China's Moonshot, Netflix's Slump & Greylock's $1.5B Bet

Summary

Bloomberg Tech – Episode Summary

Episode Title: China’s Moonshot, Netflix’s Slump & Greylock’s $1.5B Bet
Date: July 17, 2026
Host: Emily Chang (Bloomberg Tech)
Main Theme:
A fast-moving episode focused on three major storylines driving global tech news: China’s surprise leap forward in AI with Moonshot’s Kimmy K3 model, Netflix battling growth and content concerns, and legendary VC Greylock announcing a massive new AI fund. In addition, the show explores broader ripple effects on markets, the credit and bond environment for hyperscalers, rising competition in the AI model race, Apple’s unique approach to AI and China, and the changing landscape of space and private investments.

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1. China’s AI Moonshot & Global Market Reaction (01:53–10:15, 39:20–43:41)

Key Points:

• China’s Moonshot startup stunned the AI world releasing the Kimi K3 model:
  • 2.8 trillion parameters.
  • Cost-effective: $3 per million input tokens, $15 per million output tokens.
  • Claims to rival OpenAI and Anthropic – far cheaper to run.
  • Industry worries about whether “the spending spree” on AI across the globe is now justified.
  • U.S. markets (NASDAQ 100, SOX/Semiconductor index) dropped sharply on the news.
• Geopolitical & Policy Developments:
  • President Xi Jinping made his first-ever appearance at the Shanghai World AI Forum (05:11), signaling personal and political support for Chinese AI dominance:
    • Pledged $295 billion for new nationwide compute infrastructure.
    • Argues for "AI for all," especially the Global South—framing China as the more equitable technology partner.
    • Urges guardrails and global cooperation, echoing some U.S. concerns.
• AI Model Controversies:
  • Rumors of “distillation” practices: Chinese firms possibly using outputs of U.S. models to cheaply train their own. China denies, but it’s a continuing friction point. (04:04, Mike Shepherd)
• Investor & Market Angst:
  • U.S. tech stocks, especially in AI and semiconductors, face profit-taking, questions about ROI, and a market recalibration on hyperscaler spending.
  • Bond markets: Concerns over hyperscalers running up debts to fund AI; AI bonds generally underperforming (07:57–10:15, Tessos Vosos).
• Greylock’s Some Motto cautions:
  • Benchmarks aren’t the same as real-world performance.
  • Kimi K3 may be less "token efficient" than its U.S. rivals despite its cheap pricing.
  • The “best model” narrative is more nuanced—Incumbents like OpenAI/Anthropic maintain defensive moats with real revenues, ongoing innovation, and first-party products (39:42, 41:55).
  • "The only mistake one can make is underestimating the size of this overall wave." (43:26, Some Motto)

Notable Quotes:

• Mike Shepherd (Senior Tech Editor):
  • “This really does put China on the map once again with a model that rivals some of the best coming from Silicon Valley... an important friction point between the US and China in this broader global race to dominate the emerging technology of AI.” (04:04)
• Some Motto (Greylock Partner):
  • "It reminds me a little bit of when the deep SEQ moment happened last year... Benchmarks are imperfect. It's not until that model's had time to percolate in the real world that we can get a true sense for the trade-offs..." (39:42)
  • "The only mistake one can make is underestimating the size of this overall wave." (43:26)

Important Timestamps:

• [01:53] – Host introduces Moonshot’s Kimi K3 release and immediate market reaction.
• [04:04] – Mike Shepherd on Chinese AI strategy and U.S. tension.
• [05:11] – President Xi’s policy and global AI leadership goals discussed.
• [07:57] – Bond market perspective on tech’s AI-fueled debt.
• [39:20–43:41] – Some Motto (Greylock) on Kimmy K3, market dynamics, and the AI “token economy.”

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2. Netflix: Growth Concerns & Content Questions (10:15–16:59, 43:41–45:58)

Key Discussion Points:

• Netflix shares plunge: Down 8% after earnings; investors worry about second straight quarter of slowing revenue growth (11:00, Emily Chang).
• Highlights from the Quarter:
  • Healthy membership and margins, recent price increases accepted by users.
  • Still expects to double revenue this year, but QoQ “softness” concerns the Street (11:52–12:21, Helena Wang).
• Shifting Strategy:
  • Pivot to more live events (including sports, podcasts, gaming) in response to changing user behavior—competing for “eyeballs” not just with other streaming services, but TikTok and YouTube Shorts (12:57–13:42).
  • Increased role for AI: Product improvement, cost reduction, margin expansion (13:42).
• Content is King:
  • This year’s slate (72 Hours with Kevin Hart, NFL games) seen as less compelling than mega-hits like 'Wednesday', 'Stranger Things', 'Squid Game', which previously drove subscriber surges (15:07, Helena Wang).
  • Concern about “stickiness”: Some shows do not reliably keep viewers engaged; overall engagement, however, not yet declining per company reports (16:13).
• Investor Take:
  • Despite a pullback, strong pricing power remains and the correction may be a buying opportunity, per Helena Wang.
  • The broader market, however, needs signs of reacceleration before sentiment improves.

Notable Quotes:

• Ted Sarandos (co-CEO, Earnings Call):
  • “It takes great artists to make something great and AI is not changing that. AI will give creators better tools... Movies are being made by people who make movies; AI provides them with better tools.” (10:44)
• Helena Wang (Philip Securities):
  • "Membership trends... really healthy... But there is definitely a long-term challenge for [Netflix] as competition for screen time intensifies." (11:52–12:57)
  • “Content is definitely not as exciting when you compare to last year... investors are constantly looking for signs that there’s going to be reacceleration...” (15:07)

Important Timestamps:

• [10:44] – Sarandos on Netflix’s approach to AI and creativity.
• [11:00–12:21] – Chang and Wang discuss Netflix’s quarter.
• [13:42] – Netflix’s planned use of AI.
• [15:07–16:13] – Content slate and engagement issues discussed.
• [43:41–45:12] – Geeta Ranganathan (Bloomberg Intelligence): “The main point is they somehow have to turn the narrative around. On this whole deceleration in revenue growth… it’s going to be really hard to get behind this...”

