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- [00:01]
IDA Ireland / Optum Representative
With the highest number of young STEM graduates per capita in the eu, Ireland has the people and skills your company needs to succeed here. IDA Ireland, the national investment development agency, can help you find and nurture the people you need to internationalise and thrive. Our talent is just one of the extraordinary benefits Ireland has to offer. Learn more@idailand.com invest in extraordinary
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Animal Rana
the thing
- [00:31]
Ed Ludlow
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.
- [00:51]
Mark Gurman
Now we're helping companies get smarter by
- [00:53]
Ed Ludlow
putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business.
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IDA Ireland / Optum Representative
IBM Healthcare doesn't always work great. If you've ever waited on a refill or couldn't schedule an appointment, you get it. That's the kind of stuff Optum is changing. They're using data and technology to integrate patient care, pharmacy and everything else. So healthcare is connected, not complicated. What's that look like? Cheaper prescriptions that are easier to get and care that looks at the whole person how you need it. Optum is helping make healthcare work as one for everyone. Everyone. Learn more@business.optum.com Bloomberg Audio Studios podcasts Radio News. Bloomberg Tech is live from the heart of Silicon Valley with Ed Ludlow in San Francisco.
- [01:52]
Ed Ludlow
This is Bloomberg Tech. Coming up, Apple bets big on Broadcom for the future, expanding its custom chip partnership through 2031. Plus, Microsoft eyes a massive reorganization of its exports unit, with plans to eliminate 20% of its staff over the next year. And SK Hynix begins marketing its U.S. listing with plans to sell roughly $28 billion in American Depository receipts from New York City this week. Welcome to Bloomberg Tech. This is what markets look like. Chip stocks are rebounding, semiconductors high today as investors return to the trade after last week's sell off betting the spending cycle still has legs. The Philadelphia Semiconductor Inde Index is being led by Broadcom, one of the biggest points contributors. But by the way, AMD is really accelerated into the session, up almost 9% or so. Our top story is Broadcom. Broadcom isn't just leading the rally, it's also at the center of the biggest news item the stock is higher after announcing a new agreement with Apple that extends the partnership through 2031. Broadcom will develop custom chips for multiple generations of Apple products. Bloomberg's consumer tech and Apple Managing editor Mark Gurman Also here in New York City. Super interesting. There is a historic relationship with Apple and Broadcom we can get to. To me reading your report, this might be a server related. What do we think multiple generations of products means?
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Mark Gurman
You know, when partners to Apple put out these press releases, they're as vague as possible. They're not going to come out and say what it is. But what I'm telling you is that this is specifically for a new server chip that Apple is developing. They're using some Broadcom technology. This is called ASIC chips and ASIC chip silicon is support, single purpose silicon.
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Ed Ludlow
Right.
- [03:35]
Mark Gurman
You're not going to need that for anything really other than a singular functionality which is processing for AI. And so they're going to be rolling out this chip as early as next year. It's called Baltra within Apple. It's their first server specific chip. Right now for the Apple intelligence servers they use M2 processors. Those were made for Macs. This is going to be a version of the M5 Ultra, which is going to be the most powerful chip ever. But this is going to have 4X, that performance on the GPU and on the CPU side. This is going to have some Broadcom technology in there.
- [04:09]
Ed Ludlow
You heard it first here on Bloomberg Tech, the Stock's like up 4% at one point. It was up 6% and on track for its best day since February. So on the Broadcom side, investors saying that this is a big deal for them. What you were just describing we're probably most familiar with in the context of the tpu, Google's tpu. Right.
- [04:25]
Mark Gurman
They similar tech.
- [04:26]
Ed Ludlow
So like the history is that Broadcom had a part in the handset on the iPhone side. Is there anything that we know about broadening this relationship to devices away from the server?
- [04:36]
Mark Gurman
Yeah, this is super exciting for Broadcom and Broadcom investors. Obviously you're seeing the stock bump that you mentioned because Broadcom had been designing combined WI Fi plus Bluetooth chips for Apple for a number of years. They've been designed out of the new generations of Apple products. Right now Apple has their own and one chip. That's right, they do WI Fi plus Bluetooth themselves. Now in a lot of the new iPhones, Macs and iPads, Broadcom had been pushed out. Now they're coming back in for AI and for server purposes.
- [05:05]
Ed Ludlow
Bloomberg's Mark Gurman who leads our coverage of consumer tech and all things Apple, thank you very much indeed. Today's big number, $28 billion. That's the anticipated value of SK Hynix's US listing. According to a filing with the SEC, the South Korean memory chip maker is looking to sell American Depository receipts representing almost 18 million common shares as it kicks off the formal marketing process for its U.S. debut. For more, Bloomberg's Bailey Lipschultz, who leads our coverage of IPOs is here. This is a big one, right? This would be the biggest share sale by a foreign entity in the U.S. but we had the filing hit this morning. Bring us up to speed on what we need to know.
