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- [00:01]
IDA Ireland Representative
With the highest number of young STEM graduates per capita in the eu, Ireland has the people and skills your company needs to succeed here. IDA Ireland, the national investment development agency, can help you find and nurture the people you need to internationalise and thrive. Our talent is just one of the extraordinary benefits Ireland has to offer. Learn more@idailand.com invest in extraordinary.
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Bank of America Representative
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IBM Representative
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Bank of America Representative
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Bloomberg Tech Host
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IBM Representative
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Bloomberg Tech Host
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IBM Representative
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Bank of America Representative
America checking account and grows from there. What would you like the power to do?
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IBM Representative
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Bank of America Representative
account@bankofamerica.com B of A rewards bank of
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IBM Representative
America Corporation All Rights Reserve the thing about AI for business, it may not automatically fit the way your business works. At IBM we've seen this firsthand, but by embedding AI across hr, IT and procurement processes, we've reduced costs by millions, slashed repetitive tasks and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business IBM
- [01:33]
IDA Ireland Representative
Bloomberg Audio
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Bloomberg Tech Host
Studios Podcasts Radio News.
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Bloomberg Tech Reporter Ed Ludlow
Bloomberg Tech is live from the heart of Silicon Valley with Ed Ludlow in San Francisco.
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Bloomberg Tech Host
This is Bloomberg Tech. Coming up, we check in on Nvidia and its next generation AI chips as the battle for compute gets into high gear. Plus a judge hits pause on Paramount's merger with Warner Brothers Discovery throwing the Blockbuster Media deal into limbo. And the race is entering a new phase with Washington promising to scrutinize Chinese models as investors hunt for the next big winners. We're going to discuss with some of the lock yet of Bessemer Venture Partners chip makers semiconductor stocks. The rebound continues and is gathering some pace. We went from closing in a bear market Friday, which was catalyzed by the Kimmy K3 release, to now being a little more confident after that pullback. The Philadelphia semiconductor index or stocks is up more than 4%. A big point being that even in yesterday's session we saw some pretty wide swings and choppy changes between the level of gains that that index had. We're also checking in on shares of Nvidia. Actually just in the last 30 seconds, taking a little bit of a tick higher, up 1.4% have been higher. Nvidia says it's full steam ahead on its latest chip designs, Accelerated computing systems based on the new Vera Rubin platform have been delivered to major AI companies and are about to start running workloads. Bloomberg's reporting the Vera Rubin rollout has been under scrutiny by both investors and analysts. For more, Bloomberg's Ian King joins us fresh off a trip to Nvidia HQ in Santa Clara. And you've been speaking to one of the key leaders there about the actual state of play. What is it?
- [03:25]
Bloomberg Tech Reporter Ian King
Ian Book, who's basically the head of their data center business, dragged us all into Jensen's office and we all got a walk through of where they are basically. And really what they were keen to do was to kind of slay the dragon. This kind of lingering myth that there is somehow a problem with the rollout. They said, you know, we're going to go faster, everything's working. They even took us to a secret location and showed us a rack of servers that's already actually in use, up and running.
- [03:55]
Bloomberg Tech Host
A rack of servers. This is a representation of MV 72, 72 Rubin GPUs. Obviously this is not life sized. It wouldn't fit on set with you and I. There was the key takeaway from the real version of this, that it's in full production. You know that I think Jensen's been quizzed about that quite a lot recently. But that is pretty definitive answer to what the market's been questioning.
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Public.com Representative
Right.
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Bloomberg Tech Reporter Ian King
There was a report out there saying that they had some actual materials issues, that it wouldn't be ready. And what they did was say, look, it's here it is. Guess what?
- [04:33]
Bloomberg Tech Reporter Ed Ludlow
What?
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Bloomberg Tech Reporter Ian King
What? Used to take hours for a human to put together and a human who would make mistakes. Now we've designed it so it can be put together by a robot.
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Bloomberg Tech Host
Great pictures, by the way, that you took on your trip down to Nvidia HQ with the iPhone.
- [04:47]
Bloomberg Tech Reporter Ian King
And they said, look, when we drop one of these things off at the dock at a data center in the past, you know, it would take a long time to get it up and running. Now we're talking tens of minutes to have it from the loading dock to being up and running. So really what they're pushing the idea is we're going faster, try and catch us.
