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- [00:00]
EY Consulting Representative
You have invested in artificial intelligence. Maybe you have pilots or even proofs of concepts that show real promise. The next opportunity is scaling that success across the business. At EY Consulting, we help organizations redesign how work gets done so innovation can move beyond the nascent stage. By addressing architecture, operating models and governance, we help AI deliver real, lasting value at scale. When AI fits how you actually work, that is EY Consulting.
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IBM Representative
The thing about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand. But by embedding AI across hr, IT and procurement processes, we've reduced costs by millions, slashed repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business. IBM.
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Bloomberg Tech Host (Ed)
At Venture Global, we think about what
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Public Investing Representative / Show Support Announcer
can be done, not what's usually done through innovation.
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Bloomberg Tech Main Host (Ed)
Venture Global is not only building some of the largest energy facilities in the
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Bloomberg Tech Host (Ed)
world right here in the United States, but delivering American energy at a fraction
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Bloomberg Tech Main Host (Ed)
of the cost in a fraction of the time.
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Bloomberg Tech Host (Ed)
So while others are busy talking, we're busy building. That's Venture Global. That's unstoppable energy.
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Bloomberg Audio Studios Announcer
Bloomberg audio studios podcasts radio news.
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Bloomberg Tech Main Host (Ed)
This is Bloomberg Tech. Coming up, Anthropic gets a warning from the US Commerce Secretary saying it needs government permission to grant foreign nationals access to its most advanced AI models. Plus, after three days of soaring SpaceX shares come back down to earth and drop for the first time in the company's fourth trading day. And Bloomberg reports Apple's upcoming camera equipped AirPods will launch in late 2027 as part of a flurry of new release releases. There is a lot going on in the world of technology and that's playing out in Equity Markets. The NASDAQ 100 has seen a lot of churn and chop. We're up modestly few 10 of a percent. Chip stocks are rebounding, but we had a really big drop in yesterday's session. But remember, as an index, as a bucket, chip stocks are up like 90% year to date. And Space X, that's a pretty reasonable pullback, down to $193 per share, down 4%, but had added $930 billion of market cap in the days of its life as a public company. Let's get to the news stories and an extraordinary escalation in Washington's conflict with Anthropic. Bloomberg's obtained a copy of the letter from Commerce Secretary Howard Lutnick dated last Friday, warning that Anthropic faces severe civil and criminal penalties if it grants foreign nationals access to its most advanced AI models. Bloomberg's editor in D.C. mike shepherd, is with us for more. So what do we learn from the letter that start there?
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Bloomberg Editor Mike Shepherd
Well, one of the things we actually didn't learn, Ed, was the rationale. What was the underlying security concern that drove Howard Lutnick and the US Government to take such a drastic step as to order and impose export controls on shipments and sharing of this sensitive technology. But what we did learn was this, that the government is using authorities that are typically reserved for dual use technology that is, is products that could be applied for both civilian and military purposes. And the government is, is invoking these authorities in a way to try to prevent foreign nationals perhaps from leaking either intentionally or unintentionally these wares, these products, the top two AI models from Anthropic to foreign adversaries of the US and they are preparing to impose these export controls and have them in place until further notice. And they're warning Ed of criminal penalties and civil penalties if Anthropic fails to compl.
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Public Investing Representative / Show Support Announcer
Shep.
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Bloomberg Tech Main Host (Ed)
Just very quickly, let's recap the reporting of the show. Yesterday, technical staff of anthropic went to D.C. they met with the administration. What do we know?
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Bloomberg Editor Mike Shepherd
Well, we haven't seen any further signs of progress in the negotiations between the two sides. We do, however, have today at the G7 summit in Evian, Dario Amadei, the anthropic CEO, and President Donald Trump in the same room for an a lunch hosted by French President Emmanuel Macron. Now, at the lunch, the two men did not sit anywhere near each other and it's unclear whether they had any interactions or sidebars. But after his bilateral meeting with Indian Prime Minister Narendra Modi, President Donald Trump was asked, well, how are things going at Anthropic? And all he could say was going fine. We may hear more from the President on this, but clearly it's something that's on the mind of G7 leaders. And Macron himself is pushing this idea of trusted partners for sensitive technologies like Anthropic's AI models in which these partners allied countries would be vetted by security authorities so that they too could perhaps regain access to sensitive tech like these two models.
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Bloomberg Tech Main Host (Ed)
Bloomberg's Mike Shepard, thank you very much. I want to go deeper on that story. The G7 is underway in Avion, France this week. And beyond geopolitical and economic debates, AI is in the spotlight. The chief executives of OpenAI Anthropic and Google all on hand, joining world leaders to discuss the global future of of AI. The conversation comes as the US Government indicates its willingness to use emergency powers, forcing private developers into compliance over national security threats. The President of the United States also in everyone and we expect to hear from him today. Bloomberg's Kailey Leinz, co host of Balance of Power, is with us. Such an interesting dynamic, right? Power players, world leaders, AI leaders recap.