- [05:41]
Bailey Lipschultz
Yeah, the main things to keep in mind, there is indications of interest for about $7 billion of that demand. So 7 out of 28 already being potentially allocated to the likes of CO2 and others who have again kind of prop this up from Cornerstone perspective. Another thing that investors were closely watching was the fungibility of these ADRs or ads is what that really means is can you exchange the South Korean list in shares for ADRs and vice versa? As of as of now, our understanding is that you can take these ADRs and convert them into South Korean shares, but not vice versa. The reason that matters, that's exactly what Taiwan Semi has done. That's why TSM shares that trade here in the US trade at such a large premium relative to their Asian listed shares. So certainly something to keep an eye on as we get underway. A big presentation at 1:30pm New York time is something all investors are going to be tuned into since that's the only real time SK Hynix is going to market this deal.
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Ed Ludlow
This is on the one hand about cash, right? SK Hynix has a really strong position in the high bandwidth memory market. It needs cash to expand capacity. But as you and the team wrote about on July 5, a must read story, there's more to this listing than that. This has to US investors bridging the valuation gap. Just run with it.
- [06:54]
Bailey Lipschultz
No, exactly. I was going to say this is all kind of $28 billion will help fund those expansions, fund those projects in South Korea. But this is about being able to open up the deepest pool of capital here in the US So investors who don't want to trade overnight or simply don't have the ability and their mandate to invest in emerging market companies. This allows them to trade here in the US So you're looking at potentially down the line inclusion in the NASDAQ 1 and obviously retail investor appetite will probably be through the roof just given what we've seen with Micron and other companies and you're kind of bread and butter investors. Those Long only managers who aren't able to invest outside of the US now will have another company to play. As it relates to this memory, memory
- [07:35]
Ed Ludlow
boom that I find fascinating, like the enthusiasm of the market, I don't know that I've recovered yet from the space X ipo. You know, like that week that I was here with you in New York City. The story around the retail allocation investors trying to understand the AI story for a space and rocket company. Do you get any sense yet about how US investors feel about SK Hynix?
- [07:57]
Bailey Lipschultz
It's a pure play and they love Micron for the exact same reason. Obviously this is potentially a debate we have two or three, four years from now. Is this still a cyclical business or is this in fact a revolutionary change where we are not going to be talking about the cyclicality of semiconductors, but when you talk to US investors, there's excitement to have exposure to yet another company.
- [08:16]
Ed Ludlow
Bloomberg's beta lip shots will be here all week on this one. Thank you very much. Despite chip makers rallying hard, Morgan Stanley's Mike Wilson says the trade is entering a new phase with investors potentially rotating out of those stocks and into hyperscalers. I expect the hyperscalers now to stabilize and the semiconductor stocks are going to,
- [08:34]
Bailey Lipschultz
are going to correct.
- [08:35]
Ed Ludlow
That's a good, that's a good development. That doesn't mean the capex cycle is over, but that ebbing and flowing between the two is a natural kind of governing factor because you can't have this divergence Continue. It's unstable. 30% correction in these stocks is, I mean, well within possibility. Let's bring in Janet Newey, head of market analysis at RBC Bruin Dolphin, who says the recent pullback in semiconductor stocks looks more like a healthy consolidation after an outstanding rally than the start of a broad reversal. And here we are after the the long weekend and US holiday and chip stocks are rebounding again. Do you feel like you got that one right?
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Janet Newey
I asked. Thanks for having me. I guess it's just the fundamentals haven't changed. Is the demand that is far outstripping supply at the moment. So I guess my cast from time to time will be spooked by various news. I think last week by Matters, you know, entering the cloud computing arena. But I think, you know, the fundamentals remain very strong and that's why we keep seeing investors buying the deep after some consolidation.
- [09:45]
Ed Ludlow
The more the Morgan Stanley view of rotation, specifically out of chip stocks and into hyperscalers. It's kind of an extension of something we've been talking about in the show for a while the difference between capital expenditure deployers and capital expenditure recipients. Right. How do you view the argument that Ms. Is making?
- [10:06]
Janet Newey
Well, I guess first of all it's right for investors to worry about hyperscalers. Lower cash flow these days is quarterly free cash flows have absolutely plunged whereas it has gone to the chem makers and that's reflected in their share price performance. But on the other hand, I think investors hopefully want to see that one day these investments will come into fruition. It's too early to tell but we already have seen sort of productivity improvement across various industries and I think hyperscalers, they are poised to actually benefit from the increased demand from cloud computing and various services they provide to various corporates. So I guess the attractive point about hyperscaler is that they have really sold off. The valuations are now trading in, most of them are in the low 20s and some even below 20. So I guess you know they have very strong core business models anyway so I think it's right for, for them to gain further attention going forward.
- [11:09]
Ed Ludlow
Is CapEx still the main figure to watch indefinitely at this point?
- [11:14]
Janet Newey
I think near term sentiment will be very much driven by CapEx because we have the upcoming earnings season and I think investors will continue to look at are they going to keep spending at this sustainable pace. Any sort of pullback or even just slowing down a little bit will potentially cause some wobble in the cheap makers. Although I wouldn't, I wouldn't see this as a reversal of that secular trend, I would still view this as a very strong trend in demand. So any sort of pullback won't present buying opportunities as we have seen over the past couple of years.
