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For every six Chinese people, there's a Ping an customer. We have accumulated a massive amount of the customer data, not just on the financial side, but end to end across channels thanks to our AI advancements.
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This is the Technology Empowered Growth at Ping an podcast. In our latest episode, Ping an is utilizing technology to provide integrated and personalized 24. 7 support for China's rapidly growing elderly population. Now available on Spotify, Apple Podcast and Ping An's website.
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So have you heard the story about the prescription plan? With savings automatically built in, it's where a family of any size can feel confident the cost of their medication won't hold them back. Go to CMK Co Stories to learn how CVS Caremark helps members save just by being members. That's CMK Co Stories. This holiday season is likely to be a roller coaster for logistics and manufacturing, but having the right staff in place can be when you choose Express employment professionals, they can handle everything. To ensure you have the right size contract workforce, go to expresspros.com solve your workforce challenges when you choose Express to support your hiring in a variety of roles, including two of our biggest areas, manufacturing and logistics. Visit ExpressPros.com today. That's ExpressPros.com.
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Bloomberg Audio Studios podcasts Radio.
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News.
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Bloomberg Tech is live from coast.
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To coast with Caroline Hyde in New York and Ed Ludlow in San Francisco. This is Bloomberg tech. Coming up, Amazon's cloud unit signs a $38 billion deal to supply OpenAI with computing power. Plus how Charmies pivot from smartphones to electric vehicles may have come at a human cost. And all eyes on Palantir posting its earnings results after the closing bell. This is Defense Tech spending is ramping up, but first we check in on the markets also ramping up, not quite at a record high for the NASDAQ 100, but we are up some 4.10of a percent for the big tech benchmark as we focus in once again on earnings and the never ending desire for AI compute. Let's go there because the key points drivers on this particular Benchmark are are two stocks we shine a light on Amazon pushing on 4.5% higher after significant gains on Friday after its earnings. This is a company that is of course shrinking its workforce but focusing in on US growth and it manages to sign OpenAI is that new client $38 billion deal. We'll dig into it. Nvidia well, they're the GPUs that go inside all these data centers. It too climbs in terms of market capitalization up another 2.7%. I just want to go to the top story that is Amazon and OpenAI as they sign a $38 billion deal for further cloud compute. And it's bloo Seth Fiegelman that we turn to. Seth, in the grand scheme of things, scheme of things, it's not $300 billion of Oracle Cloud that we saw before, but it is notable that OpenAI turns to more and more cloud providers at this moment.
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That's right. It really is telling about this moment for both companies. OpenAI just is tapping every possible resource it can to meet its cloud computing needs. And Amazon, which had previously been investing Anthropic, is also trying to have a piece of Open Air and possibly other players down the road. So it contributes to that incestuous web we keep talking about. Everyone is backing everyone else.
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And of course we'd seen a deal to offer OpenAI's open large language models into the overall bedrock offering of us, but this is different. This is a seven year deal. It goes out, but actually by end of 2026 we're going to see the amount of compute already necessary for OpenAI to go on to a bit more.
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Near term than some other deals we've seen. OpenAI broker and OpenAI is leaving the door open to expanding with more investment down the road. I do think it's telling though that this is Amazon providing Nvidia chips, not training, not in house. So on the one hand it's a testament to Amazon's ability to build up cloud computing infrastructure at scale to meet opening eyes needs. But you have to wonder what that means about the quality of Amazon's own chips.
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I mean go into that for us because they talk about the tens of thousands of Nvidia chips that are going to be used, but they then talk about the millions of potential CPUs that they might eventually help using. Is that where his own vertical integration comes in?
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It's possible because I think the larger industry is also thinking more about investments in inference as opposed to training. So a training, you want those GPUs the best possible. But with inference CPUs and some maybe second tier GPU type chips could could meet the needs. So maybe that's where we see them play more.
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And then take us to how continues to Therefore show this 20% growth that we saw on the Friday. Is it going to be more deals coming from OpenAI? How much farther can they sprawl? Or is it more about individual enterprises or sovereign AI, for example?
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I think it's a little bit of all those and I Think what we're seeing with opening in particular is that now that the exclusivity arrangement with Microsoft is kind of a done deal, they can tap everyone. They already have Google as a partner, they have Amazon, they have Nvidia, Bruckcom, everyone. And I think Amazon's ready to play ball in that category.
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Well, Seth Beagleman playing ball with us this morning. We really appreciate it. Meanwhile, Nvidia of course, as we just talked about at the GPU supplier, it made history last week with the first company to ever hit a $5 trillion market cap. According to Loop Capital Markets, though the company could add trillions more as Nvidia leads the quote golden wave of gen adoption. Let's get out to Bloomberg's run for Stella because all paths lead back to Nvidia when we talk about any of these COMPUTE deals right now. Ryan?