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Bloomberg Tech Host
A big part in the moment of the rebound in chip stocks is Intel's having a pretty good day. And as an aside to that, we got some a statement from the company about them rightsizing, streamlining one of its divisions. What do we need to know?
- [05:15]
Bloomberg Tech Reporter Ian King
Yeah, I mean, they've already, you know, got rid of multiple tens of thousands of employees and reduce their cost count appreciably and that looks like it's something which is going to continue. They've said that that data center group is going to be dealing with some more redundancies to get those costs down and get that company into the kind of lean position it feels it needs to be in.
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Bloomberg Tech Host
Bloomberg, Zane King, who leads our coverage of semiconductors, thank you very much. The cost of building the future may be about to get even more expensive. According to a Nikkei report, TSMC has finalized plans to raise chipmaking prices by as much as 10% starting in 2027. The increases would affect both advanced AI chips, but also more mature semiconductors, potentially impacting customers from Nvidia and Apple to Amazon and Alphabet. For more, Bloomberg's Peter Elstrom, executive editor, who leads our coverage of Asia Tech, is with us. This again is a Nikkei report, but what's in it? What do we need to know about TSMC actions?
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Bloomberg Tech Executive Editor Peter Elstrom
Yeah, hi. Well, this is one of the questions that the tech industry has been asking for a long time. TSMC has this unique position where they have a lock on the most advanced manufacturing of chips. So we talk about Nvidia as a chip maker. They don't do their own manufacturing. They have to farm that out. And they farm it out to TSMC in particular. So when you look at Nvidia's income statements, you see they have gross margins of something like 75% these days. And one of the big questions is why doesn't tsmc, which is essentially the only company that can make their chips, why don't they raise their prices? Why don't they take some of that profit from Nvidia? And one of the reasons they've been cautious about raising their prices is they don't want to give companies like Nvidia, Amazon, Apple a reason to go to the other foundries out there. There are only a couple of foundries that can do this. They don't have very much market share. They're not considered as good as tsmc. But intel and Samsung in particular are trying to get that business and TSMC wants to keep it. So they've been raising prices, but very, very cautiously. And despite those rich profit margins and some of their customers like Nvidia, they've been cautious about this. So now what we're hearing is that they are going to raise prices, but very incrementally, 5 to 10% to be able to capture some more of that profit margin. That's partly key for them, are changing their business model. In a sense, they're manufacturing now chips, not just, just in Taiwan, but they're trying to build these facilities in other countries, particularly the United States. So part of this is just to try to capture some of that profit that we've seen in the rest of the industry.
- [07:47]
Bloomberg Tech Host
There are lots of reports on the Bloomberg this morning relating to Chinese AI and one of them is a report from Reuters that ahead of President Xi September trip to the United States of America there is a plan for the US and China to hold talks. What do we know?
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Bloomberg Tech Executive Editor Peter Elstrom
Well, Scott Benison actually gave an interview today where he talked about some of these issues. There are many different issues that they, that they want to discuss around AI, including AI security, proper uses of AI models. But there's also this question about IP and AI. As we've heard, Anthropic and OpenAI have accused some Chinese companies of distilling their AI technology, trying to essentially take a shortcut to be able to develop their own models. We talked about Moonshot a lot over the past few days. Moonshot is one of those companies. There have been others also Deep Seek that's been accused of distillation. So bessant. And I think the US side wants to raise this question and try to set some boundaries about what's appropriate and what's not. The industry is, is evolving so quickly at this point. It's not clear how much distillation you can do. Many companies, American, American AI companies also do distillation themselves to check their models and verify. One of the big questions is how much can you do without crossing that line into what's considered either illegal or untoward in the industry.
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Bloomberg Tech Host
Bloomberg Tech Executive Editor Peter Ellstrom, thank you very much. Stay with China. And joining us now is Stephanie Aliaga, JP Morgan Asset Management global market strategist who writes China's AI models remain a wild card. And I was so interested to read your your research and how you model this for the markets. One of the factors of recent days has been us reevaluating the economics of particularly open source or open weight models. Outline your point of view on that?
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Bloomberg Tech Reporter Ed Ludlow
Yeah, absolutely. I mean these AI model labs, you know, these are native AI services. They're quite new in nature. You know, our clarity around what the margins of using these models is still quite new. And I think there is a little bit of a misunderstanding around how cheap these AI models are. They may be cheap to call, so the API price is quite low. But to use them, especially if you're using something that is very compute intensive, right, that's very capable and in order to achieve that, it still Requires a lot of computation compute, you still need a lot of those resources. You'll need clusters of GPUs, you'll need significant electricity. So this isn't something that you can just run on your laptop. You know, you still need that infrastructure around it and we think the US model labs are still well positioned to provide that. But there's just more that needs to be done around model routing. Right. For the more efficient queries and getting them to where they should be.