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Ed Ludlow
Janet, if you've been able to identify any link between what's happening in AI on the infrastructure side, the data center build out and what you see in US economic data. In other words, all this stuff's happening, things getting built, money being spent, who's benefiting from that in the, in the real economy.
- [12:08]
Janet Newey
So directly we have already seen that boosting US real gdp. Our capex spend on air has already been a very strong driver of GDP growth. And secondly I think as I mentioned there has been already some productivity improvement. You can see that the US economy is doing well, whereas actually there's no longer as many jobs needed. We have seen that happening so that there is a reflection of better productivity. So I guess there's also this wealth effect, this trade is suddenly pushing US stock markets to record highs and that wealth in fact is certainly helping with consumer spending, which is translating into real growth.
- [12:50]
Ed Ludlow
Finally, at the end of this week, as Bailey was outlining sk, Hynix will list shares in the US a pure play memory name. There is Micron and there is Samsung. What do you expect that to do for markets? And what kind of from, from your desk at least. What kind of appetite do you think there is for investors to get more access to sk?
- [13:12]
Janet Newey
Well, I will be very excited to see the market impact. I would presume there will be a huge appetite because there's just insatiable demand for memory makers and given this is a pure plate and wasn't accessible by US Investors before and it is basically the leading memory chip maker and also the Micron actually. So it will be interesting if that would divert some of the demand for stocks from Micron. And I suppose again the debate over whether this is cyclical or secular will continue. And I will say on that front, I think the demand is very strong for sure. But obviously Micron, for example, these memory chain makers, they are generating record profits at this point in time and investors seem to be kind of in trouble interpolating these record profits into the foreseeable future that may not ultimately prove sustainable. So the demand could be very strong, but maybe not so sustainable at these kind of rates for, for many years to come. So we have to be a little bit more cautious.
- [14:17]
Ed Ludlow
Janet, Mary, vc, Brew and Dolphin back on Bloomberg Tech. Thank you very much indeed. Now coming up, Microsoft's Xbox slashes jobs and cut studios. Going to have the details. What is a massive overhaul next. This is what shares of Microsoft are doing right when the news broke there was this initial big move, low around 2% decline. We're down just a touch above 1%. We're going to get all the details next. This is Bloomberg Tech. Shares of Microsoft sliding down about a percentage point this morning after the Xbox parent announced a major overhaul of its video game unit, including cutting nearly 20% of staff and divesting its development studios. Bloomberg's Jason Schreier, who leads our video games industry coverage, is with us. Let's start with everything we know, where the impact is in terms of headcount, the studios that will be impacted and also like why Xbox is doing this.
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Jason Schreier
Top line is Xbox is laying off 3200 staff or I should say cutting 3200 jobs. 1600 today and then another 1600 in the coming fiscal year. That second number also includes divestments from four studios with a fifth one plan. Two of them will be sold off to undisclosed Buyers and two of them are going to go independent. And this is all essentially happening because, as new Xbox CEO Asha Sharma has been saying, the business is in a bad place. Asha Sharma calls it a reset where she is restructuring the entire organization in hopes of returning to growth in the immediate future.
- [15:58]
Ed Ludlow
Jason, do we have a sense of, like, where the pain points are? I'm a console gamer, as you know, but not an Xbox gamer. I do use Xbox cloud gaming, you know, and Xbox Game Pass. Right. Like is is the failure in the software side and that they just haven't done well with hit titles or in the hardware space. Consumer technology is just a difficult place to be right now.
- [16:21]
Jason Schreier
It's both. And the two are linked because the way you sell hardware in this business is by making great software for it and ideally keeping it exclusive to that hardware. That's what works for Nintendo with their Switch, and that's what works for Sony with their PlayStation. Microsoft has not been able to pull that off over the last decade, and so their hardware has fallen behind. They have been investing a lot, lot, including, of course, buying Activision Blizzard for $69 billion in the games industry and making content for what they call Xbox Game Pass, their subscription service, basically Netflix for gaming. But that has not panned out. It has not grown. It has actually plateaued.
- [16:57]
Ed Ludlow
Jason, we're showing the other piece that's out today, the tech in depth about how PlayStation on the console side is giving up on the hard disk. I have a PlayStation 5 that doesn't have a disk drive at all. What is the attitude of the consumer right now to gaming? Like, where do we find ourselves in the cycle?
- [17:15]
Jason Schreier
Yeah, so PlayStation, they're saying we are going in terms of software, we are going digital only starting in 2028. And the reason they're doing that is because they looked at a spreadsheet, they looked at their data, and they saw that the majority of purchases on PlayStation are digital. The majority of purchases across the entire games industry are digital. And so they are ditching the disc, which has been extremely extraordinarily controversial. A lot of people are pointing out the problems with that strategy and how many issues it will cause for preservation, for collection, for costs. A lot of. Lot of potential issues there. But they are doing it in reaction to the market, mostly moving to digital purchases.