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Yeah, absolutely, it certainly feels that way. This is the latest in a series of street high price targets that we've seen on Nvidia before Loop we had HSBC which forecasts I think 70 or 80% upside. Before that we had an additional loop street high price targets. People keep sort of outdoing each other trying to estimate how high up this stock is going to go. So right now the latest estimate points to about 8.5 trillion market capitalization. Like you said, it just hit 5 trillion. So that points to still a lot more potential upside from here. And the story hasn't really changed. People continue to see a lot of long term demand for all kinds of AI related hardware and infrastructure and certainly it will expand out a little bit. Nvidia has a very important software business for example. But in general this is all about the GPUs that have been driving the AI trade really for the past couple of years now.
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And look that GPUs are also part of the Microsoft Iran deal that we're talking of today. A $9.7 billion look for compute of Microsoft using yet another Neo Cloud, this time an Australian one. We've also got in the news how Alphabet selling a huge amount of debt to be able to finance the overall trade and compute purchase. But Ryan, you've got a great story and just showing how last week if we reflect a bit, we started to be discerning about which companies were going to celebrate AI investment and we're not going to.
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Yeah, absolutely. So really the, the poster child on the other end of this trade is Meadow. That stock fell quite sharply last week after it came out, really talked about its expense growth, its Capex growth. It's talking about taking write offs and all of this there I think there is more skepticism. People want to see that all of this spending is being done in a diligent and disciplined kind of way and that this is really going to lead to some kind of pronounced return on all this investment. Now I think there's still a lot of support for AI related strategies overall and especially at companies like Amazon and Alphabet, which are showing a pretty direct link between all of this spending and improved performance in their cloud computing businesses. But for someone like Metta, which doesn't have an equivalent cloud type business, the story is getting a little bit trickier for them. People are getting a little bit more discerning and like you said, we did see the stock come down last week as I think people just are maybe getting a little bit of cold feet.
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What's interesting Ryan, is also you shine a light on how we've had a bit of dispersion outside of the key well mag 7 and then some names, Broadcom and others thrown in. We've got some of the suppliers to the data centers or suppliers to some of these compute powers that are also winning. I mean Micron's another key winner on the day. But you shine a light on other companies have outperformed.
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Yeah, certainly. I mean it's not purely an Nvidia story anymore by any stretch of the imagination. Anything that is involved in any kind of components here. I mean we've certainly seen Broadcom another major winner, Micron storage companies like cp, Seagate and Western Digital, these have been some of the biggest performers of the year. They're a little bit less high profile, but they are certainly seeing very strong growth inflections because they are just part of the overall ecosystem that is required to build out all these data centers. Power all the data centers, do storage, memory, all the stuff that is involved with AI and having it produce the material that people are using, it's a much bigger trade than it was a couple of years ago for sure.
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Ron Vasselika, always with a must reads. We thank you. Let's get more on this AI compute trend that's never ending. Tony Wang's with us. T. Rowe Price, Science and Technology Fund portfolio manager. Your top holding is in video and all parts lead back. But Microsoft's a big one. Broadcom, Alphabet, really all of the big winners. Is this playing out as you anticipated?
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Yeah, well I think that you know a huge productivity driver in my opinion and I think that these companies are really well positioned to essentially capture that and be the platforms for I think growth in the economy and you know what I'm looking for going forward is like, you know, the new use cases really come through like agency, for example. I think it's to fill this capacity. It can't just be you and me using chatbots. It's got to be, you know, thousands of agents for each company like making decisions and executing and unlocking. I think labor essentially is what I'm looking for. And that's what's exciting going forward.
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It's exciting when you see Nvidia's name referenced in about 3 of the compute deals just on this Monday alone. But take us to perhaps the one that you don't own. Interestingly you don't have exposure to Amazon and us, but it signs its deal with OpenAI. Has there been methodology around that about its own cloud prowess or perhaps worries about the lack of growth that we'd seen in previous quarters? Bar from the previous numbers they just reported Friday?
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Hey, well, I think that they had a nice earnings report and I do think that there seems to be a lot more momentum now. You know, you talk about the deal that they just did today and just essentially like rolling out a lot more compute and accelerating AWS I think is really good for the business. I think they're well positioned to essentially leverage AI and their E commerce business as well as BE and infrastructure provider. So I don't think you can count them out at all. And it's good to see them, you know, outperforming.
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What's interesting is someone who got beaten up is in the portfolio which is matter. And I'm interested on your take of how we're deciding who we reward of capital expenditure and who we don't.
