SpaceX Joins Battle for Control of $26.5 Trillion AI Market

Summary

Podcast Summary: Bloomberg Businessweek

Episode: SpaceX Joins Battle for Control of $26.5 Trillion AI Market

Date: May 21, 2026
Hosts: Carol Massar & Tim Stenovec
Notable Guests: Ed Ludlow (Bloomberg Tech), Gautam Bandari (I Squared Capital), Tripp Hornick (Quinn Street Strategy), Dr. Dhanish Nagda (Resilient Health)

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Episode Overview

This episode explores the intersection of artificial intelligence, infrastructure, and national security. Major themes include SpaceX's strategic positioning in the evolving $26.5 trillion AI market, the technological implications of quantum computing, the shifting landscape of supply chain self-reliance, the future of healthcare with AI, and opportunities in infrastructure investment. Industry leaders and Bloomberg journalists break down these trends, offering in-depth perspectives on emerging market opportunities and the challenges to global competitiveness.

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Key Discussion Points & Insights

1. Software, AI, and Market Dynamics

[02:19 - 04:54]

• AI’s Market Disruption: Investors are wary about traditional software companies being disrupted by AI unless they show they’re integrating it into their core offerings.
  • Tim Stenovec: "Investors ... want to sell software because they think it's going to be completely disrupted by AI. These companies really need to show that they're integrating artificial intelligence." [02:30]
• Agentic Era of AI:
  • Ed Ludlow explains the shift from generative AI (content creation based on prompts) to agentic AI—autonomous tools that can act independently for users, especially in software engineering, e.g., “You go to bed and wake up the next morning and the agent has done it for you.” [03:17]
• Mainstream Potential:
  • The biggest hurdle for mainstream adoption is that the current AI market is dominated by hyperscalers (largest cloud companies); the wider use and profitability of AI agents is yet unrealized. [04:16]
  • Ed Ludlow: “They looked well past the numbers ... and said: what is the story next?” [04:54]

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2. SpaceX Enters the AI Arena

[04:54 - 06:41]

• IPO and Market Narrative:
  • SpaceX aims to target a $26.5 trillion AI market, according to their IPO documents. Notably, Starlink’s total market is “capped” at $2 trillion—the rest is an as-yet-unrealized AI opportunity.
  • Ed Ludlow: “The rest of it, the 26.5 other trillion, is something that doesn't yet exist ... It's them saying that will be the mainstay of our business.” [05:10]
• Integration with xAI:
  • Through incorporating xAI, SpaceX is positioning itself more broadly than just space/communications—they seek to be a leader in AI deployment across industries.
• Revenue/Profit Reality:
  • Currently, SpaceX revenue ($18 billion in 2025) comes mainly from Starlink; they are “losing billions” on AI investments at present. [06:12]
  • Ed Ludlow: “The opportunity in the future is AI. The cash burn right now is AI and the revenues right now are Starlink.” [06:12]

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3. Quantum Computing & IBM

[06:41 - 08:09]

• Quantum Leap:
  • IBM shares surge after a $2B quantum chip venture, illustrating big bets on next-gen computing.
• What is Quantum Computing?
  • Ed Ludlow explains simply: “Instead of the code ... being done in bits, ones and zeros, it's done in qubits ... this is real in the sense that the administration ... is giving over a contract $1 billion.” [06:54]
  • Quantum excels at solving a single, highly complex computation much faster than conventional supercomputers: “You’re just working in quantum on one single goal ... it can be computed in a more realistic timeframe.” [07:57]

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4. Wearable Tech Spotlight: Oura Ring

[08:09 - 09:29]

• IPO Watch:
  • Oura Ring confidentially files for an IPO after being valued at $11 billion.
  • Ed Ludlow (self-admitted user) describes its pitch: previously focused on women’s health, now moving into men’s health and longevity—“Helping men live longer and better.” [08:09]

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5. Infrastructure & Energy Investment Trends

Guest: Gautam Bandari, I Squared Capital
[12:06 - 19:40]

• Where’s the Opportunity?
  • Despite AI/data center buzz, risk-adjusted returns are best in energy infrastructure, especially pipelines and last-mile power. [12:50]
  • Renewables dominate in energy-deficit regions (Europe, Asia), while gas is still king in the US. [13:10]
• Global Energy Security:
  • Pandemic, trade wars, and geopolitical conflicts have revived interest in energy independence and reshoring manufacturing.
• Private Credit:
  • Middle-market US infrastructure build-outs present unique lending opportunities, as mid-market banks are still untangling real estate exposure.
  • “We are lenders to those mid-market developers and entrepreneurs ... that's where there is a pretty big opportunity.” [14:42]
• Data Center Caution:
  • I Squared Capital prefers edge data centers over large campus (LLM) types due to better returns and more “nuance.” [16:49]
• Retail Investor Sentiment:
  • 75% of surveyed advisors want to increase infrastructure exposure, signaling a mainstreaming of infra as a “ballast” for portfolios. [18:00]
  • Current allocation remains low in the US, but the shift is underway as institutions eye 5%+ allocations for infrastructure. [19:08]

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6. National Security, Rare Earths, and Supply Chain Resilience

Guest: Tripp Hornick, Quinn Street Strategy
[20:11 - 30:58]