- [17:53]
Ed Ludlow
There is just so much more to discuss, and luckily, Bloomberg's Jason Schreier will be back tomorrow. Tune in tomorrow for a live Q and A with Jason and myself. It's gonna be on bloomberg.com starting at 1pm Eastern and we will go back through the Xbox story, but so many others that he's broken of late as well. Now coming up in the show, we're going to speak with Runway CEO Cristobal Valenzuela. As the company ramps up its global expansion, there are new hubs in Tokyo, London and in Paris. This is Bloomberg Tech.
- [18:27]
IDA Ireland / Optum Representative
With the highest number of young STEM graduates per capita in the eu, Ireland has the people and skill your company needs to succeed here. IDA Ireland, the national investment development agency, can help you find and nurture the people you need to internationalize and thrive. Our talent is just one of the extraordinary benefits Ireland has to offer. Learn more@idaiirland.com invest in extraordinary support for
- [18:57]
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- [19:52]
Ed Ludlow
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- [20:06]
IDA Ireland / Optum Representative
let's talk about health care for a second. It doesn't always work the way people expect it to. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling the system should just work better for everyone. And that's exactly what the people at Optum are trying to do every day. They're a healthcare company linking patient care and pharmacy services and using data and technology to drive the whole system so care is connected, not complicated for patients and providers. Things like making it easier to get care that looks at the whole person, from primary care doctors to mental health support and even in home care. And then using technology to make sure they all work together. Technology designed to help doctors spend less time on busy work and more time with their patients and those prescriptions. Optum is working to bring costs down, save patients money, and make it easier to get refills. Little by little, Optum is helping make healthcare work as one for everyone. Head to business.optum.com to see how.
- [21:11]
Ed Ludlow
Runway is going global. The AI video company companies opening new hubs in London, Tokyo and Paris, with plans to invest nearly $300 million over the next few years as it scales its business and also its AI research. Joining us now is Runway co founder and CEO Christobal Valenzuela. So I think that there's a clear link here from where your, your priority markets are and where you're growing fastest and where you've opened up these hubs. Explain that.
- [21:39]
Cristobal Valenzuela
Yeah, I think in the subversion of the same, to be honest, we're growing really fast. Of course, in the us that's our biggest market. But we see natural expansions happening both in Asia. So a couple of months ago, we announced Japan and our office there and our presence there. I've been spending a lot of time in the region and our growth there is consistent. So we want to make sure we have more time and more people just in that region. And more recently, we open up two European hubs. We announced London, London News, and Paris that we're announcing today. Both of them are on the heels of just growing the market and are being close to our customers. The Europe is our second largest market and Japan is our third. We're also making inroads in Latin America, so Brazil will start becoming also a hub and of course, Mexico. And so for us, it's more about making sure we're close to our customers, we're close to how we're serving them. And then talent. Talent these days is broadly everywhere. So we need to be also everywhere to hire the best people we can.
- [22:36]
Ed Ludlow
That $300 million commitment, how much of it really is talent, the cost of talent?
- [22:42]
Cristobal Valenzuela
A big chunk of it is talent, specifically research. As you know, researchers are expensive and talent is expensive. And so people is what makes this company really special. And a lot of it is definitely dedicated towards not only growing our research team, but our go to market team in Japan. It's kind of interesting because we've grown a lot there. And traditionally everyone will tell you that in Japan, you need to have a commercial team, a business seem just to be able to sell one contract. And that hasn't been the case for us. We actually have been able to sell into Japanese enterprises and Asia with no commercial presence whatsoever. And so really for us, is ability to double down and make sure we can sell more by having great teams and great people there. And now we're kind of putting time and effort and money into that.
- [23:27]
Ed Ludlow
The debate facing, I was going to say Hollywood, but the industry at large right now has been, you know, what will the impact of AI be on content creation? You know, for one of the blanket expression, how much has that shifted Christobal to not. Not whether they should, but how they should use the technology?
- [23:47]
Cristobal Valenzuela
Well, I think the question of, like, will I will ever be useful in creating content in Hollywood was really a question two years ago at the most. I think these days you could assume, and it's fairly common to assume, that every company, every media, every studio is using AI somehow. I mean, we work with all of them. So we can tell you from the inside that that's actually the case. And so companies are seeing significant impact in their business by using the technology, the models themselves to make content. Just couldn't do before. And we have countless cases of, I don't know, the BBC using it to create content they just couldn't do before. Studios using it to create storyboards or art directions or edits of things. And so for us is that that's kind of like resolved already. You know, Hollywood and media has been all over and has finally fully adopted. We now need to grow really outside of that.
- [24:41]
Ed Ludlow
On the studio side, the Lionsgate relationship is really interesting, right? That you're. You're co developing on projects, but they took an equity stake. Correct. Why? But also, is that something you feel like you could replicate with other studios?
