TikTok Buyers Group to Include Oracle, Silver Lake, Andreessen

Summary

Bloomberg Businessweek Podcast – Episode Summary

Episode: TikTok Buyers Group to Include Oracle, Silver Lake, Andreessen
Date: September 16, 2025
Hosts: Tim Stenovec, Joe Weisenthal (with appearances by Carol Massar)
Guests: Brad Stone (Editor, Bloomberg Businessweek), Katie Kaminski (Alpha Simplex Group), Adair Fox Martin (CEO, Equinix), Ali McCartney (UBS Alignment Partners)

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Episode Overview

This episode explores significant developments across the tech and financial landscape: the evolving TikTok divestiture process, the rise of AI-generated content (so-called "AI slop") and its implications, the rapid expansion of data center infrastructure driven by AI, nuanced shifts in Fed policy, and broader macroeconomic and market trends. Expert guests weigh in on what these changes mean for global business, technology, and investment strategies.

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Key Segments & Insights

1. TikTok's US Operations: Brewing a Silicon Valley Consortium

Timestamp: 02:00–05:29

• Breaking News: The US deadline for TikTok’s Chinese owner, ByteDance, to divest its US operations has been extended until December 16th. Oracle, Silver Lake, and Andreessen Horowitz are central to a potential buyers' group, with Oracle keeping the TikTok cloud contract.

• Complexity of New Structure:

  • Oracle, Andreessen Horowitz, and Silver Lake would control US operations.
  • Potential of making 170 million US users download a new app, which introduces “friction.”
  • New entity would license tech from ByteDance but potentially rebuild algorithms domestically.

• Brad Stone's Skepticism:

  “Frankly, it seems... like a win for Metta and YouTube. There's very little that says this new TikTok US operation that licenses the technology from ByteDance but then recreates the algorithm domestically... It just doesn't sound like an agile company that can adapt to the rapid changes we're seeing in social media and AI.” (Brad Stone, 03:32)

• Uncertainty Ahead:

  • US investors may hold ~80% stake; Chinese investors retain the rest.
  • US government appointed board member anticipated.
  • Concerns linger over actually executing a successful spinoff or whether this is just more regulatory brinksmanship.

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2. The Rise of ‘AI Slop’ and Social Media Content Trends

Timestamp: 05:29–10:51

• Definition:

  • “AI slop” refers to the flood of AI-generated videos—talking dogs, animated babies, bunnies on trampolines—now omnipresent on platforms like Instagram, TikTok, and YouTube.
  • Powered by tools like Google’s VO3 (capable of generating audio and video from scripts).

• Cultural Impact:

  • Young creators—even teenagers—are profiting, albeit modestly, from viral AI-generated content.
  • These videos serve as marketing for apps and attract significant user eyeballs.

• Hollywood & Content Creation Implications:

  “Just a few years ago during the writers’ strike, Hollywood writers expressed a real allergy to the use of AI in professional productions. And now we have this groundswell of content... flooding social media. It's pretty high quality... There's a loosening of restrictions in Hollywood.” (Brad Stone, 08:31)

• Ethics and Oversight:

  • Social platforms currently require creators to self-report AI-generated content, but enforcement is lax.
  • Risks around deepfakes and viral misinformation are escalating, highlighting the need for proactive labeling and detection technology.

  “The potential for confusion, for deepfakes that defraud or deceive viewers, is so high that it probably is incumbent upon the companies to label those...” (Brad Stone, 09:48)

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3. Social Media, Tragedy, and Corporate Responsibility

Timestamp: 10:51–12:02

• In the wake of high-profile tragedies (e.g., the assassination of Charlie Kirk), public criticism of social media’s role as a “cancer” (per Utah’s Governor) intensifies.

• Brad Stone’s Observations:

  • Despite outcry, major platforms have reduced content moderation due to political pressure.
  • The current environment is one of “downshifted content moderation,” with few signs of positive change.

  “No, there’s no sense that companies are amplifying or amping up their content moderation strategies. In fact, they might see it as a political danger and so are doing the opposite.” (Brad Stone, 11:23)

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4. Federal Reserve Policy: Divergence, Volatility, and Independence

Timestamp: 14:18–21:32

• Fed Policy Dynamics:

  • 25bps rate cut expected, but future moves debated.
  • Unusual level of dissent within the Fed (not seen since 1988) is stoking market volatility.

  “So we haven’t seen three dissents since 1988 and you’re starting to see a much wider range of views on the Fed itself... everyone’s trying to understand and are these dissents going to move to a new consensus or are we just going to be in the same scenario for a longer period?” (Katie Kaminski, 15:38)

• Fed's Independence Questioned:

  • Recent appointments and political influence are perceived as eroding central bank independence.

  • Potential implications for bond markets and investor confidence.

    “Nothing is ever 100% independent in Washington... there’s definitely influence... that has a potential to make independence a little bit weaker than it was before.” (Katie Kaminski, 17:05)

• Rate Path and Economic Risks:

  • Downward trend in rates anticipated; over-aggressive cuts could stoke inflation and disrupt bond curves.
  • Stagflation remains a “corner case” to watch, with the main risk being too-rapid monetary easing.

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5. Data Center Expansion and the AI Era

Timestamp: 22:03–31:56

• Massive CapEx Boom:

  • Tech giants (Microsoft, Amazon, Google) to collectively spend ~$344 billion, much for AI-oriented data centers.

