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Bloomberg Audio Studios Podcasts Radio News. Bloomberg Tech is live from coast to coast with Caroline Hyde in New York and Ed Ludlow in San Francisco.
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This is Bloomberg Tech. Coming up Netflix Netflix reaches an amended all cash agreement to buy Warner Brothers discovery studio and streaming business, aiming to expedite the sale.
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Plus we bring you some of our top tech conversations from the World Economic Forum, CEOs from G42, Anthropic, DeepMind and many more.
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And VC firms continue piling into defense tech. This as geopolitical tensions escalate between the US And Greenland and that takes us.
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To the market said because the tussle over Greenland, the concerns around further tariffs on Europe and what Europe's reaction to the United States might B has got volatility higher and risk assets lower with selling America again, Nasdaq off by 1.2%, having its worst day in over a month, The S&P 500 wipes out its gains for the year and you're seeing money move into the havens such as gold. And what are you looking at underneath.
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The Hood, I'm looking at Netflix reaching an amended agreement with Warner Brothers Discovery for an all cash offer to buy the studios and streaming businesses. And remember, the plan is for them to then spin off the legacy networks. And this was the overhang. Paramount account's argument was that its bid was superior because of the stock component that had been in Netflix's initial offer. Bloomberg reported last week that this was going to happen. So it's confirmation. That's where the names involved are trading. There's still a lot more to come, of course. Let's get the reaction and analysis the new offer with Geetha Rangana from Bloomberg Intelligence. And you write two things in your research. The first, that this ramps up the pressure on Paramount. Geeta. But also it raises the stakes for Netflix. Let's start with, with why you think this ramps up the pressure on Paramount.
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C
Yeah, this really ramps up the pressure on Paramount because really the ball is now in their court. They've been arguing for the longest time that the Netflix offer obviously is not that great because it had that stock competent. Now obviously Netflix making it an all cash deal. And now really what this hinges on is the value of the cable networks business. So remember, Netflix is only buying the studio and streaming assets. There is still that cable networks business from Warner which they expect to spin out. And, and if you read a fil that was put out by Warner today, they have those cable networks valued anywhere from about one and a half dollars, depending on how you value it per share, going up to as high as about $7 a share. So again, I think they believe that they can actually extract more value if they go ahead and they complete that spin out. So now really all of the ante, this is really kind of up the ante for Paramount. They have to raise their bid significantly, I would think, in order to sway Warner's board.
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A
Either. You think $32 is the magic number? Why?
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C
I actually think so. 32 we think is, you know, a starting point to get Warner back to the board. Just, just kind of looking at the value of the networks, looking at possible, you know, termination fees, financing costs. But really, again, we think that, you know, Warner really looks at its cable networks business. Yes, there is no doubt that this is a declining business. It faces a lot of secular pressure from cord cutting. But at the same time, I mean, they do have some great assets. They have international exposure. You know, they can spend, they can possibly sell cnn. So they think they can extract a lot of value. Which is why we think that Paramount might need to go up to about $34 to to to fully kind of get on on board.
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Keith Again Netflix adjusting to an all cash offer in part because its own stock that was part of its initial offer has been under pressure since this all started. We get earnings after the bell. What are you expecting to hear from Netflix and what do to give them confidence that this is the right path forward?
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C
Yeah, what really investors need to hear is first of all I think everybody is looking for really good 4Q numbers and that should, I think that should absolutely Netflix would absolutely deliver on that. But I think the major thing that investors are going to focus on Ed is going to be guidance for 2026. The magic number that consensus is looking at is 13% revenue growth. Should Netflix guide to anything lower than that I think they are going to be in trouble.
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Geeth Iranganathan it's always great to get your take and your analysis which is so instant when we have this breaking news we appreciate it from Bloomberg Intelligence. Let's stay with the context of Earnings with where MAG7 names are whether they're set of course to begin reporting next week is the big ones like Microsoft, Tesla Matter kicking things off on Wednesday of course Netflix is tonight. Tiffany Way, Columbia Threadneedle senior portfolio manager joins us. As we are on the cusp of earnings and as geopolitical headwinds seem to just shift the narrative entirely. When you see down days like today, should people making the most of it buying into weakness?
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C
I think that's the case. The backdrop for stocks still looks very good. Obviously the headlines over the weekend are creating some volatility and I'm not surprised to see some selling just given stocks have been very resilient but the backdrop for the economy and I think the market is still very strong. So yeah I think this should be an opportunity and then you know, earnings coming up we'll bring the focus back to fundamentals.
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A
Are the fundamentals good?
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C
I think they should be pretty good. You know demand especially you mentioned the Mag 7 and the hyperscalers. I think we're going to see great numbers out of those companies numbers importantly I think we'll probably continue to see very strong capex numbers which is important for a lot of the tech sector. So I think those should be good indicators for for rest of the market.