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Yeah, well, I think that, you know, is a long term investment for matter and I think that the market's probably digesting the, you know, high level of CapEx and the depreciation that's coming through the PNL. But I think that's a little bit too short term to view it. And you look past that, you know, the returns are there and these are going to be great investments and you know, definitely has the digital formats to leverage, you know, AI and tremendous scale across customers. And so I think it's exciting what they're doing in in the S and P segment as well. If it unlocks a lot of ability for companies to essentially reach customers with just a credit card and asking for the ROI from ad campaigns.
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I just want to go to what president of Microsoft was telling our network a little bit earlier today about the Risks of underinvesting really here we spoke with Brad Smith. Just take a listen, Tony.
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Our biggest challenge is not a risk of getting ahead of demand. It's actually keeping pace with demand. And what we are finding finding is that our customers, whether they be enterprises across the economy or governments or nonprofits, they are looking to us to build out this capacity. They want to use this compute so for us, if we build it, it will be put to use as it's put to use. There will be a return to our shareholders.
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You of course have exposure to Microsoft, Tony. Brad, really talking about how they're expanding more geographically as well and investing over in the Middle east, not just taking money from the Middle East. And I'm interested in what you think about Microsoft's need to depend on NEO clouds. We saw them strike a deal with an Australian NEO cloud provider for Texas datacenters. Is that something you like to see, that use of their money and capital expenditure on NEO cloud as well of their own?
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Yeah, I think it allows them to be flexible and nimble. I think that standing up these data centers is no small feat. And a lot of times it requires various players. It requires the data center capacity, the power. And so I think it's encouraging to see Microsoft collaborate with the ecosystem and plug in partners. And so to me, I think it makes sense. I think it's also a testament to the demand signals they're seeing and kind of the workloads really take off. And you know, I think it is really hard to do. Not every company that is trying to do it is successful, but I think the ones that are finding success are seeing tremendous promise. And so I think that's what essentially gives people confidence to invest here, confidence to keep adding.
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When we've seen runaway performance not just of Nvidia at 5 trillion, but another one of your holdings, Micron, for example, I mean, significant outperformance. When do you decide that you want to cash in profit take.
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Yeah, we're all constantly managing position sizes in the portfolio. But you know, in my opinion, I think that you want to be invested in areas where there is essentially a bottleneck, there's scarcity and that performance depends on it. So I think that HBM memory, you know, HD and now, you know, nand, there's, there's becoming more of a shortage. And so to me, the industry is getting better and it's a critical component. So, you know, from my perspective, there is opportunity for these companies to compound value over time.
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You are of course equity focused, but when we have Alphabet Selling debt in Europe and the US Any of that financing of this I spend give you pause?
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Yeah, well, I think it's novel. But you know, you look at the cash generation of a lot of these companies, they're really blue chip. And you know, to me I think that this investment is smart and to do some, the appropriate level of debt financing I think can make sense. In addition, I think that the infrastructure, you know, there's a lot of debate of like the useful like this. I know that Nvidia comes out with a new generation every year, but I think that these are longer lived assets than people appreciate potentially. And they're not just like three years obsolescence, but probably more like five or six. And so, you know, in terms of the appetite to lend against it, I think that in three or four years it's going to be more commonly accepted. I think we're probably on the path there because these are really like, I think revenue generating assets and there's a lot of productivity coming off.
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And Tony, that productivity, as you started the conversation is about how we use deploy generative AI and Palantir is one that really has. But how do they fight? Also the macro headwinds. A government shutdown. Do you have any concerns at the valuations that some of these companies trade at?
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Hey, absolutely. I mean these are, you know, very elevated multiples and so they need to keep delivering the growth here. You know, Palantir is definitely, I think at the tip of the spear in terms of influencing. I mean they started doing that in the government and now the commercial business is growing rapidly. And so, you know, I think the government shut down. Like I think that's probably a temporary thing. They could get a pass for that just because government's not going to be shut down forever. And you know, you look forward. I think what really matters is that they're driving significant ROI for their customers and they're able to do it in a way that connects their data. And I think that's like the change in IT services is I think that you need to come with a solution and the engineers to help your customers instead of implementing like a SaaS based off the shelf solution. So I think that's what's exciting and yeah, we'll see later on today.
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Tony Wang, it's always great catching up with you. Another busy week with Palantir after the bell. We so appreciate your expertise, T. Rowe Price. Thank you. Coming up, charm is pivot from smartphones to electric vehicles when it may have come at a very high human cost. More on that next. This is Bloomberg Tech, China's Xiaomi. It set a relentless pace to pivot from smartphones to EVs, but it may have come at a human cost. Bloomberg Spotlight story this week follows the intense schedule of Wang page as he transformed Shami's retail network before ultimately collapsing of a heart attack in 2024. Bloomberg's Peter Elders from joins us now. It's a deeply reported story through the bravery of a widow who is convinced that it was his work schedule that in many ways contributed to his death at the age of 34.