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3. Greylock’s $1.5B AI Bet & Private Market Insights (35:45–43:41)

Key Points:

• Greylock closes its 18th fund: $1.5 billion focused on early-stage AI across infrastructure, cybersecurity, fintech (36:24, Some Motto).
• Strategic Focus:
  • Despite famed bets on Anthropic and OpenAI (model layer), now investing across three AI layers: foundational models, infrastructure (ex: “agent cloud” for new AI workloads), and applications (e.g. autonomous ops agents).
  • Belief that the definitive wave of AI applications is just beginning (“equivalent of 2008 or 2009 in mobile”).
• Interpreting China’s Kimi K3 market shock:
  • Vibrancy and competition are healthy, but real-world performance trumps benchmarks.
  • The cost debate is more complex than token pricing; Kimi’s “token efficiency” lags U.S. models.
  • The model race is dynamic, with OpenAI and Anthropic expected to release new, improved models soon.
  • Greylock sees space for both closed and open-source models, and enormous further growth in the AI “token economy.”

Notable Quotes:

• Some Motto:
  • "We're just getting started in this era of technology." (38:50)
  • "The only mistake one can make is underestimating the size of this overall wave." (43:26)
  • “Benchmarks are imperfect... it’s not until that model’s had time to percolate in the real world...” (39:42)
  • “I’d be careful to jump to the conclusion that Kimi is now competitive with the best. Certainly on some benchmarks, but it’s competitive with, I'd say, one generation prior.” (42:32)

Important Timestamps:

• [35:45] – Introduction to Greylock’s $1.5B fund.
• [36:24–39:42] – Some Motto details Greylock’s investment approach and AI strategy.
• [39:42–43:41] – Discussion of Kimi K3, open-source vibrancy, and the real economics of AI development.

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4. Apple: Strategic Positioning & China Market Dynamics (21:24–24:00, 32:22–34:43)

Key Points:

• Product Refresh:
  • Major iPad mini update (OLED screen), broad iPad lineup enhancements to justify price hikes caused by memory shortages (21:24–22:23, Mark Gurman).
• Apple’s AI Approach in China:
  • Apple leverages Baidu for search and chatbots in China, substituting for Google and OpenAI.
  • Incorporation of an “Alibaba censorship filter” for ongoing government compliance.
  • All phone model updates must be periodically government-approved (22:38–24:00).
• Apple’s “Safe Haven” Status:
  • Apple’s lower capex and more cautious AI spending now looks like a market advantage as hyperscaler and chip stock momentum reverses (32:22, Ryan Vasilica).
  • Upcoming features: “Foldable iPhone”, “Agentic AI Siri”, brightening long-term prospects.
• Semiconductor sector in “bear market” territory:
  • Profit taking and concerns about chip demand if AI spending slows. SOX down significantly this week (33:53, Helena Wang).

Notable Quotes:

• Mark Gurman:
  • “Phones in China will continue to use on-device Apple models, but there will be a layer on top using Alibaba AI technology that I call a censorship filter.” (23:16)
• Ryan Vasilica:
  • "What used to be seen as a real risk for Apple, that it wasn’t aggressively pursuing AI... that’s now become a real asset." (32:22)
• Helena Wang:
  • “The fact that Apple isn’t participating in AI in the same way... that’s become a real positive.” (32:50)

Important Timestamps:

• [21:24] – Mark Gurman on Apple's iPad lineup overhaul.
• [22:38] – Apple's "censorship filter" in China explained.
• [32:22–34:43] – Apple’s market positioning and impact of chip sector slowdown.

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5. SpaceX: IPO Hangover & Texas as Space Hub (24:00–31:41)

Key Points:

• SpaceX’s setback:
  • Scrubbed 13th Starship test launch, immediate stock drop (down 4%).
  • Shares now below their IPO price little over a month after a record offering (27:23–28:42, Anthony Hughes).
  • IPO “hangover” and overall IPO market losing steam.
• Texas as “Space State”:
  • Texas Space Commission invests big in building a commercial space ecosystem.
  • Major players: SpaceX (Starbase), Blue Origin, Firefly, Axiom, Intuitive Machines.
  • Grants expected to double to $300M by year-end.
  • Broader shift from government-driven to commercial-led space development, boosting Texas’s economy and innovation.

Notable Quotes:

• Anthony Hughes:
  • “...it’s a long-term proposition. Anyone familiar with Tesla knows there’s plenty of ups and downs along the way.” (28:42)
• Texas Space Commission Rep.:
  • “What we wanted to do is make it well known that those companies who had already decided to set up here in Texas, that they didn’t leave and also helped to expand their existing footprint.” (31:10)

Important Timestamps:

• [24:00–31:41] – SpaceX’s IPO aftermath; Texas commercial space boom story.

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6. Additional Noteworthy Segments

Other Market & Tech Headlines

• Google’s Gemini 3.5 Pro AI model delayed: Raises concern Google is falling yet further behind OpenAI/Anthropic (19:29–20:39).
• Databricks seeking new mega-round at $188B valuation (18:27).
• Japanese memory chipmaker Kioxia’s valuation sliced in half: Part of the AI “rally gone too far” narrative (18:27).
• Director Christopher Nolan’s “Odyssey” blowing up the summer box office: Anticipated as year’s biggest blockbuster, featuring IMAX camera technology (45:12–45:58, Mandeep Singh).

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TL;DR: Executive Takeaways

• China’s Moonshot AI model launch stunned markets and raised major questions about the economics and competitiveness of the global AI race, roiling U.S. tech stocks and igniting a policy debate.
• Netflix’s growth is plateauing, with content not matching last year's hits—forcing the company to pivot into new verticals and further embrace AI for efficiency, while investors hope for a reacceleration.
• Greylock’s massive new AI fund signals unshaken VC confidence in a vast, still-maturing AI “token economy,” even as the public market cools and U.S. tech giants face tough questions on ROI.
• Apple benefits from a more measured AI strategy and faces fewer “capex risks,” while adapting its technology in China to meet complex local regulations.
• SpaceX’s IPO hangover and Texas’s rise as a commercial space hub highlight sector turbulence and new winners in tech’s next frontier.

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For anyone following global tech or investing in it, this episode’s throughline is clear: The AI and innovation arms race is only accelerating, but smart money, strategic caution, and global positioning are more critical—and more complicated—than ever.