- [24:55]
Cristobal Valenzuela
Yeah, we're replicating related with other studios. Again, if you're a great technology partner to a lot of studios, what you're bringing to the table is the ability for the studios to create content they couldn't do before. And Lionsgate was one of the first and the most vocal kind of proponents of this. But really we're working with a lot more studios and companies in similar models. Some of them don't involve equity at all. It's more about partnerships and to integrate our products into the way they work. And there's so much great ip, there's so much great content out there that needs to be made somehow. And so if you can help them make it, they just want to partner with you. And that's kind of what we've done to make sure that hopefully we'll get to see more interesting stories out there.
- [25:39]
Ed Ludlow
Christopher, just very quickly, where is Runway in its efforts to raise money? Need to raise money to fund all
- [25:45]
Cristobal Valenzuela
of this we've, we've raised almost like every 10 to 12 months. And so we're pretty much probably going to go into that trajectory. We close our series on late last year, so December of last year. So hopefully later this year we'll, we'll announce something.
- [26:01]
Ed Ludlow
Cristobal Valenzuela, Runway CEO expanding outside of its top market, the US To Europe and Asia through Paris, London and Tokyo. Thank you very much indeed. Now coming up is AI a path to prosperity and jobs. Chief Investment Officer Lauren Cassidy of Founders100 ETF is going to join us to explain why she's optimistic and why in the ETF space there's a way of tracking the founder trade, something we talked about in private late stage markets where you make a bet on founders. You can do it in public markets too. She'd argue. This is what markets look like. NASDAQ 100 up one and a half percent. But it's the rebound in chip stocks. That's our top story right now. A big part of it, Broadcom's deal with Apple. But there's other things out there. Bitcoin $62,337 per token. It's half time. I'm in New York City this week. There is a lot going on. Stay with us. This is Bloomberg Tech. Welcome back to Bloomberg Tech. July 6, 2026. This is what markets look like and chips are the big story, really rebounding from a bit of a sell off last week. There are lots of reasons why we're going to get into them in a moment. MicroStrategy is down 2.10 of a percent. It had been down a lot more. Basically they're selling $260 million worth of Bitcoin. There's been this financing overhaul at the company because of the volatility in crypto assets. It's one of the most read stories on the Bloomberg and it accounts somewhat for the trading in bitcoin today. But all eyes on the stocks. The Philadelphia Semiconductor index off session highs but up around 4%. A big reason why Broadcom one of the biggest points gain is it has extended an agreement with Apple for multiple generations of Apple products on custom silicon ASICs. But Bloomberg's Mark Gurman right at the top of the show, you heard it here first. It's all about an AI server chip. So we'll continue covering that as details emerge. It is all about chips today and markets are arguing that is hitting state infrastructure continues to expand. Capex expected to overtake $1 trillion by 2030 and chips are expected to continue generating value through inference workloads. Inference will be here for a long time. Chief Investment Officer Lauren Cassidy of Founders100 ETF is with us on set. And this is part of your argument, right, that we've shifted to the inference phase. The point being though, the inference phase is going to be here for a really long time. You still see value in the chip stocks for that reason?
- [28:25]
Lauren Cassidy
Yes, a tremendous amount of value. We're going to need chips for decades to come. They'll be used for training upfront, but they can be used to your point, for inference for for decades. Even the A100 servers that were created back into 2020 are still in use and we think these are very long lived assets.
- [28:47]
Ed Ludlow
Just to catch our audience points up the A100 again, an older generation of GPU or accelerator from Nvidia. Some of the data points that you and your peers look to is the pricing on renting capacity through those older chips is like through the roof.
- [29:01]
Lauren Cassidy
Yes.
- [29:02]
Ed Ludlow
And the latest generations of chips are really hard to get hold of.
- [29:05]
Lauren Cassidy
Exactly.
- [29:06]
Ed Ludlow
What does that tell you?
- [29:06]
Lauren Cassidy
Yes, that we are still in the early innings and that we have a long road ahead of us and it's going to over time create a tremendous amount of prosperity and jobs for our country. We're just going to go through the transition period first, but we're very positive long term.
- [29:22]
Ed Ludlow
There are lots of different themes and arguments here. So one of them is we were bound to see a sort of pullback in chip stocks eventually because of the dramatic performance over a longer time horizon. Morgan Stanley and Mike Wilson are saying, well actually we think we'll see some rotation out of chip stocks and into hyper. Hyperscalers because that's where the sort of economy is at. And then there's the idea. Well actually there's a lot of potential upside. Memory still tight. SK will list this Friday which is the dominant theme.
- [29:50]
Lauren Cassidy
Yes. So actually to extend that, we see a broadening from just not just the chips and the memory names and to the hyperscalers but also to software names, to security names, observability. There's also different areas of AI and we think that we are already seeing some broadening of participation in the tech complex and we expect that trend to continue this year.
- [30:15]
Ed Ludlow
Okay, super interested in you, the firm and the idea of tracking founders.
- [30:20]
Lauren Cassidy
Yes.
