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From.
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The heart of where innovation, money and power collide in Silicon Valley and beyond. This is Bloomberg Technology with Caroline Hyde and Ed Ludlow. Live from New York, I'm Caroline Hyde.
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And I'm Jackie Devalos in Washington. This is Bloomberg Technology.
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Coming up, the FTC is charging ahead with the Biden antitrust probe of Microsoft. We'll discuss what this means for Trump's new FTC chair and his scrutiny of tech giants. Plus intel shares jumping following the news of a new CEO tasking Lip Bhutan with restoring the company's fortunes after a slump in earnings and market share. And a conversation with podcaster turned investor Harry stebbings on from 20 VC on how 120 tech founders are joining his project to boost European startups. But first to check in on these markets. And we raise yesterday's gains. The NASDAQ 100 currently off by about a percentage point. After yesterday we got a bit of a reprieve and a push higher of more than a percentage point. Overall, we're once again filled with anxiety about US growth and about basically still selling some of your key winners largely within the Magnificent seven going to some of the individual movers. The earnings flow still not living up to expectations. I'm looking at Adobe down crushed another 11%. This is how the fiscal first quarter delivered 10% growth in revenue and lived up to expectations. But the current quarter that we're operating in the guidance not good enough. The full year guidance remaining the same. Analysts wanted more. Many cut their price targets. Intel though, soars on the back of a new CEO. Lip Bhutan returns. He was on the board before and of course he did that Turnaround at cadence on we'll dig into that in a moment. But Microsoft just up by about 2.10of a percent but is contributing to the points decline on the NASDAQ 100. But what does it mean that the FTC is looking into that anti competition analysis? Microsoft Bloomberg reporter Josh Sisco is with us. You look at Microsoft from an FTC and anti competitive concern area here, Josh, what is it that the FTC is doing? Because we all thought a new Trump administration would mean maybe less scrutiny on tech giants. It doesn't seem to be the case.
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D
Well, I mean from the beginning, since before Trump took office, both himself and his allies have made it pretty clear that tech is going to be a key focus of their enforcement and regulatory efforts. We're still a little sort of uncertain about how exactly that will play out, but this isthe fact that they are picking up this investigation and carrying it forward from the end of the Biden administration is a major sign that they're going to keep keep an aggressive stance against the tech sector.
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A
Josh, remind us what other cases this FTC commissioner is inheriting from the Biden administration, because this could potentially offer clues as to how those might result in as well.
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D
Yes sir. He's got a bunch of stuff both on the competition, antitrust and sort of the consumer protection side as well that the agency does both enforcement in both areas. They're going to trial next month against Meta in a case that was first filed actually in the initial Trump administration in December 2020 to break up Meta and that's finally going to trial in April that was sort of filed at the end of Trump's first term. And then FTC chair under Biden, Lina Khan, she carried that forward. They also have a lawsuit against Amazon that could potentially lead to major divestitures of Amazon's business that's not going to trial for about a year and a half. There's another lawsuit challenging Amazon's prime subscription business and how it how the FTC says it doesn't allow consumers to cancel easily. Those are just a few of the big ones.
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B
Yeah. And interesting that resources is an issue is why they delay the Amazon investigation, Josh, that you've been reporting on. But the context here is one where also the DOJ seems to still be going after that Google investigation and and some of the really pretty tough remedies that they're eyeing to ensure that Google doesn't seem in some way a limitation on competition. From the context of overall this administration, it looks as though big tech is not getting off the hook. Here, particularly when it comes to AI.
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D
Yeah, I think that's true. I mean some of the regulatory stuff around air safety and other other guardrails, that's a little bit sort of up in the air. But I think they've made it clear so far that they want to see more than two or three companies sort of dominate the technology from Nvidia and Chips to Microsoft and OpenAI and sort of more end user applications. It is, I think, at least for now, going to be a major focus.
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That's Bloomberg's Josh Cisco. Thanks so much for joining us. For more on Microsoft and the broader tech market, Rishi Jaluria, RBC Capital Market Software Equity Research Managing Director, joins us now. Rishi, this isn't the first time that Microsoft is dealing with a more strict ftc. Is this latest development sparking you to kind of change the risk calculus that you were embedding in your modeling for the coming year or are you mostly brushing it off?