Transcript

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[Bloomberg Tech Host (likely Emily Chang)]

This is Bloomberg Tech coming up. The global air race is accelerating as Chinese startup Moonshot says its latest model can compete with with the best from OpenAI and Anthropic. Plus, Netflix shares tumble after the streaming giant warns of slowing sales growth for a second straight quarter. And Greylock, one of the oldest venture firms, just raised $1.5 billion for its 18th fund. We speak with partner some modem let's get straight to our top story. Technology stocks are under pressure all around the world this Friday, and the catalyst is a surprise out of China. I start up Moonshot has unveiled Kimmy K3, a 2.8 trillion parameter mod model it says can compete with the best from OpenAI and Anthropic. It charges about $3 per million input tokens and $15 per million output tokens, basically dramatically cheaper to use than many leading AI models. Despite performing at the frontier, investors are drawing parallels with last year's deep seat moment and questioning whether the industry's enormous spending spree is becoming harder to justify. Here's what's moving and here's where the pressure is. Right now we're off session, but the NASDAQ 100 down 1.7%. The Sox down almost 3%. The Sox is on track for its biggest weekly decline since April of 2025. Right now, it's trading at its lowest level since about early to mid May. The NASDAQ 100 is not far off that weekly drop milestone either, about a percentage point away from its biggest drop since April of 2025. The individual movers that compute names that we're looking at one point, Apple, is now down modestly 2, 10 of a percent. It is very close and at one point did overtake Nvidia as the world's most valuable company. But basically the market's under pressure generally. Let's get to Bloomberg senior tech editor Mike shepherd and let's talk about China and I mean, Shep, let's start with moonshot and Kimmy K3. I will try to get as much of the detail of this release as possible. And the market reaction is clear. But what else do we know?

[Mike Shepherd]

Well, what we know is that this really does put China on the map once again with a model that rivals some of the best coming from Silicon Valley. And it also echoes in a way, if you ask around town here in Washington and certainly among some of the companies here in the US that some of these models that China is putting forth may have been built on the backs of this practice known as distillation, where results are harvested from the outputs of American AI models to build this rival generation of chapter bots in China on the cheap. China has rejected a lot of those claims, and yet it certainly is a friction point between the US And China in this broader global race to dominate the emerging technology of AI.

[Bloomberg Tech Host (likely Emily Chang)]

Chinese President Xi Jinping has been out staking his claim of leadership in the field of AI, talking about China's domestic prowess in AI, but also kind of taking policy action to support what we see from from Moonshot. What do we need to know about what President Xi has been saying this week?

[Mike Shepherd]

Well, it really earlier today he made a debut appearance, his first ever, at the Shanghai World AI Forum. This is an event held annually there. But this really signified his personal stamp on China's push to lead in AI. Earlier this year, the government there had agreed to put as much as $295 billion toward nationwide interconnected network of computing hubs, data centers to really power the nationwide push to ensure that there is enough compute to go around to support all of these startups that are developing models like Kimi and others that we have been talking about on this program. And then she is also making this not just a message about China, but about the world. He is calling for AI to be something distributed more equitably around the world. He pitched this message to the globe Global south, saying he wants to see AI for all countries, not just the richest and most powerful. And that really played to concerns that we have heard from decades from developing nations that they are the last to bear the fruits of any big technological advance. And I many countries in the Global south have been watching advances by the US and by China, wondering when they would get a piece of the action. And she is making an offer to them that look, if you sign up with us, you will, you will get your fair share. He is also calling for some guardrails on the technology. He, he sees, just like officials here in the US do, some of the security risks potentially not only to China's national security, but the global security. But he is also calling for cooperation with the United States and other countries when it comes to development of AI and promoting it worldwide.

[Bloomberg Tech Host (likely Emily Chang)]

Ed Bloomberg's Mike shepherd in D.C. thank you very much. The surprise release of Kimik 3. It is a massive market story and throughout the hour we're going to get different perspectives on what this means for American. I will continue to track the market moves, but right now you see the NASDAQ 100 and in particular semiconductors under pressure. That's in the equity markets. The trade isn't just hitting stocks. It's weighing on bonds to debt sold by tech giants to fund massive investments is underperforming as investors grow more cautious about the sector's spending spree. Bloomberg's Tessos Vosos joins us for more. And like, look, the bond market, this predates the headline overnight, right on Kimik 3. But if you look at portfolio performance, we made a lot of news headlines about the issuance of the debt, the need for capital. Tell us how those that's gone for those bonds in the interim period.

[Tessos Vosos]

And that's the thing, a few months ago, people already warning the debt is building too fast within portfolios, within indices. What if something actually goes wrong? And as you said before, it's not driven by the same thing, which actually makes it rather confusing for investors who may have both equities and bonds in their portfolio, some of them issued by the same company, Hyperscaler, for example, because in the credit market, the main concern now is Whether the debt is being built up too fast and by too much more than the market can actually absorb, because obviously the races is heating up and you cannot possibly lose out. You have to spend a load of money and you have to actually raise it from every corner of the oil you can find. Which is why now that we're seeing a downturn in bonds that are leading losses, it's actually happening across the world and not just in the United States.

[Bloomberg Tech Host (likely Emily Chang)]

Tesla's, I'm going to read you some of the data from your own report, if that's okay. 79% of the sector's bonds sold since early 2025 are now currently indicated at a wider spread compared to the first day of trading. Explain that to us. But the other point being that price moving inverse to yield the price have fallen from the issue price on average across that, that bucket.

[Some Motto]

What's going on?

[Tessos Vosos]

Well, the reason why we're using so many metrics is because different investors may be using different metrics to benchmark themselves and explain to their, you know, their investors whether they actually performing well or not. But whichever metric you use on the AI bonds now, whether it's spread, whether it's price, whether it's total return, that looks into interest income as well, they're all negative. What that shows is that whichever your approach has been towards that sector actually hasn't worked out. Whether you try to eliminate one, one risk or another, either way, you're in the red. So what a number of active investors have been telling us is that actually, do you know what, I don't even want to hold them at all. Because unlike stocks where if the future is as bright as some people pretend to be and you end up holding an AI winner, then then the stock can go through the roof. The problem is with the bonds, because of the mechanics, you're getting paid face value at par. That's not going to happen. So the upside is actually rather limited by the downside could be really significant.