• Equinix at the Forefront:

  • CEO Adair Fox Martin discusses strong, cyclical demand for data center infrastructure, driven by both AI training and especially inference (deployment of AI models in production).

    “We see that opportunity [inference] as potentially double the size of the training opportunity. And at our company, we feel we were built for this moment.” (Adair Fox Martin, 23:07)

• Location, Labor, and Supply Chain:

  • Equinix focuses on urban, connected locations.
  • Labor shortages exist, but the company actively manages supply chain constraints.
  • Skilled trades (plumbers, electricians) are “unsung heroes” of data center ops.

• Business Model:

  • Mix of wholesale (direct to hyperscalers) JV agreements and “colocation” facilities for enterprises.
  • Company claims durable demand regardless of cyclical swings in AI/tech investment.

• AI Investment ‘Bubble’ and Market Risks:

  • Despite warnings of over-exuberance, Fox Martin believes in the "enduring nature" of the AI-driven transformation and Equinix's somewhat insulated position.
  • Some investor anxiety persists due to heavy ongoing capital expenditure.

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6. Market Outlook, The Fed, and Global Investment Position

Timestamp: 33:52–43:28

• Market Context:

  • Historical parallels to other highly valued markets, notably pre- and post-Great Financial Crisis (2008).

  • Current markets may still be in a bull phase, but tomorrow’s Fed signals are pivotal.

    “The markets have outperformed in decreasing Fed interest rate environments where earnings are growing or stable... they've tanked when the Fed is tightening and earnings are slowing. So I think we have a little bit of a recipe for tomorrow.” (Ali McCartney, 34:24)

• Inequality and the "K-Shaped" Economy:

  • Low rates can benefit both struggling consumers (making loans more accessible) and encourage risk-taking among the “haves.”
  • The challenge: rate cuts may inadvertently fuel asset bubbles.

• Fed Political Alignment and International Capital:

  • Concerns rise over politically influenced Fed policy and the long-term implications for US financial dominance.

  • Demographic issues (declining workforce, birthrates) may gradually erode the US competitive edge, but for now, the dollar and US markets remain dominant.

    “A non-independent Fed is a really challenging place to be.” (Ali McCartney, 39:14)

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Notable Quotes & Memorable Moments

• “It just doesn't sound like an agile company that can adapt to the rapid changes we're seeing in social media and AI.” (Brad Stone on TikTok US operations, 03:32)
• “The potential for confusion, for deepfakes that defraud or deceive viewers, is so high that it probably is incumbent upon the companies to label those...” (Brad Stone, 09:48)
• “So we haven’t seen three dissents since 1988... So it kind of suggests a new regime shift, a very different type of Fed to try to analyze.” (Katie Kaminski, 15:38)
• “Connectivity is the secret sauce of Equinix as a data center.” (Adair Fox Martin, 27:28)
• “The markets have outperformed in decreasing Fed interest rate environments where earnings are growing or stable... they've tanked when the Fed is tightening and earnings are slowing.” (Ali McCartney, 34:24)
• “A non-independent Fed is a really challenging place to be.” (Ali McCartney, 39:14)

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Timestamps for Key Segments

• TikTok buyers & Silicon Valley’s role: 02:00–05:29
• AI slop & content trends: 05:29–10:51
• Oversight, deepfakes, and social media accountability: 09:48–12:02
• Fed policy, market divergence, independence: 14:18–21:32
• Data center investing & Equinix’s perspective: 22:03–31:56
• Macro markets & Fed implications for investors: 33:52–43:28

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Summary

This episode delivers an incisive look at the shifting tectonics in both tech and finance. The TikTok saga highlights ongoing friction between US-China tech interests and the challenges facing regulators and acquirers. The explosion of AI-generated content—and its potential for misinformation—raises questions about social platforms’ responsibilities. The unprecedented data center investment cycle demonstrates AI’s outsized influence on business infrastructure, even as some warn of tech investment bubbles. Meanwhile, persistent questions about the Federal Reserve's direction, independence, and the health of the broader financial system dominate the investment discourse, set against a backdrop of political uncertainty and global realignment. The result is a wide-ranging, fast-paced snapshot of a world in transition.

Transcript

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[Host/Interviewer (possibly Joe Weisenthal)]

We've been monitoring some news when it comes to TikTok.

[Tim Stenovec]

Yeah, well, speaking of President Trump, he signed an executive order to extend the deadline for TikTok's Chinese parent, ByteDance, to divest the platform's US operations until December 16th. So another extension. Also some details about US operations, including Oracle, Silver Lake and Andreessen Horowitz. Oracle would keep the TikTok cloud contract. This would be the group that would control the US operations of TikTok. For more, I want to bring in Brad Stone. He's the editor of Bloomberg Businessweek and the author of Amazon Unbound, Jeff Bezos and the Invention of a Global Empire, among many other books. He joins us from our San Francisco bureau. Brad, the latest on TikTok, it's not, it's interesting because it's, it's one that's sort of faded into the background a little bit until it comes up for deadline and then also comes up as sort of like a tool for trade negotiations. I'm just curious what you think of this group, Oracle, Silver Lake, Andreessen Horowitz and the idea that US operations would be controlled by a group that, you know, you've come to know pretty well in Silicon Valley.

[Brad Stone]

Right? Well, first of all, Tim, how long have we been talking about TikTok?

[Tim Stenovec]

I can tell you, I can answer that question for you. It was during the, longer, longer than I've been at Bloomberg. It was during the first Trump administration that we were talking about be in.