- [10:37]
Bloomberg Tech Host
Friday chip stocks close in a bear market in part because of the concern that more efficient means less need for hardware. By Monday morning we'd reverse back to the assumption that there's demand there so there will be greater hardware demand. On the inference side, where have we netted out do you think?
- [10:55]
Bloomberg Tech Reporter Ed Ludlow
I think recent years have given us so much evidence to Jevons paradox that as we get more efficient at using AI, calling on AI routing our queries to more efficient models, the overall pie of AI demand continues to expand. And where we are today is that overall pie of demand is growing way faster than we can reliably service. So I think this emphasis on efficiency right now is very needed. But it's a bullish indicator I think on overall AI infrastructure, not a bearish one because it's going to help the economics of all of the of this really work for more parties involved.
- [11:34]
Bloomberg Tech Host
Stephanie, there's a critical report on the Bloomberg about China making intervention in the stock market following heavy selling in Chinese technology stocks. It makes the point in this report that this is probably the broadest effort in quite some time that China, its regulators, state backed investors, etcetera have moved to shore up confidence again. Global market strategists analyst's view. How do you interpret that? What does it mean for markets going forward?
- [12:03]
Bloomberg Tech Reporter Ed Ludlow
Investors should not forget the lessons learned in 2022 that you know, Chinese equities are still very, very susceptible to sudden changes on the policy front from their government and so forth. It's a reason why we've been more cautious on Chinese equities, particularly in this wave. But we continue to still have a lot of confidence on in the broader EAM Asia story, but really around whether what other companies or compute providers are helping service some of that demand that is growing in China.
- [12:35]
Bloomberg Tech Host
We are right on the verge of a massive earnings season. Every earnings season is big, but it starts in earnest with Alphabet from the hyperscaler perspective. Tesla, you know, what are the learnings going to be in the next few weeks for you? What will you pay most closely to on the Corporate side, absolutely.
- [12:56]
Bloomberg Tech Reporter Ed Ludlow
It's been a really volatile last three to four weeks, but we think that volatility has actually been healthy for the market. You know, a digestion of what had been some meteoric gains in parts of the ecosystem. And the, the pressure on valuations has also left things in healthier levels. I mean, the valuations for the hyperscalers right now. Right. That have been singled out, all of this caution and concern around roi, well, their valuations are trading at some of the lowest levels that we've seen since early 2023, before the AI boom was really even priced into markets. So I think positioning is a lot healthier today and I think that we may be near the inflection point when it comes to upward guidance on free cash flow margins. You know. Yes, yes, capex has grown to a level that is likely consuming 100% of these companies operating cash flows, but their operating cash flows are nearing $1 trillion. And we do think that we're going to see a deceleration in this pace of CapEx growth into next year and particularly 2028. And what our investment teams have really underscored to us in their conversations with many of these companies in Silicon Valley is that across so many different cylinders, air demand is still very red hot. So we feel comfortable that these companies will be able to monetize AI. And after this period of digestion in the markets, maybe investors will feel more ready to reward them for it.
- [14:21]
Bloomberg Tech Host
Stephanie Aliaga of JP Morgan Asset Management. Thank you very much. Coming up, a judge just halted the highly awaited merger between Paramount and Warner Brothers Discovery. Joining us next, just Just Imlugen, director of the center for Technology and Innovation with the Competitive Enterprise Institute. Everyone thought this deal might close Wednesday after European regulators make a decision on it. Then a US judge came in. We need to go over it. This is Bloomberg Tech.
- [14:56]
IDA Ireland Representative
With the highest number of young STEM graduates per capita in the eu, Ireland has the people and skills your company needs to succeed here. IDA Ireland, the national investment development agency, can help you find and nurture the people you need to internationalise and thrive. Our talent is just one of the extraordinary benefits Ireland has to offer. Learn more@idaiirland.com invest in extraordinary
- [15:25]
Public.com Representative
support for the show comes from public.com if you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, putting on a hedge on public. You can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English, like if the Vix hits 25. Buy a put option on the S&P 500 or if my cash balance goes above $20,000, move the excess into my Direct Index. You approve the workflow and your agent handles the risk, monitoring the market, watching for your conditions and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com market and fund your account in five minutes or less. That's public.com market paid for by Public
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Public.com Disclosures Announcer
Investing Brokerage Services by Open to the Public Investing Inc. Member FINRA and SIPC Advisory Services by Public Advisors, LLC. SEC registered advisor. Complete disclosures available@public.com disclosures so there's a
- [16:36]
IBM Representative
lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now a global workforce of 300,000 can use AI to fill their HR questions, resolving 94% of common questions, not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business.
