Tom Giles (5:06)

So an extraordinary, extraordinary amount of steps on Paramount's part to address the concerns that Warner Brothers had identified last week and why they didn't pick them to begin with. So quite a lot there. The personal guarantee from Larry Ellison. One of the issues was this was being backed by a revocable trust. What if he revoked it? A lot of other changes to terms in terms of their ability Warner Brothers ability to operate in the interim period before something's improved. They extended the tender date. A lot of changes. Everything but raising the price. And that's a big issue because if Warner Brothers did decide to not go with Netflix and go with another suitor, they would have to pay Netflix $2.8 billion and somebody's going to have to pay that. So so everything but a change in price.

Caroline Hyde (5:52)

And then for does it all come down to what you think the cable networks are actually worth, Chris? If they indeed managed to convince David Zaslav that they're good for the money, is this more personal for David or is this more about the price of the networks?

Tom Giles (6:07)

You know it does go beyond all of that for sure. Right now there is this difference in the how you. Because you know Netflix is not buying the cable networks and they're worth Paramount says only a dollar a share. Other people say three or four dollars a share. That's a big part of it. But really when you also saw that letter and filing last week from Warner Brothers they talked about having a stronger balance sheet long term which Netflix undisputably has about fewer cuts of jobs because Netflix really doesn't have a studio and lot like Warner Brothers does. So they wouldn't. They aren't promising as many cuts as Paramount would. So sort of better for Hollywood is one of the things Warner Brothers said. So sort of intangible things are also part of the mix.

Caroline Hyde (6:56)

Chris Palm Harry running us through what is a very complex Hollywood shakeup look. In fact we talked about this last week. Remember Kevin Mayer joined the show his Candle Media Co CEO former Tick Tock CEO but also a Disney executive. Here's what he had to say about a potential Paramount comeback even though Netflix.

Tom Giles (7:13)

Won the first round. Don't count out the Ellison's. They're incredibly smart and aggressive. Don't cut out. Don't count out Jerry Cardinal or Redbird. These guys are very serious. I think they're going to come back with a higher bid and when they approached and remember shareholders still haven't spoken yet. I think the likelihood here is that Marner Brothers ends up with Paramount. I think it's ultimately the cost of jobs. Obviously in Hollywood there's no, no getting around that but ultimately good for creators.

Caroline Hyde (7:38)

I mean, he helped found Disney plus. What therefore for Born and Brothers Discovery saga, John Klein's with us, co founder of Hang Media, of course, the former president of cnn. You know, the inner workings of media right now. John, do you think that the deal has to, to be sweetened? It can't just be about more for a breakup fee or good for the money in terms of Larry Ellison.

Tom Giles (7:58)

Yeah. You know, it's a very clear picture of who's got the leverage here. Clearly WBT has suitors. David Zaslav can just sit and fold his arms and say, look, you're not talking in my good ear yet. Paramount. And it's a, it's not a dumb way to try to drive their offer up even higher. And that wouldn't surprise me.

Caroline Hyde (8:21)

What do you think could be the quibbling around the cable networks, that's the area that you knew you loved, you performed in. And there has been, of course, the regulatory concern about who ends up owning cnn, but more broadly about what they really are basically priced at. John?

Tom Giles (8:38)

Yeah, and you know, value really depends on the acquirer. And there could very well be acquirers out there in the universe of media who value those cable networks much more highly than a Netflix would or even Paramount would. And you know, you could see where Versant, for example, which is being spun off from Comcast, which is identical to the cable spinoff that WBD is doing. You could see them valuing TNT, TBS, TruTV, CNN much more highly than these current players are. So value is in the eye of the beholder. I could see the local station giants like nexstar and Sinclair also loving the idea of having both a national footprint as well as their ever growing roster of local stations. So, you know, there could be even more money available to WBD if they go ahead and sell those two components separately.

Caroline Hyde (9:41)

I see. What would you think would happen if, and it's a big if, Paramount Skydance got hold of all the assets because Netflix, we know if that deal gets done, the cable networks would be spun off. But if Paramount Skydance took hold, what do you think then would be the evolution here?

Tom Giles (9:57)

Well, they could still do a spin off of their own cable properties and broadcast properties. There's, there's all kinds of financial engineering that could then take place. I don't know that it would happen overnight, although this new Paramount management team has moved extremely quickly. You know, David Ellison gets a lot of attention, but Jeff Shell, who was the chairman of NBC Universal, is a fantastic operator and, and I could see them moving quickly. However, it Sort of reminds one of the snake that eats the deer. It's, you know, it unhinges its jaw and it spends the next three months just trying to move that thing down the tunnel. And it could take a while for all of these synergies to be realized.

