at the hyperscalers, I always ask them, you seem to be pitching and working on the same kinds of technologies that your customers already do, you know, so how do you respond to that? The idea that the hyperscalers, you know, the cloud computing companies, let's call them what they actually are, are going to want to offer the same tools that you might back at that early stage.

[Rudina Cesare]

So the under. Thank you Ed. The underlying question is where is the moat for the startups relative to the incumbents? And I think the moat depends. Some of it has to do with, you know, vertical plays. You know, I recently backed a company called Modern Industrials. They are developing an end to end demand planning for distributors of lumber and building materials. Very, very specific tens of billions type of opportunity a year in terms of the revenue they can generate. But if Microsoft or Anthropic or OpenAI are going to that level of specificity, we have something to worry about. By the same token, who will be their customer? So they have to draw a line to your very astute question around where am I going to stop competing with my customers? And oh by the way, is there value in highly, highly specialized? My view is that there is and the value doesn't necessarily lie in the models. It actually lies in the highly specific, albeit not as broad data sets which then, you know, deliver much, you know, superior outputs.

[Carolyn]

I would say if I'm I'm pharmaceutical maker or like in the medical field.

[Dr. Ellen Wald]

Right.

[Carolyn]

And like I would say that I want a data set that I'm going to play with and that's very related to my field. I don't need to know about the rest of the stuff that some of the large language models are doing.

[Interviewer Ed]

Yeah, or they 100% or Redeema they. You know something you said a moment ago is really interesting. You are backing not companies necessarily. We'll work out the business plan later. You're backing the researchers out of the lab and like that. That applies at the late stage as well. Right? The founder led thesis. But those people also have specialisms. Right. Does it matter to you if they have a core team of not just computer scientists but in biobiology, biochemistry, etc.

[Rudina Cesare]

Yeah. So let me parse what I intended with what I shared. In the case of the modern industrial, I'm very much going in with a very clear understanding of how it's monetized. What's the ROI for the customer. So in many ways that's extremely tangible and very clear around the TAM pricing, competitive dynamics. My earlier comment related more to what I would call frontier tech. So we have already achieved what we have achieved with the large language models. What comes next? You know, we backed a company called Recursive AI. It's about the models correcting themselves to get around the next set of issues like hallucination and other problems that the large language models have. There is a whole paradigm of neo labs and new researchers that are bypassing in many ways the capabilities of the current incumbents. Think about liquid AI, multi, multi, multibillion dollar company. They're actually doing all the processing at the edge is actually a whole different sort of way to bypass the need that we currently have on compute. So in those cases you solve one of the compute problems or the energy problem or the sort of the performance of the models and then you worry about monetization. So it's not pie in the sky. I'll beg the smart people and someday they will deliver something. It has a purpose. But you might not know the pricing. Kind of like how many of us would have guessed that pure consumption pricing was going to be the model. Does that make sense?

[Interviewer Ed]

One contemporary difference though is that that group of three or four people can raise a billion dollars out of the gate or several hundred million dollar seed round at crazy valuation based on the value of their own intellectual capital. How does Glasswing even participate in early stage valuations like that?

[Rudina Cesare]

Very good question. So our core product is actually you know, the more typical precede seed stage rounds, we have a pool of capital and a product called Access Checks where we write, you know, small one to $2 million access checks in these gigantic rounds to have a seat at the table, to have a seat to the ecosystem, to support the founders and participate with those that actually make it big. So while our core checks are focused on building the companies from the ground up in the more typical fashion that you think of early stage venture, we absolutely get access to the big guys and it's important there are benefits for both.

[Carolyn]

Hey, speaking of the big guys, I just got time for maybe one or two more last questions. I'm thinking about Space X which does go into the NASDAQ 100 at the end of trading today. Xi, like what's your thought about that company? Which seems to be to some extent coming from behind, but it's got certainly deep, deep pockets.

[Rudina Cesare]

It's emerging more and more, I think, you know, in many ways I think of Elon's companies as all being intertwined with one holding and the holding being Elon himself, I think will be interesting to do to see what he does with Xavier, Space X and maybe even what happens with Tesla. Eventually they are catching up. I think performance has improved and to be perfectly honest, in the, in the circles that sort of are leveraging the most cutting edge models X is starting to become a real contender. Definitely coming from behind though are people

[Carolyn]

are talking more about Xai.

[Interviewer Ed]

Yeah. Than before, increasingly because of cursor. Right. Like the cursor acquisition moving so quickly, people pay close attention because it's such a widely used tool.

[Carolyn]

All right.

