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- [00:00]
Caroline Hyde
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- [00:32]
Ed Ludlow
See details online. Introducing the all new Adobe Acrobat Studio now With AI powered PDF spaces do more with PDFs than you ever thought possible. Need AI to turn 100 pages of market research into 5 insights with a click. Do that with Acrobat. Need templates for a sales proposal that'll close that deal. Do that with Acrobat. Need an AI specialist to tailor the tone of your market report to sound real smart in real time. Do that with the all new Adobe Acrobat Studio. Learn more@adobe.com do that with Acrobat the Chase Inc. Business Premier card is a.
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Caroline Hyde
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- [01:09]
Ed Ludlow
Owners who make things happen. Earn a total of 2.5% cash back on every purchase of $5,000 or more, plus earn unlimited 2% cash back on every other purchase, giving you unlimited earned potential to invest cash back into your business. Ink Business Premier is part of a suite of credit cards from Chase for Business designed to meet your needs every step along the way. Learn more@chase.com businesscard chase for business make more of what's Yours Accounts subject to credit approval restrictions and limitations apply. Cards are issued by JPMorgan Chase Bank NA member FDIC, Bloomberg Audio Studios Podcasts Radio news. Bloomberg Tech is live from coast to coast with Caroline Hyde in New York and Ed at Ludlow in San Francisco. This is Bloomberg Tech coming up Matter eyeing Google's AI chips according to reports how the market is questioning Nvidia's long term dominance. Plus Xi Jinping brings the issue of sovereignty over Chip Hub Taiwan back on the agenda with Donald Trump during their phone call and Apple eliminates sales roles in a rare layoff to streamline the way it offers products to businesses and governments. We have the details, but first let's check in on these markets that are trying to digest a war of delayed data. At the same time as baking in maybe an 80% chance of a Fed rate cut. That's what the market price is in. But all eyes on tussle at the top in AI dominance, I'm looking at a 5 10% drop on the NASDAQ 100. On the upside, some key players on the downside, we're seeing a key drag from some of the key chip names in particular, let's delve into what's moving this particular index which does lag the S and P and the Dow. Today we're seeing in video off by 5%. No wonder the NASDAQ 100 is underwater when the world's most dominant player from a market cap perspective is coming off by 5%. Big moves for a $4 trillion company. And in large part it's because of Alphabet that actually is trimming its gains, but still at a new record high. This is, we Understand, matter eyeing TPU's this is all about the dominance of where we get the chips of the future to train our models as well as use our models. Matter is the key line of questioning here is matter eyeing TPU's from Google to put in its own data centers. They're the reports coming from the information today. Let's talk about the market reaction. Equity reporter Ron Plastellica is here with us. Ryan, it' monumental move the Alphabet has had. Since mid October it's added a trillion in market capitalization. We're starting to become aware of its prowess in AI and in chips.
- [03:49]
Caroline Hyde
Yeah, absolutely. Thanks for having me. So yes, certainly sentiment has really reversed on Alphabet and I think people are really appreciating how dominant it is across every layer of the AI stack. Of course, it recently released the latest update to Gemini, which was seen as very strong across all the major benchmarks that people use to evaluate AI models. Models. The chip business is getting a lot of attention lately. Between the report with Meta and the deal with Anthropic. People really see this as a really significant potential competitor to Nvidia, as you were discussing earlier. And beyond that, it has a huge cloud business that is seeing accelerating growth. It has so much data and users and distribution and talent. It really has all of the pieces and that has really helped. The stock surged not just recently but over the past several months. It is by far the biggest performer or the best performer of the Magic.
- [04:43]
Ed Ludlow
7 this year, I think Counterpoint Research analyst and co founder Neil Shah in a story on Bloomberg saying it's a sleeping giant in the race and is fully awoken. But many have been trading for the last few days ever since Gemini 3 release may be going short. Open air suppliers and long Alphabet suppliers. Is that still bearing out? I'm looking at Oracle down once again.
- [05:06]
Caroline Hyde
Ryan, Oracle has really been under a lot of pressure lately. I think it's on track for its biggest one month drop since 2001. So certainly a real reversal there. It does seem like people are moving towards the Google and Alphabet suppliers, which is companies like Broadcom, while at the same time the companies that are more connected to OpenAI. You mentioned Oracle also AMD Microsoft to a certain extent. These companies have really been under a lot of pressure lately.
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Ed Ludlow
It's worth reminding though that yes, Alphabet's been on a tear and actually its valuations have started to trade way higher than we used to. I think about 26, 27 times future earnings. But still leapfrog just Microsoft. Ahead of it in terms of market cap is Apple. I think it's got another 7% to go to hit that, but 15% to go to Nvidia. We're not questioning longer term at this exact moment Nvidia's dominance in AI and semiconductors.
- [05:58]
Caroline Hyde
Well, Nvidia right now has I think 90% or so share of the data center market. If there is potential for Alphabet to start eating into that, I think that would change a lot of calculations for people in terms of how much can Alphabet scale this business. I have talked to someone who thinks that this could potentially be worth more than Alphabet's cloud business, potentially up to $900 billion. So that is a huge potential market there. And if that means that Nvidia starts losing market share, I think people will start reassessing how to value that company and its growth and its val. Now I will just simply say that the AI market is growing so rapidly that people do see room for a lot of big players and even Alphabet remains a major customer to Nvidia. Just because there is so much demand for COMPUTE right now, people don't want to be beholden to any single supplier. It does suggest that there is a lot of room for growth to go around even if we start seeing some erosion in market share at Nvidia.