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Bloomberg Co-host Kailey Leinz
Yeah, well, and Mike spoke to some of this incredibly well Ed, basically what we have here is countries who are all calling for a regulatory regime around AI. The German Chancellor, Friedrich Merckx talked about the need for an intensive discussion around that, while also saying that all countries need to have access to this technology and admitting Friedrich Merck did that Europe needs to play catch up. And that's really what's at issue here as we consider anthropic and these export controls being slapped on in particular, is that Europe doesn't have its own AI juggernauts such as those in the United States. This is somewhere, and we heard President Trump speak to this earlier as well, that the United States is leaving, leading in and Europe wants to be able to trust that it can access the technology. Thus the push to have Europe considered some of these trusted partners who would be able to access this technology versus adversaries like China, for example, when we're considering things like Mythos and Fable five. So this is obviously an activist discussion. We could hear more from President Trump about this. But it also feeds into another issue that was raised at the G7 summit at as we can consider the technology questions that leaders are grappling with. It is also inputs into certain technologies like rare earths and permanent magnets. And we actually saw the G7 countries agreeing today to cap their imported supply from China to 60% of rare earths and permanent magnets by the year 2030. The ultimate goal as soon as possible is to get those imports down to 50% and they're going to by the end of this year have a separate discussion around other critical minerals. But the idea is reducing the dependence on China, which has shown a willingness to restrict exports of this market in which they are dominant, not just in terms of mining these rare earths, but also in the refining of them. This is going to be a really ambitious target for these countries to meet at as they have to work on their own supply chains. Even officials at the G7 are admitting that may mean imposing quotas on certain industries like defense, for example. But this is actually one of the big tangible Items that is emerging from the G7 summit, the 60% cap on rare earths from China again by 2030.
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Bloomberg Tech Main Host (Ed)
Katie Lines, thank you very much. And of course, we expect to hear from the president about the status of an agreement with Iran, another topic that has had direct impact on supply chains and tech, including semiconductors. Let's stick with AI. Nvidia founder and CEO Jensen Huang sat down with the AP to discuss the need to build AI in a safe and responsive, responsible way. But beyond that, he says the US Needs to harness the new technology to stay ahead of the curve globally. Listen to this.
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Bloomberg Tech Host (Ed)
We have to be very careful that
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Bloomberg Tech Main Host (Ed)
artificial intelligence, this new next generation of technology revolution that we're also enthusiastic about adopting it and make sure that we don't get left behind. Joining us now, Udetrov, you're a member of the portfolio management team for the International Equity Strategy desk at Harding Lovena. You know something that's come up actually very recently, yesterday's show was what is the kind of black swan for this market where we are right now? And it might just be regulatory risk. Listening to what Jensen Wong had to say there, extrapolate on that a little bit. You know, we're still unresolved with China. Supply chains are impacted by the war in Iran. What's top of mind for you right now?
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Udetrov, Portfolio Manager at Harding Lovena
Top of mind for us is productivity gains or the return on equity that can be generated from AI and how much people are embracing it and what purposes they're using and what is the adoption curve. And the return on that adoption curve is what's on top of our mind. And we point out less regulatory risk might be less of an issue. The bigger issue is going to be people have to take time to digest what they're included what AI they've started using in their workplaces, and then understand the returns of it before they can generate additional demand. And to us, the timing of that is where the market might get most, might get most confused about. And to us, that's that black spawning in short term risk might be extrapolated as long term risk. And that's where the market might overreact.
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Bloomberg Tech Main Host (Ed)
Where do you look for the evidence of productivity's impact from AI, you know, very recently and I think you're talking about in equity markets, right?
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Udetrov, Portfolio Manager at Harding Lovena
Yeah.
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Bloomberg Tech Main Host (Ed)
We had a conversation 10 days ago with San Francisco Fed President Mary Daly saying I don't see any evidence of productivity in this country being impacted by AI for better or worse.
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Udetrov, Portfolio Manager at Harding Lovena
Yeah. So from that I think there's a number of ways to look at it the first thing we do is to talk to companies at the individual levels how they're adopting AI and what impact that AI is having on either the cost management or the sales that they're generating or the activity that they're doing. So one clear evidence that we find is people are able to do a lot more with a lot less human resources or keeping human resources the same. What we yet to see is that translate into profit growth for anyone either and that's to us is what the next step is going to be and trying to understand where that profit growth is coming from. Most immediate is that some costs can come down but that cost is being reinvested into AI and to us that's where that discrepancy could come from.
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Bloomberg Tech Main Host (Ed)
We started the program saying there's been some choppy trading in churn in equities. In this morning's session at least I remind the audience that we have a Fed decision, a meeting today, the first of Kevin Wash as chair. Is that a factor for technology investors right now?