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Peter that's right. So Wang was one of the key managers as Shami, the company best known for its smartphones, decided that they were going to push into electric vehicles. The founder late June said this was going to be one of his last strategic plays for the company. He had really earned a fantastic reputation for himself in the smartphone arena, but he wanted to succeed in EVs too. Remember, this is something that Apple tried and wasn't able to pull off. Shami has actually designed a very good car. They've been able to succeed in the market. They've been able to gain some traction in that space. But Wang was one of the key employees who was responsible for redesigning stores as they were shifting these stores from really showcases for smartphones to something that could show you an automobile, a full size automobile that would have the infrastructure to be able to show that off and demonstrate what kind of cars they actually had. So at one point he was responsible for 267 stores. He was working almost nonstop hours. His wife told our reporter that he would, he would frequently work until the wee hours of the night. We also saw his WeChat messages where he was exchanging messages at 230 in the morning and working on and on and on. And as you mentioned, tragically at the age of 34, he died of a heart attack. And so it's a story really about how this, this extreme, these extreme hours can take a toll on managers, especially in an area so competitive like technology.
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Shami has responded in part to our investigation and talking about their sympathies that go to the family. But set this in the context of996 of what is very much a cultural focus on working extremely hard in China and tech.
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Right? Yeah, you're referring to 996 in China. They talk about working from 9am in the morning until 9pm six days a week, which is extremely long hours. The World Health Organization defines overwork as working more than 55 hours. Now in China they work even harder than the United states. It's about 49 hours on average for full time workers compared with 45 in the United States hours in the tech industry. It's far beyond those kinds of hours at show me. The workers in independent survey showed that they were working 11 and a half hours a day. So you're talking about, you know, almost 60 hours a week that they were working. And Wang seemed to be one of the workers who was going even beyond that at this point. So of course there's a lot at stake here. They're competing for leadership in AI, in chips, in electric vehicles, etc. And there's a lot of money at some point stake. When you look at the most valuable, the wealthiest people in the world, they're all tech entrepreneurs led by Elon Musk of course, but you've got Larry Ellison and Jeff Bezos in there too. There's a lot of money at stake. There's also geopolitical advantage and Shami was pushing very hard to make this pivot into electric vehicles.
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Peter Ostrom, thank you so much. It is an emotive story and a must read. We appreciate it. Now coming up we'll dig into Apple how it's set for a make or break year on the regulatory front as it gears up to to start 2026 with $140 billion quarter. This is Bloomberg Tech.
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For every six Chinese people there's a Ping an customer. We have accumulated a massive amount of the customer data, not just on the financial side, but end to end across channels thanks to our AI advancements.
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This is the technology empowered growth at Ping An Podcast. In our latest episode, Ping an is utilizing technology to provide integrated and personalized 24. 7 support for China's rapidly growing elderly population. Now available on Spotify, Apple podcast and Ping An's website.
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Set to kick off its 50th year with what's expected to be a nearly $140 billion quarter. For more, Bloomberg's consumer tech managing Editor Mark Gurman has the details on this week's Power on newsletter. Hotly read as always, Mark and 140 billion is what the math reads out as of what that holiday quarter will look like. Important when April is a 50th anniversary?
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Yeah, it's quite interesting. They normally in the last half a decade or so since the beginning of COVID haven't really given guidance. But for this holiday quarter they're back to that. So they said that the quarter would grow 10 to 12%. That's the current quarter, the holiday period, and that comes in anywhere between around 135 to 139 billion. Typically when they've given guidance in the past they've been conservative, so they like to sort of smash through that. And so you can imagine that internally they're aiming for something north of 140 billion, which obviously would be quite impressive given where they've been the last few.
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Years and therefore take us where they're going in the next year or so, because Power really outlines the myriad of areas they're trying to leap forward on not just Siri, but real hardware and chip updates too.
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Yeah, there's a lot going on. You're going to see a series of M5 related updates to the Mac. Things like the Mac Mini, the Mac Studio, the MacBook Air and the MacBook Pro across the first nine months or so of 2026. You'll see a foldable iPhone at the end of 2026, perhaps the introduction of the smart glasses at the end of 2026. The first three, four, five months of 2026 are going to be chock full of things. A push into smart home devices that HomePod with the display, the MacBook Pro and MacBook Air. I mentioned a ton of things on the software side related to Siri. So it's going to be a pretty jam packed year for 2026. Now you go into 2027 where you're going to see even more major leaps and bounds when it comes to hardware.
