OpenAI Gives Microsoft 27% Stake, Completes For-Profit Shift

Summary

Bloomberg Businessweek Podcast Summary

Episode Title: OpenAI Gives Microsoft 27% Stake, Completes For-Profit Shift
Date: October 28, 2025
Hosts: Carol Massar and Tim Stanweck
Key Guests: Anurag Rana (Bloomberg Intelligence), Danielle DiMartino Booth (QI Research), Eric Roston (Bloomberg News), Will Wade (Bloomberg News), James Walker (Nano Nuclear Energy)

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Overview

This episode explores seismic shifts in global tech, finance, and energy markets, opening with the news of Microsoft's 27% stake in OpenAI—signaling OpenAI's full move to a for-profit model. Hosts and top analysts weigh in on:

• The economic and tech fallout from the OpenAI/Microsoft deal and related AI partnerships
• U.S. labor market complexities in a cooling economy
• The business of natural disaster recovery amid climate change
• The evolving resurgence of nuclear energy as AI and data center power needs soar

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Main Segments and Discussion Points

1. OpenAI’s New Structure and Microsoft Partnership

Timestamps: 02:09–09:43 (main discussion)

Key Highlights:

• Microsoft now owns 27% of OpenAI—the result of a year-long negotiation to transition OpenAI into a for-profit enterprise and settle revenue and tech-sharing tensions.
• The deal secures Microsoft ongoing access to OpenAI's premier models—critical for Microsoft’s Copilot AI suite for productivity and coding.

Notable Quotes:

• Anurag Rana (03:16):
  "Microsoft had to do it because OpenAI has been raising capital with the idea that they will go from a not for profit to a for profit company eventually going public someday. So I mean this had to be done."
• Tim Stanweck (04:02) on public valuation:
  "Can we look at Microsoft share price on a daily basis as some sort of public proxy for OpenAI and how investors are valuing OpenAI or am I trying to do too much math here?"
• Anurag Rana (04:20):
  "That's a bit too much extrapolation... the thing you want to focus on is for how many years will Microsoft have access to OpenAI's leading models... this contract extends that to 2032... [giving] themselves seven years to figure this thing out."

Additional Points:

• OpenAI is simultaneously forming alliances with PayPal, Walmart, Stripe, Shopify, and Salesforce—positioning ChatGPT as the primary consumer interface for online transactions and productivity (05:46–06:44).
• Alphabet (Google) is seen as safe for now, though ongoing integrations of PayPal and retailers into ChatGPT spark fresh fears over Google’s core search and ad business (07:21).

Memorable Insight:
Rana emphasizes the paradox of "coopetition" in tech: "Almost everybody who's competing with each other are also working closely with each other." (05:46)

Financial Realities:

• Despite massive capital infusions, OpenAI's outlays—like a $250B computing deal with Microsoft—far outstrip revenues, making near-term profitability or an IPO uncertain (08:57).

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2. Labor Market Weakness and the Fed’s Dilemma

Timestamps: 13:37–21:03

Key Highlights:

• Discussion with Danielle DiMartino Booth (QI Research) reveals a deteriorating labor market, especially for college graduates now facing the highest unemployment since 1988 (14:28).
• Announced layoffs (UPS, Amazon, etc.) are at two-year highs, while hiring remains sluggish, signaling broader economic fragility.

Notable Quotes:

• DiMartino Booth (14:28):
  "Right now the unemployment rate among college graduates is the highest it's been since 1988. 1988, it was a supply issue...Now it's a demand issue...these kids are rightfully ... anxious."
• DiMartino Booth (17:13):
  On the economy in one word: "Weak."
• DiMartino Booth (17:17):
  "The Fed absolutely has to cut. I think... what they're discussing is 25 or 50 in December."

Additional Points:

• Earnings growth is outpacing revenue growth, but largely because of "lowered bars" and cost-cutting, not robust demand. Bankruptcies are at post-pandemic highs (18:03–18:16).
• Market asset prices remain elevated due to passive investing flows, not necessarily fundamentals—a vulnerability if conditions shift (19:33).

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3. Disaster Recovery: Economics of Climate Catastrophe

Timestamps: 21:20–29:51

Key Highlights:

• Eric Roston (Bloomberg News) details the massive, often overlooked industry supporting disaster recovery after events like Hurricane Helene ($60B in damage to North Carolina; 23:19).
• Government participation in disaster recovery costs has sharply declined—now estimated under 2%—leaving regions financially exposed (25:10).

Notable Quotes:

• Eric Roston (25:10):
  "Whereas until maybe till 2016 or 17, the US government was picking up the bill for maybe a third of recovery costs... that number has been falling dramatically since then."
• Roston on systemic risk (27:39):
  "We have a system of federally backed mortgages that hinges on potential homeowners being able to get insurance policies at a time when disasters are becoming more intense, more frequent and more expensive."