[Rudina Cesare]

And yet even with cursor now, you know, the next generation saying we've bypassed cursor, so things are moving so very fast. What becomes, I go back to what becomes sustainable versus what is the flavor du jour. We shall see.

[Carolyn]

You know, and it's fascinating too. Rudina, thank you so much. Rudina Cesare, Founder and Managing Partner Glassware Ventures we always appreciate your, your view. I have to, I have to say more and more conversations I have with folks where companies are using a lot of different alarms. They're saying they're starting to get more discretionary in terms of who's got access to what because there is a cost.

[Interviewer Ed]

Well, real quick, the reason people loved Cursor is you could swap in anthropic open air Gemini model and change it. Now Elon owns it, they're going to be allowed to do that. It's a big question.

[Carolyn]

It is a big question. Hey, Listen, I'm so glad you're here this week. We're going to reach out to to you a bunch of course. Our Ed Ludlow Catch him on Bloomberg Tech 11am on Bloomberg Television. Stay with us. More from Bloomberg Businessweek Daily coming up after this.

[Fidelity Announcer]

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[Ed Ludlow]

team that's tested AI tools for data has seen the pattern already. AI gives a different number than your bi tool. Metrics don't match across teams and inevitably users lose trust. It turns out turning on AI is easy, but making it work on data is not. Hex AI was built to solve this. The key is nailing context. Hex is built to unify and curate your data context for agents. Data teams can observe, govern and continuously improve every AI answer. So answers get smarter the more your team asks the result. Your entire organization asks data questions in natural language and trusts the answers. Not because the AI got lucky, because it knows your business and its data. Because that's what an AI analytics platform should do. Join data teams from Cursor, Lovable Ramp, aws and over 2,000 more at Hex AI.

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[Carolyn]

Hey. Among our most read stories on the Bloomberg today, Saudi Arabia making big reductions to its main crude oil price for buyers in Asia, selling barrels at a discount for the first time since it embarked on a price war in 2020 as a surge of global supply is heightening competition to find buyers. State producer Saudi Aramco will lower Arab light oil for next month by $11 a barrel to 150 below the regional benchmark is according to a price list that they put out today. The retreat, though, underscoring the speed that we've seen with Persian Gulf producers that have really ramped up flows through the Strait of Hormuz after an interim US Iran deal. I mean, this is something, Emily, I think it happened faster than we thought. We've seen either more oil come out on the market. I think we were concerned about the repairing, the rebuild as a result of the US War in Iran. But it does feel like there's a lot more oil that's come through.

[Emily]

Yeah. And you're seeing there was already pressure on prices already after the cease fire. Oil prices were coming down. You have to wonder how much more now this is going to weigh on global oil markets. And I think we have a perfect guest to talk about all this.

[Carolyn]

Carol, we have a great guess and we do see both WTI and Brent crude slightly lower today. Both have slid about 30% since mid May. So we've seen quite a pullback. Dr. Ellen Wald is the voice that we wanted to talk to. She's president of Transversal Consulting, senior fellow at the Atlantic Council. She's also the author, excuse me, of Saudi Inc. It was published in 2018. It detailed the history of what was is. I don't know if it still is the most profitable company in the world. We're talking about Saudi Aramco. Ellen is with us once again at Boca Raton, Florida. Ellen, you are the voice that we wanted to talk to. What's your read on this? Is it a surprise? Does it make sense in terms of what we're seeing out of Saudi Arabia and Saudi Aramco?

[Dr. Ellen Wald]

So I think it's interesting mostly because Aramco has traditionally done most of its business, you know, in Asia in long term contracts. So they've got long term contracts for crude with Chinese refineries, Chinese petrochemicals, Korean, Japanese. They've Got a lot of their kind of long term contracts. They've got that basically locked up. And so what we're really seeing here, I think, is a very temporary situation in which there's a lot of crude oil that needs to move out of the Persian Gulf basically to get things unplugged and get things moving again. So you had oil that was sitting in tankers, you know, that had already basically been, you know, bought, that was just waiting to go. And we've seen a lot of that start to get moving out of the Gulf. But now we're seeing oil that's basically sitting in storage tanks, onshore storage, that also needs to get moving. And they've got to get this stuff moving in order to get back to, you know, what we call normal business. Remember, we're also seeing, you know, a lot of declines in terms of gasoline, diesel and other petrochemicals, chemical and other petroleum products in the Middle East. They've got to get this stuff unplugged so that they can get back to selling these other cargoes as well if, if that's possible, to move them out of the straight up Hormuz. And so the lower price, I think, reflects a lot of that backup that they've got to lower the price enough to make it, you know, to make it likely that Asian buyers will snap up these cargoes and also to make it worthwhile to charter a tanker to go into the Persian Gulf, collect this stuff and get out. Because that is in no way assured. That process is still very much up in the air. And so I think that this is not necessarily something that we're going to see happen in the long term. This is a temporary thing just to get that market on unplugged, so to say.