[Brad Stone]

The retirement home one day analyzing this. Look, I mean, I mean, first of all, you know, they're talking about spinning off the US operation into this consortium of, of, of Oracle and Andreessen Horowitz. They're talking about asking TikTok's 170 million US users to download a new app. So, so that's a little bit of friction right there. I mean, frankly it seems this to me seems like it would be a win for Metta and YouTube. I mean there's very little that, that says this new TikTok U.S. operation that licenses the, the technology from ByteDance but then recreates the algorithm domestically. It just doesn't sound like an agile company that, that can adapt to the rapid changes we're seeing in social media and AI. And I just have to question, you know, because we have been talking about it for so long, whether the spin off will really happen. You know, this has been promised and, or threatened many times over the years.

[Host/Interviewer (possibly Joe Weisenthal)]

And you know, Brad, I'm also seeing some reporting out, I think from the journal that said U.S. investors holding a roughly 80% stake and Chinese shareholders owning the rest according to those in the know. So like, and I think there's going to be a board and that there's going to be one board member designated by the U.S. government. It just, as you say, it just sounds like kind of a strange entity.

[Brad Stone]

And tiptoeing around the law. Right, because during the Biden administration, you know, Congress passed a law that said that the TikTok algorithm would have to be created and controlled in the U.S. and yet, you know, according to this report, they'll still be licensing some technology from ByteDance. So of course the devil will be in the details. And you know, you can also imagine that it's all subject to the next presidential pronouncement and a potential trade deal with China. And so we'll see, we'll see. But look, I mean this is terrain that is as we know, in Silicon Valley, everything changes Every single day. And the idea of asking 170 million users to download a new app with a new algorithm and then to compete with the likes of YouTube and Instagram that really over the past few years have copied a lot of TikTok's functionality.

[Host/Interviewer (possibly Joe Weisenthal)]

Not doing it. Not doing it. I'm opt out already. Brad, what I want to ask you about, I'd much rather look at though, some AI slop. Can you talk about AI slop? I do have to say, I just.

[Tim Stenovec]

Have to say people give AI slop a hard time. Carol Massar, Brad, is a fan of this stuff. She's like reading the story earlier today and she's saying, I love this stuff.

[Host/Interviewer (possibly Joe Weisenthal)]

I've lost many moments of my time watching stuff. Tell us what it is though.

[Brad Stone]

Right, well, so this was my, is my opening essay for our October issue. It's our Screen time issue and I'm looking at. And if you use social media, you're probably familiar with it. The AI generated video that has come to Instagram and tik tok and YouTube. So talking dogs with their own podcast, babies being interviewed, bunnies jumping on trampolines, you know, all sorts of craziness that is in our feeds right now. It really has been ushered in just over the past few months in, in large part Google introducing a new tool, VO3, which, you know, as you can see here, does a pretty good job not just with video generation, but also audio generation, transform, transferring a written script that the user inputs into spoken dialog and also a sort of realistic depiction of it.

[Host/Interviewer (possibly Joe Weisenthal)]

I got to tell you, I'm watching those dogs, sorry for those who are listening on radio, but those dogs, man, I mean, I believe that they.

[Tim Stenovec]

Do you think they're really talking?

[Host/Interviewer (possibly Joe Weisenthal)]

Yeah, I believe that they have a podcast. I mean, it's.

[Brad Stone]

What is the matter with my dog that he's not podcasting? I don't understand.

[Host/Interviewer (possibly Joe Weisenthal)]

Yeah, here he is here.

[Tim Stenovec]

Like we need more podcasts. Come on.

[Host/Interviewer (possibly Joe Weisenthal)]

Are people making a lot of money off of this?

[Brad Stone]

You know, create? I've talked to a bunch of creators and you know, all of them alarmingly young. I Talked to one 13 year old who is, who is generating videos using Stormtroopers. So, you know, Disney ip, he made like a couple thousand dollars over the summer just putting up these short videos of, of stormtrooper misadventures on Instagram and TikTok. I talked to another set of brothers from Montreal who were supporting their, their dog, their pet app by producing the dog podcasting videos. And it's been a great marketing tool. So, yeah, some of the social networks do pay creators for creative content. It's also a marketing tool. I don't know that anyone's getting exceedingly wealthy, but certainly the attention and the eyeballs are there.

[Tim Stenovec]

I'm curious about what this all means for, for Hollywood and for content creation. And it kind of gets into this a little bit because as you mentioned, this is the introduction for the screen time issue of Bloomberg Businessweek. And I'll use this as an opportunity to plug the event. Bloomberg screen time October 8th and 9th in Hollywood. Carol and I will be there. I assume, Brad, you will be there. If there are still tickets, you can get them@Bloomberg live.com we hope to see you there. What does it mean for Hollywood? Because there's been, there have been a lot of concerns about the ability to create content that has become so realistic and what it means for the folks who are to the south of you. Brad?

[Brad Stone]

Yeah, I mean, I think, I think it just shows how rapidly things are changing. Just a few years ago during the writers strike, you know, Hollywood writers expressed a real allergy to the use of AI in professional productions. And now we have this groundswell of content that's being created in dorm rooms and in basements that's flooding social media. It's pretty good. It's pretty high quality. And then we're seeing a little bit of a, of a, of a loosening of the restrictions in Hollywood. There was a studio that was aligned with Amazon that recently announced it would be sort of finishing or, or recovering some scenes from one of the last Orson Welles productions, the magnificent Anders Ambersons, using AI. So you sort of, you sort of can see sense the, the winds shifting a little bit in Hollywood and a realization that the technology is getting so good it can no longer be ignored.