- [06:54]
Ed Ludlow
And I'm pretty sure Jensen Huang will be responding to any concerns about erosion in market share. Run the Celica. We so appreciate you joining. Let's dig into further analysis here with Stephanie Allagai to the conversation. She's global market strategist at JP Morgan Asset Management and has $4 trillion in assets under management. 4 trillion. Rather similar to the market capitalizations of some of these companies. And I'm interested, Stephanie, does it matter to you from a market sentiment perspective if there's squabbling at the top of the US domiciled companies? Is it a worry that we'll see perhaps Nvidia being questioned in terms of its dominance? I think it's quite healthy. We've seen the AI trade has delivered enormous returns for markets over the last two years and we're I think all kind of experiencing the sigh of relief or this exhale. I guess in a way we've moved from a rising tide lifting all boats to more choppier waters and investors are being far more scrutinizing when it comes to how much is being spent. The quality of those investments we're seeing as this AI trade continues to grow in its enormity, the investment being made and the moats and such being questions and shifting. So I think it's quite healthy that we're focusing on selectivity. I mean this is what you want to see to Prevent a.com bubble. And when looking at valuations today, you know, we don't really see a big risk of that happening amongst the big tech firms. So even these worries about debt in particular, and you are coming to us with a viewpoint that is cross asset in many ways we have seen a real desire to get into AI related debt. Some of the bond sales have come from the likes of Alphabet and the likes of Matter and Oracle have been scooped up. But there's been this worry that in the longer term it might start to maybe pull back on overall demand. We might see some of these big hyperscalers coming to market so often that it drives up prices. For others this, it's possible. I mean I think first just looking at the magnitude of how much investment is needed or being spent already by any way that you cut it, the amount of spending right now is enormous. But just like Cartier isn't that expensive for a billionaire. When looking at these capex relative to the sales from these companies relative to their current revenue growth which has also grown significantly, it's actually not that extreme. So we're seeing this increasing move to tap into debt markets. But for us it's not so much these companies getting overextended but actually more so a reflection of, you know, a better, sorry, a better capital structure. You know, there are some investments like these data centers that are going to be invested over multiple years. It might make more sense to tap debt markets for some of these deals or an off balance sheet structure. So for example, we're going to be looking not only at investment surging but, but credit default swaps of Oracle surging, has that just been acting as a bellwether and a necessary bellwether to start reflecting some of the risks that maybe people had been ignoring for the past few months? No, I think it's, it's very apt. And not all of these companies have the establishments. You know, they differ in many different ways and also in their sources of revenue. And I think it makes sense that, you know, Oracle is one of the more, you know, riskier companies that is tapping these bond markets and you're seeing that being reflected and CDS spreads, but that also can't be extrapolated to the entire shift right now towards debt markets to help finance these datacenter bills. And I'll also add, look, when it comes to cloud services, that business model is one of the most cash generative business models in the world. So at the end of the day, these bonds are also being tied to services business operations that have tended to do quite well for these companies. It's interesting of course, that deciding where the margin accrues, we're going to have Dell, HP after the bell. Many feeling that margin is being eroded because of the cost of memory. Meanwhile, we'll get Micron next week with its earnings and many anticipating they're strong because of the memory demand there. From your perspective, is there still room to run in just the tech trade more broadly or has that shift into more value names? And certainly with the context of the Fed changed things longer term into the end of the year, we still think we're quite, quite early in this wave, but we've seen a chapter or two. And moving forward, I think the focus is not going to only be on compute needs and capacity needs, but also on AI utilization and what companies are really critical for that. Whether it's in software, what companies are leading the way in financials and entertainment, in adopting AI, and then also how, once we learn more about the end user demand for AI in the pricing power of these services, that's going to give us a lot of clarity around the ROI around these investments. So is that what we need? Is it ultimately the revenues of companies outside of the world of tech to vindicate that? What pushes us higher in terms of real context for you? Is it December when we get the Fed decision? What is the catalyst, do you think, for us to reassess where we are in valuations? I'd say it's less of the kind of macro backdrop really here and much more of the kind of proof point around the monetization of AI. I think the more that you see businesses ramping up their IT budgets, the stickiness that you see in those investment spending and then also AI delivering and we've seen some proof cases of that so far. Coding has been a huge factor of that. But once you see more companies, particularly outside of tech, maybe tech adjacent coming other earnings calls and talking about their AI generated savings, I think that's going to be a really important next lever for the trade. And then what about the lever for actually the companies that are adopting the clients that are calling you on a daily basis, Are they saying do I double down more in tech or are they saying I need to double down outside of the world of tech? I think it's, it's diversifying that tech exposure. You know, after a long run in these names, you don't want all your eggs in one basket because it is all in Nvidia. No, probably, probably not. At least you want to right size some of that exposure, build on top of all of those gains that we've experienced and position for how this wave is going to evolve. There will undoubtedly be losers and winners and but we also don't want to be out of the market. And that's another thing that we're trying to talk to clients about because even when you call a bubble correctly, if you weren't in the market from 1995 to 1999, you would have missed out on over 400% and total return in the Nasdaq. You were right. But you locked in years of underperformance to so when it comes to US Equity markets today, we don't see that real risk of a systemic bubble. But we do see a real opportunity to just make sure that portfolios are built for resiliency and they're also built to take advantage of how this wave continues to evolve. Well hopefully keep having you on as a bubble or indeed the narrative does evolve. We so appreciate Stephanie Aliaga of JP Morgan Asset Management can cross tech for us. Meanwhile, coming up with China's Xi Jinping revives talk talks to sovereignty over Taiwan in a phone call with President Trump. More on that next. This is Bloomberg Tech. Chinese President Xi Jinping well has revived the topic of China's sovereignty over Taiwan in a phone call with President Trump yesterday discussion that didn't come up during their face to face meeting last month in Beijing. Bloomberg senior tech editor Mike shepherd joins us for the latest. And Mike, remind us from a tech perspective, Taiwan, we know its dominance in chips. We understand its integral nature to the tech ecosystem. What is happening between Xi Jinping and Trump on this?