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And will it be the same people at the top? How do you see the talent and the focus and reworking of Apple continuing amid its 50th anniversary?
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You know Apple's biggest challenge right now is retaining talent specifically for its AI division. Its machine learning folks, they're bleeding talent to places like Metta to Anthropic, to xi. It's been very difficult for them to hold on to people because Siri really, it has a really bad reputation. One of the big things they're going to be doing for Siri to improve it is using a custom model developed by Google's Gemini team. It's going to run on Apple servers but Apple is paying Google to develop it and that's a bit of a setback for Apple's new internal models team. And so they've basically for now have split it. Whereas the models that run on Apple devices themselves, the ones for Apple intelligence, those are those in house models which have been somewhat problematic depending on who you ask. And then for the Siri models, they're moving to to Gemini to power some of it. So it's an interesting dynamic they've created there.
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Gurman, as always, it's a must read. We so appreciate it. Let's check in on these markets because well, we're close to record highs in the NASDAQ 100. We're just up by about 310 of a percent as the wall of worry when it comes to geopolitics is put to one side as we focus more on earnings to come after the bell Palantir of course, and more on what the trend is when it comes to compute. Let's focus in that. The two key points contributors to the NASDAQ 100 are these two stocks. Amazon up 4.6%, a new record high. It's now worth $2.7 trillion. But that kind of pales into significance when you think of the 5 trillion that Nvidia is now worth. And that's because all roads lead back to Nvidia GPUs. This time, Amazon striking a deal with OpenAI to offer many, many GPUs in further data centers. A seven year relationship with OpenAI now as they turn ever further into compute and data centers from various places. But look, it's not the only wall of news we have on compute. And Microsoft is another one that's planning to spend more than $7.9 billion on data centers, on cloud computing and employees. But over in the United Arab Emirates, and it's over the next four years capitalizing on a US Government clearance to ship AI chips to the Gulf nation. Now Microsoft Vice chair Brad Smith explained why just during an interview with Bloomberg's Jomana Versace in Abu Dhabi earlier today.
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If you look at the uae, the UAE now literally leads the world in the percentage of the population using AI, 59.4%.
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Number one.
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Singapore, about a point behind is number two. But what we're seeing here in the UAE UAE is across the economy, whether it's companies like Adnoc and the Energy sector or the financial services or the health care sector, all of this is being put to work.
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Discuss all of this with Bloomberg's Freddie Ford who covers Microsoft for us. And this was Brad trying to articulate. We expand in there, We've got the ability and the permission. Why do they want to be building out and expanding in the Middle East?
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Because they need power. Right? The Gulf is a very interesting market for data centers because in the US and Europe, in many ways they're kind of tapped for power. Everyone is kind of scrounging for a megawatt here or there in the Gulf. You know, they have oil power and they are really keen to want to diversify their economies. And this seems like a pretty natural fit for data center center companies. So we've seen Microsoft, we've seen Oracle want to expand their presence out there. And today is kind of the latest example of Microsoft coming out to say, look at all the money we're spending. This is a serious bet for us.
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C
And capital expenditure that they did articulate in their earnings just last week. But Microsoft's been perhaps more upfront than many. As to how they're having to use other offerings, Neo Clouds in particular, they've been leaning on N scale and navy so far in Europe, but here in the US they're going ever more into Texas. But with an Australian company, correct?
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Yeah, we saw them make about a $10 billion deal with an Australian company this morning. And it's funny because 10 billion sounds huge, but it's really like, what, 15% of what they've announced so far? I mean, the spending quantities here are really getting hard to fathom. Microsoft has committed around 60 billion to a variety of providers just to be able to rent these AI chips quicker.
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And what's interesting is Iran is one of those sources of power and compute that all used to be in crypto. And another one of those that now suddenly finds itself the darling of an AI trade.
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Exactly. Yeah. Corey was the classic example. This, you know, crypto market crashed and all of a sudden they said, hey, wait a second, Data centers is the way forward. And Microsoft's been the most kind of prominent customer of these Neo Clouds. But you know, we expect over time that every major hyperscaler looking for capacity is going to turn to these companies.
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C
And when we think about the scale and the numbers, it can just become almost arbitrary. But I think the $3 trillion figure that Morgan Stanley's wrapped its head around is an important one, right? That 3 trillion of data centers are likely to be built out by 2028. But actually half of that's going to come from their own money. And then maybe the rest is coming from debt markets and the like. But Microsoft really does seem to be talking up how it's leaning on its own cash flows.