[Host/Interviewer (possibly Joe Weisenthal)]

The one thing I keep thinking about and you touched upon this is the responsibility of social media companies, Brad, in this column. And you know, we've already seen the difficulties in policing harmful posts and information. And I'm thinking deep fakes and so on and so forth. Take this potentially to a whole other level. So I don't know, what are we hearing when it comes to oversight and responsibility and stuff that could be harmful?

[Brad Stone]

You know, when a creator uploads a video to Instagram or TikTok, they're asked to check a box as to whether the video has been AI generated. It's essentially optional. And look, I mean, I think the potential for confusion, for deepfakes that defraud deceive viewers is so high that it probably is incumbent upon the companies to label those and to use technology, employ technology to look for, you know, hidden fingerprints or other indications of AI and to do their viewers a service and show when, when AI is being employed. I use the example, and maybe some listeners remember this, of the bunnies jumping on a trampoline. A lot of people thought that was real. It was AI generated. It was a video that was popular over the summer. You know, the creator of that video didn't even realize he was being asked to mark the video as AI generated. So it probably, the companies probably need to do a little better job telling people what say and what's not.

[Tim Stenovec]

Hey Brad, real quick, apologies to end on a somber note here, but I've been meaning to ask you about this and we have the opportunity now. Last week Governor Spencer Cox of Utah gave a press conference following the assassination of Charlie Kirk and he said something that stuck with me. He said social media is a cancer and it made headlines. But it made me question, is this going to be a moment where social media companies take a look at their algorithms or is this just a speed bump or something that isn't even considered when thinking about algorithms?

[Brad Stone]

I mean, Tim, there's no evidence of it. You know, particularly over the last year, they have downshifted content moderation strategies, you know, partly under pressure from the U.S. administration. And you know, and then you look at services like X over the last week and everyone is almost their worst selves. Right. And going to battle over what's really undeniably a tragedy. So no, there's, there's no sense that, that companies are amplifying or amping up their content moderation strategies. In fact, they might see it as a political danger and so are doing the opposite.

[Host/Interviewer (possibly Joe Weisenthal)]

Yeah, it's kind of remarkable this, this environment. Brad, we got to run. Thank you so much. Looking forward to talking to you more and looking forward to being there with you on screen time. That, of course, is our Brad Stone, editor of Bloomberg businessweek. He's the author of Amazon Unbound, Jeff Bezos and the Invention of a Global Empire. Many, many other books too. So highly recommend all that he has written on.

[Tim Stenovec]

Stay with us. More from Bloomberg businessweek Daily. Coming up after this.

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[Host/Interviewer (possibly Joe Weisenthal)]

Let's get to Tim A trusted voice when it comes to the U.S. treasury Trade and what the Fed is up to.

[Tim Stenovec]

Katie Kaminsky is Chief Research strategist and Portfolio Manager with Alpha Simplex Group. She joins us from Boston. Also the co author of the book Trend following with Managed Features, the Search for Crisis Alpha. Katie, good to have you with us this afternoon. First, make the call about the Fed's not just tomorrow's move, but also the move to the end of the year. We want to put you on the spot here. What do you think happens tomorrow and then what do you think happens for the remainder of the year when it comes to the path of policy?

[Katie Kaminsky]

Oh, you love to do that. I get that. So I'd say 25 tomorrow, but that's consensus. But I do think we will get some more cuts later this year and the market has definitely already been pricing that in, particularly in the futures market. What that means is that people are expecting this to be a catalyst, a start of a new regime, which is important.

[Host/Interviewer (possibly Joe Weisenthal)]

Well, having said that, you know, I was thinking about your background. You've got a Bachelor of Science in electrical engineering, a PhD in operations research from MIT. Oh yeah, you're super smart. We know, we know. I'm just wondering, Katie, is it easier to kind of figure out Fed policy, the US Fixed income market right now, or is it easier figuring out a complicated electronic schematic? I'm just curious. With all that's coming at investors, I.

[Katie Kaminsky]

Actually think it's equally as complex and let me tell you why is right now is a very interesting time in history for looking at the Fed and just the amount of dissent is actually is unprecedented. So we haven't seen three descents since 1988 and you're starting to see a much wider range of views on the Fed itself. So I'd like to say that this is going to cause a much wider reaction, a range of reaction or more volatility in the reaction function of markets once those decisions come out and we try to figure out what that means.

[Host/Interviewer (possibly Joe Weisenthal)]

Is that dissent in your view, political, or is it, you know, representative of a lot of things coming out investors and maybe some mixed signals?

[Katie Kaminsky]

Well, it's, I think, you know, there's clearly some political leaning in terms of that type of dissent. I mean, there's, but just the fact that you have such wide range of opinions and I think like I said, we haven't seen this many dissents in Fed boats for decades. So it kind of suggests a new regime shift, a very different type of Fed to try to analyze and everyone's trying to understand and are these dissents going to move to a new consensus or are we just going to be in the same scenario for a longer period of time?

[Tim Stenovec]

Do you think the Fed is, is independent right now?

[Katie Kaminsky]

I mean, I think, you know, it's hard to have Nothing is ever 100% independent in Washington, as you guys already noted. You all already noted. But I think the fact that, you know, there's definitely influence coming from those that are appointed that has a potential to make independence a little bit weaker than it was before. And that's definitely the market's sentiment on that. And the things that you see is there's a lot of concern over that and that could put the bond market at risk.