[Emily]

Okay, so you have to imagine though, right, that if one producer is cutting prices, that's going to weigh on global oil markets more broadly. Right, exactly.

[Dr. Ellen Wald]

And it is weighing on global oil markets more broadly. But it doesn't necessarily indicate that we're in some sort of oil glut. It's sort of like there's a glut in the Middle east because there's a backup getting things out. And that does impact prices all over the place. But for example, you know, someone who's trying to sell oil in, you know, say Houston or sell it in the Gulf of Mexico isn't going to have the same tanker issues as someone in Saudi Arabia. So they can command a higher price, not necessarily as high as, as they would like to on the market, but you know, because what's going on in one place does affect prices elsewhere. They don't face the same issues, you know, getting a tanker in and out, for example. So we're really just seeing a lot of disconnect in the market. You know, we're also seeing these issues with gasoline and diesel. Gasoline prices are much higher than oil prices would indicate they should be. And that's really because, you know, we don't have enough refining capacity for the oil. And so they can't reduce their prices until, you know, either we get all of these kind of kinks worked out of the system or we see more refining capacity come online.

[Carolyn]

So, Ellen, it isn't like a bigger story of Saudi Aramco or are they as powerful as they were when you wrote that book back in 2018?

[Dr. Ellen Wald]

They're extremely powerful. They've made a lot of money off of this crisis. I mean, it's not ideal for them. Okay. They. They prefer to have oil prices fairly stable. They prefer to sell their oil and, you know, deliver it to their customers with, you know, great regularity. They would prefer not to have, you know, had to have cut production. But overall, this price cut is probably not seen as. As a. As a major blow for them. I mean, there was a point where they were selling cargoes for over $140 a barrel. So they've made plenty of money. I think what they'd like to do is get things back to. To where they were. They'd like to be pumping more oil, producing more products, selling those cargoes on, you know, get the supply chains running again. And if they have to cut the price on their oil to get it out there, to get China to buy it, to get. To make it worthwhile for China to buy it just so they can, you know, f. So to speak, then they see that as worthwhile, really, for the long run.

[Emily]

Right. How long does it take to get the plumbing fixed? Essentially? Like, are we talking about a couple of weeks here?

[Carolyn]

I tried to call a plumber. It takes a while.

[Eric Roston]

That.

[Dr. Ellen Wald]

That is definitely the question. It could take several months. It could take less. It's. The market is incredibly resilient, but it also depends on a lot of factors, such as whether China is going to be enticed by these lower prices and willing to, you know, remember, China cut between four and five barrels that it was importing. Is China going to say, hey, these are great prices? So we're just going to, you know, send those tankers in and, you know, whatever happens, we'll see what happens. We're willing to take the chance because the price is so good, or are they going to be more hesitant? Are they going to get back to, you know, producing a lot of gasoline and selling it around Asia or are they going to be more hesitant? That's, that's definitely one factor. And so the same thing is with Iran. Are they going to clear the mines from the main corridor in the Strait of Hormuz and will that be able to be used reliably, say in a month, or are we stuck with these, you know, Iranian northern lanes and American southern lanes?

[Carolyn]

Ellen, I have to jump in just because we got 30 seconds left here. I am curious about China because they are of course so important in terms of being a buyer of oil and in particular rainy and oil, but they have shown that they want to move towards make a greener transition even more quickly. And this has happened before where nations don't want to be dependent on another country for oil and China doesn't make its own. So are we just going to see more of that just quickly?

[Dr. Ellen Wald]

Well, I think we've seen that China is not dependent on foreign oil for necessarily they managed to cut their imports by a lot and still maintain economic function. But I don't think the answer is because of green improvements.

[Carolyn]

All right. All right. Good stuff as always. Thank you so much. You're a gem. Thanks for coming on on this Monday, Dr. Ellen Waltz, President of Transversal Consulting, senior Fellow at the Atlantic Council. Her book back in 2018, Saudi Inc. Stay with us. More from Bloomberg Businessweek Daily coming up after this.