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Correct, Its own cash flows. But part of the Neo cloud stuff that's interesting is that they are leases, right? You are leasing. If you build a data center, you're stuck with it for a good 20 years. Right? You lease for five years. If the demand environment changes at the end, you say, well, thank you, Nibius, it's been beautiful. Right. So it gives them a lot more financial flexibility. And I think we should see that within the context of hyperscalers to tapping unique financing sources. Even like Google hitting the bond market today.
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Oh, you lead us perfectly to an assignment for it. We are as one. We so appreciate you as always. And meanwhile, he said it. Alphabet looking to raise about $15 billion from a dollar bond sale in the United States. According to sources, the deal is being offered in many as eight parts maturities ranging from three to 50 years. The company is also tapping the European market. Seven and a half billion dollars of notes in Europe too. And this all adds to a wave of borrowing from tech companies. Remember, met as 30 billion one last week. And it's all about investing aggressively in AI. And let's dig into the impact of all of this financing a little bit further. Ana Rathmann's with us, founder and CEO of Grenadilla Advisory. You think this is smart, the way in which they're tapping debt markets or depending on their own cash flow?
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Good morning. I do think it's smart. I mean, sometimes cash on hand is the most powerful thing. And so it doesn't make sense to spend all of your cash and put it into, you know, the future investment in AI. Sometimes it makes sense to borrow from the debt market and to finance it and so that you have some leeway and some flexibility in what you want to do with the assets that you have.
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And what about even more creative financing such as these private credit deals? And the way in which we see Blue Album Met as the partner of choice here is, is that what you're likely to see more of? Not just ever more debt being tapped, but just off balance sheet?
- [32:19]
B
Yeah, I think so. You know, private credit market is constantly looking for ways to deploy their capital that they're getting from the investors. And right now, the investment that seems the most exciting seems to be this data center. And I play. And if we heard from Microsoft and others last week during the earnings call, the demand is just out of this world and they're having a hard time supplying that demand. And therefore, I think, I think you're going to see more of it. And by the way, people are worried about this off balance sheet financing. In my opinion, it's dangerous if you don't know about it, but everyone knows about it. So you can definitely put that into your calculation for the valuations that these companies.
- [33:03]
C
Okay, that's really interesting because in many ways matter has led the way in that creativity. And matter got beaten up last week because of their capital expenditure and perhaps it coming in a more rapid clip than the revenue growth that we're seeing. And how do you make the discernment that's currently happening among the AI players?
- [33:21]
B
Yeah, with regards to Metta, I think there were a lot of things that were idiosyncratic. I mean, if we were to think about the capsule stack if debt is issued, equity investors don't like it. Right. But if you look at the debt market, a lot of investors in the debt market actually liked it. And there was a lot of demand for it. But there was also the deal about Meta not being a hyperscaler. Investors wondering where all of the investments are going and they're going to invest more of it. So that's Metta, but everyone else, I think there is a race here and there's a bit of a FOMO in all of the AI players and there's a higher risk to missing out than to spend today and to see where we are tomorrow, because I think the demand is still going to be high tomorrow.
- [34:06]
C
But is that FOMO leeching into the investment community and is that a good way in which to invest one's money?
- [34:14]
B
Right, so here, here are a few things I think people thinking about valuations and that's myself included, it's very, very high compared to historical norms. It's nerve wracking, but it's a short term sentiment driven play. Beta is subject to a lot of noise and it's going to happen. There may be a correction or people are going to get nervous. However, if you're a long term investor like a lot of our clients are, you're going to take a look at the fundamental value add of these data center build outs and AI moves. And I do think that there is something there. If you look at the S&P 500 index and the companies in there, how many can actually do the I play? How many of them have the expertise, the vision, the balance sheet capacity to do all of this? And there are just a few. And that's one of the reasons why investors who want to put capital into the air play have no choice but to go into it in the public markets. Right. So I think the valuations, although they are high, they're telling us something about the future growth of these companies and AI in general, and that can withstand.
- [35:19]
C
What has been a torrid time of geopolitics, of angst, of trade. And I think it's interesting that you said it's noisy. It's been really noisy in other players, like rare earth stocks, for example, tumbling today because, well, maybe China will continue to export and many had run up MP materials and other players thinking that we would be cut off more significantly from rare earth materials, materials that were necessary for this whole trade. What do you make of some of the highs and the lows in ultimately a geopolitical war?