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E
Yeah, and thanks so much for having me. Look, I don't want to say I'm brushing it off but but I do feel like the potential impacts we've been prepared for this. This is something that has been talked about for a while and remember, I mean Microsoft obviously historically under Bill Gates and later Steve Ballmer had gotten themselves in a little bit of hot water when it came to antitrust. But under Satya Nadella it's definitely been a kinder, gentler Microsoft that has very much embraced interoperability, embraced coopetition and I think we see that playing out here. You know they have, they obviously were very invest in OpenAI and they've really gone all in on, on Jenny, I become an AI first company. But you actually notice over the past several years micro or past several quarters, Microsoft has been diversifying, right? They've been building relationships with other vendors. At the same time OpenAI themselves has been diversifying where they have their own relationship with oci, including with Stargate. They have their own relationship with Core Weave per the reports out there and so really feels like Microsoft is doing the right things to show that they' not abusing their position, you know, in terms of the relationship with OpenAI. And I think it becomes tougher to make an antitrust case against Microsoft with the open Air relationship when there is that level of interoperability. And the other competitors have these sort of similar relationships. You think about Amazon with Anthropic, you think about Oracle with Cohere, Even Google buying DeepMind a long time ago and that's a foundation for their efforts. So I think it's going to be a tough argument to make against Microsoft on the antitrust given all of these moves.
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B
Rashid is interesting though, when you think back to the inauguration of the current president, how many technology leaders, CEOs, founders were there and many felt that we were coming into a different type of feel for business. But will that be the case or any of these companies ever going to be able to do decent M and A again, or any of these companies going to be able to dislodge the overall time investment that they have to make in proving they're not anti competitive?
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E
Yeah, look, I think we're probably going to be in a better environment for M and A. I think it'll be hard to get away with these sort of acquisitions that we've saw maybe a decade ago or so of, you know, Facebook buying Instagram and then WhatsApp and, you know, Microsoft making some of these big blockbuster acquisitions. But I still think we're going to be in a more favorable environment for M and A. And I think, you know, there's going to be scrutiny on there to prove that there's power to prove that, you know, to maybe try to keep the big tech companies in check and in line. But I still think that the idea of splitting up companies, divesting assets, that's going to be more unlikely under the new administration. To me, this is kind of just a continued show of wanting to keep them again in line.
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A
Rishi, how do we reconcile the fact that President Trump has really almost anointed certain tech companies to be the shepherds of a competitive need Here in the US you have Oracle OpenAI as part of the Stargate deal. Could that shield the companies that have stakes in those particular companies a little bit more from, you know, some of the FTC scrutiny that we're seeing? Or will we see kind of this broader scrutiny across tech?
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E
Overall, I think we're going to see broader scrutiny across tech, you know, as opposed to at least over the past or at least relative to the first Trump administration. But I think it'll be equivalent to what we saw during the Biden administration and maybe taking that one step forward. I do think very much there is a relationship angle to, to all of this. So I think your instinct in the question is accurate, right, that companies that have maybe ties to the administration, you know, in some way, or at least work constructively with them, are going to be a little bit more protected. And so I think it's in a lot of these companies interest to at least have A good working relationship with pieces. But remember, the FTC is its own independent entity, right. And they, you know, even if the chair is appointed by the Trump administration, the way they act should be fully independent. You know, again, I think the case comes down especially for Microsoft to prove that there is some sort of competitive harm to prove that they are abusing their position that there are antitrust concerns. And the more work we do on that, the more we see the moves that both Microsoft and Open Air making independent of each other, the diversifying, the embracing of interoperability, the harder I think it is to make a case for antitrust here.
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B
So Rishi, we then return just more broadly to fundamentals for the software companies that you cover at the moment, Microsoft being one of them. But you cover a whole host of books. I think of Salesforce, I think of Oracle. Software hasn't been as punished as hardware, but we are reevaluating our previous winners, Rishi. And at this moment do you think that we're hitting a bottom after the sell off of this week?