- [17:02]
Bloomberg Tech Reporter Ian King
Business.
- [17:02]
IBM Representative
Let's create smarter business. IBM
- [17:07]
Bloomberg Tech Host
Just a day before the Paramount Warner Brothers Discovery deal was set to close, a federal judge ordered a pause on the merger over potential antitrust violations. Now the companies need to wait two more weeks as a judge deliberates if the deal is legal. Joining us now, Bloomberg's Lucas Shaw, who leads the team at Screen Time. And this was with the biggest deal for the industry that we cover at screen time. Right. What do we know the basics at this point about the timeline and procedure of what will happen. But also you must be getting a sense of how terminal or serious this is being treated as.
- [17:47]
Bloomberg Media Reporter Lucas Shaw
Yeah, well, what we know is that we have a couple of weeks before the judge is going to make a ruling as to whether we will delay the deal even more. Right. This is a temporary restraining order. They could decide in a couple weeks. You know, go ahead, go for it. Or based on a lot of people are reading into the language of the ruling this week that they may say, actually we're going to have to pause on this because this case from the states has a reasonable chance of winning. We don't know which way they're going to go. Obviously, Paramount is hoping that they can kind of move ahead. I think we're hopeful that there's going to be an update in two weeks. But also you see in their language, you know, they have gotten less confrontational and dismissive because now they realize they're in a real legal fight and they need to win.
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Bloomberg Tech Host
Right. The judge has scheduled a hearing for August 3rd, but that hearing is to decide whether to extend the hold for longer. What are the concerns here, Lucas? You know, we're quite far down the road at this point on this deal. If there are some antitrust concerns, were they known prior to today, or. Or this is something that's sort of been ruminated on for a while.
- [18:54]
Bloomberg Media Reporter Lucas Shaw
There were definitely antitrust concerns all along. You know, as much as, you know, there were concerns about Netflix back when they were going to buy Warner Brothers Discovery because of how much bigger it is and then becoming even more dominant in streaming. By some measurements, Paramount and Warner Brothers is sort of the more logical antitrust case because you're combining two companies that are very similar. Right. So the primary cases that the states have outlined are around movies and cable networks, that if you combine two big movie studios, they have too much clout in that business. You know, they would be 25 to 35% of the. Of the film business every year, and that cable networks, they'd have an even larger share. Now, obviously, Paramount feels that these are too narrow of definitions. Cable networks in particular doesn't account for streaming. But Paramount was also the one that was previously defining the market as just streaming. And there are real stakes in this for Paramount, not just because they want to get the deal through, but if they are delayed longer, given the nature of what they agreed to, they owe a ticking fee. And so they will owe millions of dollars a day if this deal passes beyond the end of September.
- [19:58]
Bloomberg Tech Host
Bloomberg's Lucas Shaw, who leads our coverage of the media and entertainment industry, thank you very much indeed. Let's stick with the Paramount Warner Brothers Discovery merger that is now being paused. Joining us now is Jesse Killer Malluchin, director of the center for Technology and Innovation with the Competitive Enterprise Institute. And again, to start your reaction to a federal judge putting a hold in place.
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Jesse Malluchin, Competitive Enterprise Institute
I think it's sort of the latest chapter in all of this being, unfortunately, a political football a little bit. Going back to the Netflix attempt to purchase the studio, we saw that there was a lot of reporting about the. The White House being involved, and there was things beyond just what we should be focused on, which is what does this mean for consumers and competition? That's the job of these agencies to review these mergers. But there's always been some chatter in the background that there was more going on around it than just that. And we sort of See that? That's the next chapter of that. Right. It's not coincidentally, I don't think 12 Democrat AGs, most of them running for office in the fall who are challenging this. That's an unusual move. Usually, I mean California sometimes can surprise you, but usually once the feds have cleared something, the states go along with that. That's not what we see here. There's also been reporting that the DOJ cleared this without the final recommendation of the staff investigating it. That's a little unusual. And they also issued a letter that in some ways some have noticed anticipates the AG arguments.