Caroline Hyde (10:44)

How important is the Ellison relationship with the administration at this point, John? Because that's in many ways what they thought would clinch the deal. It's been reported.

Tom Giles (10:54)

Well, much as David Zaslav is able to sit there and play one side off the other, so is Donald Trump in a similar position where he's has not put his finger on the scale yet in favor of Paramount's offer despite his relationship with Larry Ellison. And he has said very nice things about Ted Sarandos, the co CEO of Netflix. I think that Donald Trump is enjoying being a position to see who can curry more favor with him. So there's no reason for either President Trump or David Zaslav to pull the trigger on anything just yet. They want to see how these deals all get sweetened.

Caroline Hyde (11:37)

I suppose the other contingent of stakeholder who is sat there with their arms folded is the investor base right now. They've got what until January 21st to digest whether this go direct in way the Ellisons have approached them. Warner Brothers Discovery shareholders, brothers to be clinched versus going with Netflix. What would you say to an investor who's holding Warner Brothers Discovery shares right now?

Tom Giles (12:02)

That there's plenty of time for this deal from Paramount to go even higher. So one way or another, WBD is going to be making out very nicely. History has shown us that the sellers in these media media deals tend to make out better than the buyers. So they're in a pretty good position in that respect as well. You look at Disney's acquisition of the Fox assets a few years ago and Disney's valuation has dropped significantly since then and Rupert Murdoch is counting his money. So they're in a decent position and there's no need to get too worked up just yet. Plenty of time for the dollars to increase.

Caroline Hyde (12:45)

What's so interesting about your trajectory in media is you've sort of been able to see around the corners. You were in the heart of news, in the heart of production. Then you went into the world of AI selling while helping manage a business, eventually went to Apple. You're with Hang Media at the moment. What does all of this mean for Hollywood and for content creation right now?

Tom Giles (13:04)

Well, we're on at the very beginning of a content creation explosion. And this deal, however it turns out, is taking place within A much larger environment in which creators who are being distributed by YouTube and TikTok are commanding much more viewing time than the traditional producers, writers, directors and most of all studios. And so in a lot of ways this, this battle for the assets of, of WBD is really all about the way media used to be. But the big winner here is YouTube, because nobody's keeping their eye on that. I mean, YouTube made headlines last week, they just stole the Oscars from ABC. Beginning in 2029, YouTube is going to be where you go to watch the Oscars and listen in the2030s, I think all those tech giants are going to be running media and all of these other companies will be significantly smaller. And we're just seeing the beginning of this. So in a lot of ways this matters a lot to the shareholders for the, for WBD, Netflix, Paramount, etc. But in terms of the long term trajectory of the media industry, that's all happening somewhere else.

Caroline Hyde (14:26)

And certainly that's one the regulators had to digest. What really is the market market that a Netflix plus Warner Brothers discovery would be competing in? John Klein of Hang Media. It's always great to catch up with you. Happy Holidays. Thank you. Coming up, Google is buying Intersect Power to help build out its energy infrastructure for AI products. We delve into that next. This is Bloomberg Tech.

Tom Giles (15:01)

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Caroline Hyde (18:04)

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Tom Giles (18:07)

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Caroline Hyde (18:08)

Busy taxes and fees extra see mintmobile.com. Google is agreed to buy power provider Intersect Power for $4.75 billion in cash plus existing debt. That says the tech giant makes a push to grow its datacenter presence. Bloomberg's Joshua joins us now to discuss that. Shares are moving higher, up about 5 10%. Josh why is Alphabet getting ever more into the world of clean energy?

Tom Giles (18:38)

Ever since we saw tech companies needing a lot of electricity for their data centers, there's been a conflict between utilities. Traditional power providers which move slow, make sure that nothing ever breaks Grid reliability is paramount for them. Tech companies want to move really fast. They want to get a ton of power. They're not, not against breaking things. This is an example of a big tech company saying, we're just going to bring a whole, a whole power generation company. We're going to bring that in house so that we can really quickly develop a lot of clean energy to power a lot of our data centers and our dreams.

Caroline Hyde (19:17)

Insect Power is an interesting company. It's been backed by private equity players such as tpg, but they actually build out, particularly in Texas, not just for Alphabet, so they've got other clients on their books. How is this actually going to work.