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E
Yeah, look, I think this, this big sell off that we've had over this week and really in software over the past month, you're right, hasn't been punished as much as the hardware names, but there's been a lot of names that I cover that are high quality businesses down 30% over the past month on really no fundamental news. In our mind it is creating some really great buying opportunities. You know, I think, yeah, some of the big guys like Salesforce and Intuit I think are interesting here, even going a little bit more down the cap spectrum, I think HubSpot, which is actually competitor to Salesforce, super attractive name, down 30%. It's one of our favorite names here, MongoDB, which I look at as the next gen Oracle in the database space. Really compelling, you know, with this 35% drawdown that we've seen over the past month. So I do think it is creating some buying opportunities because remember software, you know, let's see what happens with the broader macro environment in the economy. But software is very much a tariff proof sector and I think that's an important point to keep in mind as you think about all the rhetoric around tariffs and trade wars.
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That's Rishi Jill area of RBC Capital Markets. Thank you so much for joining us. Still coming up, Open Air shares its suggestions for AI policy with the Trump administration. We'll have all those details when we come back. Caroline.
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Meanwhile, we've got to keep an eye on what's happening with intel while the rest of the market falls once again. Intel outperforms by 15%.
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Why?
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Libertown returns the to of the company was on the board until August 2024. Of course, he did the turnaround for Cadence. And now his task to turn around intel to improve its market capitalization. This is Bloomberg Technology. Hello, I'm Caroline Hepka.
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And I'm Stephen Carroll. Every weekday morning we bring you the Bloomberg Daybreak Europe podcast.
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It's 15 minutes to get your day started.
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All the top global news stories, how they affect the economy and your finances.
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We have to understand the changing world.
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When it comes to trade. Wage growth is really, really high.
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Subscribe today to get us in your feed by 7am OpenAI has responded to a Trump administration request to share ways to boost U.S. competitiveness in the global artificial intelligence race. Here to tell us what they came out with, Meg Seth Beagleman. Funnily enough, less regulation seems to be the vibes.
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C
It's shocking, isn't it? It's a real wish list of a deregulatory and heavy investment vibe here. Basically opening is saying we want laxer rules on copyright, we want more infrastructure investment. And perhaps the most surprising thing is they're asking for little bit more protection and relief from the patchwork of hundreds of state AI bills out there. Saying the government should kind of weigh in here and say if we work with you in providing access to our models to review, then give us a little bit of leniency on the many bills out there in the country.
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A
Seth, talk to us about what that patchwork currently looks like because a lot of these are still underway. And it's interesting that they use the word preemption because it hasn't exactly happened yet, but it kind of alludes to the fact that they want that shield. How many bills out there are they afraid of?
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C
You know, there's hundreds. I believe the number was something like 780 currently in discussion right now. These range from bills around you know, deepfakes and bias in AI systems to something like the controversial legislation that we saw moving through California late last year. That opening I was vehemently opposed to. That said, we might have civil liability here if you have critical harms from your AI models. It's clear OpenAI is not so happy with that, despite having previously said they're in favor of regulation. They just want it to be from the federal government, which has done nothing much to date.
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B
The minute you said copyright, it made me think of what's happening in Europe and the UK in particular. We've already seen JD Vance been put out to Europe to try and fight the good fight and say go away with your regulations. But ultimately, ultimately the US Is one case. How much do they want the US government to do their bidding abroad as well?
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C
It does sound like opening is basically saying we want you to go out there and advocate for the fair use regime that they have been betting on for the last couple of years. Basically saying that we have a right to use training data that might be copyrighted because it's fair use. We're seeing that other markets outside the US are much more restrictive on that front and it faces lawsuits in numerous countries and it could be critical to how they develop this technology.
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Seth Another thing that OpenAI added to their wish list is that they want to use government held data like health care data to train their models. How do we think that's going to go over?
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It's going to go swimmingly, I'm sure. No, I mean, I think again the point is if copyright becomes too strict and they have a harder time getting the robust amount of data that they need to build new models, they're hoping the government can step in and provide a wealth or a resource of other data. I'm sure not everyone will be comfortable having their health care information be used to feed these models though.
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Bloomberg. Seth Figerman, thank you so much for joining us. Turning to shares of Adobe that are sinking today after the company gave a disappointing outlook for revenue growth. For more on that, Anuragrana of Bloomberg Intelligence joins us now to discuss Anurag. Sales in the current quarter are expected to be between 5.77 billion to 5.8. Two analysts were projecting 5.8. It's really not that far off. So help us understand what investors are worried about here. Is it the execution or the competition?