[Bloomberg Tech Host (likely Emily Chang)]

Bloomberg's Tesla versus with the credit market, some of what's happening in AI and hyperscalers. Thank you very much indeed. Coming up, another top story. Netflix is under pressure. The streaming giant is warning of slower sales growth. And we're going to speak with Helena Wang of Philip securities to try and work out what the story is here with Netflix. That's next. This is Bloomberg Tech.

[Ted Sarandos]

We believe it takes great artists to make something great and AI is not changing that. AI will give creators better tools to bring their visions to life. Movies are being made by people who make movies AI provides them with better tools to make them even better.

[Bloomberg Tech Host (likely Emily Chang)]

That was Netflix co CEO Ted Sarando speaking on yesterday's earnings call. Look at Netflix shares. At one point in the session, we're on track for our biggest drop in four years, down more than 8%. The company outlined a bigger role for AI and pointed to advertising as its next major growth engine. But investors are beginning to worry that the company's breakneck growth is starting to slow. Specifically, it's slowing for a second straight quarter with decelerating revenue gains. Joining us now is Helena Wong. She has a buy rating on Netflix. They're looking for a story beyond subscriber growth.

[Helena Wang]

Right.

[Bloomberg Tech Host (likely Emily Chang)]

Was so interesting to go through how they'll use AI advertising, live content. We'll go over all three. But for you, Helena, what was the main takeaway from this Netflix print and what was said on the call?

[Helena Wang]

Well, I guess if you just look at the quarter results, this. So I would say it's still overall, broadly in line. So membership trends has been really healthy. They recently increased their price again earlier this year in the markets like the U.S. mexico and Spain. It continues to be well accepted. Their revenue continues to spend. It's on track to double its revenue this year. So that helps us the monetization. So margins are holding up fairly well as well. So I would say the result is actually pretty healthy.

[Bloomberg Tech Host (likely Emily Chang)]

See, yeah, you know, how long did Netflix say judge us by traditional financial metrics? And you look at those metrics, pretty good. They're talking about how Netflix will be different as well, Right? The platform, I mean, more live content, live sports in particular, video podcasts, creators, cloud gaming. I'm looking at that and saying, I watch Netflix in the evening, sit down, stream a show, a film platform. What about the rest of the day? To me, it seems like Netflix is thinking about how do we get into that addressable market for people's eyeballs morning through evening? Is that what you see?

[Helena Wang]

Yeah, I think another challenge that they're seeing is they're facing a lot of competition that is not just from the traditional streaming platform. So they are competing a lot of the screen time with short video subscribers to services like YouTube shorts and TikTok videos, because consumer behavior is now changing. So now every time you go home, you're not just owning a tv, you're spending a lot of time on your phone as well. So they're definitely competing with this limited screen time that people have. So for them, they are also trying, they're trying to strengthen their engagement. They're trying to do a Lot of the life events, a lot of the podcasts and a lot of the mobile features. But it's definitely going to be a long term challenge for them.

[Bloomberg Tech Host (likely Emily Chang)]

They're talking about using AI in three different ways. Improving the product, lowering costs and expanding margins. You talked about the margins point earlier for the stock. What's most meaningful for Netflix to communicate on that, on their use of AI?

[Helena Wang]

I think the use of AI is inevitable because it's now just expanding to all aspects of the industry. But I think the reason that the market is reacting very negatively relatively is mainly still because that they are giving a relatively softer guidance for their third quarter revenue. And I would say it's still considered pretty healthy growth. It just compared to the growth that we have been seeing earlier, it is considered slightly softer. So Netflix is a business where everything is going right. So naturally the investors expectation for it is just relatively high. So they're really not tolerating any of the minorities disappointment that comes it. I think another reason that it's not doing well is because the content slate is not as compelling compared to last year. So this year they have some exciting.

[Bloomberg Tech Host (likely Emily Chang)]

Sorry to interrupt you, Helena.

[Anthony Hughes]

I'm.

[Bloomberg Tech Host (likely Emily Chang)]

I'm so glad you went to the content slate. Right. I get you have to model on certain metrics the growth of this business. But like what are you watching right now? It still comes down to content is king. How's Netflix doing on that front?

[Helena Wang]

Yes, I would say their content is definitely not exciting when you compare it to last year. So this year they do have some exciting coming up like 72 hours with Kevin Hart and they have some NFL games lining up. But compared to last year they had Wednesday they had stranger things. They had all those exciting content. They had Squid game. So that was all. These are very popular franchise was a lot of hardcore fans. So they actually managed to bring a lot of subscribers onto the platform because of that. So this year compared to that, it is just not very exciting. And for Netflix is a company that has a lot of high expectations. So investors are constantly looking for signs that there's going to be reacceleration in the business. So for this sector we're not really seeing that.

[Bloomberg Tech Host (likely Emily Chang)]

Helena, we just showed Lucas Shaw, who leads our coverage of Screen Time, the entertainment industry's column prior to earnings and he was writing about how Netflix can't get its audience to stick with a show. So they start and then they don't stick with it. Why does that matter?

[Helena Wang]

Well, it does matter because at the end of the day it really comes down to your ability to to persuade your customers customer to stay on your platform. But I will say right now I don't see very clear evidence that their engagement is deteriorating. Actually their engagement is still improving compared to 2025 according to their engagement report. So I think right now there is no clear sign that they're losing on that and there's still very strong pricing power. So overall I would still say we're very, very positive on Netflix, especially with the recent price correction. So previously the premium valuation largely limit the upside that we have in our views. So right now is the stock pullback. We do think it is a good opportunity to actually start building a position.

[Bloomberg Tech Host (likely Emily Chang)]

Helena Wang of Philips securities back on Bloomberg Tech thank you very much. All things Netflix coming up. There's a setback for Google's ambitions. Why? Gemini's latest delay has investors questioning whether the company is losing ground in the air race. This is Bloomberg Tech.