• US Dependency:
  • Critical raw materials, especially rare earths, remain a leverage point for China.
    • Tim Stenovec: “It will be many years before China loses its leverage, despite the White House's best efforts.” [20:11]
• Government Intervention:
  • US is shifting toward equity stakes in strategic industries instead of outright grants (“state capitalism” with American characteristics).
  • Tripp Hornick: “The administration ... is specifically saying we're not just going to hand out grants, we're going to take equity positions ... that's a return to the taxpayer.” [21:51]
• Pharma Vulnerability:
  • US is highly dependent on India and, indirectly, China for drug precursors—“We are 100% reliant on China.” [23:06]
• Supply Chain Gaps:
  • The issue isn’t US raw materials availability but processing capacity—technology developed domestically was allowed to migrate overseas. [24:12]
  • Environmental and permitting hurdles, along with cost pressures, led to offshoring. [24:31]
  • “The problem is the mid supply chain, the processing. And do we have that? The answer is no.” [24:12]
• Self-Reliance Realism:
  • US can reach self-sufficiency in critical minerals, but not broadly in all manufacturing categories, given lack of supply chains for many goods. [27:02]
  • Automation can help overcome labor cost differences, but structural supply chain gaps are limiting. [27:56]
• Final Assembly Strategy:
  • Best approach: import components, do final assembly in the US for proximity to customers and cash flow optimization. [28:24]
• Capital Market Support:
  • Current focus is defense-critical sectors (medicine, weapons, water, grid), with less appetite for broad manufacturing reshoring. [29:05]
• Pharma Reshoring Initiatives:
  • New incentives and grants are expected for US-based pharmaceutical compounding as chronic medicine shortages highlight vulnerabilities. [29:42]

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7. Healthcare, AI & Digital Transformation

Guest: Dr. Dhanish Nagda, Resilient Health
[33:13 - 40:11]

• Access Crisis:
  • Employers are struggling to provide employees with timely, affordable healthcare. Waits of several months for appointments are standard—even for primary care. [35:09]
  • Dr. Dhanish Nagda: “If you keep opting out of the healthcare system, when you actually get sick, you don't know where to go. You don't have an existing relationship.” [34:22]
• Primary Care Shortage:
  • Doctors are shifting to concierge models or leaving the field, partly due to poor reimbursement, high patient volume, and system “moral injury.” [36:01]
• Preventing Chronic Disease:
  • Early intervention can save lives and reduce costs, but chronic shortages and misallocated incentives let disease go undetected.
• AI in Healthcare:
  • AI tools like ChatGPT and Claude handle 40 million health queries daily—far surpassing traditional system usage, though not always accurate. [38:17]
  • Dr. Nagda: “People are just saying we're done, we're opting out, we're going to go this other route because we trust them more than we trust doctors.” [38:17]
  • Resilient Health leverages AI with “guardrails”—using model confidence scores to trigger escalation to a human provider when necessary. [39:46]
• Future Model:
  • The most effective approach blends AI convenience with clinical oversight for safer, more accessible care.

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Notable Quotes & Memorable Moments

• "An agent is just an AI tool that can act on your behalf. It is genuinely autonomous."
  — Ed Ludlow, on the next phase of artificial intelligence [03:17]
• "The opportunity in the future is AI. The cash burn right now is AI and the revenues right now are Starlink."
  — Ed Ludlow, on SpaceX’s current vs. future business model [06:12]
• "We are lenders to those mid-market developers and entrepreneurs ... that's where there is a pretty big opportunity."
  — Gautam Bandari, on infrastructure private credit [14:42]
• "The problem is the mid supply chain, the processing. And do we have that? The answer is no."
  — Tripp Hornick, on US rare earths and minerals [24:12]
• "People are just saying we're done, we're opting out, we're going to go this other route because we trust them more than we trust doctors."
  — Dr. Dhanish Nagda, on the surge of AI-based healthcare queries [38:17]

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Timed Segment Highlights

| Timestamp | Topic / Segment | Guest / Speaker | |-----------|----------------------------------------|----------------------------| | 02:19 | AI disrupting software, agentic phase | Ed Ludlow | | 05:00 | SpaceX enters $26.5T AI market | Ed Ludlow | | 06:41 | Quantum computing & IBM news | Ed Ludlow | | 08:09 | Oura Ring, wearable tech IPO | Ed Ludlow | | 12:06 | Infrastructure, energy, renewables | Gautam Bandari | | 16:49 | Data center investment strategy | Gautam Bandari | | 18:00 | Retail/private client interest in infra| Gautam Bandari | | 20:11 | Rare earths, US-China supply chain | Tripp Hornick | | 23:06 | Pharma supply chain vulnerability | Tripp Hornick | | 24:12 | US lacks critical mineral processing | Tripp Hornick | | 27:02 | Limits of reshoring US manufacturing | Tripp Hornick | | 33:13 | Healthtech, AI in care, Resilient | Dr. Dhanish Nagda | | 38:17 | Patients using AI tools (ChatGPT) | Dr. Dhanish Nagda | | 39:46 | Guardrails for AI in healthcare | Dr. Dhanish Nagda |

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Tone & Style

Fast-paced, fact-rich, and accessible for business and tech leaders. The hosts and their guests blend macroeconomic context, technical explanations, and policy realities with candid, often humorous asides.