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Udetrov, Portfolio Manager at Harding Lovena
I don't think it's a factor for technology investors. From a fundamental perspective we still are focused on what's happening in the fundamental markets. The market is reacting to a lot of the fundamental news that's coming out. So the investors in my mind have become more and more sensitive to profit and what impact is having on profit versus revenue over the last two years, revenues, backlogs, bookings was what the markets reacted to. It started to turn in the last two quarters where revenue growth is being given less of of interest and more interest is given to profit growth. So I don't think we're there. The point where the interest rate changes itself will have a big impact on the market in the longer run. It will because that sets the discount rate at which you npv the future.
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Bloomberg Tech Main Host (Ed)
Yes, it's been, it's been a long time since I've said this out loud on Bloomberg Tech, but higher rates discount the present value of future cash flows and continue to remind ourselves of that point. Look, I won't ask you about Space X specifically but there's this idea that, that presages a big IPO window. But more sophisticated than that, after a long era of buybacks and other shareholder friendly policies, lots of new equity will hit the market maybe this year. How does that go for you? Sorry, go ahead.
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Udetrov, Portfolio Manager at Harding Lovena
So that's good. That creates a technical risk in terms of where is if when anthropic and OpenAI come to the market, the equity that's raised for that and the Funding that's raised for that, where is that going to come from? Which sectors of the market, which parts of the market? And we've seen some of the reason why the semiconductors have done so well is software has underperformed. So what other segments of the markets are going to underperform? So there are going to be technical factors and they'll become even more important in the market over the next six months.
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Bloomberg Tech Main Host (Ed)
Just very quickly, French President Macron saying in his own presser in Avion, it's good that the US realizes the dangers of frontier AI models. We're showing live pictures of him speaking at the G7. This idea of government intervention and dictation on how technology can or can't be used, how is that playing out in the market mood right now?
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Udetrov, Portfolio Manager at Harding Lovena
I think it's not as important to the market at this point in time because we're still trying to understand what are the capabilities of AI. And there's so much latent demand in even the previous generation of models that we're less concerned about is there going to be the next generation going to be restricted? Well, we still haven't used the full capacity of the previous generations. So let's do that and understand what the tam of that is before we worried about the next generation.
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Bloomberg Tech Main Host (Ed)
Like I said, there is a lot going on in the world of technology this morning. Harding Loebner, Portfolio manager. Uday, great to have you back on the show. Thank you very much. Coming up, we're going to hear from HP CEO Antonio Neri Story about let's make networking great again in the world of AI. That's next. This is Bloomberg Tech.
- [14:49]
EY Consulting Representative
You have invested in artificial intelligence. Maybe you have pilots or even proofs of concepts that show real promise. The next opportunity is scaling that success across the business. At EY Consulting, we help organizations redesign how work gets done so innovation can move beyond the nascent stage. By addressing architecture, operating models and governance, we help AI deliver real lasting value at scale. When AI fits how you actually work, that is EY Consulting.
- [15:19]
IBM Representative
So there's a lot of noise about AI, but time's too tight for more promises, so let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now a global workforce of 300,000 can use AI to fill their HR questions, resolving 94% of common questions, not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business.
- [15:48]
Public Investing Representative / Show Support Announcer
IBM support for the show comes from Public. Lately it feels like there are two types of investing platforms. Some are traditional brokerages that haven't changed much in decades. And others feel less like investing and more like a game. Public is positioned differently. It's an investing platform for people who are serious about building their wealth on public. You can build a portfolio of stocks, options, bonds, crypto without all the bugs or the confetti. Retirement accounts? Yep. High yield cash? Yes again. They even have direct indexing. Public has modern design, powerful tools and customer support that actually helps go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market ad paid for by Public Holdings Brokerage services by Public Investing Member FINRA SIPC Advisory Services by Public Advisors SEC Registered Advisor Crypto Services by 0/ all investing involves risk of loss. See complete disclosures@public.com Disclosures.
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Bloomberg Tech Main Host (Ed)
As AI infrastructure scales, attention shift Shifting beyond the chips to networking. HP is betting that demand and its Juniper acquisition will be a major growth driver. I sat down with HP President and CEO Antonio Neri. Listen to this.
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Antonio Neri, HP CEO
We believe, and has been for now three years plus that networking is the core foundation to deliver AI across many aspects of the market. Not just enterprise, but obviously to train these models. Because networking is also the bottleneck to get the best productivities for all the GPUs we are deploying all over the world. And so Juniper has been a key thesis of that. We understood in 2023 when we started thinking about the acquisition of Juniper with Rami, which was the CEO of Juniper and now leading our combined networking business, that this is a massive opportunity. And the combination of Juniper and HP and particularly with compute storage and our Greenlake platform will allows us to differentiate the market. So clearly it's going to be the driving force as we go forward because enterprises need to put that foundation in place and then the cloud experience around it because is the definition of a hybrid workload.