Industry Impact:

• The “Prepare and Repair Index” tracks public companies benefiting from climate disasters, spotlighting the overlap of catastrophe with investment opportunity (29:04).

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4. Nuclear Power’s Revival for the AI Age

Timestamps: 33:45–44:54

Context:

• U.S. government signs an $80B pact for new nuclear reactors, aiming to power high-demand sectors, especially AI data centers (33:45).
• Companies like NextEra and Nano Nuclear are reviving mothballed reactors and racing to deploy small modular reactors (SMRs).

Notable Quotes:

• Will Wade (34:32):
  "When [reactor shutdown] decisions were made, it was the right decision then. They were expensive to operate. Nobody wanted to pay that much for power. But the world has really changed around us."
• James Walker (Nano Nuclear, 38:54):
  "So construction [starts] 2027, 2028, 2029 and then fully licensed reactor operating commercial license 2030 is very reasonable timeline."
• Walker on competition (44:35):
  "In the terms of micro reactors? Yes, 100%. I believe we'll have the first US constructed full scale, commercially licensed microactor in the country."

Additional Points:

• While enthusiasm and investment in new nuclear are high, construction and fuel supply delays mean real power increases years away (earliest: 2030).
• The intersection of AI/data center power demand and ESG/clean energy policies is the new driver for nuclear’s renaissance.

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Memorable Moments & Notable Quotes

• On OpenAI's partnership web:
  "OpenAI wants to make sure that they are the front end for a lot of discussions that are going to happen. And that's where I think a lot of the fighting is going to be down the road." – Anurag Rana, 06:23

• On market valuation and passive flows:
  "There's something very automated about this market and this market will continue to feed on itself because that, that is, that is the structure of passive investing." – Danielle DiMartino Booth, 19:35

• On the future of nuclear:
  "It's, it's a good question because it gets asked as you can imagine, more than any other question. And there's kind of two answers to it too... even things like gas contracts, they're all tied up for seven, eight years... There's no easy solution here." – James Walker, 39:41

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Timestamps for Key Segments

• OpenAI/Microsoft/AI Ecosystem: 02:09–09:43
• Labor Market & Fed Policy: 13:37–21:03
• Extreme Weather & Disaster Recovery Industry: 21:20–29:51
• Nuclear Power’s Comeback & AI Demands: 33:45–44:54

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Conclusion

This episode underscores the intertwined forces shaping today’s economy: AI’s consolidation and commercial ambitions, a shifting labor market, the economic toll of climate change, and the critical reboot of nuclear energy to support the next generation of technology. The hosts navigate major news with probing analysis, actionable context, and candid exchanges with top reporters and industry insiders.

For listeners: If you're tracking AI’s business realignments, the health of the U.S. economy, how climate change is impacting markets, or the infrastructure challenges of tomorrow—this episode offers a brisk, insightful tour of today’s headline risks and opportunities.

Transcript

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Bloomberg Audio Studios Podcasts Radio News this is Bloomberg Businessweek Daily reporting from the magazine that helps global leaders stay ahead with insight on the people, companies and trends shaping today's complex economy. Plus global business, finance and tech news as it happens. The Bloomberg Business Daily podcast with Carol Massar and Tim Stanweck on Bloomberg Radio.

[Tim Stanweck]

As we've said, Tim, there's just so much coming at us on this Tuesday and a lot of it is because of Nvidia. But there's just so much going on when it comes to AI related news today.

[Tim Stanbeck]

Yeah, OpenAI continues to forge relationships as does PayPal. The two announced a tie up whereby PayPal's digital wallet will be embedded into Chat GPT. It'll send PayPal shares up the most in more than six months or it did send PayPal shares up the most in More than six months. And then the Microsoft news that we've talked about quite a bit. Car longtime backer Microsoft a 27% ownership stake in OpenAI. This part of a restructuring plan that took nearly a year to negotiate. It removes a major uncertainty for both companies and clears the path for ChatGPT and the maker of ChatGPT to become a for profit business.

[Tim Stanweck]

It's a lot. So let's get into it and really just how Open Air continues to be at the center of so much but we've so many questions about why Microsoft is doing this at this time. Bloomberg Intelligence senior technology analyst Anuragrana joining us from the Bloomberg news bureau in Chicago. Anurag, why is Microsoft doing this? Did the company need to do this kind of cement that relationship financially and otherwise with OpenAI?

[Anurag Rana]

Yeah, I mean they had to do it because OpenAI has been raising capital with the idea that they will go from a not for profit to a for profit company eventually going public someday. So I mean this had to be done. The big contentious. Well there are so many things that they were arguing against, you know, revenue share, technology share, all sorts of different things. Microsoft had control over which cloud providers that they can use, etc. So this new agreement kind of cements a lot of those things, removes a big overhang that's on I would say more on Microsoft than on OpenAI frankly because Microsoft is using OpenAI's technology in their products, in the co pilot products that are out there. You know that's, I think for us that's the most important thing frankly it's not so much the other financial details.