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The reality right now Tiffany is that tech's the big underperformer in the session. Right. It's a moment in time. But The S&P 500 is wiped out its gains from 2026. This is escalating, not de escalating where do you expect markets to go from here based on the headlines that have come out from President Trump and what's happening with Greenland?
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Yeah, I think we could see some more consolidation, maybe a few points lower in the market. You know, certainly volatility might lead to additional selling. But again I think this is a good opportunity and as we get farther into earnings I think things will stabilize.
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D
The biggest declines are in the biggest name. Some of the Mag 7 names, is that just general sort of anxiety, geopolitical anxiety as opposed to some direct read through where if this tariff threat is enacted it is those names that are hardest hit?
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C
I think that's, I think that's fair for today. I think it's just a general selling of the market. We're not seeing additional selling in names that might be hardest hit by the tariffs. We don't have a ton of additional details on what these tariffs might look like. So I think this is just a reflection of broader selling in the market that's hitting the largest names the most today.
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Some are getting love. Intel is actually getting love at the.
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Start of the year.
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More broadly we seem to be betting once again not just on the GPU furor, but also CPU fear and everything around AI and they still going to be a winners and how nuanced you need to get on name by name.
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C
Yeah, I think we're definitely seeing people try to pick spots outside of the main winners so far. So outside of the net, the Nvidia's and the Broadcoms trying to look for other ways to play the trade. Intel's been a case of that. We've seen the semiconductor equipment stocks have done well so far to start the year. The memory stocks are also ways that people have tried to play this sort of broadening AI exposure. Intel I think is a trickier one because they do still have trouble with their foundry business. But I think there's definitely some, some other opportunities where investors are looking for other ways to play the AI. The trade.
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A
Are you looking at other ways to play the trade? Nvidia is such an important part of some of the portfolios you run. Should people be expanding or is the still previous winners going to keep on giving in 2026?
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C
Yeah, I think the fundamentals for Nvidia are still very good but I think it makes sense that people are looking for what the next leg of the value trade may be for. So we're certainly looking at other parts of tech like the semicap equipment companies, but also companies that are involved in the infrastructure build out for AI. So things like electrical equipment.
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D
Tying that all together please, Tiffany, Then, you know, next week is huge. What are the data points that you look for when those biggest technology names have earnings? Of course we've studied capital expenditure closely, but we're trying to gauge this time. Like when does it transition to you guys saying we need to see really big top or bottom line growth to feel confident that this thing is real?
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C
Yeah, I think especially for the largest hyperscaler names, we need to see continued acceleration and growth of the cloud businesses and then we also need to see the capex numbers remain stable or higher for the year. And I think those are kind of the two large indicators that we'll be looking at from those companies.
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D
In particular, which of the world's technology companies are you going to be paying most attention to? Tiffany?
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C
I think in the near term it's, you know, the, the Mag 7 and especially Amazon, Microsoft, Google and then Metta also, which had a big CapEx announcement last quarter. So interesting to see what they have to say.
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A
Yeah, I mean we had nice tea leaves already. If you're looking at earnings from TSMC and that's something that you've been looking at, semiconductor equipment manufacturing, how much resilience did you hear from that company and how much do you just put a bubble worries to one side?
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C
Yeah, I mean they commented that they don't think that there is a bubble in AI, that they're seeing a ton of good demand from their customers and I think that's reflective of the entire ecosystem for air right now. And that's a great indicator for again, like you mentioned, the semicap equipment names and also a good indicator of demand we're seeing from, from memory companies which are part of the value chain as well.
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Tiffany, one of the things that's come back out of Davos is the idea of whether America should or should not allow technology to be exported to China. You know, when you, when you're coming up through the ranks of Bloomberg Television, you kind of learn about China as the engine room of the world economy. And I've always been curious to ask you how much you worry about that, the balance between need to accessing that market and the competitive risks in exporting technology and national security risks to a market like China.
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C
Yeah, I think this is a very tricky one. Right. Because we want to keep our dominance in AI and technology and development of new technology, but we also don't want to force China's hand to sort of replicate some of our technologies or develop their own technologies. So keeping them to some Extent dependent on our companies is also an interesting balance to strike. So, honestly, this is, this is a very tricky one to figure out.
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D
Tiffany Wade of Columbia, Fred Needle, great to have you on Bloomberg Tech. Thank you very much. Now, Bloomberg is in Davos this week speaking to leaders across finance and tech at the World Economic Forum. Coinbase CEO Brian Armstrong is speaking with Bloomberg's Emily Chang. Listen to this.
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The flight risk concern.