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Bloomberg Tech Main Host (Ed)
And so let's pretend for a moment that the Bloomberg Tech audience is not familiar with networking. They know all about the GPUs, they know all about the high bandwidth memory. But what is it that we're talking about materially here?
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Antonio Neri, HP CEO
Yeah, when we think about AI and we think about the amount of accelerating computing through the GPUs we're deploying today, you have to connect all of them together in a parallel process and that that connectivity is the networking fabric. And there are three aspects of that. One is in Iraq. Think about the cabinet. You bring together 72 or 144. That requires a lot of networking connectivity. That's what we call scale up. That's where Juniper is going to play a bigger role with the introduction of AMD Helios in the fall, where Juniper will be the de facto networking fabric inside that architecture. And then when you start putting cabinets together in large data centers, you need to connect these cabinets all together and that's what we scale out. And that's also Juniper. And then finally, as we build these amazing data centers all over the world, you have to connect them with each other and that's what we call scale across. And that's where our Juniper routing business excelled because we have one of the best platforms in the world. So that's why network is so relevant to train models and to to influence models.
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Bloomberg Tech Main Host (Ed)
That was HP CEO Antonio Neri. There is a lot going on in the world. Technology. So many news stories. Let's get out to New York and Bloomberg's Johann Yahir.
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Bloomberg Co-host Kailey Leinz
Hi Ed.
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Bloomberg Tech Reporter Johann Yahir
It's time now for talking tech. First up, creditors are taking over software company Medallia. It's an effort led by Blackstone after owner Thoma Bravo said it would not inject fresh cash into the struggling SaaS company. Creditors will invest in invest $150 million into the company to curb its debt and accelerate AI efforts. Plus, SoftBank says it's becoming harder to find Latin American startups that are ready for major investments. The company says fewer firms in the region are meeting the requirements for its preferred investments of $50 million or more. It's a big shift from just a few years ago when Latin American startups were attracting record amounts of of venture capital. And we end on Lenovo. It is the latest company tapping the debt market, looking to raise $2 billion through a convertible bond sale. The Beijing based maker of PCs and AI servers is returning to the market just two years after securing a similar size investment from Saudi Arabia's sovereign wealth fund. It says the money will be used to refinance debt and buy back shares.
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Bloomberg Tech Main Host (Ed)
Ed, thank you, Hira. As we discussed earlier, the US has told Anthropic not to give foreign nationals access to its most powerful models. But CEO Dario Amade says the best defense against those risks is getting the technology to cyber defenders. He spoke with Bloomberg's Emily Chang for the circuit.
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Mackenzie Listrup, Space Systems Expert
If this helps defenders, it also helps attackers.
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Bloomberg Equities Reporter Carmen Reinecke
Can we defend anything anymore?
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Mark Gurman, Bloomberg Apple and Consumer Tech Editor
What I would say is that the reason that we're giving Mythos to defenders before we give it to attackers is to patch all the bugs. I don't Know, as the models get better, there may be more and more bugs to be found, but there's only so many. They're finite. Right? It's like you have this surface and there's only so many holes in it. You patch all the holes and the surface becomes very hard to attack. As well as the code itself is written with the powerful models. So it's. It's then becomes very hard to find flaws in or break into. So I think on the other side of this, hopefully six months or a year from now, we have a much more secure Internet ecosystem than we had in the past. We're trying to get to that world, and we're doing the best we can to open up Mythos to new cyber defenders. We've been talking to the government. We're very respectful of their recommendations. They're slowing the pace at which we open it up because they're worried about counterintelligence risk. I think that's sensible. I think all serious people here understand that there's real trade offs here. We see a lot of sniping from people on Twitter and from, you know, from other AI companies. You look at what they're saying and the inconsistency with what they're doing, it's not. They're not serious people. They're not seriously engaging with the, the serious trade offs that, that, that, that we have here. Look, I have customers calling me up every day saying, I want access to Mythos. I have countries call calling me up saying, I want access to Mythos. And I have the US Government and my security team saying, no, wait a minute, there's risk to it. You know, I'm not saying one side or the other is right. I think it's somewhere in between. Both sides have valid points, but there's a real challenge here, and we need to face it together as a society.
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Bloomberg Tech Main Host (Ed)
That was Anthropic CEO Dario Amadei speaking with Bloomberg's Emily Chang. You can catch that full episode of the circuit later today on Bloomberg TV. And on bloomberg.com SpaceX shares come back down to earth, dropping for the first time. It's only the company's fourth trading day since that blockbuster IPO. It puts the stock on track to snap three days of gains where the shares have pushed nearly 50% above the IPO price and added almost $1 trillion of market cap. Bloomberg equities reporter Carmen Reinecke is trying to keep track of numbers that, in real time, keep changing. I mean, what is the, what is happening right now?
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Bloomberg Tech Host (Ed)
Right?
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Bloomberg Tech Main Host (Ed)
There is scarcity. There is only 4% of this company available for trade on the float? What was the big thing here?