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Conclusion

This episode provides a comprehensive overview of the fierce competition and innovation underway at the intersection of AI, infrastructure, and supply chains. SpaceX’s bold push into AI, policy-driven reshoring efforts, and the unmistakable rise of AI in healthcare all showcase the scope and speed with which technology is transforming core sectors of the global economy—and the critical importance of balancing ambition with practical, risk-aware strategies.

Transcript

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[Podcast Host (likely Carol Massar or Tim Stenovec)]

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 Week Daily podcast with Carol Massar and Tim Stenovec on Bloomberg Radio.

[Tim Stenovec]

I'm interested in the kind of read that we're getting on the software sector, at least from the workday results, because now I cover private credit.

[Carol Massar]

Oh yeah, and private credit. Software is big for private.

[Tim Stenovec]

Yeah, software. It's just been such a big kind of trade in the market that investors, you know, they, they want to sell software because they think it's going to be completely disrupted by AI. And what these companies really need to do is show that they're integrating artificial intelligence instead of being disrupted by it.

[Carol Massar]

Okay, the perfect segue to getting to Ed Ludlow, Bloomberg Tech co host, who joins us from our San Francisco bureau. Ed, we want to talk in Video and so much more. I mean, we're going to go a very lightning round here because, you know, we only have seven minutes, but we have a lot to talk about. Nvidia is facing investors, some investor skepticism. I know you were on the call last night. Jensen spoke repeatedly about entering the sort of agentic era of AI. Explain what that means to people who don't have agents acting on their behalf right now.

[Ed Ludlow]

Yeah, an agent is just an AI tool that can act on your behalf. It is genuinely autonomous. So what we've become accustomed to is generative AI, a tool that can create text, images, video. It creates something where the input is your prompt in text format. With an agent, what you're talking about is a piece of software or tool where you can say, okay, you have availability to a piece of software or system and I authorize you to make an action, do transactions, financially speaking, or like book me on a flight and you don't have to run it past me. And present day, where that's most common place is in software engineering, coding rights. The idea is if you are a software engineer and you need to write a very large body of new code instead of just doing it yourself, you go to bed and you wake up the next morning and the agent has done it for you, then it's incumbent on you to check that work. That's kind of what we're talking about in real terms is so.

[Carol Massar]

So give us a gut check. Is it set to go mainstream?

[Ed Ludlow]

So the problem is right now that Nvidia's revenues are dominated by the hyperscalers. This body of activity is everything else, right? Yes. The hyperscalers have some involvement in what's happening in AI agents. When we say agents, it's also the inference phase. Right. You're not training a model anymore, you're running it, you're asking it to do something. It's the bit beyond the hyperscalers, other types of software company, types of technology companies that are building their own data centers on premises and basically the market just didn't really buy the longer term story. They looked well past the numbers in the quarter gone and in the projected quarter. And then they just said like, what is the story next?

[Tim Stenovec]

Well, tell us about what is the story that Space X is marketing to.

[Carol Massar]

Potentially told you we're going everywhere.

[Tim Stenovec]

We're going everywhere. And you have a piece out today with Bailey Lipschultz and Carmen Arroyo about just exactly how they're not just marketing themselves as a space company, but an AI company.

[Ed Ludlow]

Yeah, $26.5 trillion that's the total addressable market. The Space X is telling investors that it's going after largely in selling AI to enterprise companies. And they are super clear in this S1 filing that even though that's the big goal for them, like we focused a lot on Starlink, which is their constellation based Internet and direct to cell service. They are telling us this prospectus that's capped at about $2 trillion as not. Well, just $2 trillion, but you know what I mean, the rest of it, the 26 and a half other trillion is something that doesn't yet exist. But it is what we were talking about this agentic era. It's them saying that will be the mainstay of our business.

[Carol Massar]

I mean it's, it's so interesting to see that given that just a few years ago, Ed, we were talking about how Starlink was such a huge opportunity for Space X and now with the integration of X AI, they're essentially saying, well, the biggest opportunity for us is the as deployment of the tech.

[Ed Ludlow]

Yeah, but a total addressable market figure is part of the IPO process.

[Carol Massar]

Yeah.

[Ed Ludlow]

Story you tell when you dump the document. That's different to the reality of now, which is in 2025, Space X had revenues of $18 billion. Right. And Starlink was a great deal of that. But right now, you know, they are losing billions of dollars relating to their spending on AI. So that's kind of like the imbalance that is the opportunity in the future is AI. The, the cash burn right now is AI and the revenues right now are Starlink. It's kind of a dynamic investors are trying to digest.

[Carol Massar]

Okay, can we talk about IBM now?

[Tripp Hornick]

Yeah.

[Carol Massar]

Quantum computing. IBM shares surged today all because 10% like that.

[Gautam Bandari]

Yeah.

[Carol Massar]

This $2 billion quantum chip venture.

[Tripp Hornick]

Yeah, yeah.

[Carol Massar]

What is, what is quantum computing?

[Ed Ludlow]

Well, on a technical basis, instead of the code or the underlying math being done in bits, ones and zeros, it's done in qubits, which is a different unit of measurement. And if you want, we can get into the physics of it. But basically this is real in the sense that the administration, the Trump administration is giving over a contract $1 billion. And the main thing, right. About the difference between a quantum computing exercise and a supercomputer that is training AI or running AI, is that you are just working in quantum on one single goal, one single narrowly focused but highly complex calculation or computation that would take a normal computer like decades to do. But in the quantum realm, using, instead of using ones and zeros, you're using qubits. It can be computed in a more realistic time frame based on the performance of that computer.