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it's time

[Hira Anand]

now for Talking Tech. I'm your Hyra ANAND. First up, Z.AI, also known as Jeep, who is on track to to be China's first AI firm, hitting $1 billion in annual sales. The AI startup achieved its full year sales target in July, marking a milestone for a company aiming to distinguish itself as a provider of AI to companies and enterprises. Plus, Databricks is in its second round of financing this year and is seeking capital from investors led by Kochi management at a $188 billion valuation. That would mark a 40% jump from the 134 billion it achieved earlier this year. Databricks, of course, has long been regarded as an attractive candidate to IPO and Chinese. Sorry. Japanese memory chip maker Kioxia has now lost more than half its market value from its June peak. At that point, the company was Japan's highest valued firm. The sell off coming on growing concerns AI driven rally has gone too far. Something we are seeing again today.

[Mandeep Singh]

Ed.

[Bloomberg Tech Host (likely Emily Chang)]

Okay, thank you Hira. The air race is moving so fast that even a few months can make a big difference. Bloomberg's reporting Google is months behind on the release of its next flagship AI model, Gemini 3.5 Pro, raising new questions about whether it's falling behind rivals OpenAI and anthropic Bloomberg Intelligence analyst Mandeep Singh writing a reaction video piece to the report that this could be a sign that recent high profile departures have hurt frontier model development. And Mandeep joins us now. It was an interesting and detailed report from Bloomberg News but I like the thesis presented in the react. Go a little bit deeper into it.

[Bloomberg Tech Producer/Host]

Well we've seen you know Fable 5 and the latest open air model clearly have had a step up in terms of functionality and coding agents is where Google seems to have missed the boat with Gemini. So I would have expected Gemini 3 to be released sooner and now we are talking about Gimme3 and how you know that has.

[Bloomberg Tech Host (likely Emily Chang)]

Stepped and jump in here guys because I think Mandeep's zoom is hitting some technical issues and maybe the control room just hit mute on him for a second. Sorry about that Mandeep. We'll come back to the story that the race and model development obviously Today with Kimmy K3. It's our top story. Let's get to Apple. Apple's product refresh is far from over. The company is now preparing a sweeping update to its iPad lineup. Bloomberg's learned Apple is planning its biggest iPad mini overhaul in five years, complete with an OLED display. Bloomberg's Apple and consumer tech managing editor Mark Gurman joins us with the details. Spare a thought for iPad mini? It's been a while since I think you and I have talked about that product line. A lot of detail in the new strategy. What do we need to know?

[Mark Gurman]

Yeah, Apple's got a jam packed product portfolio over the next few years and part of that is a big overhaul of the iPad lineup. And so this fall you're going to see one of the biggest ever updates updates to the iPad mini. It's getting an OLED screen which means the display quality is now going to be up there with an iPhone or an iPad pro. This has been a long time coming. This is something that tech enthusiasts have been clamoring for. You're also going to see updates to all the other iPads next year that includes faster iPad pros. New iPad airs in a new entry level iPad in the backdrop here is that Apple has made all of the iPads more expensive in recent weeks because of the memory shortage. Right. Some of them went up by $100, some of them went up by 150, some of them went up by $200. So now you need upgrades to the product to make them more worthwhile in this competitive environment where you have great tablets from other companies like Amazon, Samsung and the like.

[Bloomberg Tech Host (likely Emily Chang)]

Mark is the first opportunity you and I have had to discuss Apple's AI plan for China. There was some developments this week in how they're able to put an AI product into that market. Could you explain the basics of it to us?

[Mark Gurman]

So right now, Apple intelligence inside of the United States and the rest of the world for the most part uses models from Apple on device, models from Apple in the cloud. And then there's partners for some features that Apple Apple doesn't do so well. So search, they work with Google, then they work with open AI as sort of a fallback for Siri. If you ask it something it doesn't know the answer to, it'll query Chad GPT if you allow it to. So for China, there's a few nuances. For search, they're working with Baidu for that chat bot, the open Air replacement, they're working with Baidu. Obviously OpenAI chat CBT is not available in that part of the the world. But then there's the Alibaba component. And so the phones in China will continue to use the on device Apple models, but there will be a layer on top using Alibaba AI technology that I call a censorship filter. And so what this will do is will keep the phone in constant connection with the Chinese government. So as there's updated models that are hitting the iPhone, Apple of course is always updating its models in the background. Those will need to be approved every so often with the Chinese government. And this type of censorship filter is what other companies in China who operate have to do. Show me while wei the other phone providers with AI technology on their phones.

[Bloomberg Tech Host (likely Emily Chang)]

All right, Bloomberg's Mark Gurman. With everything that's happened this week, actually not everything. There was a lot more with Apple too, but thank you very much. Coming up, just a little over a month after its blockbuster IPO, SpaceX Index is experiencing a few setbacks. There was a Scrub Starship launch last night. The stock reacted, but the stock generally is under pressure. We're going to have more on that story next. A reminder. Overnight China's moonshot released Kimik 3, an open weighted model that has top benchmarks, but there's a big focus on training costs and token economics with this as well. Right now the markets are asking itself do we need to reconsider all of the money that is going into AI from an American perspective and do we need to think again about what the motives for some of these American companies? We're going to have that conversation next. Now if I'm lucky, we're going to cut some beautiful pictures of San Francisco. It's half time. We'll be right back. This is Bloomberg Tech. Welcome back to Bloomberg Tech. All across the AI trademark, US technology stocks are under pressure. The NASDAQ 100 and SOX both down in the session significantly. But on the week, the SOX is headed for its biggest weekly drop since April of 2025. The NASDAQ 100 is not far off that about a percentage point from being in the realm of the same milestone, China's moonshot with a surprise release of Kimik 3. The market recalculating a lot of the spending that has, is and will happen on the on AI development and the infrastructure side. Nvidia biggest points drag intel down significantly. One story which is kind of chopped and changed is that at one moment in the session, Apple overtook in video as the world's most valuable company. We're going to do the math on that a little bit time. It's close but again we're a few hours from the session being closed over overnight. Space SpaceX's Starship rocket mission failed to launch yesterday. It would have been its 13th Starship test flight. Right at liftoff, plumes of smoke erupted or steam from the launch tower. There was an engine failure. This isn't the first time Starship previously had delays and malfunctions. But what CEO Elon Musk said on X is that the next launch attempt would hopefully come in the next few days. What was interesting about it in the moment, in after hours trading, the stock immediately reacted and there was a decline of about 4% already in the session yesterday. Space X's shares a drop below its IPO price. The company's facing turbulence just a little over a month after its historic IPO and dampening euphoria potentially for newly public companies. Joining us now is Bloomberg's Anthony Hughes. This is where we stand. We're showing it on the screen June 12th to present day. What has been the market's digestion of the biggest IPO of all time?