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Bloomberg Equities Reporter Carmen Reinecke
Yeah, so I think we're seeing some of the key note, you know, volatility that can be associated with new IPOs in their earliest days of trading right here today. I mean shares are down 6% right now. We're a little bit off the lows of the day for Space X, but this is a pretty extreme drop. It was up about 6% earlier in the session is pared all of that to decline here. We know that there's low float that can make swings in the stock price look extra large or bigger than maybe than they usually would. And that can also then have an impact on market cap. So yesterday we reported that Space X had jumped over Amazon in market value. That's a little bit up in the air today. We'll see where it ends at today's close.
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Bloomberg Tech Main Host (Ed)
This there's also like the, the listed, listed options. Right. The options market came into play over the last 24 hours. Is that a factor in the volatility?
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Bloomberg Equities Reporter Carmen Reinecke
It definitely can be. I mean, you know, traders are obviously now making bets on where Space X shares go next. You know, they're buying puts and calls. They're trying to additionally sort of game this system or see if they there's extra, you know, alpha here. One thing that we have heard or something seen that is that options contracts are pretty expensive. You know, investor Michael Burry wrote in a substack note yesterday that he was looking at puts and they were just too expensive to buy right now. So I think we have a lot of traders looking there. We have more options trading actually coming online in the next few weeks from others.
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Bloomberg Tech Main Host (Ed)
That's a, that's a volatility premium. Just really, really quick and I know this is unfair to even look at prices to sales ratio for Space X. What's the point?
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Bloomberg Equities Reporter Carmen Reinecke
It's a great question. I mean I think the point is just in comparing it to some of these other large companies where it now has a similar market value. Right. I mean it brought in about $19 billion in revenue last year. And if you compare that to Microsoft, that is, you know, it's 15 times higher. So it's good to keep that in mind sort of as we look at the value of this company.
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Bloomberg Tech Main Host (Ed)
We had to talk a lot more about the company a little later in the program. Bloomberg's Carl Reinecke, thank you very much indeed. There's a lot of news from Bloomberg as well. Apple's investors are frustrated. The iPhone maker has Been slow to deliver on AI promises even with its latest Siri AI features. And after a disappointing performance at its annual Worldwide Developers Conference last week, investors are becoming a little bit impatient. Bloomberg's Michael Reagan leads the team that's been writing about this shares. It's interesting, right? Actually I was staring at the chart and being like, what are the shares telling me in the days since I was in Cupertino? But that's still the same story. Everyone wants to see a little bit more from Apple.
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Michael Reagan, Bloomberg Reporter
Yeah, I think that's, that's pretty much it, Ed. You know, as you're familiar with, it's not uncommon for there to be a lot of optimism ahead of the developers conference from Apple and then a little bit of a letdown when there's not really a big bang product elect announcement. So yeah, the investors we've talked to are basically saying we're just hoping for a little bit more oomph from their AI offerings, their Apple intelligence offerings. There's a little bit of disappointment that Siri will only be in beta mode in September, only available in English, not available in Europe or Asia. So a bit of a disappointment there. But I would say, you know, Apple stock is still, it's up 10% this year. It's right in line with the S&P 500. But I think it goes back to those chip makers you're just talking to. People are, you know, turning their head over there and seeing these triple digit gains. You know, there's something like a dozen chip makers in the NASDAQ 100 with, with triple digit gains this year and just saying, you know what, we wish Apple had been a little bit more ahead of the curve, a little bit more aggressive with AI. Now that said, said, we do have these days in the market where everybody starts second guessing all the capex involved in AI and that's when Apple sort of becomes almost your defensive tech stock play. So there is a little bit disappointment. But you know, at the end of the day, this is Apple with this fortress balance sheet still looking at 15% revenue growth for this fiscal year. So you know, I don't think we can make too much out of the disappointment from the, from the developers Bridge conference.
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Bloomberg Tech Main Host (Ed)
Just very quick, Mike, there was, there was a part of our report on this that basically seems to indicate the market's more focused on the next hardware upgrade cycle. Just real quick, what are they talking about?
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Michael Reagan, Bloomberg Reporter
Yeah, exactly. I mean when you're looking at the iPhone that's coming out in September, you know what is sort of baked into the assumptions about, you know, how much growth we can, we can see because of people refreshing buy new iPhones just because they're excited about the new one.
- [28:19]
Bloomberg Tech Main Host (Ed)
Right.
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Michael Reagan, Bloomberg Reporter
So far, you know the, the revenue estimates are pretty much staying where they are so it doesn't seem like they've really adding on to the estimates.
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Bloomberg Tech Main Host (Ed)
Following the conference, Bloomberg's Michael Reagan with the Apple stock story, thank you very much. Meanwhile, the company holds steady with its ambitions, planning camera equipped AirPods, smart glasses and new foldable iPhones as part of this like major product push which will span the next two years. Bloomberg's Apple and consumer tech editor Mark Gurman is with us with the latest reporting. I just, I read it a few times. AirPods with camera and the new bit I think is the kind of timeline for launch. Go with that. Like what was the important bit of what you reported, Mark?