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Ed Ludlow
On Bloomberg Tech we have a lot of late stage VCs that will say even at that late growth stage we're backing companies where the intellectual capital is in the founder.
- [30:30]
Jason Schreier
Mm.
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Ed Ludlow
You seem to be saying like actually there's there's lots of different ways through the ETF market you could do the same.
- [30:37]
Lauren Cassidy
Exactly. So the founders 100 ETF ticker FFF invests in 100 of the 200 largest companies that are founder led that are listed on the US exchanges. We really care a lot about fundamentals so we look at strength of the balance sheet, quality of cash flows and earnings and as well as value valuation and deciding each quarter the hundred founders that we want to own.
- [31:01]
Ed Ludlow
I'm also looking at Space X. You have a lot to say on Space X just to catch the audience up again. $161 a share essentially IPO to 135 opening trade was 150. What's that experience been like for the last few weeks?
- [31:14]
Lauren Cassidy
Yes. So as focusing on founders, Elon is one of the greatest founders of our generation and we were day one buyers of Space X at 150 a share. We are very excited about what he's building. Our thesis is really vertical integration. So terrafab, he's going to have his own chips and memory, not have to wait on Samsung, not face shortages or volatility in prices if he's providing them for himself. He's going to have GROK as his LLM, he'll have X as his expert know network. So Twitter really provides the insights in real time that he can feed and can add to insights and intelligence. He then has Starlink for the communications globally and inter terrestrially over time and then also Space X to build it all in space over time. We think that he's going to be the low cost provider of data centers
- [32:13]
Ed Ludlow
through through orbit, orbital compute. Maybe a little bit more near term but what's your five year outlook for Space X?
- [32:19]
Lauren Cassidy
Yes. So we really think with no night, no clouds and no NIMBY up in space, that Elon Musk has a once in a lifetime opportunity to put data centers there and really compete on price against the terrestrial players in including Amazon, Google and Microsoft.
- [32:41]
Ed Ludlow
We just have about a minute left. But you have this sort of unwavering belief that in the end AI is going to revolutionize the U.S. economy.
- [32:49]
Lauren Cassidy
Yes.
- [32:49]
Ed Ludlow
And the global economy. What is that founded on?
- [32:52]
Lauren Cassidy
We're already seeing early evidence that companies that are the heaviest investors in AI actually two years later have 10% greater employee headcount and that's led by entry level workers. We've had a lot of fear in the early days that some of these initial layoffs that we see as rightsizing are going to be permanent. But we don't see that Kevin Marsh just said a few days ago, you know, who knew that the Internet would bring a million and a half uber jobs? We think there's all new industries that are going to be created from AI in the years ahead.
- [33:26]
Ed Ludlow
Founders100 ETF Chief Investment Officer Lauren Cassidy Great to have you here in New York York on Bloomberg Tech. There's more tech headlines to go through. Let's get to Bloomberg's Johara Anand, who's standing by.
- [33:35]
Lauren Cassidy
Hira hi Ed, Great to have you here in New York, but it's time now for Talking Tech. First up, prosecutors in Singapore have filed new charges against the key suspects in a money laundering case tied to the alleged transfer of Nvidia chips to China. The suspect, a businessman born in China, pleaded not guilty. Prosecutors say he misled LED server manufacturers in order to obtain hardware that may have included Nvidia AI chips restricted under US export controls. Plus, ByteDance and Alibaba are dialing back some AI companion features as China rolls out new regulations. The rules take effect later this month and are aimed at preventing users from becoming too emotionally attached to human like chatbots. And a Samsung union leader who secured bonuses of up to $400,000 for some workers is now facing backlash. That's because employees in less profitable areas received much smaller payouts. So thousands of members have quit the union, weakening its bargaining power, while others are wearing black to work to show their discontent.
- [34:43]
Ed Ludlow
Ed thank you, Yuhara. Now coming up, countries are shelling out to develop and control the battlefield tech of the future. We're going to discuss the new $2 trillion arms race next. This is Bloomberg Tech.
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Ed Ludlow
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- [38:18]
Ed Ludlow
A $2 trillion race to develop new battlefield technology is underway. The spending spree echoes the Cold War buildup, but instead of nuclear stockpiles, think drones, AI and hypersonic weapons. Bloomberg's Global Defense editor Jerry Doyle wrote today's Big Take and joins us now. You know the number is staggering in some sense to others, you know, maybe that's what you'd expect take us inside the big take. What is the point that we're getting at the top?
- [38:46]
Jerry Doyle
Well, the point we're getting at as much as you described in the intro. We're used to thinking of an arms race in these Cold War terms of building up enormous stockpiles of varied types and huge numbers of nuclear weapons. But we sort of move past that to the point where there are new technologies that countries think could reshape the battlefield, could give them an insurmountable edge in whatever future combat looks like. And those are things like AI, those are things like hypersonic weapons, those are things like the militarization of space and drones. Some of these we've already seen in action. We've seen drones in heavy use, obviously in Ukraine in the last four years. We saw them also surface quite a bit in the Iran war. We've seen hypersonics used in the Iran war. And we even saw. And in Ukraine, and we even saw the US say that it had used AI to help plan its strike campaign against Iran. So some of these technologies are already in use, are already surfacing. There might be in their, you know, sort of initial forms, but they're developing into things that the countries that can afford to get in the game think will be massive game changers.