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Caroline Hyde
Well, what was interesting yesterday, Carol, is that we get two very different versions of this phone call between the leaders of the world, so two largest economies. The first version came from Beijing. The official state news agency, Xinhua put out its version of the conversation, presenting it really as one centered on the question of Taiwan. And then a few hours later, we heard from President Donald Trump himself on Truth Social, posting that they had had a great conversation about issues including soybeans and, and other matters, rare earths and other key topics and that were dear to the US President, but he made no mention of Taiwan there. Now, while he did not bring it up, several hours later, he did call the new Prime Minister of Japan, Japan, Sinai Taka, who had enraged Beijing with comments a few weeks ago. You'll remember Carol saying that Japan would consider leaping to Taiwan's defense in the event that China were to try to take it. Now, all of this has huge implications for, for the supply chain of semiconductors, as you noted, especially Taiwan Semiconductor. It's one of the world's largest producers of AI chips, and they are moving some of their production, as we know, to the US they've pledged $165 billion in investment in plants here in the United States, but they would still retain a significant amount of their capacity on the island. Therefore, any question of Taiwan really does bring up tech issues for us.
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Ed Ludlow
And talking of tech issues, the administration once again trying to signal its commitment, seeing the infrastructure build out akin to the Apollo mission or to the Manhattan Project.
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Caroline Hyde
Mike, now they are talking about a Manhattan Project like effort in this executive order called Genesis that President Donald Trump signed yesterday. But it was really more a call to action for various agencies to start working together more closely, and that includes the Department of Energy and its national research laboratories. But when we talk about Manhattan Project, though, we do need to remember that that effort took $36 billion in real dollars today from back then in the 1940s as the United States was in the race to develop a nuclear weapon ahead of the Axis powers. This is a very different time. We are not seeing new money being pledged toward this effort. It's important to remember, Carol, though, that the US Already has put in production of chips that would be needed for artificial intelligence, and that is the Chips and Science act of 2022 that put tens of billions of dollars in loans and grants and other support, including tax incentives, to support the development of a chip industry domestically that would help artificial intelligence take hold and gain ground and lead the world as President Biden and President Donald Trump now say they would like the US to do. Now we are seeing companies like Open Air push for further investment to support data centers and that would include extending some of those tax credits to data centers. It'll be interesting to see how this develops and whether more of those tax credits will go to some of those projects. Just Kara, as we are wrestling with those questions of whether we are seeing too much money going into this space.
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Ed Ludlow
Bloomberg's Mike Shepard all the context from Washington. We appreciate it. Meanwhile, it's time for talking tech now. First up, Alibaba reported 34% growth in its cloud unit during the September quarter. Despite the gain though, spending on consumer subsidies, data centers has eaten into its profits. The company's ADRs as you can currently see, just trading off by some 2% today. Meanwhile, anthropic it's got a new model, Claude Opus 4.5, that the company says is better at coding and office tasks such as financial analysis and creating presentations or spreadsheets. It's part of Anthropic efforts to compete with OpenAI with Google for Business customers. And meanwhile, OpenAI is a new tool to generate personalized shopping guides. The company trained a version of GPT5 mini model to ask follow up questions, draw answers from reviews published on what the company considers higher quality websites. Now let's talk Apple. Because in a rare movie move for the company, the tech giant has eliminated dozens of sales roles in an effort to streamline the way it offers its products to businesses, schools and governments. For more on this breaking story, Mark Gurman joins us. It's not hundreds, we're talking tens of people. But still it's notable because we don't often see layoffs at Apple.