[Tim Stenovec]

I think Tim wants to talk more about the physics of quantum computing, but I'm actually more interested, please, in the ring on your finger. And are you wearing an Aura ring?

[Ed Ludlow]

God, this is like really stressful. But I kind of am here for it. I'm wearing an Aura ring. Full disclosure, my wife got it for me and she used FSA funds to pay for it, which I guess is part of the broader story. The news, as first reported by Bloomberg, is that Aura has filed confidentially for an IPO. Another one? There will be another IPO probably this year. It was last valued $11 billion in the private markets in October. You know, it is a ring. It is basically a sleep data device that has had its origins in women's health. But actually, you know, and women account for the vast majority of the customer base. But you know, I've spoken a lot with Tom Hale, the CEO, like over the last couple of years. The opportunity in male health. The pitch is longevity, right? Helping men live longer and better. And you know, like, why, why does Ed Lovello look so fresh?

[Carol Massar]

What you sleep.

[Ed Ludlow]

What is your sleep score at 90 last night.

[Carol Massar]

Wow.

[Tim Stenovec]

My gosh.

[Ed Ludlow]

Like jokes aside like that is, it's been a massive improvement in my own life. I come in at like 3am Right? So it's hard.

[Carol Massar]

Hold on. He's doing, he's pulling a 90 on the Aura ring after Nvidia earnings on the same day that SpaceX drops his prospectus. He is a super. He is a superhero. Ed Ludlow. That's a no.

[Ed Ludlow]

I know. I just like, I went home last night and I crashed out and I went to sleep. Simple.

[Carol Massar]

I love it. All right. With not enough time, never enough time with Ed Ludlow. He's the co host of Bloomberg Tech out there in San Francisco. And check out Bloomberg Tech every day on Bloomberg TV at 11am Wall street time. Stay with us. More from Bloomberg Businessweek Daily coming up after this.

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[Podcast Host (likely Carol Massar or Tim Stenovec)]

You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5pm Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTub Bloomberg News team

[Carol Massar]

reporting that the infrastructure investment manager, I Squared Capital was among firms that advanced to the second phase in a bidding process to acquire a $5 billion port in Brazil. For more, we're joined by Gautam Bandari, co founder, Managing partner and global CIO at the private equity infrastructure investment firm I Squared. The firm has $63 billion in AUM. It builds and buys infrastructure assets across the world. We're talking about power and energy, transportation, logistics, digital environmental, social and more. Gautam, welcome. How are you?

[Gautam Bandari]

Thank you for having me. Pleasure being here.

[Carol Massar]

Yeah, thanks so much for joining us. You play in a lot of different areas when it comes to global infrastructure, renewables, battery storage, pipeline, data center, cellular, wastewater, elder care. The list goes on. Where are you seeing the biggest opportunity right now?

[Gautam Bandari]

Look, I think the world is quite focused on AI and data centers, but I think risk adjusted we're seeing better returns on the energy side. It could be pipelines, it could be behind the meter power. We have a big play there almost 6 gigawatts of behind the meter power. Last mile transmission is a very good play as well.

[Carol Massar]

What about renewables?

[Gautam Bandari]

So renewable is still a part of the energy mix. It's 90 plus percent of what's waiting in the interconnection here and will remain a part of that mix. And renewables with batteries and certainly renewables is the solution in Europe and in Asia because they're energy deficit countries.

[Carol Massar]

Is there a certain part of the world where energy infrastructure is more appealing to you than other parts?

[Gautam Bandari]

You know interestingly, there is a desire to get energy security globally. So you know you hear in the news about AI but I think what people forget is that the world had fragmented and really went after re industrialization. It really started in Covid, right. So people thought the vaccine should be manufactured close to home. And then tariff war, Ukraine war all meant that people want to re industrialize. And so chemical plants started moving back. So you see power consumption in US but also in Europe and Asia really go up. So energy is a theme, it's not the only theme there. And actually the energy demand, it means different things. So in Asia it means renewables, in US it means gas.

[Carol Massar]

But maybe it could mean renewables under a different administration in the U.S. yeah, absolutely.

[Gautam Bandari]

And by the way, still even under the current administration, solar plants and others are getting connected to grids and supplying electrons.

[Tim Stenovec]

We know that you're primarily a private equity firm, but you also lend as well. I'm wondering specifically where are you seeing opportunities for credit investments in infrastructure?

[Gautam Bandari]

Correct. So you know, if you think about it, a lot of infrastructure build is going on in the US as well as in Europe. And build generally happens in the middle market space. So we are lenders to those mid market developers and entrepreneurs who are building that power plant or the fiber optic network or you know, the logistics facilities. And so we think that on that mid market space which traditionally was occupied by mid market banks, I think many of them are stuck with some real estate exposure that they're trying to work through. So I think that's where there is a pretty big opportunity.

[Tim Stenovec]

There's just so much. I mean I know you're not just focused on AI but the capex kinds of projections that we're hearing, the amount of money that's being raised to fund the infrastructure buildout is quite staggering. Do you think we're in an environment where the investor kind of is still able to dictate terms of the deals that are getting done? Because there is kind of this surplus of supply that needs Capital.