Tom Giles (19:28)

From an M and a perspective that, that's, that's interesting. I'm not sure how that's going to get worked out, but I think what it means for Google is that they'll be obviously front of line and able to build a lot of clean energy on site with its data centers. Something that, that allows Google to go even faster with is it won't have to build big transmission lines if you have, you know, power plants or solar and wind farms somewhere and then you have to permit transmission lines to move that electricity long distances to get to the data centers. What Intersect is good at what Google has expressed interest about in the past is building those big solar and wind farms on the exact same site, basically ringing or adjacent to the huge data centers. So that means that the electricity can just flow directly into those facilities.

Caroline Hyde (20:19)

So now Pitch I, chief executive officer of Google and parent company Alphabet talking about how it's going to expand, expand capacity, going to operate nimbly, and building new power generation in lockstep with the data center need. They are not the only player needing to expand in data centers. Is this kind of going to become thick and fast? These sorts of energy assets are going to be really interesting to some of these big hyperscalers.

Tom Giles (20:42)

Yes, for sure. We've seen all the big hyperscalers making different moves in the energy space in a way that they wouldn't have in past years. I've reported this year on Metta getting into power trading. That's so that they're able to help energy generation get brought online faster, more at the cadence that that, that they want, as opposed to the, to the frequency and speed with which power generation has been provided in the past. So, yeah, basically to a company, you can expect all of the big hyperscalers to be making different moves in the energy space to try to make sure that they're getting as much electrons, as many electrons as they need for their big goals.

Caroline Hyde (21:24)

Josh, it's going to be a busy one for you. In 2026. Thanks so much for talking us through this particular deal. We appreciate it Josh. So that. Chinese chip makers, they are rushing to IPO following some blockbuster debuts that we've just had as recently as last week. There seems to be huge demand for future national champions the analysts say could one day rival even the like likes of Nvidia. But does that enthusiasm mask technological challenges facing these firms? Bloomberg's Maggie Eastland who covers chips joins us now. The context of this is almost a 700% pop in Metex that debuted last week. We've got other of the so called four little dragons looking to ipo. It's all about domestic national champions. Exactly, Caroline. So China is certainly putting a lot of support but behind these chip champions and there's no shortage of capital. Bloomberg has reported on an incentives package for semiconductors of up to $70 billion. So the push for domestic chip companies is alive. It's strong and well the questions come in when you look at the technological challenges. So Chinese chip makers, you could look at Huawei as one of the top champions. They this year we're still relying on foundry services from TSMC as well as memory from Korean providers. So you know, it's a key question what is going to happen once China actually makes that shift to relying on SMIC and relying on their own manufacturing where the yields are kind of questionable. Okay. So they've got to get the foundries in place. They've got some of course many wondering what the small competitor is over there as well. Maggie. But take us back to some of the other reporting that's in the market today that H200 from Nvidia will start big produced and being able to be issued into China. I mean we haven't heard from the government but what do you think about the need the use case of H200? Of course when you look at H2 hundreds, I think one of the key questions going forward is how is this going to affect the ecosystem of Chinese model companies? You know last year we had this deep sea moment and that is very intertwined with access to chips. Of course now it's widely be known that you know, deep seek access A100, those are Nvidia chips that are less powerful than the 2002. So you know what is going to happen once China is able to access if they accept the 2002, what does that mean for the Chinese model companies? Will they grow more competitive? There was a story today on Bloomberg about Cebu and Mini Max and their revenue. We're just seeing some numbers. They're not quite as high as OpenAI and anthropic, but this is a key area of interest going forward.

Tom Giles (23:59)

Right.

Caroline Hyde (23:59)

Given that they're no longer going to be as hindered by their lack of access to advanced Nvidia chips. Eastland, it's going to be a fascinating trend you're continuing to watch for us. Thank you. Let's talk more about the geopolitical issues at play here between the US between China. Liza Tobin's with US Managing director at Garno Global. All of this is so interesting as to whether or not indeed Nvidia gets access to China. Whether we see a tick tock deal, whether we see continuing trade issues between between us and China. Iron out do if we talk about chips in particular, what have you made of the ferocious focus on domestic supply chain resiliency coming from China? Yeah, it's a great question, Caroline. And I agree with Maggie just now that the, you know, the H200 is really going to be a boon for.

Tom Giles (24:46)

Some of these Chinese companies.

Caroline Hyde (24:48)

As we've seen over and over again, COMPUTE is really the bottleneck. But I want to go back to what you said about the tick tock deal. You know, we heard the news a few days ago, it hasn't yet been finalized. And I think a lot of investors are going to be analyzing what is the structure of this deal. But what I think is more interesting is what appears to be the case is that ByteDance, the parent company that owns TikTok, is going to maintain control over TikTok's algorithm.