[Tim Stanbeck]

Since Microsoft will have this 27% ownership stake in OpenAI, can we look at Microsoft share price on a daily basis as some sort of public proxy for OpenAI and how investors are valuing OpenAI or am I trying to do too much math here?

[Anurag Rana]

No, I think that's, that's a bit too extrapolation over there. The thing that you want to focus on is for how many years will Microsoft has have access to OpenAI's leading models. So when you look at Frontier models, you have OpenAI, you know, perhaps you know most in the lead. Then you have Anthropic and Gemini. Those are the three big ones that everybody talks about down the road. Microsoft needs to make sure that the Copilot products that they are selling out to the public Both on the M365 and then the GitHub copilot which is used for coding, they really have an alternative to OpenAI? One answer could be they have their own models, but they're not there yet. So this contract, you know, extend that to 2032, which is, you know, you can say that they're giving themselves seven years to figure this thing out.

[Tim Stanweck]

Help me out though. It's just like OpenAI and Microsoft. I'm looking at the Bloomberg OpenAI and PayPal, OpenAI and SoftBank. OpenAI, you know, pick your company. They are just, I feel like lining up deals or agreements or relationships with everybody and anybody. I mean, Microsoft, I mean, are they going to have to share the wealth, if you will, and does it become a little bit messy? Because I'm just assuming that there will be companies that maybe in some ways are also competing with Microsoft that have deals with OpenAI or is that not right? I don't know.

[Anurag Rana]

See, it's a, it's a very common thing in technology. Almost everybody who's competing with each other are also working closely with each other. So that's, you know, that's on the side. But when you look at OpenAI, that's an area where you and I use a chat GPD a lot. But imagine that now that what you can do is, you know, let's say they have a partnership with Walmart, with PayPal. Today you are looking at a product and you decide that you can just buy the product seamlessly from that. They have a similar agreement with Stripe and Shopify. So what OpenAI is basically saying, let us be the front end for a lot of what you're doing, let's say on the consumer side. So example that I gave you is more for a retail purchase. But on the other hand they also have a deal with Salesforce. So for example, if you are in ChatGPT and you want to look at your Salesforce application, you can do that as well. So OpenAI wants to make sure that they are the front end for a lot of discussions that are going to happen. And that's where I think a lot of the fighting is going to be down the road.

[Tim Stanbeck]

Anurag, I'm we had this conversation with Jan Van Eck of Van Eck yesterday and he talked a lot about AI and the AI trade, but he also mentioned some stats about when, when web traffic is going from chat GPT to websites. And it got me thinking about how people are increasingly replacing or supplementing what they do on the Internet using Chat GPT. The news today too, that that this potential PayPal tie up where you can pay for stuff within ChatGPT also got me thinking, does, does Alphabet have to be scared about its core business here?

[Anurag Rana]

But, you know, but that's been the case for so many years. I mean, there have been, people have been talking about this the first day ChatGPT was launched that, oh, what's going to kill Google search business? I mean, so far I haven't seen those numbers that are out there that it's just having a very large financial impact. I'm sure there is some share loss in searches, but I haven't seen it. So we'll see, you know, how this shapes up. Google has or al that has a lot of interesting assets. I mean, they have semiconductors that are very important. They have a cloud platform, they have a large frontier model. So I think they have all the pieces out there. The question is, you know, whether the market is big enough for a lot of them to exist or coexist at the same time.

[Tim Stanweck]

Hey, Anurag, you know, over the summer Bloomberg put out how open I said Elon Musk identified Mark Zuckerberg as one of the people with whom he had communicated about potentially financing a deal to purchase Open Air. Does this Microsoft deal put an end to any other big player coming in? I mean, this is theirs.

[Anurag Rana]

I think so. But again, you know, legal ramifications are such that you don't know how some of the judges will move towards. But this is, you know, this is basically OpenAI saying we have figured out a way to how to go, you know, you could say become nonprofit, become for profit and eventually someday go public.

[Danielle DiMartino Booth]

Hmm.

[Tim Stanweck]

Yeah, that's going to be interesting. Right?

[Tim Stanbeck]

I mean, listen, what valuation.

[Tim Stanweck]

Well, right, but for Open Air, right. They can kind of stop the money grab for now. Right. Because they just got a massive cash infusion.

[Anurag Rana]

Yeah. But they are also spending at the amount that nobody has seen. I mean, they have a very large contract with Open Air, with Oracle, and they, you know, today with this agreement, They've committed another $250 billion of computing capacity with Microsoft. So it's, you know, expense is far exceeding the revenue. Right now they are doing these, you know, you could say investments so that down the road they can recognize the, the value of some of these investments. So that's, I think, where the, where the mismatch is for a lot of people. And so unless there is some equilibrium, I think it's going to be very tough for them to go public.