- [21:30]
Bloomberg Tech Host
I'm sorry to interrupt you. The President of the United States is speaking at the White House.
- [21:34]
Bloomberg Tech Executive Editor Peter Elstrom
That was with John.
- [21:35]
Bloomberg Tech Host
That was President Trump speaking in a bilat with the president of Lebanon. Stocks, technology stocks in particular at session highs. A lot of discussion on the situation of the war in Iran. Trump saying that there is no interest in meeting with Iran and holding talks for peace or a cease fire if they are not going to take it seriously or until they're ready. He said that Iran wants to meet but that this time the US has no interest and that they will continue deploying military might to pare back Iran. A lot of questions focused on also what's happening with the Strait of Hormuz and but let's get a recap. Bloomberg's Washington correspondent Tyler Kendall out in D.C. for us wide ranging, lots of questions but Iran a focus. What do we need to know?
- [22:32]
Bloomberg Washington Correspondent Tyler Kendall
Well, and you really hit one of the main headlines there. President Trump saying that Iran is desperate to meet in his words, but that the US doesn't have any interest until Iran is willing to meet in what he called a meaningful way. This is Bloomberg News confirmed earlier today that Iranian officials are in Pakistan for two talks with mediators. Now he was also asked about a headline that we have been tracking very closely here, which is that threat from the Iranian backed Houthi rebels to institute immediately a maritime blockade against Saudi Arabia. President Trump saying that if it happens we will take care of it. Also for context, we had confirmed earlier today that this potential threat is extending to any vessels going to and from Saudi ports, threatening potentially the 4.5 million barrels per day that Saudi Arabia exports via the Red Sea. President Trump also went on to confirm that Israel is currently in the process of withdrawing troops from southern Lebanon in a test of the truce between Israel and Lebanon in Israel's fight against the Iranian backed proxy group Hezbollah. This move comes as you're seeing President Trump is meeting with the Lebanon President ED Marking the first time that we have seen a meeting between the two leaders of this country in nearly 20 years.
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Bloomberg Tech Host
Tyler Kendall in Washington, D.C. summarizing the president's comments. Thank you very much. This is what markets look like again. Technology stocks pushing to session highs as the president was Speaking, the Nasdaq 100A gain of almost 2% on track for its biggest jump in about three weeks. The stock similarly just coming off its session high of 5% but on track for its biggest jump in about a month. But you know, it's been a lot of swings and moves. Nvidia is up 1.6% at the top of the show. We brought you some news based on a Bloomberg News interview with Nvidia personnel that they are very much on track with Vera Rubin, their latest generation system. Full production is underway. They've already actually shipped some Vera Ruben based platforms to some of the biggest AI companies where workloads are expensive. Expected to run imminently. We'll keep tracking it. The trade is evolving. Investors are looking beyond the biggest winners and asking where the next wave of profits will come from. Joanne Feeney, who advises Capital Management, says the recent pullback on AI related stocks is an opportunity that investors should focus on the companies with durable competitive advantages. Joanne, it's great to have you back on the program. You know, the situation's moving fast and changing quickly. Right. Chip stocks closed in a bear market Friday night on the idea that better, more efficient AI, less demand for hardware. By the time I came into work Monday morning, we were back to where we were prior to that. There's lots of demand for hardware. Try and explain it to me.
- [25:16]
Bank of America Representative
Yeah, you know, you and I have been talking about this for a long time and right now I think investors are starting maybe to parse through where the strength in competitive advantages actually lie. You know, first, obviously it's the suppliers to the data center build out to the enabling of these AI models like in video, like Broadcom, which both of which we've owned for a long time for clients. But now I think people are trying to think about, okay, what about those model companies? Because although, you know, most of them are not public, we're starting to see more and more of them. We saw a couple of announcements in the last week of new, very high powered models out of China. We're seeing the price of the implementation of AI in terms of the token costs falling. And it just seems like there's, you know, a concern that the model makers are going to struggle to be able to continue to differentiate what they're offering and that suggests profit margins, they are going to be challenged and that you'd better look elsewhere. And that's why we like the chip suppliers still and the data centers, because they have other things that they're offering besides just racing running these models. The security, the stability, the reliability, the data handling, all of that gives them, we think, a more durable moat and that would sustain their profit margins.