Tom Giles (25:18)

This, of course, is the special sauce.

Caroline Hyde (25:21)

That makes TikTok what it is. It makes it so addictive and so special and so the first place. And I just want to remind your audience that Beijing has never agreed to turn over control of this algorithm over to these U.S. investors. And that's really at the heart of the deal. So what you see is as the Trump administration keeps trying to come up with some kind of a deal to end this TikTok saga and keep it in the United States, it keeps kind of lowering the bar on this deal.

Tom Giles (25:51)

With Beijing over TikTok to the point.

Caroline Hyde (25:53)

Where now we're probably, probably going to be settling on a deal where Beijing, through ByteDance maintains control over this algorithm and this vector of influence over American discourse and what, you know, hundreds of millions of people are seeing on this app every day. So Liz, are you saying when the talk is the reporting is that they will be able to license the algorithm and then rebuild it, you don't think that they, they will rebuilding you don't think that will be some sort of retraining will still be dependent on ByteDance's underlying algorithm.

Tom Giles (26:27)

Yeah, I mean, color me skeptical.

Caroline Hyde (26:29)

They are. They've been working on this so called security deal for quite some time. But the reason that the Congress on.

Tom Giles (26:37)

A bipartisan basis passed the law in.

Caroline Hyde (26:40)

The first place and then the Supreme Court upheld it was because they did not see it as viable for US national security for a adversary controlled company, you know, ByteDance and TikTok to be maintaining control of this algorithm. So I think they're going to be.

Tom Giles (26:58)

Putting some kind of lipstick on the.

Caroline Hyde (27:00)

Pig and some kind of security arrangement in place.

Tom Giles (27:02)

But remember going all the way back.

Caroline Hyde (27:05)

To 2020, Beijing put export controls on this algorithm. Those haven't gone away. Beijing has never budged in its stance. It's the US side that has kind of lowered expectations over and over again and the deal still isn't done yet. Liza, very briefly, is national security at risk if that starts? Yeah, you know, it's, it's, you know, we can make an analogy perhaps to the Cold War. It's almost as if, you know, during the Cold War we let the Soviets take control over some of our major newspapers. Or imagine today if Bloomberg TV were up for sale to the Russians or the Iranians. What's somewhat ironic is that last month the Trump administration put out its national security strategy.

Tom Giles (27:50)

You can see it on the White House website.

Caroline Hyde (27:52)

And it makes the point over and over again that foreign interference in US media is a problem. Yet here we are on the verge of this deal with TikTok, with Beijing maintaining control. Liza Tobin, managing director at Garnet Global, it's great to catch up with you. Thank you. This is Bloomberg Tech. Welcome back to Bloomberg Tech. Let's check in on these markets because we're on risk, on mode. It is a shortened week ahead of the holidays. People selling up their books and just trading into this tech market. We're seeing NASDAQ 100 up 5, 10 of a percent. In fact, it's on calls to delivering more than 20, 70% growth for the entire year. So big tech remains on top even as we still have some anxieties around. We're seeing less anxieties around crypto today we're up more than 2% but look, it is down on the year by some 4%. We have only seen that a handful of times for the OG in the crypto space. Keep an eye at the $90,000 level. Let's move on and look at the individual players in the NASDAQ 100 you want to keep an eye on because it's all about M and A in media and the tussle at the top for what is a prize asset. A Warner Brothers Discovery is trading up 2.9% because we seem to have an amended offer coming from the Ellison family. This one Paramount skydot saying, look, we'll pay more if there's a breakup fee. And also we guarantee the money coming from Larry Edison, David Ellison's father. Meanwhile, Netflix off by 7.10of a percent as it looks as though we might have to be a bit more of a bidding war or indeed some sort of worry that they might not clinch. Cinch the deal. Let's talk about it all. We've got Bloomberg Tech editor Tom Giles with us. So it seems as though Larry Ellison to the rescue. A lot of the worry from Warner Brothers Discovery have been around how good Paramount Skydance was for the money.

Tom Giles (29:39)

That's right. When you've got the backing, the personal guarantee of one of the world's wealthiest people, that's bound to make a difference. Remember that one of the bones of contention between the two companies were was the idea of where this money, how this money would be held previously was going to be held in a revocable trust. And as the name implies, there was, there was a little bit of room there for it to be moved around for the terms to change a little bit somehow. Now Larry Ellison is saying that 40 billion, we're going to back it with an irrevocable trust. That's an extra element of assurance that time that Warner Brothers shareholders should be able to take away from this extra bit of this extra assurance from one of the world's wealthiest people.