- [18:54]
Caroline Hyde
Yeah, to your point, it was several dozen people across Apple's sales division. And the sales division, they partner with carriers across the world to sell iPhones, but they also partner with enterprises, large scale businesses, government organizations, schools, educational institutions, major universities across the world to sell products like iPhones, iPads, Macs and you name it. And over the course of this month, there was a big streamlining rounds of layoffs, including, like I said, several dozen people. There were account managers, they are called account executives for specific government agencies, for specific university systems, people who partner and pitch companies on buying Apple products. There are these tiny Apple store like fixtures called briefing centers at Apple offices in California and Texas. And the people managing that for the most part were laid off as well. And so this is going to change how Apple sells products to these different organizations. The majority of products are bought through what's called the channel. So third party retailers and so those products are still going to sell but quite a bit of a shake up here for Apple sells products and delivers these devices to the major customers and of course as you said a rare layoff for Apple.
- [20:14]
Ed Ludlow
Apple did respond to your reporting and saying we're continuing to hire and those employees can apply for new roles. Mark but what do you think this signifies more broadly about how Apple is trying to streamline line, trying to become more efficient, trying to ensure that it doesn't seem like it's a laggard in this age of AI?
- [20:32]
Caroline Hyde
Yeah, you know I don't think this has much to do with I think this has to do with cutting roles internally to lower costs because they realize most of these sales are happening from the channel and there's a lot of duplicate efforts internally with the channel so the third party retailers. So I think it's just one of your classic layoffs to to create more efficiency and cost cutting rather than having much to do with artificial intelligence. In terms of layoffs related to AI at Apple, I guess the only thing you've seen related to AI from Apple that has to touch a layoff was the self driving car project job cuts of a thousand people in the beginning of 2024 and that was actually to do more AI rather than because of AI. So they moved a lot of those folks over to the generative AI division. But I haven't seen any job cuts at Apple to date because of AI. That doesn't mean they're not going to happen but so far they haven't.
- [21:27]
Ed Ludlow
Well thus far we're starting to still see some job cuts across technology. And Mark Gurman, you've been at the front of that reporting. We really appreciate it now coming up, Michael Burry stands by his Nvidia criticisms as after calling out the company for stock buybacks for compensation dilution but in video itself responded to analysts. More on that next is a Bloomberg Tech Foreign.
- [21:55]
Caroline Hyde
Six Chinese people. There's a Ping an customer. We have accumulated a massive amount of the customer data not just on the financial side but end to end across channels thanks to our AI advancements.
- [22:06]
Ed Ludlow
This is the Technology Empowered Growth at Ping an podcast. In our latest episode Ping an is utilizing technology to provide integrated and personalized 24. 7 support for China's rapidly growing elderly population. Now available on Spotify, Apple podcast and Ping AD's website.
- [22:23]
Caroline Hyde
Support for the show comes from public.com you're thoughtful about where your money goes. You've got your core holdings, some recurring crypto buys, maybe even a few strategic option plays on the side. The point is you're engaged with your investments and Public gets that. That's why they built an investing platform for those who take it seriously. On public you can put together a multi asset portfolio for the long haul and stocks, bonds, options, crypto, it's all there plus an industry leading 3.6% APY high yield cash account. Switch to the platform built for those who take investing seriously. Go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market paid for by Public Investing. All investing involves the risk of loss, including loss of principal. Brokerage services for U.S. listed registered securities options and bonds in a self directed account are offered by Public Investing Inc. Member FINRA and SipCrypto trading provided by ZeroHash complete disclosures available at public.com disclosures.
- [23:22]
Ed Ludlow
Introducing the all new Adobe Acrobat Studio now with AI powered PDF spaces do more with PDFs than you ever thought possible. Need AI to turn 100 pages of market research into five insights with a click. Do that with Acrobat. Need templates for a sales proposal that'll close that deal. Do that with Acrobat. Need an AI specialist to tailor the tone of your market report to sound real smart in real time. Do that with the all new Adobe Acrobat Studio. Learn more at adobe.com/do that with Acrobat. As we've been reporting, Nvidia shares they are under pressure today. Competition fierce when it comes from Alphabet and TPU's. We understand reporting that Matter is eyeing potentially turning to Google for its chips in its data centers in the future. But there's also Michael Burry there isn't that standing by his criticism of the company after a video pushed back on his earlier analysis of stock based compensation of share buybacks. For more Bloomberg equities reporter Carmen Reineke reminds us of what the Cassandra, as he dubs himself, has been saying. Michael Burry laid on issues about the circularity of tech deals. Worries about the interoperability of what big tech occurrences currently doing in the world of generative AI. What did he take issue though with Nvidia when it came to share buybacks and stock compensation? Yeah, so I think most basically his.
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Caroline Hyde
Argument is that the amount of stock.
- [24:48]
Ed Ludlow
Based compensation is diluting, you know, owners.
- [24:52]
Caroline Hyde
Power, that if you hold the stock.
- [24:54]
Ed Ludlow
It'S being diluted by the stock based compensation and so it really is just another thing and sort of a myriad.
- [25:00]
Caroline Hyde
Of things that he has called out with Nvidia in recent years, recent weeks.
- [25:04]
Ed Ludlow
And yeah, we saw the company, you know, push back.
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Caroline Hyde
There was a memo that they sent.
- [25:08]
Ed Ludlow
To some Wall street analysts.
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Caroline Hyde
This is according to a Barron's report that said, you know, we think his math is wrong.