- [26:33]
Bloomberg Tech Host
One interpretation post Kimik 3 release was it's a 2.8 trillion parameter model that's priced $3 per million tokens on the input side, $15 per million on the output side. And that would basically be an indication that the Chinese companies feel good about where they're pricing it. They see demand and when we enter the inference phase, there'll be even more demand for Nvidia based or GPU based platforms. Is that an argument that tracks for you?
- [27:02]
Bank of America Representative
Yeah. So I think this competition story among the models is going to take some time to play out. I think you'll see that gap shrinking over time as more and more models come out with better and better, better capabilities. But you know, the demand will rise. Yes, because of lowering costs on the inference side. And that only then spurs more demand for more data centers, for more Nvidia chips, more broadcom design chips, etc. So you know, you just have to think about where the profit margins are going to be maintained and where they're going to start to shrink over time.
- [27:33]
Bloomberg Tech Host
Is it healthy to sort of go from a situation where you enter a bear market market to. And there have been big swings in the stocks and I remind the audience of your many years covering the semiconductor industry but you know, it's amazing how quickly things return to normal, so to speak.
- [27:51]
Bank of America Representative
You know, I think one of the areas to really be a little bit worried about is the memory space. And I think they're, they're so called priced cheaply like Micron, at whatever it is, six times future earnings bring it up. A reason for that, that and the reason is that those profits, those sales numbers have in large part been driven higher by massive price increases, hundreds of percent. That's not going to be sustainable for forever. And at some point we're going to get more supply. And even with some of the innovations we're seeing in high bandwidth memory, we're going to see those prices come down as more supply comes on. Why? Because you have three players at the leading edge, you have some at the trailing edge. They're all building more capacity. And this is how the memory world works. Some people are saying, oh, this is different. We're no longer in a cyclical industry. I just disagree. The game theory behind when these guys add capacity and how much they add has always pointed to them collectively adding too much capacity. It's in their interest to build more capacity than their current market share justifies because they want to gain market share. And so we're going to see those prices come down at some point. And we always see the prices of the stocks come down well ahead of that. So I think that's a particularly dangerous area. I don't know for how long this current, you know, positive momentum is going to last. But I also don't think it's a problem, Ed, that we saw a little bit of a pullback. Investors probably had become overly concentrated. You know, we are pretty active in making sure our investors, our clients are not overweight, you know, any one name. And so you see some diversification, which is simply smart. And it does lead to these kinds of periods of pullbacks, of volatility every day.
- [29:30]
Bloomberg Tech Host
You want to be able to answer the question, why? Why is something happening? We're showing microns up almost 11%, which is only its biggest gain in about three weeks. But you're right, trades at 6.5 times forward 12 month earnings. Why? What is going on in the here and now?
- [29:48]
Bank of America Representative
Well, it's hard to know. I mean, look, stock prices are noisy, right? You know, I spent a lot of time studying asset pricing when I was back when I was an economist. And you know, we learned looking at the data back then that you don't look at any one day, you don't even look at a week, you don't look at a month. You've got to look at the long term. And what we've been focused on is how are earnings driving the fundamental valuation of a company? What kind of cash flow can they generate over time? Time. And so these periods where you have these big run ups and run back downs are just noise. And so we really focus on long term investing for our clients and looking at the fundamentals. Ultimately that is what supports a company's valuation. And so for Micron, you know, there is a period ahead of them where they're going to continue to have really strong pricing, where they're going to continue to have strong profit growth. It's just that you don't know when we're going to get the news that, oh, this is how much new capacity is coming online from all three of these guys. And so therefore this is how much prices are going to fall. It's not that their earnings stop growing, it's that their earning growth actually at some point probably turns negative because if you get a collapse in prices, then you know you have a period of negative growth. And that's happened in Micron's history in the past. And so that's why it is trading where it is. And it also is why I think it's a little bit of a risky place to go.
- [31:09]
Bloomberg Tech Host
Joanne Feeney of Advisors Capital back on Bloomberg Tech, thank you very much. Some news. Anthropic has reached a landmark $1.5 billion settlement in a copyright lawsuit over the use of millions of pirated books to train its AI models. The deal, which received final court approval yesterday, is the largest copyright class action settlement in U.S. history and could set the stage for similar cases is against Open AI Matter and Google. And we will track what happens in that space. Now coming up, we're going to take a look at where venture capital is finding the biggest opportunities as Moonshot's Kimmy rattles the industry. Joining us next, Samir delacio, Bessemer Venture Partners back on Bloomberg Tech. Stay with us. This is Bloomberg Tech.