[Host/Interviewer (possibly Joe Weisenthal)]

So when you look at that, I mean, what are you now looking and thinking in terms of how low rates can go, Katie? I mean, we have talked with you throughout the last three to six to nine to 12 months and there points where we were talking about what, 5% on the 10 year, we've gone below 4% on the 10 year. We're right now kind of at it. So I'm just curious, what's the what's the smart thinking in your view when it comes to where US rates trend?

[Katie Kaminsky]

So this is a very good point. We have seen more long pressure in bonds. We're starting to see trajectory towards lower rates. What I get concerned about is if we stay in the middle and we sort of have a smooth and steady ride down in rates, I think that may be something where not no balance gets tipped. On the other hand, if we have a very aggressive move downward in rates, we could have some overstimulation, we could be at risk for inflation and we could risk losing parts of the long end of the bond curve just due to investors being concerned about rates being too low and inflation being too high. So I think for me it's coasting in the middle will give us a nice trend down in yields.

[Host/Interviewer (possibly Joe Weisenthal)]

Wait, so did you give me levels?

[Katie Kaminsky]

Did you give me. Not exactly, but maybe, maybe three. I don't know really. Hopefully. I don't know, maybe one. Wait, depends on the time horizon though.

[Host/Interviewer (possibly Joe Weisenthal)]

Did you say one?

[Katie Kaminsky]

No, I definitely didn't say one.

[Host/Interviewer (possibly Joe Weisenthal)]

Okay, but maybe three. Three. Are you saying three for like the five? Three.

[Katie Kaminsky]

Three and a half?

[Host/Interviewer (possibly Joe Weisenthal)]

Three, three and a half.

[Katie Kaminsky]

Perhaps all along. I mean the six month SOFR contract is already trading at a 3 4. So you know, we could get there. I don't know.

[Tim Stenovec]

What about when it comes to growth? Should investors be concerned about stagflation?

[Katie Kaminsky]

Well, I mean, I think stagflation is one of those corner cases where, you know, if things are calm and we have a balance in terms of growth is strong enough to withstand, for example, tariffs, inflation, then we should be in an okay position. I think what people really get concerned about is sort of putting the pedal to the metal, right? So you basically cut rates too quickly, try to overstimulate, it doesn't work and then suddenly inflated prices are there anyways. And so I think there is a concern because it is really sort of a very bad economic situation. It's not just low growth, it's low growth when you, the power of your purchasing power has gone down. And so I think we love to talk about it because it's sort of like the Armageddon of, of, of difficult scenarios.

[Tim Stenovec]

Hey, I just want to get a couple of headlines that are crossing the Bloomberg right now. Silver Lake and Andreessen Horowitz in a TikTok investor group. This according to the Wall Street Journal. The Wall Street Journal also reporting that TikTok's US consortium would include Oracle. The TikTok deal would create a new entity and US TikTok users would be asked to shift to a new app. This is all according to the Wall Street Journal. This comes after we did learn a little earlier that the US has extended the deadline to sell TikTok until December 16th. The White House issued an order earlier, just in the last hour on TikTok, extending that TikTok enforcement delay.

[Host/Interviewer (possibly Joe Weisenthal)]

Hey, Katie, before you go, what are you watching out for most? We get a dot plot tomorrow. We've got a new member on the Fed board, Stephen Myron, of course, from the Fed. Enough from the Fed. Excuse me, nominated by the President. So I'm just curious what's top of mind? I feel like there's going to be a lot coming at us tomorrow.

[Katie Kaminsky]

I think for me it's the dispersion in the dot plots. Do we see a much wider range and how do we distill that information and also the size of the cut? Let's just be honest. Like, do we get a surprise? I mean, I think that is always an interesting scenario to think about a 0 or 50.

[Host/Interviewer (possibly Joe Weisenthal)]

All right. Gonna leave it out there. Always, always appreciate your time in such a timely interview at that. Katie, be well. Katie Kaminsky, she's chief research strategist and portfolio manager at Alpha Simplex Group, joining us from Boston, Massachusetts.

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[Host/Interviewer (possibly Joe Weisenthal)]

Hey, over the summer, one of the things that caught our attention, Bloomberg News reporting that the world's largest technology companies, so we're talking Microsoft, Amazon, Google, all of them planning to spend billions of dollars, more than $344 billion on capital expenditures, with much of it, Tim, going to data centers for AI models.

[Tim Stenovec]

According to Bloomberg intelligence analyst Amandeep Singh, companies have quote, basically tripled capex investment in cloud due to AI. With executives emphasizing the need to invest quickly to get ahead. Our next guest is helping those hyperscalers scale up when it comes to AI. With us in studio is Adair Fox Martin, President and CEO of Equinix. The nearly $76 billion market cap datacenter reta trades under the ticker EQ IX down so far this year about 18%. Adair, welcome. Good to see you.

[Adair Fox Martin]

Thank you so much. Thank you for having me.

[Host/Interviewer (possibly Joe Weisenthal)]

Nice to have you.

[Tim Stenovec]

So how's business?

[Adair Fox Martin]

Business is very good.

[Tim Stenovec]

Like the best. You've seen it.

[Adair Fox Martin]

Like, we're in the middle of a very Strong cyclical demand cycle for the products and services that we offer.

[Tim Stenovec]

When you say we're in the middle, help us understand how long that means of a Runway there is to go here.