- [25:14]
Ed Ludlow
Kind of explained the situation a little bit better and also very blatantly stated.
- [25:18]
Caroline Hyde
You know, where we're not Enron, where.
- [25:20]
Ed Ludlow
We'Re not, you know, there's no fraud here.
- [25:24]
Caroline Hyde
But, but Burry really said, you know, I stand by my analysis that you.
- [25:29]
Ed Ludlow
Know about the stock based compensation dilution share buybacks. And he also said, you know, I'm.
- [25:34]
Caroline Hyde
Not comparing Nvidia to Enron, I'm comparing.
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Ed Ludlow
It to Cisco which I thought was really interesting thinking about Cisco, you know in the dot com era it had this huge run up but it was really associated with the over build in fiber optic cable. So he's comparing that to what's happening now I guess with Nvidia with data centers. And these are really some of the biggest, biggest concerns or pain points that we're seeing in this debate over if.
- [25:58]
Caroline Hyde
AI is a bubble.
- [26:00]
Ed Ludlow
And you know, Nvidia shares are down, I think they were down as much as 6% today. We're seeing, you know, more than $200 billion in market value just wiped off. And we're also watching that sort of 20% level. Nvidia's nearing 20% drawdown from its high at the end of October which is a significant level for the shares Technical bear market. Extraordinary. Thank you very much. Coming in, Reiner. He always has some of the most read stories across all of the technology moves. You've got to keep them up to date with it. Meanwhile coming up, Google's potential chip deal with matter. It's raising questions about Nvidia's dominance in the race for AI leadership. More on that take next. This is Bloomberg Tech. Welcome back to Bloomberg Tech. Let's take a check on these markets because we have seen some sell off continuing in the world of technology. Unlike S and P, unlike the Dow, the Moon music remains resolutely in the red. We're off by 410 of a cent. We're seeing some of the big tech names, namely Nvidia on the downside. We're still questioning valuations as we get that myriad of data that comes late to the party. When it comes to certainly our own consumer sentiment seems to be on the low side but we're seeing retail sales maybe pointing towards whether or not. We got some resiliency in the overall macroeconomic picture. But Nvidia is more a story of its resiliency versus competition. We're down by 4% once again. We're wondering if other chips will be created by other players like Alphabet for example. Its TPU is maybe being eyed by matter. That story we can delve into. We're seeing both shares trade higher. Oracle and any name really in the open air ecosystem has been a typical short for the last week or so as people question OpenAI dominance versus Gemini 3 for example. So Oracle once again off by another 2%. Let's really dig in though into the story of the day of Alphabet really giving in video a run for its money. Certainly a market capitalization front at least. Mandeep Singh, you're here. Senior Tech Analyst at Bloomberg Intelligence. You have for months, if not years been reminding me and our viewers of the power of the ecosystem of Google and TPU's. Why now are we only just getting it?
- [28:09]
Caroline Hyde
Well, because Gemini 3 showed that you could use the TPU's both for training the model and for inferencing. I mean so far the story was all these secondary providers could be used for inferencing. The fact that TPU's were used for training Gemini 3 and most likely for Anthropic frontier model as well. So two of your three Frontier models are using TPU's and I think there is an acknowledgment now from the market that TPU's are comparable to Nvidia in terms of functionality and they are a lot cheaper which is why I'm not surprised to see better do that. I mean they will raise capex and you know going to the secondary provider who is much cheaper option makes sense. And I think market will like it when they raise the capex and say that we will be using Google as their secondary provider.
- [29:02]
Ed Ludlow
These are thus just reports as it stands Mandy. But what's interesting has been looking at Jensen Huang's reaction when Alphabet or others have made inroads into some of their key clients, anthropic for example, getting a load of TPU's from Google and then we see more of a deal done between Nvidia and Anthropic. We know that Nvidia has doubled down on OpenAI with $100 billion being offered in return for a GPU has been considered in their future training. So what do you think the response mechanism could be of Nvidia?
- [29:34]
Caroline Hyde
I mean right now Nvidia's problem is no one wants to pay the, you know, the high cost they have for their chips. And that gets reflected in Nvidia's margin. 75% gross margin is something we have never seen with a semiconductor company. So from that perspective that you know, the providers who are doing inferencing are offering their products below cost, even an open air when it's deploying, you know, it's chatbot at scale I would argue, you know, their gross margins are negative because they're offering their product at below their cost. In the case of Google, they are deploying, you know, generative AI at scale on search and across their family of apps. And they're able to do it without really hurting their margins because their cost base is much lower, they're running their infrastructure a lot more efficiently. And so that is where the problem lies is you can't just keep subsidizing the inferencing because the cost of your chips is so high with Nvidia and you got to find a way to bring down the costs. Everyone wants more inferencing. You just have to bring down the cost so that you know, they can do it profitably.