[Anthony Hughes]

Yes, I mean after all the hype of SpaceX going public last month, I think we've seen a Bit of a hangover in the IPO market really with the momentum trade also coming off here at the same time the trade coming off, you know, but it's not unusual that a big IPO might sort of pull back here given that, you know, some of the technical dynamics, you know, once the price, price sort of settles down and the market settles down, that the stocks come back. So I mean obviously it's a bit concerning for investors that Space X is already trading at a, at a discount. I think it's about 3% to the IPO price because we still have all this stock to come out from out of lockup as well. So. So, you know, but overall the IPO market has lost a lot of steam here because of, mainly because of Space X. And you know, the average return from IPOs this year has really evaporated to zero.

[Bloomberg Tech Host (likely Emily Chang)]

I would just again make the point that SpaceX being down 5% in this Friday session is in part because of the scrubbed Starship Test 13 last night. You know, we're measuring the success of an IPO based on the first 30 days of trade. But for the bankers, you know, and the investors that participated, this was a success. Right Anthony? That they would say that they pulled this off.

[Anthony Hughes]

Well, yeah, I think at the time when SpaceX went public, I think it was a, it was, it was a very well executed process. I think that, you know, as, as time goes on the stock's going to, to trade more on the, you know, the news, the fundamentals and news news that the news flow here and, and obviously there's been some bad news flow initially here but you know, it's a long, for, for a lot of the, a lot of investors that got behind Space X. It's a long term proposition. And, and you know, anyone who's familiar with what happened with Tesla knows that there's plenty of ups and downs along, along the way but obviously the investors will be hoping that longer term the price is, performs a lot better.

[Bloomberg Tech Host (likely Emily Chang)]

Bloomberg's Anthony Hughes on Space X, thank you very much. From Space X to the next generation of space startups, Texas is fast becoming the capital of the commercial space industry. So what's driving the boom and what does it mean for the state's economy? Bloomberg Originals has the story.

[Bloomberg Originals Narrator]

For most of spaceflight history. NASA and government or nation states were really the biggest players in charge. That has recently shifted.

[Texas Space Commission Representative]

This was a frontier we really believed for a long time it was only a place for governments to build and innovate.

[Helena Wang]

What we're seeing is a democratized space

[Karen Moscow]

sector with a lot of smaller players and a lot of larger commercial players as well.

[Various Space Industry Speakers]

With the global space economy currently valued at over $650 billion, one American state in particular is betting big on this rapidly growing sector.

[Mike Shepherd]

Governor Abbott, coming to you from the

[Tessos Vosos]

great state of Texas.

[Bloomberg Originals Narrator]

Texas is a really good snapshot of the new direction that the space industry is taking. The biggest tenant in Texas is SpaceX. So they have set up shop with their Starbase facility on the southern tip of Texas. Another big tenant is Blue Origin in West Texas outside of Van Horn. And then you also have a big cluster of companies in Houston, the home of NASA's Johnson Space Center. So you have Axiom Space, you have intuitive machines. And then in Central Texas, Firefly Aerospace has its rocket facility and development center.

[Various Space Industry Speakers]

Last year the Texas Space Commission gave out $150 million in grants to support space business in the state. It's due to double that by the end of this year.

[Texas Space Commission Representative]

What we wanted to do is make it well known that those companies who had already decided to be set up here in Texas, that they didn't leave and that they also helped to expand their existing footprint and lift off the

[Nathan Hager]

crew of Artemis II now bound for the moon.

[Karen Moscow]

From a NASA standpoint, because of that competition, they're low range. The overall cost that allows us to be able to do more.

[Various Space Industry Speakers]

Humanity's next great voyage begins

[Tessos Vosos]

more.

[Bloomberg Tech Host (likely Emily Chang)]

You can watch the full Bloomberg original story online and of course on the Bloomberg terminal. Let's get back to Apple, who at one point surpassed in video this morning as the world's most valuable company, likely benefiting from this like broader rotation in the tech sector out of the big spenders. On joining us is Bloomberg's Ryan Vasilica. I keep glancing down at my terminal. I think, you know, we're changing hands a few times here, but I think Nvidia is now slightly back ahead. But that's been the story, right? Apple doesn't have the big capital expenditure story. It doesn't have the big dollar story around I Nvidia has been the principal beneficiary of everything in the last four years.

[Helena Wang]

That's what's very interesting about this trade right now. What used to be seen as a real risk for Apple, that it wasn't aggressively pursuing AI in the way that some of the other big cap tech companies are. That's now become a real asset. It doesn't have the sort of capex risk that's being priced into Microsoft to give sort of the typical example there. It's really been benefiting sort of as a safe haven as we see the chip space unwind, as we see more questions.

[Bloomberg Tech Producer/Host]

Right.

[Helena Wang]

The hyperscaler side of the market, it's really been pushing higher. I think it's up more than 20% in a couple of weeks. That's a huge gain for a company of this size and it's really because of its own unique path that it's charting within AI. I would also add that it does have the foldable iPhone that's expected to come out later on this year. It does have the agentic AI Siri Digital Assistant. There's been some disappointments with that, but there is optimism that we are to going going to start to see a big iPhone upgrade cycle going up. That's going to help overshadow the increase in high memory chip prices. But in general, it does seem like the fact that Apple isn't participating in AI in the same way that some of its peers are, that's become a real positive and thing that is distinguishing

[Bloomberg Tech Host (likely Emily Chang)]

the company in the here and now. I see the Philadelphia Semiconductor Index on the week on track for its biggest Weekly drop since April 2025 5. We've talked a lot about Moonshot and Kimmy K 3. A lot more to come in the show on that. But you and the team writing that the SOX is set to fall into a bear market. That's big.