- [39:58]
Ed Ludlow
There's been a lot of activity in private and in public markets, right? Lockheed even today buying Ultramarine for almost three and a half billion dollars. That, that is out there, the legacy prime spending, buying different properties in the submarine space. What I think is interesting about your story as well is that unsurprisingly, it is the US and China that are the biggest spenders. Is there any difference in approach that they're taking to AI on the warfield?
- [40:25]
Jerry Doyle
Well, China has much closer links between the government and the private sphere, so there are undoubtedly a lot of investments in and developments happening behind the scenes on the commercial side that immediately are able to be put into use on the government side. Whereas, of course, in the US there's a lot more separation. Obviously, the military organizations like DARPA are trying to develop AI tools on their own, but there are massive companies doing this as well. And those developments don't always immediately make their way into the government's hands.
- [41:02]
Ed Ludlow
Bloomberg's Jerry Doyle with the big take, thank you very much. Sticking with advancing defense tech in a case study on das, which develops drones and secure wireless communications, has agreed to buy autonomous aircraft maker Design Technologies. The cash in stock deal worth over $875 million will turn on that into a full Service autonomous defense technology platform on this Chairman and CEO Eric Brock is with us. I is think this is really interesting, the structure of the deal, the timing, the why, but, but essentially, you know, what is it you've been able to acquire that you didn't have or that you couldn't have done yourself?
- [41:39]
Eric Brock
Eric, it's a great question and firstly, thank you for having me on the show. And it is an important day for ondaz. So what we're seeing in terms of opportunity is that we're in the really the early innings of a massive, massive adoption cycle around unmanned and autonomous systems. And this is after a long period of what I would call foundational work in terms of developing and maturing the tech stack. So the things you're seeing today in the battlefield were really started to be incubated well over a decade ago. And for Ondas, you know, the opportunity we're seeing in how this market's going to evolve is we think there's a tremendous number of really valuable and critical technology platforms being developed. However, we need to bring them to the market and scale. So that means we have to scale supply, supply chain, fuel support and services and sustainment and essentially industrialize this industry. So with design, it was an amazing opportunity for us to really deepen the portfolio that we have been building previously, both through internal activities as well as acquisitions. So design for us is where across now what we call persistent isr they bring to what is already a very powerful and existing counter drone portfolio at Ondas. So now we're having wide, wide capabilities and we're just going to be delivering those now at scale to customers.
- [42:55]
Ed Ludlow
So that bit I'm interested in, you have drones, counter drone systems and the communications tech, who is the customer? You just basically want to be a one stop shop for the Pentagon or it's more complex than that.
- [43:07]
Eric Brock
Absolutely. So clearly the Department of War in the Combatant commands and armed services branches, the United States are critical customers for us. But what we're doing in terms of business model is really creating a, a global operating platform so we can deliver these technologies to, to allied countries and militaries. So that's in the Middle east, that's in Europe in a big way in the United States, which of course is the largest market for us.
- [43:36]
Ed Ludlow
Eric, how able are you to do business with US allies away from the United States as a customer?
- [43:47]
Eric Brock
Yeah, so it's become more complex. We've come as we've seen military doctrine and geopolitics evolve, there's an extreme effort or emphasis on What I call localization. So, so, for example, made in America policies mean the technology platforms you're developing and bringing to the US have to be supported with US Supply chain, have to be sold and serviced and sustained by US Citizens. The same thing's happening in Europe. Right. We've got, we're making Europe great again. So what we're doing there is we're partnering with local defense and industrial companies who bring expertise in around markets, they bring supply chain scale and they build, bring the ability to support these activities in the field. I think that's the way we're going to have to grow businesses now. You know, you can still be global, but you have to be very local. And that's the core tenet of our business model.
- [44:36]
Ed Ludlow
You structured this as $200 million in cash and then about 675 million in stock with basically a lockup for six months. Why structure it that way? And how much room do you have to do more M and A to go out and get properties you think add to add to what you do?
- [44:54]
Eric Brock
Sure. So I'll start with the latter first. We have substantial capacity to continue to do, to evolve what we call the core core and strategic growth platform. And I do believe that continuing to expand the portfolio in our operating platform through acquisitions is going to be incredibly valuable for our investors and our customers and partners. So, you know, in terms of why we structure the deal the way we did, our invest, the counterparty Highland Partners, who was the majority owner of Design, of course had liquidity needs. There's going to be taxes and, and to be paid. So we did include cash in the deal. At the same time, they were very eager in partnering with Ondaz. They're super bullish on what design does. They know the ramp there and they believe in our business model. So, you know, so, so Highlander and the investors of Design are more than happy to take on shares because they see quite a bit of upside in both the near term and in longer term.