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H
Yeah, I've been surprised about the reaction also because you know, if you look at it, they reaffirmed their guidance for the full year and frankly speaking in the current Environment, nobody knows how the economy shapes up. That's not bad at all. You know, from our side they did give out a lot more details about their initiative. The thing with it do Adobe is it is probably the most controversial stock in software right now. The valuation it has been in the last, I would say year and a half or so. I haven't, I haven't seen that. I don't even know going back, you know, 15, 20 years, it was always trading at a premium to some of the marquee names. The big issue with Adobe is people are worried about their core creative business and what would the future of that business be because of free AI tools, you know, we can develop videos or pictures on the fly. Then why would you need Adobe now? I don't, I think that's, that's way simplified risk. They have a very, very strong moat around their products. But again it's going to take a while before people get comfortable with this story.
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I feel that was a story even in the hardware names that we saw of last week. Marvell got crushed even when ultimately it lived up to expectations. But if you fall forecast is in any way off, down you go in this in market environment. Anurag, what else does Adobe need to be doing in terms of also fighting off the perception that it's really hard to get rid of subscriptions and ultimately that they're not getting bang for the buck for the customer?
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H
Yeah, I think, you know, frankly speaking, all they need to do is steady execution over the next 12 to 24 months and put this risk to rest that they will get disrupted because of the. I, I think that is, is the single most important thing for them. They keep on giving more information about how AI is enhancing their business. I think that that's going to be there. But one of the things I caught from the stock reaction today is that market still seems to be in a notion of, you know, accelerating growth for the entire software industry, which is actually not a good thing for the earnings season that's coming up. Because given where we are in the economic uncertainty, I don't think there's going to be that much seat growth going forward or at least in the near term, which means a lot more volatility for these software names going into next quarter or next month.
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B
I love that you're pointing us towards the next earnings season when we're still wrapping up. This one never ends. Ana, I ran a Bloomberg Intelligence. So good to have you.
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A
Thank you.
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Let's talk about potential IPOs and what this market volatility Means for them. Just think of cool. We've been talking about it a lot. Initial public offering one of the most hotly anticipated stock launches this year. Will it go ahead? What does it mean for the investor base? Mark Client CEO Surro Capital joins us now. $25 million worth of shares of Core Weave. You are a publicly traded venture fund recently and you disclose the holdings that you have and ultimately your vision for these businesses. Core Weave, will it go public do you think? In this market?
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I
Yes.
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E
So.
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I
So Capital is a publicly traded fund that invests in in venture backed companies. Yeah, we invested in Core Weave about a year ago. We found that it's a pretty unique property as you've been reporting and everybody's been reporting. I've never in the 40 years I've been in the business seen a supply demand imbalance in any sort of anything. And the idea of the need for COMPUTE and the supply going of COMPUTE was so offset and core we've sat right in the place to take advantage of that. So we, we made an investment. It is the largest investment we've ever made at zero capital in the 14 years that we've been investing. And we're really excited about the ipo. We think that obviously market volatility isn't great for the IPO market. I'm sure you all have been speaking a lot about that. But I do think that their business model is, is so strong, their growth is so strong that the market's going to appreciate, appreciate it. And I think that we will have the opportunity to go public in this market.
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B
I mean the market was a little anxious about the fact that they're so dependent on a couple of key clients, Microsoft being notably one of them. How do they prove that diversification? There aren't that many hyperscalers out there that need this sort of compute, but they need to show that they can serve more than just two key.
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I
Right. So I think you start with the point that Microsoft obviously is risk factor in the fact that there's such a large customer and they do service some of the other larger technology type companies but there aren't that many that actually need it. It's sort of like looking at the health insurance industry. There's a handful of health insurers that supply for everybody. In this case CoreWeave supplies computer for the folks that need it. And as COMPUTE becomes less expensive and more they'll be able to diversify their customer base, which I'm sure they'll be able to do.
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A
Mark, how are you advising your portfolio companies particularly Those that haven't gone public yet. Are there certain sectors that should avoid the public markets and just stay private for now?
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I
Well, I think one of the reasons we, we built this company 14 years ago as companies wanted to stay private longer. And that is certainly proved out when we first started. So There was under 100 companies that were worth over $1 billion. There was under 20 companies worth over $1 billion. Now there's hundreds of them that are worth over $1 billion. And being public is, is something that's not for any everybody. And I think companies that want to go public have to understand, understand the merits of going public. I think the advent of the secondary market as well as the tender market that is available now for these larger companies allows these larger companies to stay private longer and allow them make a determination when it's appropriate for them to go public if, if they at all need to go public.