[Adair Fox Martin]

Sure. You know, at Equinix, we see a very significant trend from the training of models in the economy that you refer to in your opening there with the hyperscalers to the deployment of those models in enterprise systems. And that deployment is called inference. And we see that opportunity as potentially double the size of the training opportunity. And at our company, we feel we were built for this moment.

[Host/Interviewer (possibly Joe Weisenthal)]

Has that happened faster than everybody anticipated? Because I do feel like the conversation, although we've been talking about now, what, almost two and a half years, well, are well into two and a half years, but we are now increasingly talking about all of this stuff starting to be put to work.

[Adair Fox Martin]

Right. You can certainly see organizations, we have 10,000 customers across the world moving from proof of concepts into production systems and applications of the technology.

[Host/Interviewer (possibly Joe Weisenthal)]

One of the things I think we're curious about is, as you know, the. The news flow is fast and furious from the White House and out of Washington, and there have been some announcements out of the Trump administration about AI infrastructure initiatives specifically. So I'm curious, Adair, have you seen any impact of that on your existing properties leasing effort? And I'm curious how you compete with. How does that kind of compete their program with your own development program?

[Adair Fox Martin]

Look, we very much welcome the focus that the current administration has on data centers and the importance and the recognition of data centers and their important role in the infrastructure of any economy. And we certainly are looking at some of the properties that have been identified as potential for RFPs. And we would choose based on locations that would be accretive to our business, because we're very focused in cities, in metro areas close to where humans are, who will use this technology.

[Host/Interviewer (possibly Joe Weisenthal)]

Are you getting pushback from cities and humans who don't necessarily want those data centers?

[Adair Fox Martin]

Not hugely. I mean, we're very conscious of the role that we play and the role that we play with communities where we have data centers, and we're very considerate about our approach there.

[Tim Stenovec]

What makes a good location for a data center? Because it doesn't actually, apart from the construction, it doesn't actually involve that many people to keep it up and running relative to the amount of money that's spent on it and what actually happens in there.

[Adair Fox Martin]

Yeah, it's really interesting because I think, you know, when you think about the operations of a data center, you tend in your mind to go Immediately to technicians and technology. But actually there's a whole series of unsung heroes in the operation of a data center, which are the craftsmen and the tradesmen and women, you know, the plumbers, the electricians, the engineers who basically keep the Internet up and running, you know, through this data center infrastructure.

[Host/Interviewer (possibly Joe Weisenthal)]

So difficulties in finding those workers. We've done some reporting about that, that there's, you know, okay, yay, great, the spend and the build, but there's not enough workers to do it.

[Adair Fox Martin]

So I think, you know, the constraints that the industry are facing are, you know, are around energy and power, around skilled workforce and then into the supply chain for, so for the equipment. That's, that's part and parcel of a data center.

[Host/Interviewer (possibly Joe Weisenthal)]

But is that the bill that you guys are trying to do and meet that demand?

[Adair Fox Martin]

It is something that you have to actively manage as you are looking to build, you know, for example, in our case, around some of our supply chain portfolio we've pre purchased in order to ensure that we can have the delivery dates that we need to bring capacity online.

[Tim Stenovec]

We talked about the $344 billion that some of the world's largest tech companies are planning to spend when it comes to Capex. It's like the thing we look for now quarterly when a company reports results. How much of hyperscalers capex budgets actually flow through your company?

[Adair Fox Martin]

We have a very significant approach on a part of the data center industry that we call colocation, because not all data centers are the same. And so colocation is where enterprise customers, businesses, 60% of the Fortune 500 for instance, would locate their workloads or their machinery with us. And in a shared facility, we have a JV structure that works with the hyperscalers to build to suit for the hyperscalers. And so that's how we service the hyperscaler opportunity and maintain that very important partnership that we have with, I mean.

[Host/Interviewer (possibly Joe Weisenthal)]

I guess we're trying to figure out your exposure. I think your top 10 customers represent about 16% of monthly recurring revenue. So your exposure to the hyperscalers is pretty big, right? Is it manageable?

[Adair Fox Martin]

It's manageable. You know, the hyperscalers, for example, when they operate in our retail facilities, they do so because of the connectivity of Equinix. So that's going to be a requirement, you know, for inferencing and for the actual activation of these AI workloads. So it is for us about connectivity. Connectivity is the secret sauce of Equinix as a data center.

[Host/Interviewer (possibly Joe Weisenthal)]

What do you mean specifically by that? Because I Think we can use the word connectivity to mean a lot of different things, certainly in the business world. What does it mean specifically for us?

[Adair Fox Martin]

So in our world, it essentially means we're located in 273 data centers right across the planet. Inside those data centers, we have ecosystems of customers, customers whose value chains are connected to each other and we physically connect them, you know, literally interconnect those customers one to the other. That's the first part of interconnection. So that allows for low latency transactions to happen, say for example, on a trading floor that allows for that to happen in real time.

[Tim Stenovec]

And yeah, we're speaking right now with Adair Fox Martin, president and CEO of Equinix joining us here in the Bloomberg businessweek studio. You mentioned the difference between training and in inference. Thank you. When you think about this like a company like Core Weave, for example, where does that fit into this?

[Adair Fox Martin]

Well, a Core Weave is a Neo cloud. They're a company, you know, that provides GPU capability to companies who want to train their models. So they fit into the ecosystem in the same way for us as other cloud.

[Tim Stenovec]

Like a GPU as a service.

[Adair Fox Martin]

Correct.

[Tim Stenovec]

Okay, so what are the average lease terms for an agreement with GPU as a service organization?