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Yeah, so that's certainly one of the core parts of the debate. I think that some of the bank CEOs I've spoken with have kind of said, hey, we have these, this really high regulatory burden with being a bank. And what you're doing kind of looks like a bank. And so we think it's super unfair. You should have to have a bank license, too. And what I tell them is, well, we're not doing something very important that you do. We do not do fractional reserve lending. Which means for those who don't know, you know, at a bank, you deposit your funds, they're not keeping your money there. They're actually lending it out and earning interest on that. And then they pay you a very small percentage of that. Like the average savings account makes like 14 basis points or something, and that's called net interest margin. And that's the whole bank business model. And so that's why they have such high regulatory burden, because there can be a run on the bank. Like, your money is not all there. In a crypto world, there's a 100% reserve, so all your money is there. It eliminates this entire category of risk around a bank run. No such thing is possible if there's 100% of the money there. And so we don't need a bank license. We're regulated by the sec, the cftc. We, you know, we have a national trust charter. Like, there's different entities and stablecoin issuers can operate under these models as well. And so we've kind of said, you know, we don't need a bank license. That's what currently already exists in the law. The Genius act even enshrined that further. And so there has to be some other solution here. How do we flip the banks from thinking of this as a threat to an opportunity where we can all go win?
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Let's talk about the opportunity. You know, we started off talking about.
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How crypto has had a lot of momentum lately.
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A lot of that was when crypto.
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Was on a tear. The markets have definitely pulled back over.
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The last couple of months.
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C
So here, I know this is always Your favorite question, but is winter coming?
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B
Well, there's always short term fluctuations in crypto, but I think if you look over the last two years, Bitcoin's up like 100%. Pretty great outcome for anybody who invested. I've said publicly I think that bitcoin could hit $1 million by 2030. I still think that's true. So whatever happens in any given week or month, we try not to track it too much. It's the longer term trend that I think is interesting.
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A
So bitcoin had an all time high last year. 125, 125,000. What about 2026? Let's do a shorter term horizon. Where is it going in 2026?
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B
Well, you know, I don't like to make short term predictions because. Because who knows, it's the market, you know, short term voting machine, long term weighing machine or whatever. So I think if. I don't think people should be like day trading, you know, unless you really want to do that. I'm more of a buy and hold kind of guy for the long term. And I think that the cool thing about bitcoin is that it doesn't, unlike fiat currency, there's no money printer. Right. So the supply of it is fixed. It's finite.
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Coinbase CEO Brian Armstrong there along with Bloomberg's Emily Chang. You can watch the full Fireside chat just go to live. Go on your Bloomberg terminal. Meanwhile, coming up we'll bring you our exclusive conversation. Peng Shao, he's The CEO of G42 could discuss the UAE's role in global AI development. That's next. Is the Bloomberg Tech foreign. Back to Davos now where Bloomberg's Jomana Berset. She sat down with Peng show he's the CEO of G42. They discussed building AI infrastructure and the UAE's role in the global development. They spoke on the sidelines the World Economic Forum of course starting with the chip import ports amid existing restrictions.
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Just take a listen.
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In this complex world of AI, nothing is straightforward. But I must say that through the.
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Past half a year, since the May summit in Abu Dhabi, we've made a tremendous progress.
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Yeah.
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I'm happy to share with you that the first batch of the most advanced chips will be shipped to the UAE probably in the next couple of months.
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And those are mostly Nvidia chips.
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They are mostly Nvidia, but we also.
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Received the export license for service chip which is a company. We backed a startup in California and also amd.
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Yeah. Did you have to give security assurances to the U.S. absolutely.
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In fact it was not just a theoretical pledge. It's something we had to practice for the past three years now to physically demonstrate we have the ability to ensure the safety and security of dismantle technologies.
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From the US that is that there's.
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No possibility for that technology to be.
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Passed on elsewhere, cannot be trans shipped.
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Yeah.
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There's no backdoor for remote access by an approved parties, so on and so forth. Yes.
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F
Let me ask you a big picture.
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Question which is the fact that obviously.
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2026 was 2025 was a big year.
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For AI just in terms of the.
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Mainstream discussion around it. And I think there are pockets of the market where people started to speak up and say there's so much money.
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Going into this space, especially on capex.
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Investment, it's going to be really difficult.
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To generate a return on investment.
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Where do you stand in that debate?
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E
I think there are three proper major factors to cause concern or doubt or even fear in this global movement.
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One is is clear now as we.
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E
Discussed earlier has entered our societies. AI is demonstrating it potentially can do many things humans are doing today.
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B
So job security is one concern.
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E
That's number one. Number two, as we have seen does require so much electricity, especially in the.
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US There are such debates already.
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Can this data centers eventually take power away from people who need it to be left in the cold and have.
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I consume all the power? This is power concern number number two.
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E
Number three really is a concern about a global race. Can we be actually left behind and what this means for government, for national security? I think all these are factors to cause certain pockets in the US and.
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B
Elsewhere where people are confused, concerned and.
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E
Asking for a pulse. But I think it's a mistake because if we pause say in the US or the US ecosystem or US allies many other nations.