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B
Look, you've invested before in the key winners of Facebook, Twitter, Snap, Spotify, Lyft, but you're also in open air. Would you ever envisage that OpenAI would do anything but stay private for the time being they can access deep troves of capital, but they must be one of the most sought after holdings for the retail community and indeed people who can't access private funds.
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E
Sure.
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I
You know, OpenAI, Open Air, which is widely reported, is in the process of going from a not for profit to for profit.
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B
And you support that?
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I
I think that's appropriate. I think if they want to continue to aggregate capital in the way that they need to do, to continue on their mission to build out what is a phenomenal company, they're going to need a more normalized capital structure to do that.
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A
That's Mark Klein, CEO of Ciro Capital. Thank you so much for joining.
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B
Welcome back to Bloomberg Technology. I'm Caroline Hyde in New York.
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A
And I'm Jackie Devalos in Washington.
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B
Let's check in on these markets. Once again the trade wars, the anxiety this time between Europe and us dialing back up, resentment is pushed back lower. After yesterday we got a reprieve with a lower than expected CPI reading. But once again we're under pressure on the NASDAQ 100 off by 1.3% completely erasing yesterday's gains. We move under the hood though of who is outperforming because most the of the Magnificent Seven are on the downside dragging lower. On a points perspective, look at intel to the rescue. It's from a points contributor, one of the best performers on the upside. We're up 15%. And why? Because Lip Bhutan comes back not as a board member, but actually as CEO starting next week. Bloomberg's in. King has been following the trials and tribulations of Intel. Is he the right man to steer this company back to good fortune?
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D
I mean, the reaction tells you that people are clearly happy about that. Whether it's a case of them being happy that intel have just got somebody in that crucial seat at a crucial time for the company, or whether it's because they're enthusiastic about his, his capabilities and his fit for the role. We'll see how that plays out over the long term. But certainly today people are very happy about that.
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A
Ian, talk to us about what this has looked like in the past, because this is the fourth permanent CEO over the last seven years. Are investors going to look for something more other than just a new person on the job? Because the company also has some support from the Trump administration. But what other questions are still open about whether they can actually execute on this to stay relevant?
- [25:42]
D
Yeah, I mean, that is the giant question here, and we don't have an answer in terms of what direction he's going to choose. It's whether Bhutan has come in as a CEO who's going to try to make intel what it once was, which was dominant in this industry, or whether he's a caretaker who's going to preside over it being broken up. We didn't really get the answer to that. And the things that he put out there publicly yesterday, and that's going to be something that people will be really focused on.
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B
And the CHIPS act money in. When is this eight and a half billion dollars potentially going to come its way? What do you make of his interactions going forward with the current administration, do you think?
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D
Yeah, I mean, that is a wild card for, for anybody in a CEO role in the semiconductor industry, whether it's trade, whether it's the CHIPS act or anything like that. But all along, the CHIPS act has been a very structured situation where you have to build these plants, you have to equip them, you have to start production, otherwise you don't get the money. You know, it's very much a milepost kind of triggered event. So they'll have to do what they said they were going to do or they won't get the money anyway, regardless of whether President Trump turns against the act or not.
- [26:54]
A
Bloomberg's Ian King, thank you so much for joining us. Next, Janet from rbc, Bruin Dolphin, head of Market Analysis, thanks you. Thank you so much for joining us. Let's Talk, keep talking about the semiconductor space here. Intel is one big player, but I want to understand how you're thinking about the space coming off of a really busy week that got rattled by tariffs and other announcements. The chip and science act as another. How are you thinking about the space and the catalyst going forward?
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G
Hi, thanks for having me. I think over the longer term I would remain a very relevant theme and a very key driver for the semiconductors industry and the whole ecosystem. So on that we're still very confident on the secular outlook. There's still plenty of support for that. But unfortunately we're in a very complex and uncertain macroeconomic landscape at the moment where you know, companies with the most complex supply chains are likely to be at risk and that is including the semiconductor sector. So unfortunately given the macro backdrop, these also not doing well at the moment. But I think that valuations have become more attractive for the sector as a whole. And I do believe that if you pick the leaders across the semiconductor ecosystem, you are likely to still do pretty well over the longer term.