[Helena Wang]

Yeah, there's been a real reversal in momentum in the chip space. I think there are some concerns about, you know, this, the index is up. I think at some point. It was nearly double year to date. So a huge gain there and still up quite significantly for this year even though it has pulled back some, some. But I think there is a little bit of profit taking, a little bit of reversal in momentum. And as we are discussing, you know, this whole question about hyperscaler ROI that is really feeding into the chip space as well. Because if the companies that are doing all of the spending on AI, if they're not seeing a dramatic return on that, if it's not flowing through to their revenue, the issue is are they going to start pulling back on spending? Is the peak earnings being priced into the chip space right now and where do they go from there? If hyperscalers are pulling back, chip stocks likely will see weaker growth going forward is the concern.

[Bloomberg Tech Host (likely Emily Chang)]

Bloomberg's Ryan was Selica on it. Thank you very much indeed. Coming up, let's talk a little bit more about private markets. One of the oldest venture firms in the world just raised $1.5 billion for its 18th fund. There's also a lot of relevance here to what's happening around the world. Some modem Eddie, general partner at Greylock here on Bloomberg Tech. Stay with us. This is Bloomberg Tech,

[Bloomberg Audio Studios Announcer]

The Bloomberg this Weekend podcast. News, politics and the lighter side of Bloomberg.

[Bloomberg Tech Host (likely Emily Chang)]

The most coveted cosmetic enhancement in Asia

[Karen Moscow]

right now are elf.

[Helena Wang]

Elf ears.

[Some Motto]

Elf ears, yes.

[Bloomberg Tech Host (likely Emily Chang)]

People are getting injections to enhance their ears. I really don't need anything else to learn to be self conscious about. This is not something I needed to have on my radar.

[Bloomberg Audio Studios Announcer]

The Bloomberg this Weekend Podcast subscribe today on Apple, Spotify or wherever you listen.

[Bloomberg Tech Host (likely Emily Chang)]

Greylock partners just raised $1.5 billion for its 18th fund dedicated to partnering with founders at the earliest stages of AI across sectors like infrastructure, cybersecurity and fintech. Joining us now is Greylock General partner, Some Motto many. And it's good and timely to have a deep private markets and venture capital conversation. It's so interesting because I think in aggregate we see a lot of the most established firms raising funds with some regularity. This is the 18th fund at some scale. So it's an early stage fund, $1.5 billion. What do we infer from that?

[Some Motto]

Well, thanks for having us on the show. And as you mentioned, we just launched our 18th fund. It's one and a half dollars dedicated to early stage entrepreneurs. Greylock over the last six decades has been partnering with entrepreneurs when companies get started, companies like Airbnb, Facebook, Palo Alto Networks. And we're excited with this new fund to back a new generation of entrepreneurs. And as you know, we've partnered with many of the early AI leaders dating back many years before I was obvious, rewind the clock to 2019. We backed base 10. Base 10 today is the leader in AI inference with, you know, serving some of the leading application companies like Cursor, A Bridge and others. We backed Crest AI, one of the leaders in customer service AI. If you call United or Marriott today, you're talking to a Crest AI agent. And of course we're partners with companies like anthropic and OpenAI, powering the foundation model layer that's driving this whole economy. But at the same time, I think one of the benefits of our history is we've seen many of these technology waves. And when we think about the wave and you connect it back to, let's say the mobile wave, we're in the equivalent of 2008 or 2009. We're one to two years after the iPhone moment. And I think we're going to look forward. And many of the defining AI companies of this generation have yet to get started. And this new fund is all about finding those entrepreneurs and helping them build those.

[Bloomberg Tech Host (likely Emily Chang)]

And I think it's interesting what those entrepreneurs are doing and what kind of companies that they're forming. You as an example. So your investors in OpenAI and Anthropic, you got into Anthropic at series F and in the later rounds those are all the leading frontier labs. With this new 18th fund, you are not necessarily going after the model layer. What is it you're focused on?

[Some Motto]

We think of it as three layers and we will continue to invest in all three. So there's the model layer as you mentioned where investors both Anthropic and OpenAI we're seeing new companies get built around new data domains or new approaches and we continue to look for and will back new companies at that layer. There's a very big opportunity in infrastructure. The entire stock is going to get rewritten around agents. Today we have companies like based on an inference, brain trust and observability, snorkel and data. But we believe we're going to see a whole new agent cloud get created. And just like we saw happen with the rise of of the cloud and the hyperscalers and companies like Datadog and MongoDB and Snowflake, we're going to see similar purpose built services for these new workloads and that's an amazing opportunity for entrepreneurs. And then of course on top of that are applications and within applications we already have companies like Crest on customer service or Abnormal in cybersecurity. But we're going to see a proliferation of application companies, especially now that agents actually work. We're six months into, you know, the models that can power long running agents and we're seeing amazing results. For example, you know we're investors in a company called Resolve AI. They build agentic on call engineers in the last six months at companies like Coinbase, DoorDash Fireworks. Engineers don't have to wake up in the middle of the night when there's an incident because the Resolve agent can autonomously handle that incident. That's an example of agent having huge impact and we're just getting started in that era of technology.

[Bloomberg Tech Host (likely Emily Chang)]

We need to talk about about moonshot and Kimmy K3. You know the public markets is where you see the drama. But what do you what is your interpretation of that and why a $20 billion startup from China, yes, topping a benchmark and people looking at their economics has caused this reaction?

[Some Motto]

Well, I'd start by saying it was an amazing release yesterday Largest open weights model to ever be released to.8 trillion parameters. As you said, really strong initial results and they also showed a lot of interesting techniques from an efficiency perspective and how they built that model, that's really impressive and I think it's great that models like that, models like the one that came out from thinking Machines the day prior continue to give vibrancy to the open source ecosystem, which is an important part of our overall economy. At the same time, I think the reaction over the last 24 hours is perhaps a little bit premature. And I would say, you know, a couple of points. It reminds me a little bit of when the deep SEQ moment happened last year. And when you look at this new Kimmy model, there's maybe a few things, you know, the audience should consider. The first is benchmarks are imperfect, right? It's, you know, you can take a model and make it very, very strong in a particular set of benchmarks. I don't think it's until that model's had time to percolate in the real world that we can get a true sense for the trade offs that the models incurred and what its real world performance looks like. The second is this whole discussion around cost. I think the discussion misses the point. It's very focused on token cost. Yes, but we think about things more in terms of task cost. Not every token is equal. And so I'd make two points as it relates to the cost profile of Kimi. The first that's actually interesting is kimik3 is much more expensive on a per token basis than Kimik too, which is sort of contra to the narrative.