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D
That was Peng Shao, CEO of G42 along with Bloomberg's Jomana Versace staying at Davos. Anthropic CEO Dario Amadei is warning the Trump administration against exporting advanced chips to China, calling it a mistake with serious national security risks. He sat down with Bloomberg Editor in Chief John Micklethwait at Bloomberg House where the discussion started on the state of China's AI models. Listen to this.
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B
I think they never really caught up that much. So you know, of course there was this huge excitement around deep seek. Right. But you know, the truth was a couple of things. One, you know those models are very optimized for the benchmarks. It's actually very easy to optimize a model for a finite list of benchmarks. When we go out into the world, right, when, when we're, when we're, you know, competing against other companies for enterprise contracts, we see, just honestly and candidly, we see Google and we see OpenAI. Every once in a while we see a couple other US players. I have almost never lost a deal, lost a contract to, to a Chinese model.
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G
But now you have the Trump administration.
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And I think you've already protested about.
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G
This, giving high speed chips and video.
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Chips to the Chinese. That's right, that's right. The thing that is holding them back and they've said it themselves, the CEOs of these companies say it's the embargo on chips that's holding us back. They explicitly say this. And now indeed, you know, there are some policies and I hope they change their mind to, you know, to explicitly send not quite our latest generation of chips, although it was reported that even that was being considered. But you know, the generation of chips, that's, that's just one back, that's still extremely powerful. And we are many years ahead of China in terms of our, in terms of our ability to make chips. So I think it would be a big mistake to ship these chips. You know the analogy I thought of, if you think about the incredible national security implications of building model, building models that are essentially cognition, that are essentially intelligence, right. I've called where we're going with this, a country of geniuses in a data center, right? So imagine hundred thousand people smarter than any Nobel prize winner and it's going to be under the control of one, one country or another. So, so I think this is crazy. I think it's, you know, it's a bit like, you know, I don't know, like selling, selling, you know, nuclear weapons to North Korea.
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A
Anthropic CEO Dario Amadou. They're speaking with Bloomberg Editor in Chief John Micklethwait coming up. Just check out this list of investors backing the new startup humans and we'll find out what's driving the economy, excitement and the huge funding round for a company fresh off the blocks. This is Bloomberg Tech. Every day millions of customers engage with AI agents like me. We work round the clock and have the facts at our fingertips. We're fast and effective, but incredibly patient. And we're built on Sierra, the leading AI powered customer experience platform. No hold music, just answers and action. Visit Sierra AI to learn more. That's Sierra AI.
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D
HumanZand a new startup building a frontier AI lab has raised a $480 million seed funding round at a $4.48 billion valuation, an unusually large haul for a young startup. Bloomberg's VC reporter Natasha Mascara Nas joins us now. What is the news here? I mean is it the seed round of the valuation? What do we need to know?
- [23:43]
A
Yeah, I mean this is the one of the largest seed rounds in private market history. I also like to say this is the new normal for Frontier Labs. This is five top researchers and technologists leaving Anthropic xi, Google coming together and launching honestly a competitor to their previous employers in a new way. So to me the news is that the bubble talk is at least you know, a step back for now because we are seeing investors back these early companies at very high valuation. Strategic investors like in video for example. What new do we need in a Frontier Lab right now? Yeah, so the real question that we have is what does humans and really going to launch with? We don't have a really strong idea of what their first product is going to look like. But to me it's really being set up as the opposite of the set it and forget it agents. It's going to be more collaborative. When I spoke to the company they said that it's going to be more focused on long term outcomes for communities and individuals and to me that's says you know, maybe there will be a chat interface down the road, but it won't be instant.
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C
It might be more focused on memory or collaboration.
- [24:54]
A
So what I'm watching is really to see if that's going to be the.
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C
Follow on that they promised.
- [24:59]
D
We just have 20 seconds but I guess is the clue in the investors themselves.
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A
I would say Nvidia coming out as an early investor is all you need to know about how serious they're taking the compute needs of what they're going to do. So that's what I would watch. Remarks Natasha Mascarena says it's a great write up. Thanks for coming and explaining it today. Meanwhile, coming up, replit Investor what we know about their funding round of late. Jordan is the key investor in that. Margaret Wu joins us now to talk about her new portfolio company, that's Dominion Dynamics and why she's getting into defense tech. This is Remote Tech. Welcome back to Bloomberg Tech. A check in on these markets that are under pressure. Worst day that we've seen in well at least a month for the NASDAQ 100 off by percentage point. S&P 500 raises all of its annual gains. We are selling off risk assets whether it's bonds, whether it's the dollar, whether it's bitcoin as well. We're off by more than 2.6%. Your flight to safety using gold and metals. Why? Because of geopolitics worries about Greenland, worries about a dial up in tariff threats going towards Europe and what their response might be. You keep your eyes peeled. What's happening from the focus of geopolitics and President Trump. But move on to some of the individual names that are underneath the hood. Look, it doesn't help the NASDAQ 100 if you're wiping out $150 billion in market capitalization of Nvidia having its worst day again in more than a month. But I'm also also looking at some companies that still see love Intel. Wedbush says we think that overall we're going to see earnings better than expected. We're seeing hsbc, Seaport both saying the CPU side of the equation, the ideas of PCs also the ramp up in Foundry are looking good. We are up on the 30% year to date for Intel. But I'm looking also at strategy that sells off the worst in a month because bitcoin's down, crypto's lower and we're worried about the Banking Senate committee looking at that market structure structured deal at the moment. Ed, what do you keep an eye on?