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Mark Gurman, Bloomberg Apple and Consumer Tech Editor
Yes.
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Mark Gurman, Bloomberg Apple and Consumer Tech Editor (continued)
So These new camera AirPods are going to launch at the end of 2027. It's going to be a pretty blockbuster fall of next year, that's the 20th anniversary of the iPhone. So they're planning a lot of stuff to go hand in hand with that in addition to these AirPods with cameras. And just to give you some context, these are not for facial recognition. These are not for taking pictures and video. These are for being able to see the world around you and feed that information into Siri. So you can say things sort of like what can I make with the food on this table, right. What recipes can you concoct for me? Tell me more information about that object or that plant or what have you or things for visual reminders or more specific turn by turn directions. In addition to that, you're going to see the second generation of the foldable iPhone as well as the 20th anniversary iPhone, something I'm calling, calling the iPhone 20 or the iPhone 20 Pro coming out at the end of next year. So it's going to be pretty jam packed. And if you look at the more near term, this year is going to be pretty extensive, massive as well. You have several new iPads, you have several new Macs, new Apple watches and of course you have the first foldable iPhone as well as the iPhone 18 Pro, 18 Pro Max. And if you recall, Apple made that big design change with the 17 Pro and Pro Max last year. Typically when Apple does a new design change, the first two years of that design are extremely successful in terms of upgraders. Some people don't do it in year one, they like to wait for year two. And so I think the 18 Pro Max are going to be pretty hot sellers this fall as well.
- [30:33]
Bloomberg Tech Main Host (Ed)
Another big story that played out in markets, it played out on social media in a huge way in the last 24 hours is snap and Snap specs augmented reality glasses. You know what the stock reaction was? You spoke to the CEO yourself, summarize everything we need to know about this place.
- [30:52]
Mark Gurman, Bloomberg Apple and Consumer Tech Editor (continued)
I think the stock reaction is more in response to how much was spent on this product and investors and Wall street knowing that this is not going to be a hit out the gate. This is, you know, a conceptual product right now. This is something like when the Vision Pro launched a couple of years ago. This is going to be for developers, for the biggest tech fans, for the earliest of early adopters. This is not something that's going to light the world on fire from the get go, but this is the future of computing, I believe as well. And this is what Evan Spiegel has been saying. These are augmented reality glasses that allow you to overlay applications, your work notifications on top of the real world. And eventually this is a product category that is going to click, but it needs to get a little bit lighter and it needs to get a lot less expensive. These are about 20$200 right now, certainly not the priciest device in the category, the Vision Pro, obviously being over $1,000 more expensive they than that. But there is some work to be done. But this is another stepping stone towards that vision that Snap and several other companies have. So maybe I'm not optimistic about this first generation of the product from Snap, but in terms of the category, this is going to be the future. And Snap clearly is placing a foothold.
- [32:05]
Bloomberg Tech Main Host (Ed)
There's Mark Gurman who leads all of our coverage of consumer technology. Thank you very much. Did you see this one? All Birds is now smartbird completing its pivot from footwear to AI infrastructure. After selling off its shoe business and the brand's assets, the company tapped former DCI CEO Nadia Carlsten to lead the next chapter. Smartbird also doubled its convertible financing facility to $100 million and says it's ready already talking with potential customers as it builds out its first AI computing clusters. Wow. Okay. Coming up, we're going to talk about the challenges facing space based data centers, including satellite to satellite communication. The deep dive next, this is Bloomberg Tech.
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Bloomberg Audio Studios Announcer
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Bloomberg Co-host Kailey Leinz
to memorable meals, Genius by Global Payments
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Bloomberg Equities Reporter Carmen Reinecke
keeps your kitchen and floor perfectly in sync.
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Bloomberg Tech Main Host (Ed)
Real time menus, seamless updates, big league reliability. For any business, that's genius. The US Is the clear winner in the race. That's according to ASML CEO Christoph Fouquet. He sat down with Bloomberg Tech Europe's Tom MacKenzie earlier today on the sidelines of the Viva Tech conference in Paris. Here's what he had to say about his thoughts on the global air race.
- [35:52]
Mark Gurman, Bloomberg Apple and Consumer Tech Editor
If we compare all we do on the entire ecosystem versus the US and China. I think today the US is a clear winners. I mean they are looking at champion across the entire air semi ecosystem. I think the one place they were missing a bit out was manufacturing.
- [36:10]
Bloomberg Tech Main Host (Ed)
And I think they have been extremely
- [36:11]
Mark Gurman, Bloomberg Apple and Consumer Tech Editor
aggressive in bringing some key company to manufacture in the us. They can do that because they buy chips.