- [30:43]
Ed Ludlow
Well, we'll see how the response does indeed turn out and how they compare and software offerings as well as the hardware. Mandeep Singh and Bloomberg Intelligence always across the story. We so appreciate it. More insight into AI and indeed margins is set to come after the bell. Dell, hp they report. Bloomberg's Dana Bass gives us the preview. We're just hearing about the very healthy margins that in video has and in many ways it's because the margins of Dell and HP and server offer is a much thinner. Sure, yeah, Dell. The most watched part of Dell's business for the last couple of quarters has been its AI server business. Many, most all run running Nvidia GPUs and they have some a really a marquee list of customers as core weave there's X we reported the other week there they just got a deal for the first Armenian data center. The problem is in order to win some of those deals and to execute on them, Dell has had to put up with some pretty narrow margins over at hp the margin pressure is now coming from memory. So hp, the memory chips that they need to use for their personal computers are also rising in price. And so there's a concern for the future numbers from HP about how they're going to handle that margin impact on the PC side. I mean it bodes well for Micron whose earnings come the week after. But what's what's interesting thing more broadly is have they from a stock perspective, from an investor perspective, ridden the air wave? How much have people been looking to HP more broadly for AI to be the real winning star for it? So, so there for them it's more on the PCs. An increasing percentage of their personal computers are these AI PCs which have a different special chip, not an Nvidia one, in order to run AI functions natively in the personal computer. They're also really riding an upgrade wave. With Windows 10 going out of support, people are needing to Upgrade to Windows 11. So that's been, that's been helping them. But having that come at a time where they're going to have to potentially incur higher costs for the memory going into those machines is, is a concern. Well, you're going to be busy after the earnings bell tonight. Bloomberg's DNA of us across all all things Dell and hp. We keep an eye out. Meanwhile, coming up, we go to the private market. Sequoia Capital partner Brian Halligan is going to be with us. And how you model for a desirable founder and CEO, that has changed for venture investors. That's next. This is Bloomberg Tech.
- [33:15]
Caroline Hyde
Support for the show comes from public.com you're thoughtful about where your money goes. You've got your core holdings, some recurring crypto buys, maybe even a few strategic option plays on the side. The point is you're engaged with your investments and Public gets that. That's why they built an investing platform for those who take it seriously. On public, you can put together a multi asset portfolio for the long haul. Stocks, bonds, options, crypto, it's all there. Plus an industry leading 3.6% APY high yield cash account. Switch to the platform built for those who take investing seriously. Go to public.com markets and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market paid for by Public Investing. All investing involves the risk of loss including loss of principal. Brokerage services for U.S. listed registered securities options and bonds in a self directed account are offered by Public Investing Inc. Member FINRA and SIPC. Crypto trading provided by ZeroHash. Complete disclosures available at public.com disclosures introducing.
- [34:15]
Ed Ludlow
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Caroline Hyde
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- [36:25]
Caroline Hyde
Well, I'm old enough that I lived through the last bubble, Caroline, and history doesn't repeat itself. But it rhymes. Yeah, and there's definitely some rhymes going on. Like man, the valuations are high and they're high early. The thing that's different is my goodness, is there galactic level growth in these startups. The demand is amazing and it sort of started at the, at the, at the model level and then went to infrastructure, the app level. Companies are absolutely ripping now and so it's an interesting time. It's different than 99.
- [37:02]
Ed Ludlow
How are you therefore setting up as you're helping CEOs become from startup to scale up mindset and 11 labs for example, which I hear time and time again getting adopted, even Jensen Huang saying how much he's loving that particular product that's a CEO you're helping navigate. What do you say to them in these moments?
- [37:19]
Caroline Hyde
So if I were a founder and I were worried it were a bubble, I would do a couple of things. First thing I would do is in my next round, I would take a little bit of money off the table. Oh. The second thing I would do is I would raise a lot more than I planned. Because if it is a bubble and it dips and it eventually comes back, you want enough to last through. Those would be the two play 2021 mindset.
- [37:39]
Ed Ludlow
A little bit.
- [37:40]
Caroline Hyde
A little bit, yeah. A lot of those companies, 2020, a lot of great companies just didn't kind of make it out. They didn't raise enough. They didn't make it through. And if you look at 99 or the bubble era, you know, so good companies can out of there. Google came out of there. Amazon came out of there. Salesforce.com came out of there. And so even if the valuations are really inflated, if you can find some amazing founders, I mean, there's. There's going to be a lot more than three that come out of this one.
- [38:06]
Ed Ludlow
There's a lot more than three companies trying to get it on each other's space as well. And this is where kind of marketing comes in. And I want your brain space as someone who's helped led HubSpot, founded it. But also you've got this great new book out. I'm no Deadhead, but I know many people are. You are a quintessential Deadhead, and you loved all things about the Grateful Dead. But you think we should look at the Grateful Dead as a marketing model as well. What is it about community? What is it about? I'm sure it's not about bootlegging music that you think is the thing to repeat.
- [38:33]
Caroline Hyde
Absolutely. There's so much founders can learn from Jerry Garcia and the Grateful Dead. First of all, Garcia was like the ultimate in original Silicon Valley founder, founded in Palo Alto, built an amazing company. He did a lot of interesting marketing things that all the founders I coach are trying to do. First thing he did was he kind of created a whole category around this thing called jam bands that lots of people follow. Hard to do. Second thing he did is he didn't use traditional ways to market his product like radio stations and albums. He let people come in with all their equipment and record the concerts in trade tapes. He went. He was like the first viral marketer in Silicon Valley. The third thing he did that I think is quite remarkable is he didn't like that Ticketmaster in the scalpers made all the money and inflated the prices for his customers. So he disinformated those two layers and he said, we're going to start a ticketing company and we're going to sell tickets directly to customers. We're going to cut out Ticketmaster and all the scalpers. So he thought in a very original way, he was a. He was a radically first principles founder. He rhymes a lot with Jensen Huang, rhymes a lot with Sam Alban rams a lot with Steve Jobs.