[Adair Fox Martin]

It would depend, you know, they can be relatively short for us. Our leasing in our wholesale side is 10 years plus.

[Tim Stenovec]

Okay.

[Host/Interviewer (possibly Joe Weisenthal)]

Now one of the things that I think is interesting is I think we're all trying to figure out the boom and bust of is. And today on Bloomberg, there was an investor, Jack Selby. He is AZ VC founder, managing partner. He's longtime managing director of billionaire entrepreneurs Peter Thiel's family office. And he said the euphoria around I may have led to the biggest bubble yet in private technology investing. And so sounding warning bells that a correction started. Valuations is in the cards. Now. We understand when you throw AI, there's a lot of different players, but behind it all is the data center spend. And we have had a lot of conversations about the hyperscalers making, you know, multiple duplicate arrangements with power providers that they're not going to use all of them, but they just want to make sure they've got the power where they need it. Is there any signs to you that there's exuberance that the spend is slowing down, starting to. Will start to slow down maybe next year. You're seeing it, you've got a front row seat.

[Adair Fox Martin]

Yeah, I guess we believe in the enduring nature of the transformation that AI and the technology associated with it can bring and can bring to businesses. I mean, as I said, we support manifold workloads of our customers. You know, not just AI workloads but you know, standard business process workloads. And we really are about that being that connectivity engine. So, you know, I think in many ways our business model is, you know, somewhat protected from any, any potential.

[Tim Stenovec]

Before we let you go, as I mentioned some headlines on Tik Tok Crossing from the Wall Street Journal. The deal would create a new US entity, Oracle. Andreessen Horowitz, Silver Lake. Are you involved in this at all?

[Adair Fox Martin]

Well, we partner very closely with Oracle, so it would be through that partnership that we would be supporting.

[Tim Stenovec]

So you think you will support an.

[Adair Fox Martin]

Independent tick tock potentially with Oracle?

[Host/Interviewer (possibly Joe Weisenthal)]

With Oracle, yes.

[Adair Fox Martin]

A very key partner.

[Host/Interviewer (possibly Joe Weisenthal)]

One last question. Your stock's down. Why if it's so this, I mean, I know there's also an incredible spend in what you are doing. You've got to spend in order to meet the demand, you know, and so maybe that is why there isn't some reward from some of your investors. Is it kind of a conflict?

[Adair Fox Martin]

Well, we're very focused on long term value creation for our shareholders. And you know, we announced that we are going to bring on as much capacity in the next four, five years as we have done in the previous 27 years of our operations. And so we're very focused on executing against our strategy. We believe in the opportunity that we see in the market and hope to deliver proof points to that to our investor community very soon.

[Host/Interviewer (possibly Joe Weisenthal)]

We have to leave it there. We apologize. There's been a lot going on today so we hope you will come back and give us updates.

[Adair Fox Martin]

Thank you very much for having me.

[Host/Interviewer (possibly Joe Weisenthal)]

We appreciate it. Dare Fox Martin, President CEO of Equinix, joining us right here in Studio.

[Tim Stenovec]

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

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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.

[Tim Stenovec]

Wall street traders gearing up for the Fed decision, refraining from making big bets as they await clues on the path of rates that will shape the outlook for markets over the next few months. On the Outlook. Back with us is Ali McCartney, Managing Director, Wealth Management and Private Wealth Advisor with Alignment Partners at UBS that manages just over $1 billion. Ali joins us here in the Bloomberg Interactive Brokers studio. I want to get to your outlook, yes, everything that you're watching, but when you walked into our studio, you made the point that today's the anniversary or yesterday, depending on how you look at it, of the great financial crisis. And you were there, you were part of it.

[Ali McCartney]

It was. I was on over the counter equity and hedge fund derivative desk. So it was at Lehman. At Lehman, yeah. Sorry, I should have said that. I sort of thought that was implied. It was a crazy, crazy time. And it's interesting because a lot of the conversations now are, are we in a bubble? What do we do in the market is that, you know, depending on what you look at, the S and P, right now is trading at 22.03 times forward earnings. You take out the MAG7, the broad based 493 is at 20.2 times. So people are anxious, right? I think the big difference we have right now has a lot to do with the Fed. There have been four other times in history since 1950 that markets have been this highly valued. And in two of those cases the markets have outperformed over the next 12 months. And in two of those cases the markets have corrected and the difference is very, very clear. The markets have outperformed in decreasing Fed interest rate environments where earnings are growing or stable, they have tanked when the Fed is tightening and earnings are slowing. So I think we have a little bit of a recipe for tomorrow. We still think the bull market continues, but you have to be cautious. We have to look at volatility. And tomorrow is going to be really meaningful in terms of the summary of economic projections, the dot plot, the dissents, as your former guest said, and just in general the tone, how much juice.

[Host/Interviewer (possibly Joe Weisenthal)]

Do you think the economy really, really needs right now? Because you know, we got a read on retail sales and consumers are still spending and I know there's, it feels like there's a mixed bunch of data points. Ali. So how much do you think that the Fed needs to do? There are a lot just for tomorrow.

[Ali McCartney]

Yeah, no, it's the right question. What, what does this whole tightening cycle and what does the neutral rate look like? So the question is back to what we were talking about initially is is this insurance or is this against a growth scare? The numbers that we have seen have been very mixed. The effect on consumers in terms of tariffs, in terms of dwindling savings, in terms of high interest rates have not really appeared to create issues yet. I don't think it derails a bull market, a Fed tightening cycle and increasing earnings really as a tailwind with AI and increased efficiency. But it's not going to be easy. Right. We increasingly have a world that is the haves and the have nots and the have nots are in a really, really tough place. And so I think that some of these interest rate cuts are going to be stimulating the housing market, stimulating Main street, allowing people to borrow and making economic opportunity more uniform. But I think we go ahead.