Caroline Hyde (30:31)

Just remind us of the extraordinary nature that Larry Ellison has been playing in the world of tech and media just the entirety of 2025. He's sort of at the root of nearly all stories that we're covering at the moment. Tom, is that compared to competitive instinct that do we think that they'll actually raise the bid, not just amend it?

Tom Giles (30:48)

Yeah. Well, you know, right on your show, including with Kevin Meyer, former Disney executive, you've had several people speculating that they will have to sweeten their bid. As of right now, they're, they're amending some of the terms. But in terms of the dollar value that's going to go into the share, into the hands of shareholders, Warner Brothers shareholders, that has not changed. There's a lot of speculation that in order to get Zaslav, Warner Brothers CEO, back to the table, they're going to have to sweeten the bid that these terms, they're going to help, they're going to address some of the concerns, but that the number has to rise. Remember that there's disagreement between Netflix and Paramount as to whose bid is is superior. David Ellison, CEO of Paramount, will definitely say his is superior. It puts more money into the hands of shareholders, but it's difficult to assess on an apples to apples basis because one of them places a value on the cable networks, the other one doesn't. The other one presupposes that those cable networks are going to be spun off. So there's it's a disagreement around how do you value those networks. Also, how much stock do you put in? The share price of Netflix, which is a big part of its share price.

Caroline Hyde (32:00)

Is meanwhile, Netflix has been tidying up its own financing for the deal today as well. Tom Giles, very busy end of the year for you. Thanks so much for joining us on this deal. And look, let's talk about how the deal for Warner Brothers really is upending potentially the future of Hollywood. But there's a bigger shift at play as well, simultaneously. And it's artificial intelligence. It is rewriting how content is created. Its license is monetized. Let's talk about that with Robin Feldman, professor, the of of law at UC Law San Francisco and a leading expert on intellectual property and innovation. You're out with a new book, AI vs. IP Rewriting Creativity. You seem to have an argument that they could work in lockstep. But for now, just let's think back to how the IP relationship has been redrawn with Disney and OpenAI. Was that for positive, do you think? Yes. The Mickey Mouse deal? Well, it's hard to know whether there's much substance to that deal. If you look into it, we see Disney promising to invest money into OpenAI. But it's a drop in the bucket compared to the amount of money that OpenAI says it's going to spend on infrastructure and chips. And then for OpenAI's part, OpenAI says that it is licensing the Disney characters, but it's not paying any cash in the deal, just stock warrants, which is the opportunity for Disney to invest more money in the future if it wants to. So when I look at this deal, it reminds me a little of the Sorcerer's Apprentice movie. There's a lot of mopping and water going back and forth, but it's not clear to me there's anything really going on. We're living in Fantasia or fantasy in some way. I'm Interested in Professor? Look, actually, Warner Brothers. Not only is it fending off simultaneous deals, Netflix and Paramount at the moment, but also it's busy suing other AI companies in lockstep with Disney and with Universal, they've been taking on a Chinese AI company in particular, Mini Max. How are we seeing IP being at the root of legal ramifications here? Is IP being protected? So. So the Minimax case is fascinating because the lawsuits in the United States between content creators and the generative AI companies are completely different from the one that's happening with Mini Max in China. In the US we're talking about training the models, using the content. That's a little like traveling all over the world and looking at museums and studying the great artists to figure out how to create things. But Minimax, now that's different when you talk about the output, when the output mirrors the creative content and potentially competes with the creative content, courts are likely to be much more critical of activity like that. With Minimax, we also have the complications of international relations. The US is locked in a battle with China, a culture cold war of types over AI that will dominate the next generation economically and from a defense possibility. So it'll be interesting to see what moves China may make. Well, this comes in the context of actually the United States president in one speech saying, look, you can't win all your IP battles at the moment, we are in a race with China, and in many ways, intellectual property has to take some sort of sideline for national security sake. And you're. If you can just summarize, is IP safe at this moment? Robin, can it work together with AI innovation? IP has to change. Technology rarely moves backwards. So the challenge for intellectual property and content holders is to figure out how to work with it, use it, manage it, and take advantage of it.

Tom Giles (35:48)

Wow.