- [31:58]
Public.com Representative
Support for the show comes from public.com if you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, putting on a hedge on public, you can now create AI agents that handle all these tasks on your behalf. Just describe what you want to do in plain English, like if the Vix hits 25, buy a put option on the S&P 500 or if my cash balance goes above $20,000, move the excess into my direct index. You approve the workflow and your agent handles the risk, monitoring the market, watching for your conditions and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com market and fund your account in five minutes or less. That's public.com market market paid for by
- [32:54]
Public.com Disclosures Announcer
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IBM Representative
the thing about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand. But by embedding AI across hr, IT and procurement processes, we've reduced costs by millions, slashed repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where It actually pays off deep in the work that moves the business. Let's create smarter business.
- [33:37]
Optum Representative
IBM, let's talk about healthcare for a second. It doesn't always work the way people expect it to. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling the system should just work better for everyone. That's exactly what the people at Optum are trying to do every day. They're a healthcare company linking patient care and pharmacy services and using data and technology to drive the whole system. So care is connected, not complicated for patients and providers. Things like making it easier to get care that looks at the whole person. From primary care doctors to mental health support and even in home care. And then using technology to make sure they all work together. Technology designed to help doctors spend less time on busy work and more time with their patients and those prescriptions. Optum is working to bring costs down, save patients money and make it easier to get refills. Little by little, Optum is helping make healthcare work as one for everyone. Head to business.optum.com to see how
- [34:39]
Bloomberg Tech Host
China's moonshot AI is preparing to begin discussions in August on a final round of funding raising before listing in Hong Kong at a valuation of as much as $50 billion. Sources say the Chinese lab should close a financing round that began this summer at a valuation of around 31.5 billion and then intends to open discussions with potential backers about a very quick follow on capital raise. Of course, it's been in the news cycle constantly for four days. The conversation has shifted yet again after the release of moonshine shots. Kimmy K3 Treasury Secretary Scott Bessant says the US will scrutinize Chinese AI models for evidence of intellectual property theft. Against that backdrop, where is venture capital seeing things? Where are the biggest opportunities? Are we worried? Joining us now is Samir the Lucky, a partner on the growth investment practice team at Bessemer Venture Partners. There's so much in your portfolio that's, that's interesting and highly relevant to this.
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Bloomberg Media Reporter Lucas Shaw
Yes.
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Bloomberg Tech Host
But could I just start by asking what your net takeaway from. From everything.
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Samir Delacio, Bessemer Venture Partners
Kimmy K3 spin all all consuming Kimmy K in the news and I think, I think it's a great thing. I really do. I think we have a moment in time where I'm a free trade competition is for us kind of a guy. I believe that the right tool for the job is the right answer for our enterprises for customers and they will use Frontier Lab models like anthropic for the stuff that they need to use that for. And they will use open source models from China and other places in the world over time. We need our open source, US and Western based open source models, open weight models to get better and bigger. And that's great. And that will happen if we have free competition with the Chinese models. But that's, that's my general take. I'm very positive on the development.
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Bloomberg Tech Host
Let me ask you one sort of final specific thing on Kimmy K3 Bessemer is an investor in Anthropic. One of the questions posed was okay, if a startup of moonshot size and scale and resources can put out a 2.8 trillion parameter model, price it such that it did. What's the moat of an Anthropic or an open AI? Why do we value them such as we do? Your, your industry colleague, somebody from Greylock was on the show on Friday and he basically said, well, Anthropic's got a real business with multiple streams of revenue. It's completely different. Yeah, but where would you put your response to that?
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Samir Delacio, Bessemer Venture Partners
Well, because we're big investors in Anthropic and they're in the quiet period, I can't specifically on them, but I will say about the Frontier models generally what I would say about their, their moats. They're still at the frontier. They're still exceeding, extending the lead. These. We're in a stage of recursive learning improvements to the models. The models are being released faster and faster as we get ever better capabilities. I believe the Frontier will continue to stay at the frontier and you'll have others that will, that will catch up. Now, you know, there's also a lot of talk on right now around whether there should be Secretary Besson mentioned, you know, should we be going after IP theft and distillation and how do we feel about that? I'm a free, free markets guy, but I don't believe in IP theft and distillation. So I do hope that we will figure out ways to better protect the IP of the closed models and on the Frontier. But that, that would be my take on that.