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B
Is Intel a leader? I know whether it's an individual name perspective, but would you put that company alongside some of the winning formulas that we've seen of late with the Nvidia's at the top of the list?
- [28:29]
G
So for now probably not. We have to await more strategic direction from the new CEO. I think intel faces a bunch of challenges regardless of who is in charge. Basically on the design front is, you know, is lagging competitors like Nvidia and AMD and you know, as a foundry business is also, you know, its direction is not, not clear and they really have to revive that foundry business in order to, to secure its position in the sector. So I guess we'll just have to wait and see. Apparently the market is very enthusiastic about the new CEO.
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A
Janet, let's talk about software for a moment because we had a guest earlier this morning kind of tell us that these software names are a little bit more insulated from a lot of the tariff woes that we're seeing other names really get battered by. Would you agree with that? How much more of that protection do some of those names get?
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G
Yeah, I would tend to agree with that. I think in terms of the supply chain impact, I think obviously the hardware, the industrial sector would be more badly hit, whereas the software, it would be fundamentally less hit. So I would agree on that point. But obviously given the various macro uncertainties that we have, ultimately a lot of these software companies, if you look at the mega cap tech companies there, they're still Heavily exposed to the domestic US economy in terms of say advertising, cloud revenues, etc. Ultimately is still dependent on the business cycle. I mean, arguably less cyclical, less sensitive, but it's still dependent. And obviously the valuations have come off because of the sentiment hit. So I guess in the near term I think it is, it's best to say cautious because we still have potentially a range of uncertainty coming from the reciprocal tariff front that is going to hit the sentiment channel.
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A
The reason I'm curious is because more recession fears have started to come to the fore. And when we think about the tech sector, you know, we don't really remember the fact that all of these software names, many of them, I'm thinking like the social media companies are sensitive to that digital advertising. How much of that is vulnerable to the swings in the economy? Could there be more vulnerability there going forward if these recession fears do play out?
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G
Yes, I think there's certainly some risk because what we are saying now is basically the heat by the sentiment channel. We haven't really actually seen too much of the heat to actual earnings and the real economy. I mean there is recession anxiety, but I wouldn't still put that at a central case. But if that eventually did play out, I think that could be more to go in terms of the hit to the earnings outlook. So that would be quite bad to these companies because advertising I think is very cyclical. They probably the first to be cut if a company wants to reduce its spending. And if consumer confidence is falling, then consumers are going to tighten their belt and spend less. That that's all going to hit all these companies eventually. But I think as I said, is currently still that sentiment that is, you know, playing out there is not really real hits the earnings yet. We just have to wait and see.
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A
And what about overseas? Because some of the woes here in the United States might be a gain for let's say Chinese stocks. It seems like every time a new model comes out of China, it sends US tech stocks really freaking out, especially those with exposure to AI. How are you thinking about positioning outside of the U.S.
- [32:16]
G
Yeah, I think there is certainly more enthusiasm on Chinese tech stocks. I think mainly it's because sentiment has been way too depressed and basically a lot of overseas investors have written off Chinese tech for a while. And there are certainly a bunch of good news, including some shift in the tone from the politician, a bit more welcoming to more supportive to the private sector and of course the innovation in AI and broadening out of using AI in various sectors in China. So I would say in the near term I think is reasonable to feel more optimistic. I think there could still be more inflows going into that sector. But I think we have to be a bit more cautious because we understand Chinese stock market is very volatile and a lot of retail participation. I don't think this time would change. I think that would be still a lot of volatility and profit taking activity if the index continues to go up from here. So I think we've got to be a bit more careful.
- [33:15]
A
Seems like forever ago that the market was freaking out about deep Seek and all of a sudden with some earnings that have come out, capex has been reaffirmed. Investors seem assured that maybe we're a little bit past this. Do you still see the Deep Seek fear showing up anywhere? If that's something that's going to drive the market going forward?