[Tim Stanweck]

Yeah, the money flows around in, out is like phenomenal. Anurag, you too? Phenomenal. Thank you. Thank you so much. He is Bloomberg Intelligence senior Technology Analyst out there in our Bloomberg News Chicago bureau.

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[Tim Stanbeck]

It's a fed Tuesday, Carol.

[Tim Stanweck]

It is a Fed Tuesday, which means.

[Tim Stanbeck]

It'S followed by a Fed Wednesday.

[Tim Stanweck]

That's how it works. Two day meetings let's get to let's.

[Tim Stanbeck]

Get into it with Danielle DiMartino, but she's CEO and chief strategist at the research and analytics firm QI Research. She's also a former advisor at the Dallas Fed. She's here in our Bloomberg Interactive Broker Studio. We've spoken to you a couple of times in recent months. I want to go back to our conversation with you back in July. I remember it because you were kind of the first person to warn me of weakness in the labor market. You talked about the gig workers out there and the people who were driving for Uber, for example, or Lyft or doing other gig work. And the way that a lot of them, in your view, were overqualified because they couldn't find work and what they were trained for, what they went to college for, is the labor market worse now than it was back in July?

[Danielle DiMartino Booth]

Judging by my Lyft and Uber drivers, I would have to say yes. The demographics has expanded and you've especially got a lot of kind of college graduates right now who are looking for gig work because they can't secure work in the broader economy as they thought they would be able to. You know, they walk across the stage proud with their diploma and boom, there's no work So, I mean, right now the unemployment rate among college graduates is the highest it's been since 1988. 1988, it was a supply issue because that was the peak of baby boomers entering the workforce. Now it's a, the flip side of it, it's a demand issue. And these kids are rightfully, they're very anxious.

[Tim Stanweck]

So when you've got Amazon letting go 14,000 jobs, a lot of it corporate, right. We've got ups, and that's part of its cost cutting.

[Tim Stanbeck]

Matt Lizetti at Deutsche bank says, pay no attention to these headline figures because they're small in comparison to the churn that we see each and every month.

[Tim Stanweck]

And that 5 million jobs are still being created. So, so what is the net?

[Tim Stanbeck]

You look skeptical.

[Danielle DiMartino Booth]

Yeah, well, I mean, so we collaborate sometimes with Macro Edge and they're, they're, they're an alternative to Challenger Grand Christmas.

[Tim Stanweck]

Yeah.

[Danielle DiMartino Booth]

And with the UPS announcement this morning, and of course, that was so much higher than what was expected. Right. It was 30% of what they had previously announced. So we learned from so many companies after the fact about attrition or layoffs rather than layoffs being announced. In any event, at 131,000 announced layoffs for the month of October thus far, and being in the heat of earnings season when so many companies are like, I'm going to get the stock to pop, I'm going to lay some people off, we're seeing the third highest level of announced layoffs in three, excuse me, in two years. So that to me at least is alarming. When you do what Chair Powell suggests you do, if you add the lack of hiring to the firing. Because a few years ago there wasn't all of this lack of hiring. Now it's very much a pervasive phenomenon in addition to the layoffs coming through.

[Tim Stanweck]

Yeah. And then there was the hoarding that was still going on after the pandemic. People were freaked out. They couldn't find workers. Right, Absolutely. Pandemic post pandemic. And so they're like, let me hold on to it. I mean, ups is up 8%. And they're, you know, and UPS is flying.

[Danielle DiMartino Booth]

I mean, but, I mean, but look at the one year chart.

[Tim Stanweck]

Yeah.

[Danielle DiMartino Booth]

It's a good point of UPS. And that required 48,000 layoffs. In addition to the 34,000 they announced, there was another 14,000 in their corporate office. Amazon today said that's 14, but that's 14 of 30.

[Tim Stanweck]

And we know that stock's down 30% in the past year. UPS.

[Danielle DiMartino Booth]

Yeah, UPS. Oh, yes, absolutely. Well, so then got quite the yield.

[Tim Stanweck]

All right, one word. How do you describe the economy? Economy, one word.

[Danielle DiMartino Booth]

Weak.

[Tim Stanweck]

So does the Fed obviously needs to cut in your view?

[Danielle DiMartino Booth]

I don't think the Fed has any. Yes, the Fed absolutely has to cut. I think that they begin to discuss, given the magnitude of the layoffs that are rolling in and the lack of hiring that, that Chair Powell said could in and of itself increase the unemployment rate. I think that right now what they're discussing is 25 or 50 in December.