[Gautam Bandari]

Yeah, so. So I think there is a certainly a big demand cycle that is on and I think it is coming from the fact that for 20, 30 years US pretty much relied on just in time inventory and optimized corporate profits. Right. So a lot of the infrastructure that us actually used actually think of it as basically being borrowed from Chinese infrastructure. Right. So now that that build has started, capital is coming in and the big difference is government is not funding it. So it's private balance sheets. And so it seems large, but infrastructure is very capital intensive. You know, average power plants are very, very expensive and going up.

[Carol Massar]

I wanted to go and talk specifically about data centers because they're getting so much attention right now. Your chairman and managing partner told our team back in December that when it comes to data centers, quote, momentum is strong, but if this is irrational exuberance, investors will lose when the music stops. He said the firm is trying to be careful, caution that every deal has nuance. The fine print matters. Is that still the view at the firm that these deals have nuance when so much money is being thrown at these data centers?

[Gautam Bandari]

Absolutely right. So whenever you have 7,800 billion dollars being spent in a hurry, you will find fast and loose deals and you'll find well structured, well thoughtful, thoughtfully priced deals. Right. So we are, to be fair, we are investors in data centers, but more edge data centers, not LLM ones.

[Carol Massar]

Why is that?

[Gautam Bandari]

We lend to them. Well, I think the very large campuses that occupy a lot of the news are 20, 30 billion. We tend to focus on middle market, which is frankly an area where we can get outsized returns. So edge data centers and all we do, we have liquid cooled chips in our, in our premises. So you just have to be careful. And I think on the lending side, we are lenders to a lot of these large data centers.

[Tim Stenovec]

There's been a lot of talk about investor retail exposure to private markets, private credit specifically. You have a study out, a survey out about how financial advisors feel about exposure to private markets. Tell us a little bit about the current kind of sentiment around investing, specifically in infra for retail and advisors.

[Gautam Bandari]

Right. So quite surprisingly, so we pulled about 250 advisors to ultra wealthy family offices and sort of high wealth channels. And out of the 250, 75% wanted to increase their exposure to infrastructure. Remember, this was a backward kind of asset class where nobody really paid attention. Everybody liked venture capital, real estate. So 75 is a big number and out of which more than half actually wanted to put infrastructure as a ballast in their portfolio. So 7 to 10%. So meaningful from current exposures of zero. Right. So that's a pretty meaningful jump. I was myself surprised with it. And then more importantly, about a third of that wanted growth. So they're not coming into from an income perspective. They're coming into it from a growth and diversification perspective. The income number is only 17.

[Carol Massar]

Just very briefly, 30 seconds, is it what portion of a typical portfolio for a family office would be allocated to these assets?

[Gautam Bandari]

So currently for most families it's zero. So they will have real estate at 10, 20%. And institutionally the US average is closer to five. It used to be two and a half and then the big jump came about a year ago to try and get to a 5 target. So infrastructure, whether you look at institutional side, which have been historic allocators into this and of course the Canadians and The Aussies do 8, 10, 12, 18% also. But in the US for some reason, I think it has always been very low.

[Carol Massar]

Gautam Bandari, co founder, Managing partner and global CIO over at i2, $63 billion in assets under management in private equity. Gautam, thanks so much for joining us here.

[Gautam Bandari]

Thank you for having me on set.

[Carol Massar]

Come back soon.

[Podcast Host (likely Carol Massar or Tim Stenovec)]

This is the Bloomberg Business Week daily podcast. Listen live each weekday starting at 2pm Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa. Play Bloomberg 11:30.

[Tim Stenovec]

Jo Doe and Martin Richie writing most recently that rare earths are among the most critical raw materials on the planet, deeply embedded in the technologies that underpin modern life, from iPhones and cars to data centers and MRI machines. And the world has been reliant on China for rare earths. But the US Is also trying to boost its own production of the materials, but it won't be easy. An estimate from Bloomberg Economics says that it will be many years before China loses its leverage, despite the White House's best efforts. So joining us now to discuss more is Tripp Hornick, principal at Quinn Street Strategy. It's a consulting firm that secured clients over 1.2 billion in US government funding and letters of intent to fund last year. You're here with us in New York. Thank you for being with us. We want to get to national security and China and railroads. But first, just tell us a little bit about who are your clients?

[Tripp Hornick]

Oh, thanks so much. Clients are ones that are actively working to solve the supply chain intrinsic issues that we're having here trying to return us back to where we were As a superpower and how we made our ability to leverage our natural resources and our manufacturing base. We have to be able to be self reliant and not be dependent upon China and multiple other places across the world that we could name and wax poetic on. So my clients are the ones that are actually the mines, the processors and the ones that are compounding.

[Carol Massar]

The free market purists out there would say we have to be reliant. Meaning the companies have to be reliant and should not get handouts. What they might see as handouts or support from the government. What would you say to those folks out there who say hey, we don't want the government doing any sort of funding picking winners and losers when it comes to any space.

[Tripp Hornick]

I think it's a terrific point. And being a chief operating officer by trade, I'm not a big fan of the 7A program or picking winners and losers specifically. We do not want another Solyndra. However, what the administration is doing now is specifically saying we're not just going to hand out grants, we're going to take equity positions in the companies that we're going to invest a significant amount in. And that's a return to the taxpayer.