[Fidelity Announcer]

Support for the show comes from public.com if you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, putting on a hedge on public. You can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English like if the Vix hits 25, buy a put option on the S&P 500 or if my cash balance goes above $20,000, move the excess into my direct index. You approve of the workflow and your agent handles the risk, monitoring the market, watching for your conditions and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com market and fund your account in five minutes or less. That's public.com market paid for by Public

[Mark Gurman]

Investing Brokerage Services by Open to the Public Investing Inc. Member FINRA and SIPC Advisory Services by Public Advisors, LLC SEC registered advisor complete disclosures available at public.com disclosures as industries

[Bloomberg Announcer]

evolve faster than ever, companies need an environment that accelerates strategic growth, and Michigan delivers on that promise. From emerging startups to global enterprises, Michigan offers what executives value most a resilient, innovative ecosystem, diverse communities that attract top talent, and a quality of life that supports work life. Balance with our unified Team Michigan approach, businesses scale faster and compete at the highest level. Michigan Pure Opportunity Seize your [e-mail] Any

[Ed Ludlow]

team that's tested AI tools for data has seen the pattern already. AI gives a different number than your bi tool. Metrics don't match across teams and inevitably users lose trust. It turns out turning on AI is easy, but making it work on data is not. Hex AI was built to solve this. The key is nailing context. Hex is built to unify and curate your data context for agents. Data teams can observe, govern and continuously improve every AI answer. So answers get smarter. The more your team asks the result. Your entire organization asks data questions in natural language and trusts the answers. Not because the AI got lucky, because it knows your business and its data. Because that's what an AI analytics platform should do. Join data teams from Cursor, lovable ramp AWS and over 2,000 more at Hex AI.

[Bloomberg Announcer]

You're listening to the Bloomberg Businessweek Daily podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.

[Carolyn]

But what we do want to talk about is what's been going on in terms of weather. And leave it to our green team to always be on it. We did have a headline over the weekend, the largest US grid PJM saying it likely hit record demand on July 2nd. I'm not surprised by that based on what we've seen in terms of weather. And I got to say that much of the US Just came out of a sweltering long holiday weekend. The July 4th holiday weekend, an intense heat dome bore down, straining power grids, prompting the cancellation of many events. We saw that on July 4th. Parades and different things either delayed or canceled completely. Washington, D.C. saw a high of 102 Fahrenheit 39 Celsius on Saturday. That is a new local record for the date. And I feel like when it comes to weather and climate we are constantly talking superlatives and new records and we're

[Emily]

all living, you know, this this really big time here. Our Bloomberg Green team, though, is tracking this degree by degree and they're out with reporting on why the extreme heat isn't the only climate impact shocking scientists. And I got to say, Carol.

[Bloomberg Announcer]

Right.

[Emily]

It's not just extreme heat. We had like an extreme winter.

[Carolyn]

Yeah.

[Emily]

Just as several months ago. So we're going to talk about all of this right now with Bloomberg News sustainability editor Eric Ronston joining us in studio.

[Fidelity Announcer]

Okay.

[Rudina Cesare]

Okay.

[Emily]

So I want to talk about like what has been going on because we've been hearing about global warming for quite some time, but this is taking on a new phase.

[Eric Roston]

I think that's right. I think it is taking on a new phase. It's funny if you ask the simple question, is anybody surprised by global warming? No, not really. And the reason for that is because on a global level and on a global long term level, the projections have been the same for decades. Decades. But what's always been harder to do is to project what's going to happen like decade to decade or country to country. And because that's always been so hard to do, we're getting surprises all over the place and temperatures and rainfall and drought. And that's what our story focuses on is this kind of new era of surprise.

[Carolyn]

Yeah, right. Like you're, we've been talking about this for a long time. You guys have been reporting on it to like it is the severity of things that keep coming out stories. And I do wonder, you know, what is the macro response to all of this? That as even scientists who understand this are getting surprised, does it mean folks are taking it more seriously? I mean, you and I, we've all are, we've sat around this table and just talked about the political pressure on talking about climate change. Like it's, I feel like we're not talking about as much. We are still reporting. But I feel like some of our

[Eric Roston]

conversations, we may be talking about it less, but more people are talking about it. And I mean, one almost glib way of thinking about it is like 20 years ago, a generation ago, scientists would talk about, you know, extreme heat, extreme precipitation. In terms of our models project, there will be more of this.

[Rudina Cesare]

Right.

[Eric Roston]

Like now that conversation is how am I going to get everything I of my basement?

[Interviewer Ed]

Right?

[Eric Roston]

Like that's how the conversation has changed. In my own reporting, I used to talk to scientists like exclusively and go inside their models and see what they thought was going to happen. Now I write about insurance and banks because the conversation has moved firmly to the private sector, has moved firmly to public health and property owners. And that's where the macroeconomic picture comes in. You saw, you see like top US Fed officials more recently than you would expect, saying that these, if these trends continue and we don't have any reason to believe they won't, you know, parts of the country are going to become increasingly uninsurable.