- [39:42]
Ed Ludlow
What's interesting, and I'm going to keep going with this Grateful Dead analogy because I love it, disbanded in 1995 after the passing of Jerry Garcia. And there's been different combinations since that. And co we see some artistic differences. Dare I say there's a few artistic differences. Businesses as Sequoia at the moment and invention more broadly. You've been at Sequoia for a year. There's been a lot of change at the top. How are you seeing the venture community set up for this moment? What can they learn from Grateful Dead and from entrepreneurialism in this moment?
- [40:12]
Caroline Hyde
I think Sequoia is particularly well set up at the moment. The two new leaders are fantastic. They've been there a long time, they have amazing track records and like I think of the stack is like the hardware, the labs infrastructure, the apps. Sequoia is well positioned with amazing investments across all of them, particularly at the app level and particularly here in New York City. Last night I had dinner with the CEO of Profound, terrific company that does not SEO, but like SEO for chat, CBT and Gemini. And the founder of Rogo, fantastic CEO. Rogo is like AI for investment bankers. I think this is emblematic of what's going on. The app layer is starting to pop in. Sequoia is on a lot of these things. Other great companies in New York basis is selling to accountants. You've got Crosby and Harvey selling to lawyers. New York is actually having a moment in AI and it's kind of at that app level.
- [41:02]
Ed Ludlow
The app level is where perhaps the productivity really starts to rein in. That is what the proof point is needed, many would say, for the market, when actually you and I are not just using it for our own personal life, but see productivity go up and to the right and companies start doubling down on the purchase of these applications. What does that show up? When do we stop even talking about an AI bubble? Because we see the productivity, well, there's.
- [41:25]
Caroline Hyde
Just giant demand in galactic growth. One of the interesting things about all these founders is I'm like, well you're certainly going to grow with less people, right? And they said, well actually no, we're hiring, really hiring aggressively. And so like there's some people are like, is going to make humans unnecessary, necessary? They're like, no, we're going to make users unstoppable. And that's sort of the mindset across most of these AI startups. So they're pressing hard, hiring hard, growing hard and I think you'll start seeing over the next couple of years big productivity advantages like HubSpot uses AI across the enterprise and customer support in R and D. Massive productivity benefits across a couple of big parts of the enterprise.
- [42:05]
Ed Ludlow
I mean we're using Juice Box, which helps with hiring in the world of AI as well.
- [42:09]
Caroline Hyde
One of my favorite founders of Companies on Fire.
- [42:10]
Ed Ludlow
Yes, it's been wonderful having you here. You're on fire to enjoy the rest of your Thanksgiving. Brian Halligan in the house. Akoya Capital partner that we thank him. Meanwhile, coming up, robot housekeepers, are they close to a reality? We'll talk to the CEO behind Memo, the robot trained on and for your housework, Bloomberg Tech. Let's return to our key story of the day. Shares of Alphabet, another record high. They're rising as the company is said to be in talks potentially with Matter over a deal to provide AI chips. TPU's Google's own in house chips to Matter for the future. It's all according to a report by the Information. Let's get more on this and other trends and I want not to be using generative models for this holiday. Davey Alba, you're with us. And just first to the bread and butter of Alphabet. How much has caught you off guard? People working at Alphabet off guard that finally we get the understanding of the vertical model integration.
- [43:10]
Caroline Hyde
You know, I don't know that I.
- [43:11]
Ed Ludlow
Was necessarily caught off guard by that. I think that this has been creeping.
- [43:15]
Caroline Hyde
Up for a while. But it does seem like the rest of the industry is catching up to.
- [43:20]
Ed Ludlow
This idea that TPU's have enormous value and are a really, could be a.
- [43:26]
Caroline Hyde
Really valuable, valuable part of, you know.
- [43:28]
Ed Ludlow
People'S mixes that, you know, Nvidia is.
- [43:31]
Caroline Hyde
Not the only game in town when it comes to chips.
- [43:35]
Ed Ludlow
Certainly we've heard DA Davidson, you've heard Bernstein, you've had a lot of analysts saying this could be a really individual way of selling it. And interestingly now, maybe not just for Google Cloud, but TPU's in and of themselves. But aside from Alphabet, what they're doing in terms of the chip stack, their models, how are people going to be using them this holiday? You've got to go. Great story out about the anxiety perhaps this is going to create in the kitchen.
- [43:59]
Caroline Hyde
Yeah, we published a story this morning.
- [44:02]
Ed Ludlow
About how food bloggers are warning consumers about a recipe slop ahead of Thanksgiving.
- [44:11]
Caroline Hyde
We talked to 22 food bloggers ahead.