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D
Well, there's a lot of action in private markets as well. Toronto based venture firm Georgian has led a 15 million USD funding round in Dominion Dynamics, the firm's first defense tech investment. It comes, as you just said, as interest in Arctic security picks up. Joining us to discuss Margaret Wu, lead investor at Georgian Dominion Dynamics is about for both military, military and civilian use case but it's about a sensing network. In the Arctic you have focused as an investor largely on AI. This, this happens to be your first defense play. Timely. But what's your thesis here in making the play?
- [27:43]
F
Well, you're right. Dominion Dynamics is a company with a vision to become Canada's first defense Neo Prime. And they're starting by building an Arctic sensing and intelligence network for dual use purposes. Now our investment in this company really began with a first meeting with the CEO and founder, Elliot Pence. And what really struck me in that meeting was not only the scale and the strategic importance of this market, but the uniquely relevant background that Elliot has to lead in this space. Having been an early Andrew employee that helps lead the company's go to market expansion into multiple geographies.
- [28:18]
D
We see that alumni effect, that net work effect Space X alumni and or alumni new companies. But in the here and now when you, when you see the news headlines such that they are about Greenland, I guess that must give you more confidence that this is the right strategy right now.
- [28:33]
F
Oh absolutely. At Jordan we see several very strong tailwinds for a company like Dominion. First is that the Canadian government has made it very clear that they have a commitment to increase defense spending from 2% of GDP to 5% over the next 10 years. The Arctic as you just mentioned, has become an increasingly strategic and critical geography in the geopolitical landscape. And what's interesting is that there are very few technology options for operating in the extreme conditions of the Arctic environment. And Dominion is developing ruggedized devices and equipment to solve this non trivial problem. And the last thing I'll say is that with the rise of companies like Anduril and Helsing, we're really watching a battle between legacy defense primes and Neo Primes play out in the US and Europe. But it's a little bit different in Canada in that we don't have any real legacy defense primes. So there's a white space. And at Jordan we believe that Dominion is poised to go capture that.
- [29:33]
A
Margaret, there aren't many investors that also have an AI lab. So where will you help a Dominion in that case? Where you help your portfolio companies with your own talent that you Have, Right.
- [29:45]
F
What makes Georgian different and we've been investing in AI since 2016 is that we actually have our own internal AI lab of about 20 plus data scientists, ML engineers, DevOps engineers and cybersecurity professionals that work with our portfolio companies after we invest to accelerate their own product roadmaps. So as AI investors, when we were looking at defense tech in a company like Dominion Dynamics, we really see an industry that is undergoing digital transformation and disruption from AI. Like many other hardware and labor intensive industries, Defense is essentially becoming software defined. And there's an increasing emphasis on the concept of connected mass, meaning how do you quickly produce a lot of things, but how do you make sure those things, things can speak to each other. And that really intersects with what we do at Georgian every day looking at areas of technology like multimodal AI, physical AI, cybersecurity and edge computing. So our companies are working on these types of companies, tracking where we believe there are headed and going. And we believe in that sense we're going to be a great partner for a platform like Dominion along with our Canadian presence and connectivity.
- [30:59]
A
If you're thinking of you really inherently an AI investor, but now it's focused on defense. Look, defense is a hot space and we know valuations have been high. Another big bet of yours has been Replit and boy is that paying off with its scale of its valuation and the latest as we understand that, tripling its valuation to $9 billion. We understand you at Georgian are helping lead that funding round. When is it the right stage to invest? How are you getting comfortable with these valuations? Valuations?
- [31:26]
F
Well, I can't really comment on a potential transaction, but you're right, we are an existing investor in red.it and I believe this is a category defining company at the app generation layer of vibe coding. When you think about some of the lofty valuations that you're seeing, it's, it's really the potential of the, the market size behind something like relevant and app generation. If software is eating the world, then you should know that by coding is eating software and that process is only accelerating. So we believe this has the potential to be one of the largest markets we've ever seen. And what I find particularly notable about a company like Replit is that its product with the exceptional growth and millions of users is still the worst version of itself every single day. Because the company is moving with such velocity that new incremental features are coming out almost on a weekly basis. And with every new coding agent launch, the company is making leaps forward towards Creating a one shot full stack engineering team and infrastructure to boot.