Caroline Hyde (35:49)

Well, professor, we thank you so much. Ron, fellow of UC Law sf, out with a book as well. We appreciate you talking us through it. New York Governor Kathy Hochul has signed a state bill into law restricting the most advanced AI, making New York the second state to pass AI curbs opposed by the tech industry. Let's get the details of Bloomberg's Miles Miller. This took months in the making. Why did it take so long?

Tom Giles (36:16)

Yeah, the Reader act was passed in June, but it took so long because there was significant lobbying from tech industry. Right. They really wanted to see changes to this law, number one. But number two, they were cognizant that California was coming out with its own law, and they wanted to see what was in that bill. So that they could make some significant changes to New York's bill. What is at the center of all this are these frontier AI models, is what we also call foundational AI models. Right. GPT4, Gemini, Claude. The companies behind these now get a level of state oversight. The state Financial Services department will now be able to say, we want advanced reporting on these risks that these models pose. And that is really at the forefront of all of this. California's bill passed in September. What's in California's bill now is in New York's bill. And that's exactly what they wanted. Because at the heart of all this is like, if there's 50 states coming up with their own bills and how do you handle that in a regulatory space? I was at Metta and, you know, just we would think about, okay, so if this state's going to do this, how do you do it in this state? And then you've got the Trump component to it as well.

Caroline Hyde (37:29)

Right. But I mean, banks might say, well, we're regulated in 50 different states. But there is an element that the federal level is coming in here. Kathy Hochul took hits on either side. Many confronting that feeling that she did water it down. Others feeling that this is one of the most strict laws out there. So how does it come in with the executive order that was just passed last week?

Tom Giles (37:47)

Right. You know, the executive order, which is sure to have some court challenges, will also be met with probably some significant backing or opposition in Congress. Right. Congress is going to have to figure out a way to regulate all of this. But when it really comes down to it, this is about what the tech industry says is stifling innovation. But what local government says is all about trying to figure out if these models are facilitating fraud or misinformation. You've seen so many issues with some of these models where they're generating stuff that's just not true. The focus of this bill is to make sure that what is being generated it is correct and is not causing undue harm on citizens. But the teeth of this bill is that the fines from the Attorney General's office will start at $1 million. And if you know anything about Tish James, she loves a lawsuit.

Caroline Hyde (38:41)

Well said. Miles Miller, thanks so much for running us through it today. Well, let's talk about regulation and more broadly about the moves in the market that have seen AI pedestrians, pessimism perhaps easing on the stock prices today, but longer term anxieties that remain, particularly around the debt issue inside as well. To Marshall Goose is with us, his general partner at Theory Ventures. You're here to talk about the broader landscape. I want to get into regulation in a minute, but let's start with what you've been writing about. The debt issuance, the worries that you have about Oracle and the basically businesses able to afford the infrastructure build out.

Tom Giles (39:14)

That's right. One of the big drivers of US GDP growth in the last year has really been the datacenter build out about 1%, 1.6% of US GDP, probably 3% next year. It's funded a lot by debt, about 60 to 70% of it.

Caroline Hyde (39:29)

Okay, funded by debt. How does you as a VC backer, someone who's found unicorns out there who keep striking gold, how does that matter to you if some of the biggest companies out there are financing the infrastructure with that?

Tom Giles (39:43)

It matters a lot because the startups that we backed rely on these data centers in order to run AI. And if those data centers are ultimately healthy or unhealthy, it dictates whether or not there are GPUs, the processors to execute the AI. For example, we've been watching Oracle credit default swaps. You can see the spread on the CDS is growing to about 150% trading at or near junk levels. And that's because there's broader concern, concerns about whether Oracle can repay that debt. You look at the cash flow from operations is negative and they have eight years, about an eight year time horizon to repay that debt before they went cash flow negative. And so as a result they're trading a junk. And that, that can be a concern if the ultimate demand for their data centers doesn't exist.

Caroline Hyde (40:28)

Well, to watch, what about the ultimate demand? You're the person who's helping finance the companies that want to use the data centers or at least build upon models that are using them.

Tom Giles (40:38)

Well right now you see the major Hyperscalers, they're sold two years out on their GPUs. Neo Clouds, which are the smaller GPU datacenter companies, are also growing incredibly quickly. The vast majority of AI today is text. As we heard just a little bit before, we will see significant use of AI in the use of video. And as we've seen with Netflix and others, video takes about 100 to a thousand X the overall consumption. So right, right now, as of this moment, there's no real concern around overall AI demand. We see plenty of it. But what we're watching is if there's any slip, if there's a change in the dynamic between Nvidia and Google GPUs, if there's a Change in the overall consumption. If open source models, because they're so much more efficient, ultimately take GPU cycles away from some of these data centers, the massive expectations placed on these companies could, could be crushing.