- [44:15]
Ed Ludlow
Of the holiday season and all of them report, you know, traffic declines. And I Frankenstein recipes that remix their recipes and pull in bits and pieces of other recipes to create content that is not accurate.
- [44:31]
Caroline Hyde
That where if you follow the actual recipe steps that are generated by these.
- [44:36]
Ed Ludlow
AI models, you could come out with.
- [44:39]
Caroline Hyde
Literal slop, you know, inedible food. And it's really confusing people these days, sort of where to find quality content.
- [44:51]
Ed Ludlow
On food recipes this, this holiday season. Maybe stick to the source for now at least. Davey Alba punning all puns. I thank you. Meanwhile, let's talk about what else you need helping you in your kitchen. Maybe it's robots. Well, they've been busy dancing, they've been boxing, they've been running marathons. So why are they not doing more of your chores? This is memo from a startup Sunday Robotics. The company says its robot is purpose built for housework, trained on millions of episodes of everyday household routines. Sunday's co founder and CEO Tony Zhao joins us. Now. Your robot is kind of humanoid, like a little, but not totally. How does it differ from other robotics?
- [45:33]
Caroline Hyde
Yeah, I think we just think about safety as a really high priority item and we define it as being like passively safe. And what it means is that you can put the robot into any configuration and you can cut power and the robot will still be stable. So this is why we build this whole mobile base as opposed to Lex.
- [45:53]
Ed Ludlow
Where did you ultimately come to decide that this was the way in which you should think about robotics? Maybe not in a humanoid manner, maybe just with real safety first. You've got a stellar background. You're at Google DeepMind, Tesla Autopilot, Google X. You're also, of course, just coming out of stealth with a cool 30 million to put to work.
- [46:13]
Caroline Hyde
Yeah, I think the, the biggest way we think very differently is actually on how to train these robots. Not just the design, but how it obtain its intelligence. So normally people train their robots through teleoperation, which essentially means that you kind of log into the robot robot and control how it moves. But the way we learn is actually very, very different. That we learn from Humans directly. That's essentially we designed this device, a glove that captures how human do their chores and we're able to transfer those data directly into the robots and that's how the robot is able to learn from like hundreds of humans simultaneously.
- [46:50]
Ed Ludlow
These robots don't come cheap. But interestingly, Tony, you're not looking to sell immediately, you're looking to beta test. Now. How are you finding the right people to bring these robots into their home?
- [47:03]
Caroline Hyde
Yeah, so if you look at our website, we actually have a huge sign up doc for people who are interested and we already got more than a few thousand of these applications. So what we're going to work on next is to like very carefully sift through all these applications and find people who, what we call like founding families who will be there to give us feedback, will be there to kind of shape what a product will look like in the future.
- [47:29]
Ed Ludlow
What do you think the hardest element for these robots is?
- [47:33]
Caroline Hyde
The hardest element I think it will be how people will react to this like big robot in their homes. And again, this is the first time that anyone has put a mobile manipulator, like a robot with arms into real living homes. And this is something that we're incredibly excited about. I think will be people will be pleasantly surprised by how useful it is.
- [47:56]
Ed Ludlow
Why do you think so many tech companies do end up turning to humanoids, to turning to the physical form of a human rather than a more stable base as you have?
- [48:08]
Caroline Hyde
Yeah, I think if you're working on environments that with a lot of stairs or you're working on environments with like, you know, like hills, I think having Lux will be helpful in that case. And for us, in our first product, we decided to go for a real base just for the simplicity, for lowering costs and to allow us to move faster.
- [48:32]
Ed Ludlow
Talk to us about costs. You have managed to raise seed funding for from Sarah Gow over at Conviction. You've now got money coming in by benchmark. What is the key cost for you? Is it the talent? Is it the hardware? What is it?
- [48:46]
Caroline Hyde
Yeah, so our hardware is actually quite differentiated from a lot of humanoids. Even at quantity zero when we prototype it these days it costs around 25k to make and at quantity around like 5000 we're able to get a cost to below 10k. So I think we'll be ending up selling it around to 5 to 10k in the final price. And this is, we're thinking about robots, not like another car like purchase, but more like a fancy smartphone or a laptop.
- [49:17]
Ed Ludlow
How does American ingenuity when it comes to robotics stack up to that of Asia and China. And how you seeing your own supply chain develop?
- [49:25]
Caroline Hyde
Yeah this is a great question. I think American and has incredible mechanical engineers, software engineers but we are lacking in terms of some of the supply chain infrastructures. So I think we're at a point that we need to leverage some of the growing supply chains the humanoids in China and we actually share a lot of components with them so that we can have the economy of scale before us shipping like millions of robots only.
- [49:56]
Ed Ludlow
Jo CEO of Robotics Startup Sunday Fascinating to have you on. Thank you very much indeed. That does it for this edition of Bloomberg Tech. We do want to remind you of the market moves today. Nvidia under significant pressure off of its lows still down by 4% as we question its dominance in the world of chips to train as well as use your models. That competition coming Maybe from Alphabet TPU's maybe meta eyeing buying some for its its data centers of the future as information is currently reporting Oracle once again off by 1.9% from New York, this is Bloomberg Tech. Don't forget to check out the podcast. Hiscock Small Business Insurance Knows there is.
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