- [35:48]
B
Yeah, you know, if we think back to the Xi Trump meeting from last week, in my mind, I think saying that it's a one year truce is a little bit misleading. Right. So it might not be fully one year we might have a surprise even next month, who knows? And the truce part is also misleading because what I think is we just de escalated. We just went back to where we were about two months ago. So it means that we're going to continue to negotiate, but behind the scenes we're going to continue to push this forward in terms of actually racing each other. What happened after that meeting was that Mr. Trump came back to the United States, but Mr. Xi stayed and talked about having like an international body that governs AI. There is a lot of push here to having more power in AI and also in national security. This is just going to get more heated as we turn into 2026.
- [36:43]
C
Wow. Good place to leave it and a good food for thought for the investor base. And we appreciate it. Founder AND CEO of Grenadilla Advisory the final days in a closely watched campaign are here. And no, perhaps not the local elections you're thinking of, we're talking about will shareholders shareholders vote to approve $1 trillion package for Elon Musk? Well, of course, that decision is about more than just money control of the company. Shareholder value, corporate governance issues, they're all at play here. Let's speak with University of Arkansas Law Professor Rob Anderson about all of this. You are a retail investor in Tesla and you're very active within the community of Tesla Roti or Tesla retail investors more broadly. Professor Anderson, but just lay it out for us as an active investor. Talk to us about the goals, the milestones, how you interpret them, as well as being a professor in corporate governance. Are they that hard to achieve for Elon Musk to get what could be up to $1 trillion in pay?
- [37:40]
A
Yeah. Well, thank you for having me on. I mean, there's been a lot of talk about how large the potential awards are here, but I think there hasn't been enough talk about how ambitious this plan actually is, requiring Elon Musk to grow this company to 8.5 trillion in market capitalization and 400 billion in EBITDA. So I think, you know, this is ultimately a question of what will this company be able to retain Elon Musk, who, I think it's fair to say his value has been priced into the shares already quite significantly. And it's more, more than just, in my opinion, more than just a good idea to approve this pay package. It's actually essential for this company to transition to the next stage that's contemplated by the, by the award.
- [38:30]
C
You talk about the eight and a half trillion that they need to reach in terms of market cap. But there's also the milestones. 20 million cars, 10 million, and FSD. You've got to see 1 million robots out there. An army that he calls them. But professor, what's interesting is some have pointed out potential caveats here. They've talked about the board potentially being able to award him perhaps the first three tranches of the money promised. If for hacks, there's the milestones were interfered with in some way. Maybe it's disasters, war, maybe it's interference by government, but also just other unspecified circumstances. So does that give you any pause from a corporate governance perspective?
- [39:06]
A
Well, I mean, not, not really. I mean, it's normal for force majeure type considerations be taken into account. I mean, somewhat, somewhat ironically, when ISIS recommended a vote against it, it, you know, took into account, it specified that there was a lack of precision in some of the milestones, but also simultaneously said that the milestones didn't give the board enough discretion in the future to adjust it. So, you know, I think there's. It's a no win situation in terms of what, writing a plan like this, because obviously unexpected events can occur that you can't fully anticipate in writing the plan. So I don't think, I don't, I, I don't think those are particularly problematic. I mean, you know, I think probably the most common criticism I've heard is that the initial, the first step of the milestone at $2 trillion market cap, people would have said it's too easy to achieve. But I think what that fails to appreciate is that the market is already priced in the fact that it believes this pay package will pass and that Elon will be retained for at least some period of time. So it's priced in his value already. And it's a situation where he's kind of cursed by his own success of, you know, making the milestones easier to achieve because it's already priced in the value of his contribution. So, you know, I sort of feel like some of the criticisms have been a bit unfair in that regard.
- [40:35]
C
Well, some of the criticisms more broadly have been almost reminiscent of what happened in 2018. And the idea that basically corporate governance is lacking because a lot of people on the board are too close to him. How do you think that this pay package in 2025 answered that?
- [40:50]
A
So, I mean, the pay package now had the benefit, if you want to call it that, of a completely adjudicated Delaware opinion on that 2018 pay package. So they were able to address just about everything that the Chancellor identified in that, including a totally different having a special committee, this time with totally different composition, addressing all the procedural aspects that the Chancellor took issue with in the, in the court opinion as well as producing a extensive report that is more extensive than anything that I recall seeing in recent memory to, to try to address all those concerns. In addition to of course the shareholder vote.
- [41:36]
C
You are of course a shareholder. Musk himself is a significant shareholder. He wants to be more of a significant one. He's got about 15% that he could put weight behind. He in Texas is allowed to vote for his own pay package in this respect. So many say actually this is just going to pass, but it's more an idea of the court of public opinion. They need to pass with such a majority to prove that this is borne outright. What do you make of that, Rob? Do you think that it's, it will pass with flying colors in that respect and enough to stop the criticism continuing?