[Carol Massar]

But is that state capitalism?

[Tripp Hornick]

It is arguably state capital because it

[Carol Massar]

hasn't ended well in other parts of the world.

[Tripp Hornick]

It has certainly not ended well in places where you would consider communism to be the reigning way of the day. However, it is a way to backstop no different than the guarantee that is already going to go onto that loan. So the government does not wish to have a controlling stake in these companies, but it does want to ensure that these companies are able to hit the mission and that is one way of ensuring so.

[Carol Massar]

Well, we've seen investments in rare earths companies. We saw support for IBM today and IBM indeed is surging. We've seen support for intel, for example. Are there any areas of like the, the corporate landscape where you look or industries where you think have not gotten government funding yet or investment from the government that will or should certainly pharmaceutical

[Tripp Hornick]

precursors, that's gonna be an absolute gar. So I wanna be able to take my Lipitor, I wanna be able to take my Metformin. We cannot be reliant upon overseas countries and adversaries. In order to do that, our precursors and our generics are 90% reliant upon India. Guess where India gets 100% of its precursors? China. Therefore we add the math and we are 100% reliant on China. Back to the intel deal though. That was a very special scenario and I would even argue one that I would not have pushed forward.

[Carol Massar]

Why not?

[Tripp Hornick]

I don't think taking those golden shares or that 10% stake are really going to prop up a company. I would have loved to have seen that taken by Texas Instruments or another US company and have it absorbed there.

[Carol Massar]

I mean, in hindsight it's looking like a really good investment right now.

[Tripp Hornick]

It's a good investment for the markets. It's a good investment in making sure that we have jobs and that we're creating the chips. That said, how much larger is it going to go and how much longer is it going to go? As we continue to advance our data centers and our AI?

[Tim Stenovec]

What about the US's buildout of raw materials? Are these company stakes actually? Is the administration actually making any headway there on like a domestic build out of raw materials?

[Tripp Hornick]

That is the key is that it's actually not raw materials that are the problem. We often talk about the rare earth magnet and the mind to magnet issue. 95% of what we need we have in the contiguous 48 states. Most people don't know that and it's not publicized in the press. The problem is the mid supply chain, the processing. And do we have that? The answer is no.

[Tim Stenovec]

So what's the bottleneck? Why don't we have it?

[Tripp Hornick]

The bottleneck is that we let it go overseas. This is technology that was developed here in the United States 20, 30, 40 years ago.

[Carol Massar]

Didn't we let it go overseas because nobody wanted this in their backyard? Like it's environmentally very, some would argue, very dirty. The processing people, just like there's no better way to explain it. People don't want this close to them.

[Tripp Hornick]

No, that's partially it when you go back to recycling. But if you're taking ion exchange, for example, as opposed to solvent extraction, it's not a very dirty process. Consequently, you can take from the mine an MREC would mix rare earth and then have that through an ion exchange separation, turn to an oxide and then metal. It's not that dirty. In fact, it's cleaner than most textiles.

[Carol Massar]

But again, going back to this idea of capitalism and money flowing, but there is opportunity. Some people have come on our program and argued one of the reasons why we sort of let rare slip away is because companies didn't see an opportunity.

[Tripp Hornick]

That's the key.

[Carol Massar]

It was expensive to do. It is expensive to do, and then it's difficult to make a profit on it.

[Gautam Bandari]

It is.

[Tripp Hornick]

And that was the big problem. We ran into permitting issues. We ran into. We don't want to do dirty manufacturing, but we also wanted to race to the bottom. There's a reason why everything from Walmart is made overseas. Let's just be very blunt. Let's just say that we took towels and make that analogy. We let towels go to Bangladesh. We let rare earth processing go to China.

[Tim Stenovec]

What was your assessment of the inroads that the White House made with China in Trump's recent visit? Did we get any kind of insight into potentially what rare earth? Maybe not, you know, rare earths, but just the processing in the U.S. you're smiling.

[Tripp Hornick]

Oh, I'm smiling because it's a brilliant question and one that needs to be answered. The answer is no. But we will never be cut off by China. We need to be self reliant. This goes back to what I said quickly earlier, and that is, how did we become a superpower? By building upon our natural resources, our manufacturing base during World War II. We have to do that again. And that will also bring interest rates down. It will create jobs. But on China specifically, it's a game. It's a geopolitical game. It was not brought up in depth. We talked about the soybeans, we talked about the meat. But it's a way to ensure that China, from an internal perspective, works on having their presence known in the South China Sea.

[Carol Massar]

Do you think in the US it's realistic to think that we can become completely self reliant when it comes to manufacturing?

[Tripp Hornick]

100%. When it comes to the critical minerals,

[Carol Massar]

beyond critical minerals, absolutely. Towels in Bangladesh, we could talk about shoes. In Vietnam, we could talk about furniture in, I don't know, probably in Pakistan and India. The President wants, and you know, this has been lost in the conversation over the last few months with the war in Iran, but the President, the reason we have a tariff policy as it is is because the President wants all of this here in the United States. Is that realistic?

[Tripp Hornick]

It is not realistic. Even though I agree with the President's goal on it, it's not realistic because the supply chain is not present. So I actually was chief operating officer of a textile company and I reshored things from Pakistan, Bangladesh, China and India. Hence why I made the analogy. There's no base supply chain here outside of cotton. So if I want to bring polyester in from China, using this again as an analogy, I'm going to be subject to a different tariff.