- [33:38]
G
Yeah. The thing is that I think fundamentally we are of the view that deep SEQ appearance, it shows that these models can be run in a more efficient way and thereby lowering the cost of running it and training and thereby eventually it would stimulate demand if the cost goes down. So more people will be using it. So ultimately that's going to be beneficial for the whole sector. But, but at the same time the thing is we don't know yet and if you look at the latest earnings results from say Nvidia that you won't be able to see that impact yet. Actually it's more more distant in the future whether the hyperscalers are going to reduce their capital spending because of the more efficient models. There's a lot of questions that are yet to be answered. But I think from our view, if you look back at history of the semiconductors of the how cost impact demand, usually when costs are lower then eventually demand actually grows exponentially. But of course you have to also consider that the pie is going to be shared by potentially more players. So I think just focusing on say one or two particular leaders is potentially more risky. That's why our strategy is always to get exposure to a whole range of the stocks in the semiconductor ecosystem.
- [35:02]
A
We don't have a crystal ball. Dewey Janet Janet Moody from RBC Brewin Dolphin. Thank you so much for joining us. More coming up next. This is Bloomberg.
- [35:18]
E
You can get the news whenever you.
- [35:19]
B
Want it with Bloomberg News Now.
- [35:21]
A
I'm Amy Morris. And I'm Karen Moscow. Here to tell you about our new on Demand news report delivered right to your podcast feed, Bloomberg News now is a short 5 minute audio report on the day's top stories, episodes are public throughout the day with the latest information and data to keep you informed.
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E
Yes, there are other products like this from a variety of news organizations, but.
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B
They usually rerun their radio newscasts throughout the day. That's not what we do.
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E
We create customized episodes that can only be heard on Bloomberg News now and.
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A
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- [36:08]
E
We're all over the world. Listen to the latest from Bloomberg News now on Apple, Spotify or anywhere you listen.
- [36:23]
B
Time now for talking tech first up, Space X is delayed its mission to bring back to struck stuck astronauts from the International Space Station due to an issue with ground equipment and the mission would have launched a new crew to the ISS and brought back those two astronauts have been marooned since last year. Now the launch has been rescheduled to play place no earlier than tomorrow evening. Plus Alibaba has launched a new version of its Quark agent incorporating chatbot, deep thinking and task execution features in one app now utilizes Alibaba's own reasoning models and is the latest attempt by the company to keep pace with China rivals and shares at Deliveroo. They're falling today as much as 10% in London trading that says most since all the way back in 2022. The food delivery company gave an earnings forecast that disappointed investors and comes just days after announced it would exit the Hong Kong market.
- [37:12]
A
Jackie, the head of Alibaba Group's original core business, says the use of various AI applications are having a profound impact on the company. Earlier this week Alibaba.com's President Kuo Jong told Bloomberg exclusively its vendors are having an easier time finding new markets for their goods.
- [37:31]
F
Take a listen take the buyer as an example. So if we think about the search volume for the information or for product, I think that the search volume for the information part is 10 times than the products part. So think about it. If you want to start a business you will not specifically go to our products or go to a kind of suppliers. You will come up on this idea like it was trending and what's a specific kind of textile you're going to use in your your product and then it's come off the big business plan is come to the products. So now using AI how this kind of a multi round the dialog kind of search a lot of people now it's more Easy to do business online. And for the sellers we see current our kind of for agent this tools is already better than 60 or 70% of the seller if they are new on Alibaba.com in terms of the conversion rate for the customer engagement and the for the product management.
- [38:37]
B
But how many businesses I think there's.
- [38:39]
A
Around 200,000 SMEs that are on the platform.
- [38:42]
B
How many businesses are actually using AI today?
- [38:45]
F
So currently the weekly active sellers are more than 100,000. So it's more than half of the sellers is already equipped by this agent based tools. And for the buyer side actually we launched the Axial from last November until now they are accumulating more than 1 million users is using Axial using this based powered search.
- [39:09]
A
How much do you feel the competitive pressure on AI given the amount of.
- [39:15]
B
Innovation that's coming from China?
- [39:17]
F
So first of all we think there's a lot we can do so far. For example we talk about the reasoning models but the boast on based on language. There's a lot on the multimodal stuff that we can do later on. Like you can base on anything a image, a video or a file that you uploaded the file that the reason model can help you to interpret and to execute upon. So all those kind of we still believe there's a huge space to grow and we can leverage the most I mean the models from matter from Deepseeker, from Ali Cloud Tony Chairman to all these models actually can help us to boost the capability of the applications that we believe application actually is a key here and why we think we can do it here we can do better than others. Is not going to be a few tools that play for the people Answer the easy questions is need to be highly integrated into the big scenarios like Global trade is US$30 trillion business. I don't think any other business is larger than this. So if we can apply in this business and helping a lot of SMBs. So who cannot participate in the global trade and now they can. So I think this is a big success for us.