Caroline Hyde (41:28)

What about the regulatory landscape? We were just talking about that with Miles Miller and I oversight in New York, SF on the west coast in California. Does it matter to your startups?

Tom Giles (41:39)

Absolutely it matters. One of the dynamics around regulation is the idea of regulatory capture where the largest companies actually benefit from regulation. They have bigger balance sheets, they can sustain the regulatory cost, the lobbying costs in order to advocate for their, for their long term goals. Whereas a smaller company, say a business that we back to the tune of 25 to 50 million, may not have those resources. So we would like to see very simple regulations that are at an extremely high level with a single regulatory body. And that way startups can continue to thrive just the way they did in the early days of the Internet.

Caroline Hyde (42:13)

Do you think the federal government will help pass that Congress?

Tom Giles (42:17)

I hope so. David Sacks, who's the aesar has indicated that that is the intent that the federal government pass an overarching regulatory regime and ideally that simplifies the and eliminates all of the state regulation. Because if there's this panoply of different state regulation, just as there is with money, transmitter licenses or within banking, the cost of doing business in each of these states increases and that reduces the pace of innovation and ultimately our competitiveness, US competitiveness in the world.

Caroline Hyde (42:48)

How is innovation from your viewpoint right now to Marsh, how are we seeing some of your companies perform?

Tom Giles (42:56)

So the companies are growing at rates that we've never seen. 0 to 100 million in run rate in a year that is now still rare, but was unthinkable maybe five years ago in the previous generation generation of software. So these companies are growing unbelievably quickly. Another data point that I'll share is that the pace of the models themselves, their sophistication is only accelerating. So Gemini, it was just the Google model released. Gemini 3 was the single largest step function in performance ever. Which is wild, right? Because we think about AI innovation is on a step function of S curves and we think at some point it will plateau. But if any indication, if the recent data is any indication, the pace of innovation is only steepening.

Caroline Hyde (43:38)

Going to keep me busy. Can keep us busy. Come back and talk to us about it. More than $600 million assets under management for Theory Ventures. Tomas Tungus, thank you very much for your enterprise and your expertise today. Meanwhile, coming up, we're going to be joined by Ted Mortenston, Managing Director. Over at bed, we're thinking about how you're going to trade AI in 2026. This is really big tech.

Tom Giles (44:08)

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Caroline Hyde (47:52)

You know what? I can see you as Mr. Darcy. You got a little Colin Firth.

Tom Giles (47:57)

Okay, that's really sweet, I appreciate that. But are you sure I'm not the dad? I'm not Mr. Bennett. Here, listen to Earsay the Audible and iHeart Audio Book Club on the iHeartradio app or wherever you get your podcasts.

Caroline Hyde (48:24)

Time now for talking tech. First up, Walt Disney's Avatar 3 top the weekend box office taking in $88 million in US and Canada film also opening at number one in China taking $57.6 million there though not numbers come in the low end of projections. Avatar 3 is expected to dominate the box office for weeks. Plus JP Morgan well it's said to be considering offering crypto trading for its institutional clients. According to sources, the Wall street giant is looking at potential products and services to expand the crypto footprint. Discussions are said to be in early stages and a Bloomberg investigation when it's found that at least 15 deaths have occurred across dozen incidents in the past decades which rescuers were unable to open the doors of a Tesla that had crashed. Now the U.S. national highway traffic Safety Administration has opened a defect investigation into whether the door issues prevent access into certain Tesla vehicles. A story that Bloomberg continues to follow. Now we want to turn our attention back from individual companies and moves but to tech more broadly. Nasdaq 100 up nearly 21% year to date, what do we expect 2026 Ted Mortenston's with us bad managing director you've been writing look for more volatility in the tech sector as expectations are high and the reality is there's a mismatch between infrastructure Data center build versus enterprise adoption of AI. Ted, what adoption do you want to see in 2026 to help bring together this mismatch?

Tom Giles (49:46)

Well it's a great question and thanks Carolyn for having me and happy holidays. Listen, this cycle is probably the margin most robust I've seen in 30 or 30 plus years of doing this. So the the overall Jenny infrastructure is not going to change. The spend is still robust but in reality you have the stocks up 42% you have the NDX up 21% and you have the IGV index which is the software kind of index for Software only up 7.6%. If if you look at beyond that one step down most of the performance in 25 has has been really focused on optical memory quantum and some of the bigger semiconductor companies like Avago or Broadcom like Nvidia and AMD as well as some of the big cloud titans Alibaba being one in China and obviously Google. With that said going into 25 the street is really not looking around the corner of what could what you could see as it relates to headwinds. Right now we're in right now I would just say we're in a market of that's really almost over exuberant speculation, a lot of complacency.