- [32:31]
D
Margaret, our next guest is a pure play software name in the defense space. But I want to go back to what you just said. You know the software being a value here and also Dominion wanting to be a Neo Prime. Now we know that also software is capital intensive. I just wondered if you could reflect on that. The need to fund growth for these companies would be a talent access to compute and software competence. It's still an expensive gig.
- [32:57]
F
Absolutely. I think historically there has been Defense tech has been a harder sector to invest into because of the, the startup valley of death and the amount of capital required. But with the speed and the productivity that we are seeing with things like Vibe coding, we believe companies can move a lot faster in a much more cost effective way and that's how you've seen the rise of the Neo Primes.
- [33:22]
A
Margaret Wu, what a joy to have you on the show. Thank you very much indeed for joining today. Lead investor at Georgian. Let's stick as Ed says with the topic of defense military software startup Defense Unicorns has become a unicorn unicorn itself following say to $136 million funding round. Defense Unicorn CEO Rob Slaughter joins us to talk about the company's plans and how you're able to get the cap table. I mean you've got Bains Capital Tech Opportunities Fund there, but you've also got Answer Capital, Sapphire Ventures. I'm looking at Valor Equity Partners. What is it that you tell them you're doing differently?
- [33:52]
B
Rob really it just starts with the problem. I think obviously people know and follow the news. Everybody I think in this country believes and understands how lethal and effective the US military is. But a lot of that lethality, a lot of that capability was developed over the series of many decades. Meanwhile, the software world has completely reinvented itself for the last couple of years. So really I think what investors are coming to realize is not only is there a massive need, but there's a massive market. In addition to that there's, there's this massive change around how the Department of War is open to contracting. So specifically the Department of War really focuses on cost plus fees. I think the entire Department of War has reinvented itself allowing for more fixed price contracting.
- [34:41]
A
You call yourself the Air Gap software company. So does that get rid of Microsoft entirely? Do you come on and help? Sure. That the Department of War or any of these other military focus focused areas of government are able to still use the software providers they do. But you're able to put this layer on top that makes it safe. Where are you solving for?
- [35:01]
B
Yeah, you absolutely nailed it. Most of the entire world is cloud based. It's all centralized compute, the Department of War and we believe many companies, many individuals over the next decade or two will actually find the value of these air gapped systems. And let me define air gap for you. Air gap is fully displayed, disconnected. That means it really doesn't touch anything. It's semi disconnected, which means it might touch a few things or even extremely high firewalls to where, you know, you might have access to the Internet to certain domains. But you certainly can't go out and reach out, you know, reach out to Docker. You currently can't reach out to things like GitHub.
- [35:37]
D
Rob, you had a career in the Air Force focused on technology. Ten years ago you tried to work with the DoD to change how their approach software. Fast forward to present day. Clearly you see an opportunity. Has that changed how the military apparatus views its procurement of software? And how fast are you able to grow your contracts with the defense industrial base?
- [36:02]
B
Yeah, I think it goes back to the need. I think 10 years ago I didn't think, I don't think people really understood what our adversaries were capable of. I think there was a certain level of, you know, we have the superior tech advantage and I think objectively speaking that that's changed. And with that need comes a real desire to move quickly. You know, previously, you know, there was some talk about the valley of death. One way to look at it is there's several values of death. You have the valley of death of that first contract. But for a startup like us, you have this valley of death around software integration. And specifically as a company, that's the problem that we solve.
- [36:38]
D
Rob Slaughter, CEO of Defense Unicorns reaching unicorn status with its latest funding round. Thank you very much. Now coming up, we're going to go live to Davos for a conversation with UBS CEO Sergio Amati. That's next. This is Bloomberg Tech. As a contractor, I don't pay for.
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- [38:29]
D
Let's get out to Davos, where Bloomberg surveillance anchor John Ferro is standing by. John, take it away.
- [38:34]
G
Hey guys. Live from Davos, Switzerland at the World Economic Forum. Standing by the king of Swiss banking. He might not like that introduction. It's Sergeant Morty, the UBS CEO. Sergio, good to see you.
- [38:45]
B
Hi.
- [38:45]
G
Thanks for braving the cold. I appreciate it. Before we, before we get into the bank, we're going to ease into this and start with financial markets. What a start to the trading week. Stateside equities open up Gap Lower Bond yields Higher dollar weaker We've seen this movie before, last April. Got over it pretty quickly. We've thrown a lot of this market in the last 12 months. It hasn't stuck. Is there something different about the way we're set up for 2026?
- [39:08]
E
Well, I would say that it's probably the accumulation of issues that are now out there and not resolved that is becoming a little bit troubling in my point of view. So I think that this is the only major change, but we have to stay tuned for more volatility going forward and predictability and, and rapid changes. So I think that's staying diversified in financial markets nowadays is pretty important.