[Host/Interviewer (possibly Joe Weisenthal)]

Well, yes, because Tim and I talk about so much like with Peter Atwater over at William Mary of the K shaped economy. Right. The haves and the have nots, cuts. And I get it, I get why rate cuts will help folks that are having a tougher time right now.

[Ali McCartney]

Yeah.

[Host/Interviewer (possibly Joe Weisenthal)]

But can we do that without those folks who are doing just fine not leveraging up and doing crazy things? We're going to see.

[Ali McCartney]

The answer is probably not right. And think back to the times in the economy where we have had very low interest rates and ultimately what has happened, because what does it do when you lower interest rates? You put people into, you push people into risk assets cuts. So what I'm looking to see tomorrow is exactly that. Are we getting a dovish Fed, right? Are they saying this is the beginning of three to five more cuts over the next 12 months, in which case I think markets and risk takers will go all in. Or are we getting a hawkish cut which is sort of the standard Powell response, which is we're still going to be data dependent. We still know there's a lot of risks out there. But I'm looking at the labor market.

[Tim Stenovec]

I just can't imagine Fed Chair Powell making a commitment that far in advance. Somebody who has made such a point of emphasizing how data dependent he is and how data dependent the Fed is. I can't imagine it's going to be the former. I think it's going to be the latter.

[Ali McCartney]

Agreed. But that's why I think the concept of dissent and understanding who the dots on the dot plots are. Because remember his dots going away very soon, the other dots and the ones that are going to be the future dots. Dots are probably going to be much more politically and partisan aligned. So I think that's really what one needs to focus on in terms of deciding if we're going further north or if it's time to sell and take your gains.

[Tim Stenovec]

Does that concern you though? If the dots are politically aligned rather than aligned with what these individuals think or what economists think the rate should.

[Ali McCartney]

Be it personally and professionally it concerns me a lot. I think a politically aligned or said another way, a non independent Fed is a really challenging place to be.

[Tim Stenovec]

Does it make you think differently about deploying assets in the United States?

[Ali McCartney]

I think that long term implications, yes, but I think that at this point in time and when I say short term, I even mean throughout this, this presidency, no one's going away from the dollar. They may be going more into gold which is also dollar denominated. They're buying a little less Treasuries overseas, but not much. So I think that we have 60 plus percent of the equity capital markets of the world. The AI trend is one that is internationally recognized as a mega cap 5 as a US Silicon Valley based phenomenon. Both from the current hyperscalers and from the fact that they have so much cash on hand that they're going to buy not and build everything that's next. So does this create, or is this another warning sign along with the deficit, along with other polarities of things that might put a chink in the U.S. s armor. Yes, but do I think it's in the next three to five years? Probably not.

[Host/Interviewer (possibly Joe Weisenthal)]

Would that have happened without this current administration?

[Ali McCartney]

At the end of the day, one of the things that as a trained economist I always look at is the demographics. Right. So the demographics of this country are in trouble. Right. We, we have more people retiring than any of the first workforce. That was before we stopped immigration. The birth rate's gone down. So when you look at us and you look at us relative to, let's say India or China, it's a problem. But again, when does that catch up with us? And what is the rule of law and the rule of capital in those other places? And they are not as capital or law friendly as we are in terms of attracting monetary dollars or resources.

[Host/Interviewer (possibly Joe Weisenthal)]

What is your expertise in kind of understanding some really dark moments in US financial history and maybe the world looking at us like, oh my God, I can't believe what you did.

[Adair Fox Martin]

Right.

[Ali McCartney]

Yeah.

[Host/Interviewer (possibly Joe Weisenthal)]

But then understanding, because I think some would say that it feels a little dark right now in trying to understand how policies are going to impact the US longer term, but showing that we can have dark, difficult moments and then rise again.

[Ali McCartney]

Yeah.

[Host/Interviewer (possibly Joe Weisenthal)]

Are global investors willing to kind of look at the US and say, okay, this is a moment in time. And that doesn't mean that the investment environment or the political environment or the global environment, the US role in it won't change.

[Ali McCartney]

Again, I think that this is a very shocking and emotional time for many people in and outside the US I think that this is, this is more serious than a lot of other points in time in how much we changed about our role as an ally, as the police of the world, as the financier of the world. But again, Russia can't take our place. The European Union can't take our place. India can't take our place. Africa's developing, China has issues and their demographics are challenging as well. So I think it's one of those things where a lot of people and investors have hurt feelings. But at the end of the day, one thing I tell my clients is regardless of how you feel about the policies and politics of this country, you need to lean into that greed and then decide what to do with your spoils to make the change you want to make. I think that's how other countries look at it.

[Host/Interviewer (possibly Joe Weisenthal)]

You have to be quick. 10 seconds. But if we don't have an independent Fed, it changes.

[Ali McCartney]

I think it changes because I think that especially let's go back to the financial crisis, you need independence and balance to get yourself out of of tough situations and have discipline.

[Host/Interviewer (possibly Joe Weisenthal)]

Allie McCartney thank you, thank you. Managing Director, Wealth Management and Private Wealth Advisor with Alignment Partners at ubs. This is Bloomberg Business Week Daily.

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