[Tim Stanweck]

So can I just throw at you like Tim and I've had lots of conversations about earnings, right. Earnings growth is there, revenue growth is there. So companies are doing well. That's the analysis that has come our way. And it's not just big tech, although we'll see what big tech has right this week because we get a big read. But it's been broader based.

[Danielle DiMartino Booth]

I would say that.

[Tim Stanweck]

Do not agree with that.

[Danielle DiMartino Booth]

No, no, no. I would say that earnings are doing better than revenues. And so in one survey after another, whether it's a CEO survey, a CFO survey, a regional Fed survey, is revenue.

[Tim Stanweck]

Growth is, I think coming in better. That's again, there's revenue growth.

[Danielle DiMartino Booth]

But remember, these are all based on lowered bars that are easier to get over. I mean, if, if it's, if you want to look at the entire revenue picture, I think it's important to bring in the BCY go function and look at the bankruptcies that are coming in on top of this. And that is, you know, S and P has been tracking monthly bankruptcies forever. And last month September came in at the highest number in the post pandemic era of bankruptcies. And we're seeing one. I mean BCY goes hopping. Whoever's in charge of that is busy.

[Tim Stanbeck]

So is, is, you know, we talk a lot about the K shaped economy when it comes to consumers, but is it, is it, is it a K shaped market where you know the, and we know this about the s and P500 companies that they're, you know, the Mag 7 have just carried this index for years. But are you seriously concerned about pretty much the other company, all the other companies?

[Danielle DiMartino Booth]

Well, I mean, if you're asking me if I'm seriously concerned about the other 90% of Americans who are outside of the top 10% who represent 50% of spending. Yes, yes, I am.

[Anurag Rana]

Yeah.

[Danielle DiMartino Booth]

And I think we're seeing that in freight, but we're not.

[Tim Stanbeck]

But we're seeing it in freight and we're seeing it in some companies, but we're not seeing it. I mean we're at record, a new record.

[James Walker]

Oh no, no, no.

[Danielle DiMartino Booth]

We're not seeing it in asset prices.

[Tim Stanbeck]

Why are we not seeing it in asset prices?

[Danielle DiMartino Booth]

Well, there's something very automated about this market and this market will continue to feed on itself because that, that is, that is the structure of passive investing. Structure. Passive investing forces stock prices up because you have to buy the biggest market cap. Look at Nvidia today. But that's, that is a function not of necessarily enthusiasm about Nvidia the stock on a fundamental level, the way we used to think of portfolio management one on one, but function of passive investing flows.

[Tim Stanweck]

So what do you tell investors? Do you just tell them get ready for whatever the fan.

[Danielle DiMartino Booth]

According to Bloomberg, the cost of hedging against a decline in the markets is very expensive right now. So we know that, we know that portfolio managers are very nervous about what's happening. But no, I actually watch the Fed the most closely because you've got all of this money, trillions and trillions, I think 12, $13 trillion in cash, cash equivalents, money market funds, etc. That's, you know, that's predominantly owned by people who are 70 and older. So as long as the Fed does not cut too much, I think we're okay. But if the Fed starts to cut into what retirees consider to be the corpus of their monthly income because they have really enjoyed the Fed being higher for longer, they've collected every single 50 basis point cut by the Fed. You take $71 billion of cash out of the hands of retirees. We don't want for people who own 40% of the stock market, that is the 70 year olds, to even think about selling because that unleashes passive.

[Tim Stanweck]

Okay, got to leave it there. Hey, thanks. Good to see you. Danielle DiMartino Booth, CEO, Chief Strategist at the research and analytics firm Qi Research.

[Tim Stanbeck]

Stay with us. More from Bloomberg Businessweek Daily coming up after this.

[Tim Stanweck]

Let's not forget we have a big storm. We know Hurricane Melissa has made landfall in Jamaica. Strong, strong winds. So it's something we're talking about a Category 5 storm. This is a very serious storm.

[Tim Stanbeck]

Yeah. Melissa crossed into Jamaica with sustained winds of 185 mph, making it a rare Category 5 hurricane at landfall. It struck near New Hope on Jamaica's southern coast, is about 25 miles south of Montego Bay. The U.S. national Hurricane center said in a statement at 1pm in New York Times. Since then, its strongest winds have weakened to 160 miles per hour still at the top of the five step scale. We got a great voice with us. I want to bring in Eric Rostin. He's Bloomberg News climate reporter. He joins us from New Jersey. Eric, it's too early to be talking about the actual cleanup effort. We don't even know the devastation that this current storm will rot and also what happens later on in hurricane season. But you've talked a lot and you've written and reported a lot about the big business of disaster recovery. Let's talk numbers here, because you looked at those numbers of in Asheville, North Carolina, for example, just how much does it cost to clean up after one of these natural disasters?