- [36:19]
Bloomberg Tech Main Host (Ed)
ASML CEO Christophe Fouquet Back to Space X. Despite today's decline, Space X has soared since its IPO four days ago. A big part of investor enthusiasm stems from Elon Musk's goal to put data centers in space starting in 2028. We've heard from those bullish on the prospect, including SpaceX investor Sean McGuire who said this about orbital compute.
- [36:47]
Udetrov, Portfolio Manager at Harding Lovena
Every individual component here is kind of fully, fully proven by SpaceX excep for the compute side.
- [36:56]
Bloomberg Tech Main Host (Ed)
But that is not, it's just not that hard. But space does present specific challenges for compute, including communication between satellites and with the ground. That's an issue Dan Rocco, former head of software engineering at Space X set out to address when he co founded Observable Space. And Dan joins us now. I'm really grateful for you to come in with, with your expertise.
- [37:20]
Bloomberg Tech Host (Ed)
Right.
- [37:20]
Bloomberg Tech Main Host (Ed)
When you read the Space X prospectus, it's like okay, the big picture. Get it? Space day sensors, space as early as 2028. One of the things we focus on the show is the ability for communication, rf, but also laser. Try and summarize the challenge for us.
- [37:39]
Bloomberg Tech Host (Ed)
Yeah. You know, like everyone's known for a long time that laser communication is the next generation of communication for through space. You saw that really Starlink was getting built with the ISL links between satellites that are in orbit. It's you know, because it's in space, there's no like atmospheric conditions or challenges really establishing optical links. One of the big challenges you kind of have though going from space to ground and ground to space is obviously the atmosphere. But everyone kind of knows that solving those technical challenges or what's going to provide they're really like 10 to 100 times the bandwidth throughput that you're going to want and continued like low latency that we need for kind of expanding the space. That's what we're doing here. Yeah, good.
- [38:21]
Bloomberg Tech Main Host (Ed)
No, no, no, no. I'm sorry to interrupt you. I guess the easy way to help the tech audience understand is like what are the current limitations of existing generations of hardware and software in that environment in space?
- [38:34]
Bloomberg Tech Host (Ed)
Yeah. So you know, I think from being able to deploy these ground stations for laser communications at scale on Earth. Earth to communicate is definitely one of the challenges. There's a lot of technical challenges as well around being able to correct like the kind of waveform and wavefront for laser communication and around like adaptive optics as you're basically receiving the light on our ground stations. These are all like very active challenges, but we've actually made as a, as a, as an industry a lot of like advancements to make this feasible. At this point, the data centers in space now is really going to require lasercom to be the primary mechanism of communication moving forward. So the timing works out really well. There's still challenges ahead, but it is I'd say like commercially viable at this point. And so that's why we're really excited about being able to get these deployed at scale over the next six to 12 months.
- [39:32]
Bloomberg Tech Main Host (Ed)
Observable space, the world's largest vertically integrated hardware and software company for space observation. But you are working on the laser component. That's why is laser the best technology?
- [39:47]
Bloomberg Tech Host (Ed)
There's a few different things that make it clearly the winner over RF. First, just pure speed, it's 10 to 100 times faster. The second is there's no spectrum management. You know, a lot of times with the RF bands you have to work with different countries to be able to manage who owns the spectrum and how that that's kind of being used and serviced from space. And then the other one that is really important especially for kind of military defense purposes is the privacy of it. It's a very point to point communication. So it's extremely hard to eavesdrop on and be able to collect that communication. You have to be in a very specific area where the ground station is located at in order to collect any signals. So from a military perspective this is like a clear winner. And most future constellations for defense purposes are going to be optical first in the D forward.
- [40:39]
Bloomberg Tech Main Host (Ed)
The basic idea of Space X going public is also that it will shine a light on commercial space. You know, SpaceX likes to do a lot of stuff itself, but do you see a kind of ripple effect or even an opportunity to work with Space X on those technologies?
- [40:54]
Bloomberg Tech Host (Ed)
Yeah, totally. Like, you know, SpaceX, like where we love Space X is a, it's a, it's really the, the company that's defining the future of space. So, you know, partnerships with them, like we, we work with them and we continue to like would love to expand our relationship with Space X moving forward. I do think you're going to see over this next phase of space technology development, you know, people starting to unstack kind of pull out the different stacks in the space technology spectrum. It's kind of similar to like how this happened in the early days of the Internet when if you were going to be an Internet company, you had to do all the things, you know, you were a data center, you were like a website, you were doing networking. You know, as the space economy and kind of space technology matures, you're going to see these different layers being pulled out where that communication, optical communication infrastructure layer that is now pulled out and people can just buy our products off the shelf turnkey solutions to establish optical concepts from Earth to space and space lasers in space.