[Bloomberg Tech Host (likely Emily Chang)]

We do not know what it costs to train Kimik 3. We have an idea on K3 too. I just want to put that out there.

[Some Motto]

Absolutely, that's absolutely correct. So the per token cost is more, but even more importantly, it's not particularly token efficient. And so what that means is for a given task it actually uses many more tokens than an open air anthropic model. And you're seeing that already in the early cost benchmarking. And so I think this conclusion that it's going to lead to price erosion for the frontier is perhaps a bit,

[Bloomberg Tech Host (likely Emily Chang)]

in this case, the frontier, let's say it's anthropic and open air. Right. You know, some people are making the argument, well, hold on a minute. If a $20 billion valuation Chinese startup, we don't know the training costs, but they're basically saying 3 million, $3 per million tokens on the input side, $15 per million tokens on the output side. If they can do that, why are we valuing anthropic at nearly $1 trillion? Like what's the moat that Anthropic has?

[Some Motto]

I think both Anthropic, nope. And I have more multiple moats. The first is they have very significant revenues. These are the fastest growing companies in human history and those revenues are not just on the back of their models and their amazing API businesses, but they're first party products.

[Bloomberg Tech Host (likely Emily Chang)]

Right.

[Some Motto]

And I think relative to the last time I was on the show, you look at the success that Anthropic has had with Cloud code, Cloud Cowork, most recently Cloud Tag it and Open Air AI are full stack AI companies.

[Bloomberg Tech Host (likely Emily Chang)]

Can I just say one thing? I think for two years and it's been too long since you've been on the show, but we've basically assumed the best model wins. Is it as simple as that? You seem to be saying it's not.

[Some Motto]

Well, it depends on how you define the best model.

[Bloomberg Tech Host (likely Emily Chang)]

Right.

[Some Motto]

And I think I would be again, I'd be careful to jump to the conclusion that Kimi is now competitive with the best, certainly on some of the benchmarks that they release. It's competitive with, I'd say one generation prior. And of course we, you know, we don't know what's coming out from Anthropic and Open Air in the coming weeks and coming months. But it's been rumored and reported that there are significant new releases coming out from those models. So we have a particular checkpoint in time that we're comparing it to. I think, I think we're going to see a lot of really exciting releases in the coming months. But maybe if I can, I want to make one, one broader point which is if you just think about the overall size of the token economy and where we're going right. In 2023, OpenAI's API was processing per day about 30 million tokens. In March of 2026 they announced the they were doing 15 billion. So just in less than three years, a growth of 50 times. I think when we are talking in 2030, the overall token economy will be two orders of magnitude larger than it is today. And so there's going to be plenty of opportunity for the best leading closed frontier models to grow, for the open source economy to grow and for the application layer to grow. I think the only mistake one can make is underestimating the size of this overall wave.

[Bloomberg Tech Host (likely Emily Chang)]

Greylock General Partners on Monomed Back on Bloomberg Tech I hope to have you back with some regularity. Congratulations on the fund and then your success at the firm coming up. Forget superheroes. Director Christopher Nolan is becoming a franchise all on his own. We're going to take a very quick look at the blockbuster business behind the Odyssey. That's next. This is Bloomberg Tech. Let's get back to Netflix. Bloomberg Intelligence is out with a react saying the results quote, reinforce the bearish narrative with a muted third quarter and 2026 guidance signaling a slowdown in revenue growth while plateauing engagement keeps sentiment subdued. Geeta Ranganathan of Bloomberg Intelligence, the author of that research, you know, you and I in real time went over Netflix yesterday. But the main point you want to hammer home.

[Mandeep Singh]

Yeah, the main point is they somehow have to turn the narrative around. And on this whole deceleration in revenue growth, I mean, we've seen it significantly come down, you know, from 16% in the first quarter to 14% in the second quarter and now 11.7% guidance for the third quarter. And really the whole narrative here is anchored by those double digit, solid double digit mid teens gains in revenue growth. And until and unless we see see that picking up along with a pickup in engagement and subscriber growth, I think it's going to be really hard to get behind this, you know, the whole Netflix thesis.

[Bloomberg Tech Host (likely Emily Chang)]

Straight after the show, Bloomberg Tech producer Justin Laos running to an IMAX somewhere in New York City to watch the Odyssey. Is this going to be the big one of the year?

[Mandeep Singh]

It absolutely is. I mean we've, you know, believe it or not though, the tickets went on sale for this ad over a year ago and they sold out within minutes for, you know, all the IMAX and the premium formats. This one is going to be huge. We just got the numbers for the Thursday preview releases, highest ever this year, beating even Toy Story 5. So I think this, you know, combined with all of the buzz, the fact that it was shot in an IMAX camera and that, you know, everybody wants to, I mean, Christopher Nolan is always great at eventizing a film and I think we're going to see that really translate into some very, very strong numbers at the box office.

[Bloomberg Tech Host (likely Emily Chang)]

I really want to see this one. To media and entertainment analysis, Nathan of Bloomberg Intelligence, thank you very much. That does it for this edition of Bloomberg Tech. Again, the picture in financial markets, in equity markets is there's a lot of red, we're off session lows, significantly off session lows. But the catalyst was China's moonshot releasing Kimmy K3 and that causing concerns that why are we spending all this money in America on developing AI. If a startup in China can do it at a much cheaper level with different economics, there is some dispute of that. We went over in the show Nvidia and Intel down Apple lower. At one point, Apple was the world's most valuable company pipping in video. Right now it's not. We're gearing up for more tech earnings next week. This is your calendar. This is what we're bracing for. It really starts in earnest over the next seven days. Don't forget to recap the show on the podcast. You know where to find it on the Bloomberg platforms, but also online on Apple, Spotify and Iheart. Have a great weekend from San Francisco. This is Bloomberg Tech.