- [39:35]
G
Let's get to what that word means. Diversify. It feels like that's a diplomatic way of saying sell America sometimes. And I'm not going to put words in your mouth. I'll tell you what others are saying. Pimco is talking about a multi year period of diversification Away from US assets. We've seen from others moving out of US Treasuries countries. There was a headline earlier on this morning about a a very small Danish pension fund and they've got their own issues in Denmark right now. Given their relationship with America. What are you seeing develop?
- [39:59]
E
Well, diversifying away from America is impossible. I think that in any major asset allocation one could probably think about having an overweight or underweight. But diversifying away from the US and also from the dollar is a quite dangerous bet. Bet. You know things can change rapidly and, and the US is the strongest economy in the world. The one was the highest level of innovation right now is a little bit bumpy, but I would say that I wouldn't really bet against the us.
- [40:32]
G
There seems to be a difference between how the politicians and the policymakers talk about America right now in the backdrop for international relations and how a business person thinks of America, the economy and the opportunity. I've mentioned this stat a number of times already today about the survey that PwC put out. They surveyed four and a half thousand CEOs and the top destination for capital for investment, America. And it was up on last year as a bank boss. Right now a CEO who's thinking about expanding around the world. Why is US still top of mind for you?
- [41:02]
E
Well, because from our central point of view we, we see two big levers. First of all wealth creation, GDP growth, innovations. And also more idiosyncratic to UBS is that we see potential for us to become more present, increase our market share. So that's one place on the other end. We are also very big in Asia. I mean we manage 1 trillion of assets there. We are growing very fast. The economy is growing. You know, half of the population in the world is living there and is creating a new wealth. But you know, in, in the Americas, in the U.S. by the way, last year the U.S. created 25 million of new millionaires. So basically 1,000 millionaires a day. So it's a place for a financial institution, a wealth manager like UBS is a place to be.
- [41:54]
G
Well, let's talk about that. Is that something you want to do organically or through an acquisition?
- [41:58]
E
I think that we have enough to.
- [41:59]
F
Do.
- [42:01]
E
Organically by, by doing better. What we can do, we are enhancing our, our product capabilities. We just got a national charter application being approved by the fcc. We are expanding our interaction between the investment bank and our wealth management people. So I think that more things we can do to get better and stronger.
- [42:26]
G
It sounds like you're on the front foot at the same time as the balance ring behind me, I'm reminded of where we are, Switzerland and the issues on the horizon potentially for the bank and that's capital requirements. That feels like a cloud that's hanging over this bank right now. How quickly do you think we can resolve it?
- [42:41]
E
Not quickly. I think it's a political process. Most likely we're going to find out the direction of travel, you know, in the middle of the second quarter and then it's still a political process. But you're right that this is something that has been quite distracting for us. Although we have been quite successful in managing the integration of Ready Suisse is almost completed. We are almost, you know, three months to go and, and then, and then the vast majority of the job is done. So. But we look forward for a resolution also.
- [43:15]
G
I'm sure you do. From the strategic standpoint, how is it holding you back? How is it distracting you? What are you prevented from doing that you would like to do right now.
- [43:22]
E
At this point in time, to be fair, nothing. Because you know, executing the integration is the top priority. We cannot be complacent. Although 90, 85% is done, the last 15% is as important. We still need to take out 3 billion of cost and finalize the restructuring and then, then we can, we are prepared for growth and that's the reason why we are investing top line, but also in efficiencies. AI and, and how we can become better and stronger.
- [43:54]
G
Where do the costs come out? Are you satisfied with the size of the workforce? Does more need to be done on that side of things?
- [43:59]
E
There is still, unfortunately that's the one, you know, a big chunk of the savings are going to come by, by disconnecting all the IT systems, data centers and, but also there is a, you know, also painful still part of. On the account, but it's within what we always announced announced. So, you know, I'm, I think the direction of travel is set.
- [44:22]
G
This is the top of the to do list for you. And then someone else is going to step in eventually. You've offered your thoughts about where that someone might come from that you'd like to see them come from internally, from within the bank. You open to someone coming from the outside.
- [44:35]
E
Well, we always need to be open. I think the board is not, you know, my, my job is to, is to prepare and to present to the board as many candidates possible for internally. And the role of the board is to also evaluate external candidates and find the best solution for the future. But I would say the bank is Very strong. My team is very strong. And I do believe that, you know, an evolution is what we need, is probably not a revolution. But, you know, it all depends what's.
- [45:06]
G
The timeline for that process? Now, can you give us an idea at what point you present your ideas about who might succeed you?
- [45:12]
E
Well, we always, every year I present ideas and, you know, you offer them. Succession is not a process that you do, you know, only a few months or years before somebody leaves. Succession is something that we manage every year. And from my standpoint of view, we need to be just prepared to have the best person for that moment.
- [45:36]
G
When that person is selected, there is another seat that might open, and it's the chairperson seat. And I just wonder, when you step aside, a CEO, has the chapter truly closed for you and the bank?