Caroline Hyde (51:15)

So do you think some of the previous winners, the Nvidia's Broadcoms, the Microns are going to fare badly in 2026 or is it more we're going to pivot more into a software era?

Tom Giles (51:26)

I think there's a that's a great question and I think the right one when you have optical names up 300% There is a worry about two things in kind of the semi food chain. One is pricing. If you look at Micron's last report last week DRAM prices were up 20% sequentially not year over year sequentially. We have a price issue. The other thing, if you listen to the Dell call a few weeks back the CEO was very adamant that we're going to potentially run into some shortage issues. Now is that in the ecostruxure of gen I hard to say but I think when I talk to portfolio managers are managing a tremendous amount of of client money. The worry is that what worked in 25 may not work in 26 and if you look at the pivot to software in kind of that late 27:28 time frame, it's probably worth worth looking at that area specifically on the agent names and the security names which have corrected recently.

Caroline Hyde (52:36)

Maybe it's Salesforce's time to shine. Ted Waterson Abed, it's great having you. Please come back in 2026 as we push towards whether those themes start to erupt into existence. Meanwhile, that does it for this edition of Bloomberg Tech. You don't want to forget to check out our podcast you can find on the Terminal as well as online on Apple, Spotify and Iheart from New York and back again same, same time, same place tomorrow. This is Bloomberg Tech.

Tom Giles (53:20)

Support for the show comes from Public, the investing platform for those who take it seriously. On Public you can build a multi asset portfolio of stocks, bonds, options, crypto and now generated assets which allow you to turn any idea into an investable index with AI. It all starts with your prompt. From renewable energy companies with high free cash flow to semiconductor suppliers growing revenue over 20% year over year, you can literally type any prompt and put the AI to work. It screens thousands of stocks, builds a one of a kind index and lets you back test it against the S&P 500. Then you can invest invest in a few clicks. Generated assets are like EFTs with infinite possibilities, completely customizable and based on your thesis, not someone else's. Go to public.com podcast and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com podcast paid for by Public Investing Brokerage Services by Open to the Public Investing Inc. Member FINRA SIPC Advisory Services by Public Advisors, llc. SEC Registered Advisor Generated Assets is an interactive analysis tool. Output is for informational purposes only and is not investment recommendation advice. Complete Disclosures available at public.comDisclosures@CVS it matters.

Caroline Hyde (54:31)

That we're not just in your community, but that we're part of it. It matters that we're here for you.

Tom Giles (54:36)

When you need us, day or night, and we want everyone to feel welcomed and rewarded.

Caroline Hyde (54:42)

It matters that CVS is here to.

Tom Giles (54:44)

Fill your prescriptions and here to fill your craving for a tasty and yeah, healthy snack.

Caroline Hyde (54:50)

At cvs, we're proud to serve your community because we believe where you get your medicine matters. So Visit us@cvs.com or just come by our store.

Tom Giles (55:00)

We can't wait to meet you.

Caroline Hyde (55:02)

Store hours vary by location.

Tom Giles (55:04)

This is Julian Edelman from Dudes on Dudes with Gronk and Jewels Sunday mornings, I've got my game day ritual, coffee, lucky socks, and now new Morning Uncrustable sandwiches. It's all about that 12 gram protein boost with the new Uncrustables, Bright Eyed Berry or up and apple flavors. Bright Eye Berries got a feisty receiver energy up an apple. Your classic do it all tight end, soft, pillowy, packed with protein and easy enough for Gronk to grab from the freezer. Whether you're on the couch, driving to the tailgate or heading to the locker room, new Morning Uncrustable Sandwiches are the MVP of snacks. Your new Sunday kickoff ritual starts here with new morning Uncrustable sandwiches packed with 12 grams of protein. Janice Torres here and I'm Austin Hankwitz. We host the podcast Mind the Business Small Business Success Stories produced by Ruby Studio in partnership with Intuit QuickBooks. We're back for season four to talk.

Caroline Hyde (56:18)

To some incredible small business owners.

Tom Giles (56:20)

The big thing about working at tech is that it's ever evolving, ever changing. Everyone's a rookie. That's how fast the industry is changing. So what I'm really excited about is to be part of that change. So listen on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.