- [42:05]
A
I think it will, yeah. I think the, I think the shareholders other than, than Musk and Kimball will vote very substantially in favor of it. Frankly the, the main criticisms I hear are certainly not coming from the retail shareholders who overwhelmingly are not just supported but I think are, are nervous that it won't pass by, by enough. And I think, you know, the value that, that Musk brings this company, it's, it's undeniable. If, if, if he left tomorrow, you can imagine what would happen to the stock price. And so I think it's unfair not to give him the benefit of that, of the fact that the stock price has gone up by looking at it now at 1:30, $30 since this pay package was even announced. Right. So the market loves it. I don't see any criticism there really. It's just the sort of rigid voting restrictions of the proxy advisors that are going to be the obstacle here. It's the cookie cutter approach. They have to apply because they have to try to treat Tesla like every other company when it's, it's not similar to a hired CEO who's come in from the outside to manage a mature company. This is a founder led company.
- [43:25]
C
A nuanced approach from Professor Rob Anderson. We appreciate it. From the University of Arkansas. Thanks for joining us. And a retail investor in Tesla now coming up. Palantir shares though are up ahead of the company's earnings. Later today we'll discuss what to expect next. This is Bloomberg Tech.
- [43:46]
A
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B
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- [46:22]
C
Rolls on an eye bulls where they can be watching Palantir closely. It reports after the bell the stock's already up as you can see, 170%. Let's call it on enthusiasm. Bloomberg's Lizette Chapman joins us now. And there are high expectations, 50% increase in revenue. Just talk us through what going to fuel that growth.
- [46:40]
B
Is that right? So like you said, there is a lot of built in anticipation, eagerness around this going to be see they've beat the last four consecutive quarters. Going to see if they're going to beat that again or maybe they're going to fall short. What we're going to be looking for is whether they're able to translate these small, smaller customer deals, these $1 million deals into ones that expand into, you know, ones that, that really drive the US Commercial deals as well as international. That's on the commercial side. On the government side, we're going to be looking at how things are going here domestically as well as internationally with the boost that they've seen, that they've invested in the UK and a lot of NATO expansion efforts as well. So we're going to be looking to see whether they've been able to, you know, continue to expand the sizes of those deals deals.
- [47:30]
C
I mean government spending for them in defense in particular has been such a tailwind. But we're also amid a government shutdown. Is that, is that any sort of headwind?
- [47:39]
B
It the people that we have spoken to indicate that that is unlikely because of the lumpiness and long term nature of these contracts. That doesn't seem to be a major factor that we have anticipated so far. What we will be looking at going forward though is, is again like, you know, will they be and then where and how and traditionally international sales have been much softer than the US Ones. And you know, CEO Alex Karp has repeatedly said, you know, it's US Commercial growth driving this. So we'll see if that continues to be the case or whether they've been able to boost their strength abroad.
- [48:17]
C
I mean really, analysts calling out the uncharacteristically large beat cuts and raises that we've had prior quarters from Alex Karp and team. Is that what he needs to do to drive the narrative? Because boy, is he good at driving narratives.
- [48:31]
B
Yeah, I think that is a great question and I, I think the markets are going to tell us. Right. You know, he has a famously very antagonistic relationship with Wall Street. He considers financial results of vulgar and inadequate way to judge a company success. And he's consistently married the financial results with what he considers as a philosophical mandate to create a software for the use of the U.S. defense forces and allies. And so that's going to be what he's driving towards so there is not just the focus on profit, but also there's, there's some philosophical support that he may get or may not.
- [49:20]
C
We'll get to that philosophy after the bell. Is that Chapman? It's always great to have you on. Thank you so much. That does it for this edition of Bloomberg Tech. Don't forget to check out our podcast. You can find it on the terminal as well as online on Apple, Spotify and Iheart. From New York, this is Bloomberg Tech.
- [49:40]
A
Foreign this is Tom Keene inviting you to join me for the Bloomberg Surveillance Podcast. It's about making you smarter. Each and every business day, we bring you a recap of what happened overnight in Europe and Asia. The day's economic data and complete coverage of the US Market open. We cover stocks, bonds, commodities, currencies, even crypto. Crypto. All the information you need to excel. Bloomberg Surveillance also brings you the analysis behind the headlines. We do that with lengthy conversations with our expert guests, the smartest names in economics, finance, investment and international relations. We do all this live each and every weekday, then bring you the best analysis in our daily podcast. Search for Bloomberg surveillance on YouTube, Apple, Spotify or anywhere else you listen on the east coast, listen at lunch and on the west coast when you wake up. That's the Bloomberg Surveillance Podcast with me, Tom Keene, along with Paul Sweeney and Lisa Mateo. Subscribe today wherever you get your podcasts.