[Carol Massar]

But you think that is the choke point and not the cost of labor and the standard of living here?

[Tripp Hornick]

Cost of labor is not the choke point because of automated manufacturing.

[Carol Massar]

I mean I've spoken to people who manufactured, worked on supply chains manufacturing furniture overseas.

[Tripp Hornick]

Yes.

[Carol Massar]

And they said it was literally cheaper to pay somebody like cents a day to take one piece of wood and move it to the other hand and hand it to somebody else than it was to install a conveyor belt like that. Is the standard of manufacturing overseas.

[Tripp Hornick]

Absolutely. When you're looking at and having sat at those tables and watch those workers work, that is the standard. But it is a very limited and short sighted view because it is not nearest to the point of sale. That means that you are stocking inventory or you're out of inventory and therefore you are not making your sales. The best case for those types of industries is to import what is necessary from overseas and then do the final assembly and the final needs here in the US So you're closest to the customer and not being hold onto that cash. Pardon me? Holding onto your cash and not losing your cash.

[Tim Stenovec]

And is there, is there kind of like an appetite at least from capital markets to kind of fund that, that last mile manufacturing domestically?

[Tripp Hornick]

There was in, in Trump. In Trump. 45. I'm not seeing that in capital markets right now. During 47 we're hyper focused on what is being pushed out with regards to critical minerals in defense. And that's why it's also the sectors that I work in what will ensure that we are able to preserve life and limb. Medicine, weapons, grid, water.

[Carol Massar]

I'm glad you we went back to medicine because that's where I want to end up. You talked about support for generics and pharmaceutical companies here in the US what does that look like? Who could be the recipients of that? I mean I've run into situations in the past few years where I couldn't get antibiotics for, for my kids.

[Tripp Hornick]

No, it's terrible and it's.

[Carol Massar]

And we don't want to be in that situation.

[Tripp Hornick]

No, we can't be. I mean there right now we produce practically no generics here in the United States. We do all the R and D here and then we let it go overseas. What we have to do is incentivize and the president rightly wrote a very good executive order to start moving this on and make a list of the key precursor chemicals and there will be incentives and I will, you know, dare say there will be some grants and some other things coming out in the not too distant future.

[Carol Massar]

Companies could be the recipients of those grants.

[Tripp Hornick]

We need to identify them. That's the issue. So most of them are not publicly traded and that's the key. We have not identified the companies. It's not going to be Johnson and Johnson. It's not going to be Merck, it's not going to be, you know, Bristol Myers Squibb. It's going to be the companies that actually do the chemical compounding. So there's a great Israeli company out there that's name is escaping me at the moment. But if they were doing more of that in the us that's terrific.

[Carol Massar]

Maybe Teva.

[Tripp Hornick]

Teva's one. Indeed. There's a second as well. Terrific call. Thank you.

[Tim Stenovec]

But these are mostly these would be

[Tripp Hornick]

US Companies or the investment needs to go into US Companies. So this is occurring and we are keeping the supply chain here domestically.

[Carol Massar]

Really cool stuff. We were supposed to talk more about rare earths, but like I got a little carried away, Emily, so I'm sorry. But you know, when you got Tripp on the program, we know we can go. That's very kind.

[Tripp Hornick]

Thank you.

[Carol Massar]

Trip Hornick, principal at Quinn Street Strategy, joining us here in the Bloomberg Interactive Brokers studio. Stay with us. More from Bloomberg businessweek Daily coming up after this.

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[Podcast Host (likely Carol Massar or Tim Stenovec)]

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

[Carol Massar]

We've talked a lot about health care and tech today. Our conversation with Michael Magnano over at Union Square Ventures. Earlier, he talked about the investments that his firm has made in healthcare.

[Tim Stenovec]

Yeah. And just the risks that investors and consumers need to be aware of when you kind of bring healthcare and artificial intelligence together. And we also spoke with Ed Ludlow about his near perfect sleep score. Yeah, that's Oura ring.

[Carol Massar]

That's a flex.

[Tim Stenovec]

He's maybe he's Superman. And of course, Oura Health really in the news today because it's filed confidentially for a US ipo.

[Carol Massar]

And also making the point that Tom Hale, who's the CEO of Aura, has said this is a play on longevity and wellness. No question that those two things are really having a moment right now. So it's something that Dr. Dhanish Nagda knows all too well. He's the CEO and co founder of Resilient Health. It offers direct primary and specialty care for employers and their employees. Good to have you on the program this afternoon, Doctor. I want you to explain how people access Resilient Health. Because you essentially serve two different markets, right? You need to get the employer to sign on and you need to get the company to start using the benefit and then their employees can start using the benefit. How does it work?

[Dr. Dhanish Nagda]

Well, one of the biggest things that we've seen recently is that employers are really struggling with their employees getting access. I mean, that's why you're seeing the rise of these other tools, because people are just opting out of the healthcare system. And the problem with that is that if you keep opting out of the healthcare system, when you actually get sick, you don't know where to go. You don't have an existing relationship. So what the employers are doing is they're offering these really high quality benefits for their employees. And what the data shows, and it's very well established, but even our own internal data shows that when you spend a dollar on primary care, you can save three to five dollars in the same year.