- [45:49]
Ed Ludlow
Eric, I want to go back to the Bloomberg big take that. Our defense editor, Jerry Doyle was outlining the headline the $2 trillion race for the Control of the Future Battlefield. We got into this idea that unsurprisingly, the United States and China are not just the biggest spenders, but if you look at China very closely aligned with private industry, how does that impact you on this? How does that put pressure on you or give you an opportunity in this environment?
- [46:16]
Eric Brock
Well, certainly there's the arms race is, is started right. And it's not a question of of, of, of will we be able to develop these unmanned systems or not or we will be able to produce the drones? We absolutely will be able to. At the same time there are challenges around how we're localizing the business. Of course is well understood that over the last 20 plus years we have de industrialized in the United States. That means the supply chain has moved to China. And I think what you're seeing around policymakers ranging from the White House to Congress to the Pentagon, there is a significant emphasis on rebuilding our defense industrial base and we're going to be participating in that. And I think when you, when you think about strategies that Ondus is deploying and others in our industry on all sides of the table, vendors, supply chain producers and manufacturers, we have to bring scale, right? So we have to in terms of industrializing, we have built hundreds and hundreds of our corporations, home drone companies today. We need to put them on operating platforms so we can get the scale and unit economics that will justify bringing those investments here to the US to industrialize. And I think that cycle is already well on its way and I'm very optimistic that, that we're going to be able to rise the occasion. We will have exceptional unmanned autonomous systems in leadership in this sector for sure.
- [47:33]
Ed Ludlow
Eric Brock, CEO of Ondas who agreed to buy or talk autonomous aircraft maker design for $875.8 million. Thank you very much. Coming up, we have more details on SK Hynix's US Market debut. We're going to talk a little bit about Broadcom and Apple. Stay with us. This is Bloomberg Tech. Let's get back to Broadcom and Apple's partnership. Bloomberg Intelligence president's out with a note saying this expanded partnership means Apple will quote, likely have to increase its capex over the next few years amid a greater push to add more AI features across its products. Joining us now is Bloomberg Intelligence senior analyst Animal Rana. Out with the react. Take us a bit more into it. Why would they have to raise capex if they're going to go bigger on Asics?
- [48:27]
Animal Rana
Yes, one of the things we realized that if you're going to do more inferencing both on device and outside and in the case of Apple, they're going to be using cloud services from let's say Google or anybody else. But they're also going to do their private cloud set up as well, which means more data centers. Now we all know for data centers you would need chips. Now whether you go and buy them from Nvidia or you can build your own Custom chips which we have seen that you know, you know that Google has its own chips, Amazon's built its own chips and it's today's announcement and thanks to Mark Gurman for actually reporting that you know, that agreement could be related to the servers that Apple is investing. So I mean if they are going to be adding more, more of their custom chips for AI servers, you know, where is that going? It has to go. So I mean I think it all turns nicely but at the same time and remember how much does Apple spec in capex? Nothing compared to Microsoft or Amazon and the others. So it's not going to break their free cash flow nature but it is going to go up compared to what
- [49:28]
Jerry Doyle
it has been real quick.
- [49:29]
Ed Ludlow
Do you think the investors will cheer that though? You're absolutely right. You know Apple's stock story has been completely detached from, from the capex story of the hyperscalers. People have almost been like come on Apple, spend a bit of money.
- [49:43]
Animal Rana
Yeah, but again as I said, you know, if they are at 3% of of their revenue right now, which is nothing again you know, 59 billion, if it goes to even 4% of revenue or three and a half, 18 billion, 20 billion, it's nothing compared to how much they bring in every year. So if they, if Citi is going to help them sell more phones down the road, adding another 5, 10, 15 billion is not going to, you know, to be honest break the bank here.
- [50:06]
Ed Ludlow
Bloomberg Intelligence is an runner very quick with the react on this Apple Broadcom deal. Thank you very much. Well it's not exactly Terminator 2 but Reddit is using AI to fight AI. The platform which licenses content to chatbots and Gemini has become a target for marketers trying to plant posts that AI chatbots might repeat as genuine human opinions. Reddit says it's new automated System has caught 25,000 of these posts and cut users exposure to them by 20% compared to last year. Okay, that does it for this edition of Bloomberg Tech. It's day one. I'm here in New York City all week. There is a lot going on. I want to check really quickly on those big stories. Broadcom up off session ties but about 4%. Apple now 1.6% higher. An extended multi year agreement for multiple generations of products. We gave you those details. Microsoft off session lows but still down a percentage point because Xbox cutting Jobs closing studios now bring your Xbox questions to an interactive live Q and A livestream. Tomorrow I'm going to be speaking again with Bloomberg's video game industry reporter Jason Schreier. We'll pick up where we left off today, and we will take your questions from the audience. Bloomberg.com 01:00pm Eastern Also, check out the pod. You know exactly where to find it online and on Bloomberg. This is Bloomberg Tech.
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Eric Brock
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Ed Ludlow
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