[Eric Roston]

Just to take readers back a second to a year ago in the end of September 2024, Hurricane Helene technically was a tropical storm by then, but didn't matter. Instead of going out to the Atlantic, it took a left at the Appalachians and brought us just about the worst Appalachian hurricane you've ever seen. That's not a phrase we're used to hearing before. In December, after there was an accounting, North Carolina came out with a report saying that it caused $60 billion in damage concentrated in the western part of the state, which includes Asheville.

[Anurag Rana]

Wow.

[Eric Roston]

The cleanup effort has largely been completed when it comes to the immediate aftermath of removing debris. There was three and a half million cubic yards of debris removed from Buncombe county alone. That the county where Asheville, the city of Asheville is located. And what you miss from the numbers is, and I spent time down there in May is just the incredible vitality of this community and the incredible pride of western North Carolinians. Of course, other states were hit as well in trying to claw back from the worst hurricane that part of the state had ever seen.

[Tim Stanweck]

You know, I gotta say, Eric, that doesn't surprise me. My husband has a family member who is living in that area and just first of all, the neighborhoods coming out to help one another with generators and so on and so forth. But then, you know, everybody kind of had to leave because there was no infrastructure left, really, you know, to be there day by day. But as you say, it's impressive, like the comeback or what people want to do to bring everything back. It's interesting in a day where we're talking a lot about the US Economy. We're waiting for a Fed decision, we have a government shutdown. We don't get a lot of government data. We're trying to figure out what is the economy going forward, what will be the strains on the economy. Maybe I will mean Less job creation here. Unfortunately, these extreme weather disasters, you know, communities do often want to build back, right? And that creates, it comes at a cost, but it also creates economic activity.

[Eric Roston]

It does. Economists always, for decades have been fighting about the relationship between disasters and growth with different high ranking folks coming out on either side. What's interesting. So I went to Asheville in May, which was eight months after the storm. There were shoots of renaissance in business districts coming back. And the story that we ran last week is a profile of this very quiet but very, very large segment of the US Economy that is increasingly being called on to rebuild after disasters and to help places prepare for the next one. And another leg of this conversation for the last generation really has been government spending. And whereas until maybe till 2016 or 17, the US government was picking up the bill for maybe a third of recovery costs in disaster stricken areas, that number has been falling dramatically since then. It's probably down under 2%. And so there's a lot of questioning now and a lot of concern about where is the money going to come from if the government is stepping back to pay for the services that we need before, during and after disasters?

[Tim Stanbeck]

Well, there's also.

[Eric Roston]

The disasters are going to keep on coming.

[Tim Stanbeck]

There's also the question, Eric, of, of how this changes the economic landscape in these areas from a housing perspective. I mean, we've had reports coming from places such as Malibu that insurance costs have become so burdensome that you see homes for sale for a tiny fraction of what they would cost if they were insurable. One of our guests a few months ago just shocked me by noting that you could get like an actual house in Malibu for like just over $1 million, which is a shockingly small number. We're seeing this affect the real estate market in Florida as well. Is the free market solving this a little bit.

[Eric Roston]

Where the free market, like the whole system, if you talk to economists who look at systemic risks, we're a little bit protected from these disasters just by the nature of how they hit. Like they don't fortunately, or they fortunately haven't yet hit everywhere at once. And so the places that are undergoing this kind of level of suffering that I can only imagine what's happening in Jamaica right now, there's gotta be something that hits everywhere at once, right? For the systemic focused economists to really raise alarm bells. And they've started to exactly because of the dynamic you described, which is we have a system of federally backed mortgages that hinges on potential homeowners being able to get insurance policies at a time when disasters are becoming more intense, more frequent and more expensive. So the systemic concern to the extent there is one, and this has been mentioned at very high levels, the head of the Fed earlier this year expressed some concern about it in the decade or so ahead.

[Tim Stanweck]

Right.

[Eric Roston]

That is something to keep an eye on.

[Tim Stanweck]

I think what's fascinating too, there's a lot in this story. But you also cite John Stevenson, who's a senior analyst at our Bloomberg Intelligence team, who created an index, the Prepare and Repair Index, and it's about 100 large public companies that will be involved in these extreme weather situations, cleaning up. It reminds me of one of my first jobs in broadcast business journalism and it was a mutual fund show and when there was an earthquake we would put on fund managers or CEOs of cement companies because it was just a logical investment plate. Feels a little cold, but it was kind of the reality of our world. Incredible story. Highly recommend folks check it out on the [e-mail] Eric, thanks so much. Eric Roston, Bloomberg News Climate reporter joining us out there in New Jersey.