[Carol Massar]

Wow.

[Tim Stenovec]

What is the obstacle to the access to health care? Is it, is it financial? Is it a convenience thing, a difficulty?

[Dr. Dhanish Nagda]

I mean, we all have tried to get a primary care appointment. It takes three to six months. There's no availability.

[Carol Massar]

You literally have to know someone.

[Dr. Dhanish Nagda]

You have to know somebody and to have to phone a friend just to get access to a primary care doctor.

[Tim Stenovec]

Yeah, okay, I thought that was just a New York City problem, but I'm guess. I guess it's not.

[Carol Massar]

But isn't that.

[Dr. Dhanish Nagda]

Isn't that worse in other parts?

[Carol Massar]

But that's a problem.

[Dr. Dhanish Nagda]

It takes six months.

[Carol Massar]

But isn't that a problem with primary care? Because primary care doesn't really do procedures, and therefore they're not paid the way that other doctors are paid. So there's a problem attracting primary care doctors, or in the case of, like, so many doctors who I've had, even. Even our pediatrician, they're going concierge. So literally tens of thousands of dollars to actually go and see a doctor because it is so much more lucrative, and there is that opportunity there. How do you attract primary care doctors when the system, I think many people would argue, is so broken?

[Dr. Dhanish Nagda]

Well, the dirty little secret in healthcare is that everybody's focused on the boomer, the aging population, Medicare Advantage. And what's happened is when you think about Nana having seven different diseases, the primary care doctors have to spend an hour, two hours with her. But they can't worry your mental health. They can't worry about your other issues, and so they end up spending five minutes with you. And so that delay is coming from the fact that we have a mismatch. We have a primary care doctor that's coming in and is completely focused. The first visit was somebody with cancer. The second visit was somebody with maybe what seems like nothing, back pain. But that back pain can lead to a 40, $50,000 surgery. So this mismatch of supply and demand is a big issue, and that's where AI is actually playing a great role.

[Carol Massar]

So you went to med school at the University of Pennsylvania. You did your residency in otolaryngology at Washu in St. Louis. What made you want to sort of leave traditional medicine and start companies?

[Dr. Dhanish Nagda]

It's actually one of the greatest. There's recently lots of data that came out in the last week or so. A lot of doctors are leaving medicine, making the problem worse. Now, I might be part of the problem, but I want to be part of the solution as well, which is it is incredibly challenging right now for a provider or a doctor to deliver care. The reimbursement models are completely breaking. The patients are not getting enough time. There's moral injury associated with it and so what we want to do is use technology to restore that doctor patient relationship. And that's really what I built this company around. I mean, I'd already built a company before that was acquired and went public. And so this was for me the opportunity to kind of go back and build this. And most importantly, I was a caregiver for my dad. And this is the again, unspoken truth in health care in America. Because we're so focused on people with chronic diseases, you, your family members and others are walking around with undetected diseases that will become those chronic diseases. And if we could get early enough into the cycle of it, we could prevent what happened to my dad and my co founder's mom, where they literally just missed the diagnosis for decades from happening and my dad would still be here playing with my grand, you know, playing with my kids. And so I think that that's the reality of healthcare in America.

[Tim Stenovec]

How does I find those, is it AI? How do we find those undetected symptoms?

[Dr. Dhanish Nagda]

AI is already finding them today. 40 million daily queries on ChatGPT for health care, 40 million daily. That's way more than the health care system today because people are just saying we're done, we're opting out, we're going to go this other route because we trust them more than we trust doctors. And it's just the way it is. As a doctor, I feel very comfortable saying that the problem is one, those systems are not built with the clinical guardrails that are required. Two, when you do need something, they don't know where to send you. And so I think the answer is AI healthcare together solving the problem. So you could go into, for example, resilience, AI native. So you can go in and ask us questions just like you would with ChatGPT, but we can escalate it to a provider that you can see you the same day. So it's just the opportunity to be able to get as much information, as much time and most importantly, as much knowledge that is needed for you to take care of yourself, but not get lost in the rigmarole of the current health care system, which is just an absolute mess.

[Carol Massar]

Yeah, I actually threw some labs into Claude a little earlier today and I know my doctor will look at him and get back to me, but now I know what he's going to say. So I guess if Claude is correct, that's the question, hey, making sure that, that the AI is actually trained. Because we did cite a study earlier that this week that said a good portion of what you get back on ChatGPT when it comes to medicine is not actually that accurate. What's the right way? What's the right way to have the guardrails up? That that actually makes sure you deliver the right information. Just 30 seconds left.

[Dr. Dhanish Nagda]

Yeah. So from our perspective, the most important thing is to know when the confidence of that model is high or low. So if you just think about the way Claude responds to you, it's as if it knows all the answers and that everything it's saying is correct. For us, we actually look at confidence scores of the responses and use that to escalate care in what we call a harness of guardrails to make sure that no patient gets the wrong care at the wrong time.

[Carol Massar]

Dr. Dhanish Nagda. Gotta come back soon. Appreciate you taking the time and joining us. He's the CEO and the co founder of Resilient Health. He joins us this afternoon.

[Podcast Host (likely Carol Massar or Tim Stenovec)]

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 Every weekday on YouTube and always on the Bloomberg Terminal.

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