- [41:59]
Bloomberg Tech Main Host (Ed)
No longer science fiction. Dan Rocco, CEO of Observable Space. Thank you so much. Blue Origin is rebuilding the launch site where its New Glenn rocket exploded last month, aiming to fly again later this year. New Glenn is a key part of Blue Origin's plans for space exploration, but also NASA's Artemis program. But it's years behind schedule. And as Blue Origin founder Jeff Bezos said earlier today, this is not a sector where it is easy to move fast. Traditional aerospace, I think often suffers from slow decision making speed and it's, and
- [42:33]
Antonio Neri, HP CEO
I know how aerospace gets there, but
- [42:35]
Bloomberg Tech Main Host (Ed)
I mean, you know, you're building things that often have, you know, hazardous operations, life safety critical missions. And so again, not every decision is like that though. So you end up making every decision as if it's life safety critical. Let's talk more about the challenges space presents, the things we send up into it. Mackenzie Listrup joins us, a former director for the Goddard Space Flight center, which is NASA's primary hub for building and operating scientific satellites. Now principal consultant, Paradise Services. And just an absolute exit expert in space systems. So there are different degrees of orbital compute, right? Different variations of a space based data center. But at the extreme Space X is presenting, it is at hyperscale. It is running massive AI workloads, inference. Explain the distinction between those three grades of compute and why it's hard.
- [43:31]
Mackenzie Listrup, Space Systems Expert
Absolutely. So the first is really on orbit at edge computing. So this is about taking, you know, imagery data, radar, weather, maritime, climate or defense data that's collected in space and then using, you know, I, you know, edge computing, some kind of inference, some kind of processing in the space system itself before sending it down to Earth. So this is real, this is near term. So satellite sends raw data to an orbital compute node. The node performs filtering or AI ML inference and then only the higher value or smaller data products get sent to Earth. So this is a process that the company AXIOM says that it deployed as a prototype unit on the International Space Station and, and has an orbital data center node as well. Now the second is really resilient or sovereign storage and computing. So infrastructure that is physically separated from terrestrial threats, so disasters, political borders or ground based attacks that also has some real defense, continuity of government and critical infrastructure use cases, but still not entirely explored. Now the third is hyperscale AI work in orbit. And this is really the moonshot. It's potentially enormous, but it is not merely about the launch cost or even the orbit orbital downlink nodes. It really requires some challenges to be met in power, in heat rejection, in radiation tolerant computing, high bandwidth optical networking, orbital reliability and other issues. So it's a, it's a real challenge.
- [45:09]
Bloomberg Tech Main Host (Ed)
So let's zero in on some of those challenges, right? Your job was to get systems ready to be in the environment of space. The sci fi nerd in me thinks, thinks about the vast coldness of space, but in thermal it's a very different challenge, right?
- [45:23]
Mackenzie Listrup, Space Systems Expert
It is. So you know, space is not cold sometimes in the way that people think. And I would say that in orbit a data center is a heat engine first and foremost and a compute platform second. So a terrestrial data center rejects heat through chillers, through air, water or liquid cooling, through evaporative systems as well. Now in orbit there is no convective air heat sink. So heat has to be moved through the spacecraft and then radiated away. So this means that radiator area, radiator emissivity, the attitude control of the spacecraft, contamination, degradation, these are all effects that have now become first order economic variables.
- [46:09]
Bloomberg Tech Main Host (Ed)
And then there is the power challenge. There's the belief that the sun is always on infinite solar panel as long as there's nothing blocking the path. But again, it's not as simple about that. Is that when it comes to access to that power?
- [46:24]
Mackenzie Listrup, Space Systems Expert
Correct. So you know, the pitch for orbital data centers is often that hey, sunlight is stronger and more continuous in the right orbit. Google's project Sun Catcher argues that so solar panels in the right orbit can be up to eight times more productive than on Earth. So that is true. But just because you have space energy access doesn't mean that you have space energy infrastructure. So you're going to have to deal with some real constraints. And that means the close formation, orbital dynamics, the radiation effects, the thermal management, the ground communications, all of this depends on a reliable access to power. And that means power generation, but also power storage, distribution. Again, that thermal issue of heat rejection and also redundancy. Now this has to be flight qualified. It also has to be able to be reliably operated in space and maintained and maintenance is one of these hidden costs right now that we're not talking a lot about.
- [47:23]
Bloomberg Tech Main Host (Ed)
Mackenzie, we have literally 10 seconds. Do you think SpaceX can do it?
- [47:28]
Mackenzie Listrup, Space Systems Expert
Well, they're a vertically integrated company that has demonstrated many technical challenges before, so I wouldn't count them out.
- [47:35]
Bloomberg Tech Main Host (Ed)
Mackenzie Listrup, principal consultant, Paradox Services, former director to NASA's Goddard Space Flight center and a top expert in space based systems. And get used to that. We're going to be talking about it a lot. That does it for this edition of Bloomberg Tech. Really interesting mix of market, market news, political news, but the technology sector has a lot going on right now. Recap on the podcast Apple, Spotify, iHeart and all of the Bloomberg platforms from San Francisco, this is Bloomberg Tech.
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Public Investing Representative / Show Support Announcer
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