- [45:47]
E
Well, look, you know, right now I'm very focused on finishing my job. Honestly, I think this is still very intense activity and, and, and that is going to be, you know, I need to reflect.
- [45:58]
G
You realize people watching this won't really believe that you are a human being. You're thinking about the future and what comes next.
- [46:06]
E
But people watching, they are not expecting me to respond.
- [46:10]
G
That is true as well, particularly this gentleman right here who wants that response from you. Just a final question from me. I believe you first took the job as CEO back in 2011. As you look back on things, and I think this is the appropriate time to begin to think about this. Your legacy at the bank. I'm not sure you ever really thought that we'd end up here in integrating Credit Suisse in the circumstances we did. But how would you like your legacy to be remembered as the leader of ubs?
- [46:35]
E
I was very proud. I mean, in a tragic moment for Switzerland and for the banking industry. I was very proud in 2023 when I, two years after I left, that UBS was asked to step in and stabilize and help stabilize in Credit Suisse. And being part of the solution, that was, for me, you know, almost reaching what I always thought I wanted to show. With our transformations in the first period right now, I think that we have a solid bank, a stronger bank than before, and I believe we are set for growth. So the legacy is always to see that when you leave after a couple of years, things are going even better.
- [47:15]
G
Sergio, it's good to see you. Thanks for making time for us.
- [47:17]
D
Thank you.
- [47:17]
G
We'll get you into the war. That was the UBS CEO, Sergio Adams, speaking with Bloomberg Surveillance right here at the World Economic Forum. Guys, I throw it back to you.
- [47:27]
A
Extraordinary conversation as always, we thank you. John Farrow there with Sergio Almaty of ubs. Now sticking with Davos and Switzerland, we have Bloomberg's Emily Chang. She sat down earlier with Demis Hassabis, the CEO of DeepMind.
- [47:40]
C
Take a listen.
- [47:42]
D
It's been hard work, really hard work getting our technology and the models sort of back to state of the art. I think we did that with Gemini 3 especially and nanobun on our imaging software. And then I think we've also sort of adapted really to this new world of shipping very fast, kind of bringing a kind of startup energy to what we do.
- [48:03]
A
Do you think people underestimated Google or got something wrong?
- [48:07]
D
Yes, maybe. I'm not sure. I mean I think we always had the ingredients, you know, to, to, to be at the forefront of this. Obviously we've got the long history in it. I think, you know, over the last Decade, Google and DeepMind between us we've invented most of the breakthroughs that the modern AI industry relies on. Now obviously transformers most famously, but AlphaGo, deep reinforcement, learning these things and we have these incredible product services, billions of user services that are natural fits for AI actually from certain search to email to, to, to Chrome and, but it's just getting all of that together and organized in the right way and I think we've done that in the last couple of years and there's still a lot more work to do but I think we're starting to see the fruits of that.
- [48:50]
A
A year ago Deep Sea seemed cataclysmic for the West.
- [48:55]
C
Now a year later it's, it's quite.
- [48:58]
A
China seems to have been quieter.
- [48:59]
D
Yes.
- [49:00]
A
Has your opinion on competition from China changed?
- [49:03]
D
Not really. I mean I didn't think it was cataclysmic in the first place. I think it was a massive overreaction in the West. It was impressive and I think it shows that the Chinese are very capable. The leading companies, I think companies like bytedance actually I would say are the most capable and there may be only six months behind, not one or two years behind the frontier. So I think that's what Deep Seek showed. Some of the claims were over exaggerated about, you know, the amount of compute they used and being so minimal and so on because they relied on some Western models and also fine tuning on the outputs of some of the leading Western models. So it wasn't sort of de novo. And the other thing I think so far is not, you know, yet to be seen is can China actually the Chinese companies innovate beyond the frontier themselves. That was DeepMind CEO Demis Hassabis there along with Bloomberg's Emily Chang. And that does it for this edition of Bloomberg Tech. Netflix reporting after the bell. That's kind of the big one we're looking for, both because of what we're waiting on. More information about this amended offer. Caro for Warner Brothers discovery to an all cash deal. But as Geeta Ranganathan of Bloomberg Intelligence put it to us, we want to know what's going to happen in 2026.
- [50:18]
A
Yeah, we want to know if it can deliver on 13% growth in revenue where they can still hit the levels of 50, $51 billion in revenue per year. Because look, with this all cash bid doesn't drive up their leverage much does sure put the pressure on Paramount Skydance as well. So all eyes on that deal on those earnings. And don't forget to check out our podcast of course find on the terminal as well as online on Apple, Spotify and Iheart to just reimagine all the conversations we've been having at Davos. And there's a lot going on this week.
- [50:45]
D
There is an earnings start in earnest. Netflix today. And then we brace for what's to come over the next couple of weeks. This is Bloomberg Tech.
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B
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