- [40:39]
A
A lot of people are expecting industry.
- [40:41]
B
Consolidation or consolidation in China this coming year. How many winners do you see in the AI space in China?
- [40:50]
F
So actually for that part I can only speak of my opinion. So if you ask this question in January 2025 I think nobody can anticipate that there is a company called Deep Seek. I think you ask this question in March. I don't think that anybody can anticipate what going to happen in April as well. This industry is moving so fast and A lot of people doing a lot of innovations. We just need to focus on what are the right problems we need to tackle as people in this technology domain. I don't think anybody can anticipate what's going on for this year.
- [41:28]
B
Alibaba.com's President Kozang speaking exclusively with Bloomberg's Annabel Drowless. Let's just take a quick check on Apple shares year to date. Their erosion in market capitalization is to the tune of about half a trillion dollars. A 15% wipeout is actually far worse than the NASDAQ 100, which is off about 8%. Why is it underperforming? There is a myriad of risks which Ron Vistelliker really writes about to our audience today, talking about the worries of tariffs, about the uncertainty in China, about the air offering, really fizzling of course of late the Siri concerns. And then there's that lucrative partnership with Google parent Alphabet and whether or not those payments will still come for exclusive access to Google search within the iPhone. Well, let's talk all about Apple and maybe the way in which it's trying to offset some of these headwinds. The affordable iPhone 16e. How affordable actually is it? Mark Gurman is getting his hands on some of the products and Bloomberg writes about how it's kind of a tough sell at this price point.
- [42:31]
D
Mark?
- [42:33]
J
Yeah, to your point, it's not affordable enough at $600, it puts it basically at the very high end, the budget range. Right. But it specifications, one camera, its processing, its AI capabilities really puts it sort of at the bottom barrel of budget phones. You can get Android phones for a couple hundred dollars less, particularly overseas where you're getting three or four cameras, where you're getting better AI features, where you're getting better displays, you're getting higher resolution panels with improved frame rates for scrolling, you're getting better gaming, etc. Right. So they have a lot of competition there and it continues to be mind boggling that they abandoned that 3 to $400 price point. I really think something like that, well out of the typical Apple premium range, would have helped them tremendously with growth, particularly for services in places like India, Southeast Asia, Eastern Europe.
- [43:24]
B
To your point, when you first reported about this product coming out, the idea was actually it was very like an iPhone 16. There wasn't really much you were having to leave on the table by not going down to this particular phone. So will they ever bring anything out in that price range that you think could tempt more of an emerging market purchaser?
- [43:44]
J
I would Never say never. But my belief is that the plan is eventually to bring the price down of this particular model.
- [43:49]
D
Right.
- [43:50]
J
Today it's $600, but maybe in a year and a half, two years from now, maybe they'll get it down to the 500 price range. @ that point it's going to be even more outdated, specification wise. But from a price point perspective, it'll actually be quite a bit more compelling. It would put it squarely in the same price range as the Google Pixel A series. Right? They have the 88 right now they have the 98 coming. This is an annual 3. They do a lower end Pixel phone, so better competition there. The concern is right for Google is no one's really buying the Pixel phones as great as they are for Apple. They're at least getting some momentum because this is a phone that's not going to get switchers, but it's a phone that's going to upgrade from older iPhones. So from that standpoint, it's compelling for some people, but they have the opportunity to do something even bold or even bigger, even cheaper.
- [44:40]
B
Well, for now we still wonder what's happening in terms of the generative AI integration. Apple Intelligence, Siri as well. There's a lot going on for this particular company. Mark Gurman, as always, you break it down for us.
- [44:50]
A
Thank you.
- [44:51]
B
Let's just return to what is a key mover on the day though, because at last the relief floods the market that intel has a single CEO. For the long term, the interim CEOs go back to their day jobs as CFO and cheaper product. We're up 14%. As Lipputan comes back to the business, can he be a turnaround king for intel as he was for Cadence Designs? That does it for this edition of Bloomberg Technology. Do not forget to check out our podcast. You can find it online on the terminal as well as Apple, Spotify and Iheart. This is Bloomberg Technology.