[Tim Stanbeck]

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[Carol Massar]

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[Tim Stanbeck]

We gotta talk about everything. Or at least I'm not gonna make it everything cause that would be exhaustive. That would just be impossible. But we gotta talk about a lot when it comes to everything happening with nuclear energy. Shares of Canadian uranium producer Cameco rose as much as 27% to a record high today. This after the US government signed a pact with Westinghouse Electric, Cameco and Brookfield that will see at least $80 billion of new nuclear reactors constructed in the US to accelerate nuclear power and AI deployment. And breaking late yesterday, Nextera Energy planning to restart a nuclear power plant in Iowa primarily to supply Google data centers. We got Will Wade with us. He's Bloomberg News energy reporter. He joins us here in the Bloomberg Interactive Brokers studio. Did the US make a mistake, Will, in shutting down nuclear reactors over the last few years?

[Will Wade]

That's a tough question. When they made those decisions to shut down reactors and I mean, I used to keep a spreadsheet on my desk. I call it the dead nukes file. Of the dozen or so reactors that were shut down in the past a little more than a decade, it was the right decision then. They were expensive to operate. Nobody wanted to pay that much for power. But the world has really changed around us.

[Tim Stanbeck]

And I think at an Indian point close to New York City, that one was. Didn't it outlive its life cycle? It was sort of at the end of its life.

[Will Wade]

Oh, no, it was closed ahead of time.

[Tim Stanbeck]

It was closed ahead of time.

[Will Wade]

Yeah. That was a big political campaign. There were people that were really worried about having a nuclear power plant so close to the biggest city in America. I mean, that's a legitimate concern. But we closed that plant and immediately people started saying, wait, New York State carbon emissions are going to go up this year because we replaced all the nuclear with natural gas. Like, who would have thought?

[Tim Stanweck]

So it does feel like we mentioned the US signing an $80 billion pact to boost nuclear power in that AI push Google buying power from next era nuclear power plant being revived. So the spend is on, the deals are on. Is the build on though, to really build out maybe the nuclear capacity that's needed?

[Will Wade]

Oh, building nuclear. No, nobody's doing that.

[Tim Stanbeck]

But the money's there, the commitments are there. The mothballing is being undone.

[Tim Stanweck]

Right.

[Will Wade]

Okay, so here's what we're seeing. There is an enormous amount of interest in nuclear energy right now. I've been seeing it for 18, 24 months. This is because electricity demand is going to go through the roof. That's largely for data centers and AI. It's not just that. It's for a lot of things, but that's, that's the big part of it. We need new electricity. We need a lot of it. We did not see this coming. We were not building new nuclear plants at the same time. We would love our electricity to be clean. So that really makes nuclear the best option because it's available around the clock unlike wind and solar.

[Tim Stanweck]

Right.

[Tim Stanbeck]

How quickly can nuclear power plants be built outside of the United States and China, Korea, Japan?

[Will Wade]

Oh, China's really good at building them. They've, they've been doing it nonstop. They got, I think they're soon going to surpass the US in terms of the number of reactors they've got going. So yeah, they're, they're faster at it than us. The Koreans are really good at it. I was in Korea this year. Their nuclear industry is they've been going nonstop for 50 something years. Our industry pretty much ground to a halt around 1979 and with Three Mile Island. So we, we spent years doing nothing and we never really recovered from that. We're working on it.

[Tim Stanweck]

Well, we're going to keep Will Wade with us, Bloomberg News Energy reporter. Someone else who's working on it too to build out nuclear capacity is James Walker. He's CEO of Nano Nuclear Energy. It's a $2.3 billion market cap nuclear energy company that is working on smart small modular reactors. Shares are up nearly 90% so far this year. A big chunk though of the float is short. James joining us from Vancouver. James, come on in on this conversation. I mean realistically, how long before we actually you actually get an SMR built and it's up and running?

[James Walker]

It's, it's a good question because it gets asked as you can imagine, more than any other question. And there's kind of two answers to it too because to get a reactor built and constructed and licensed is one question. But the other question is how long is it going to take for the fuel supply chain to be built back adequately in the country to be able to mass manufacture the fuel to allow the mass manufacture of reactors. So on one side we, our company is already going ahead with a construction project, two construction projects to build reactor systems and we're talking to data centers and all of those, all of those sort of groups as well. But on the other side, like you know, we even our company, we need to get involved in that fuel supply chain and build it back because as well was saying just before this sort of after Three Mile island, the investment into the country sort of broke down a lot. We need that investment to go back into rebuilding that fuel supply chain so companies like ours can mass manufacture the reactor systems.

[Tim Stanbeck]

But James, on Carol's question about a timeline here, what would be a realistic timeline for completion of your first modular nuclear reactor?

[James Walker]

So we're doing a drill program right now. It's just already started to on the site. So we'll have the geotechnical data to submit for a construction permit that'll go in early next year. NRC will turn that around in 2026. So construction 2027, 2028, 2029 and then fully licensed reactor operating commercial license 2030 is very reasonable timeline. So I would say early 2030 is. Then you're going to see the, the mass rollout of reactor systems. So dozens on an annual basis.