[Emily]

I want to get to the economic impact, but just first, can you explain how can we have both unprecedented rainfall and also record dryness and record heat in the summer and then, you know, the coldest winter in New York City since 2014?

[Eric Roston]

Okay, that's. It's a lot of questions or just

[Emily]

the two extremes, you know?

[Eric Roston]

Right, right. I think I did. This was, this was. Stories come from weird places. And this is one of the weirdest places a story has come from recently is, I think it was in April. I remember I had to turn on my heat on a Sunday day, northern New Jersey. On Tuesday I turned on the air conditioning and then on Thursday I had to turn the heat back on. Yeah, and that kind of whiplash thing, we're seeing it just about every level. Like, we're seeing it like the household and community level, we're seeing at the seasonal level. You know, the western US earlier this year came off it just like incredibly weird heat wave after, you know, the previous year it was, it was quite cold. And so because there's, it's almost like there's just increasing metastasizing lack of stability in systems that we've relied on for a long time. And so crazy things are happening back to back. In some cases it's normal. In other cases they don't understand why it's happening. In other cases they know. But yeah, surprise is the new normal.

[Carolyn]

I think there's like, there's so much in this story and I highly recommend everybody read it. I just want to read something. The extra energy trapped in the system seems to be the result of the planet reflecting less sunlight back to space. That's partly the result of bright white ice turning into darker heat absorbing seawater. But the bigger concern is that reflective low lying clouds may be going missing.

[Emily]

I mean, mean, I highlighted that part to why we did not coordinate that.

[Carolyn]

No, we did not actually. And so this imbalance, like we've talked about climate change, it's not just getting warmer, although we are, but it's also these extremes in the volatility. But there are things that seem to be happening in our environment, Eric, that are making it more difficult for scientists. Their models aren't kind of working.

[Eric Roston]

There's, there's a quote we got in the story. Like the science has been around for so long and it's changed so little. Unlike the global scales, we include a, a quotation from the late Wallace Brooker, who was a Columbia scientist. He's the guy who in 1975 came up with the phrase global warming.

[Bloomberg Announcer]

Yeah.

[Eric Roston]

20 years later.

[Carolyn]

75.

[Eric Roston]

75.

[Carolyn]

Just to, you know.

[Eric Roston]

Yeah.

[Carolyn]

Kind of like the first bicentennial or whatever.

[Eric Roston]

Right, you're right. Exactly.

[Interviewer Ed]

Perfect.

[Eric Roston]

We got, we got one every 50 years. The then in the mid-90s, he said, look, the climate is an ornery beast and if you poke it a little bit, you're going to get an outsized reaction. So that's what we're seeing again at every scale is, you know, the models that ran for decades, like successfully on the planetary level. When you go look at less amount of time and a smaller footprint of space, they can't, they don't have that granularity. And so the hits just keep on coming.

[Emily]

Unfortunately, we only have about a minute left. But you mentioned a lot of your reporting now is talking to bankers and insurance firms. What are you asking them right now?

[Eric Roston]

A lot of it has to do with physical risk and how we can best understand the physical risks for, you know, wherever you live or whatever kind of the term of investment. We're talking a lot about supply chains. Bloomberg Intelligence has some amazing resources, research in terms of like the week to week, month to month financial implications of, of bad weather. So that, and just like the energy revolution is here, you know, we colleagues have done a ton of phenomenal reporting in the last few months about how the war in Iran and the subsequent energy price volatility has just like convinced country after country and company after company they don't want this fossil fuel volatility anymore and they're finding clean energy.

[Carolyn]

Listen, this goes back to something we talked about. Saudi Aramco today and you know the conversation around China saying we don't want to be buying this stuff anymore. Like we're going to figure out how to be energy independent but also potentially lean more into greener, greener energy forms. There's a lot here. I know we only scratched the surface, but seems to be certainly after the weekend we've had a really important storm. Thank you so much.

[Eric Roston]

Thank you.

[Carolyn]

Always, always appreciate it. Eric Roston, he's Bloomberg News sustainability editor. It's a lot here. There's a lot of graphs and graphics, pictures highly recommend. Check it out. It's on the Bloomberg [e-mail] this is

[Bloomberg Announcer]

the Bloomberg Businessweek Daily Podcast available on Apple, Spotify and anywhere else you get your podcasts. Listen live weekday afternoons from 2 to 5pM Eastern on bloomberg. Com, the iHeartRadio app, TuneIn and the Bloomberg Business app. You can also watch us live Every weekday on YouTube and always on the Bloomberg Terminal.