[Will Wade]

Yeah, that, that timeline fits with what I hear from a lot of companies early 2000-30-40 for a significant wave of new power plants. But I guess the issue is that we have all these people who want power yesterday. How do we meet their needs?

[James Walker]

Look, it's actually a very reasonable question. As a company, we want to be conservative and truthful with everybody because we've got to earn long term trust here. There are good interim solutions. I know companies have been exploring things like gas and to be honest, if they can get hold of that in the interim, great. But even things like gas contracts, they're all tied up for seven, eight years. Turbines around gas are tied up for seven, eight years too. So it's, there's no easy solution here. Even bringing in as you mentioned, like wind and solar or anything like that. These are intermittent technologies which require huge battery storage technology to run alongside them. A lot of the time it's just not feasible. They're also very locationally dependent so you'd be limited on where you can even deploy these things. I mean, unfortunately there's no, there's no great solution. Which is why when the show started they were talking about opening up these old power stations and recommissioning old nuclear power plants. Because those are the, some of them are the interim solutions. It won't be enough power, but it'll be some.

[Will Wade]

Yeah, those restart projects, that's the low hanging fruit. Do you think there are other plants that we can restart or is it just the ones we've already seen? Is are we exhausted that list?

[James Walker]

So it's a good question. Like this, A number have been shut down and like it's arguable. You mentioned Indian Point as an example. I know it wasn't politically popular and maybe there was some, some of that related to the decisions around that kind of plan. That could be an act, that could be a route. Even the old Three Mile island plant, since we bring that up, is, I think it's either Microsoft or Constellation were involved in, in recommissioning that and trying to get that back up and running.

[Will Wade]

Yeah, Constellation says that'll be ready by 2027.

[James Walker]

There we go. So like, you know, I think as you say, like, there's going to be big projected power demand increases in the country. They might not get sold until we get to those 2000s. And that the problem there is that that could mean a stagnation in the tech industry. They'll, they'll find every means they can to get power. But like that big online colocation green technology that provides baseload power that can only really come from nuclear. And a lot of these reactor systems, despite any really outlandish claims about deploying near term, it's going to be early 2030, 2030 and onwards.

[Tim Stanweck]

All right, so the demand story is compelling, yet the obstacles are just as apparent. Those aren't my words, those are Will Wade's words. Who reports on this sector, as you well know. I mean, help me out here though, because I'm just wondering, you know, if I'm looking at a stock that is up 80% year to date. You know, you guys don't have any revenues, right? I mean, like our investors, you know, this is what we do. Like, are they probably getting ahead of themselves? 30% of your float is short. So investors are just kind of waiting for something maybe negative to hit because they're negative the sentiment. I mean, realistically you're talking at least five years right before you're showing significant revenue or earnings or anything along those lines.

[James Walker]

No, like earnings, they will come online a long time before that. I mean, because there's this massive build back. The opportunity at the moment in the nuclear space is huge. It can come through the fuel supply chain or transportation or isotopes. Like the nice part is that we're part of this build back effort. So. And look, the stock market is always about an investment in the future. I mean, the nice part is that the demand is there in a way that's unprecedented. Like buying now really is an investment in the future and a future that's inevitable. The tech industry is not going to just give up and pack up and go away.

[Tim Stanweck]

But what if, what if the AI, what if the AI spend and build? That is. I know everybody comes out and says no bubble, or a lot of people do. What if there is though, an overspend? And where does that catch you guys? Potentially, I think the bubble has only.

[James Walker]

Been discussed around AI. But like in terms of data centers, those are things that cannot be bubbles. That is power that's needed for a whole tech industry. Like a data center cannot be a bubble. Like if you need increased power for computing power, it has to come from somewhere. I whether whether that's going to bear out the fruits of what's been promised, that remains to be seen but growth but currently it's just expanding but it's kind of irrelevant to the long term power requirements because the electrification of the country, the re industrialization of the country, that's all going ahead. And and you mentioned stocks like in the short interest. Great. If people want to short us, that's better because we've gone higher and higher as a stock just because every time the shorts have been squeezed, the more shorts the better for us.

[Tim Stanbeck]

James, only only 10 seconds left but would you say that you are most further along than any other company? The most along than any other company.

[James Walker]

In the terms of micro reactors? Yes, 100%. I believe we'll have the first US constructed full scale, commercial, commercially licensed microactor in the country.

[Tim Stanweck]

Well, you can put an SMR in my backyard because my monthly electrical bills are crazy. We're shutting off lights.

[Tim Stanbeck]

Carol, you glow. You're glowing today.

[Tim Stanweck]

Yeah, I'm glowing. We'll Wade of Bloomberg News and James Walker, CEO of Nano Nuclear Energy. Guys, thank you so much. Great discussion.

[Carol Massar]

This is 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 at Every weekday on YouTube and always on the Bloomberg Terminal.

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