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Bloomberg Tech Host
So it's been way too long since you've been on Bloomberg Tech. So take us inside the portfolio companies for some perspective on that. You know, you have concern about IP theft on behalf. How would that impact if there would be regulation or there would be an action protecting those companies that you're backing and investing in?
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Samir Delacio, Bessemer Venture Partners
Yeah, I think at the Frontier, you know, it's important that they put up defenses. I think it's important that there are protections for ip. I think that we'll see those, those, those model providers are going to continue to explode in growth. I keep trying to explain to my colleagues in the market, just to get a sense of the size of this market, Ed, is astonishing. Like, this is like having the opportunity to invest in Rockefeller standard oil in 1870.
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Bloomberg Media Reporter Lucas Shaw
Right.
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Samir Delacio, Bessemer Venture Partners
The market for intelligence is the largest market, I used to say, in technology, it's the largest market in human history. And so the frontier model, the penetration in enterprises is so tiny relative to what it will be that the frontier models will continue to excel. But the open source ecosystem is going to continue to flourish. It should. Companies like Fireworks, we'll talk about. Well, let's talk about, are going to benefit from that.
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Bloomberg Tech Host
The big news of late. So Fireworks took air from 100 million to 1 billion, but they did it in less than a year and a half.
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Bloomberg Media Reporter Lucas Shaw
A half.
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Samir Delacio, Bessemer Venture Partners
Yeah.
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Bloomberg Tech Host
And you're, with respect, somebody with experience and software, you know, you're basically saying we've not seen that, that growth trajectory, it's extraordinary.
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Samir Delacio, Bessemer Venture Partners
And I used to be the CEO of a SaaS company and took it public in 2017 to build our SaaS company to IPO scale. Took us 8 years. These guys are adding 100 million of ARR per month. That took us years and years and years of.
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Bloomberg Tech Host
You know what's interesting about that? Sorry to interrupt you. Those guys at startups like Fireworks, they're good at software, right? They're good at AI. Are they good at go to market? You know, I mean, like, so they, they're able to do that 100 million of AR per month?
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Samir Delacio, Bessemer Venture Partners
Yeah.
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Bloomberg Tech Host
Have they been able to keep up with themselves on the sales channels and like having good operational leaders in that business?
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Samir Delacio, Bessemer Venture Partners
Yeah. Well, I'll tell you, it's one of the biggest reasons we invested behind Fireworks and we're so excited to back them. The CEO, Le Lynn, is an incredible strategist, a deep technologist, came from Metta, was leading the team from Metta that built Pytorch which is sort of the leading source framework for machine learning. But she's recently brought in George Hu as president. And George and I got to work together at Twilio after they acquired my last company, Sendgrid. And I will tell you without hesitation, George is one of the absolute, absolute best go to market leaders, software executives in the industry. He was the CEO at Salesforce, then the CEO at Twilio. And so the companies that are scaling at this pace and have the wisdom to bring in Some folks that have seen scale and growth and can put in process and operational rigor we think are going to be real winners in this market. And that's why we think Fireworks will be the winner in their market to
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Bloomberg Tech Host
lots of people is still quite abstract. It can mean lots of different things. So you know, at best you guys basically say you invest across the stack, the model layer, the infrastructure layer, the vertical application layer, you know, but those are all quite different things. Like lease AI is a high flying portfolio company of yours.
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Samir Delacio, Bessemer Venture Partners
Indeed.
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Bloomberg Tech Host
But they all have slightly different factors behind them.
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Samir Delacio, Bessemer Venture Partners
They do. And you have to look at each of the markets and every, every business is different. So but what's extreme, extraordinary is just the, the demand and the pull from the market for all of them. You're just seeing exponential growth, growth curves like we have never seen.
- [41:42]
Bloomberg Tech Host
That's what they have in common.
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Samir Delacio, Bessemer Venture Partners
That's what they have in common. After I've been in Software now for 31 years, I've never seen, you know, at least I selling AI to property management companies. You know, they're at, they, they posted publicly, they crossed 200 million of RR and are still doubling like the companies in software history that reach what I would call triple digit growth at triple digit scale, those triple triples. That's extraordinary. And any company that did that in the, in the, in the prior era went on to become household names and we believe we're investing in those kinds of companies. Elise is doing it in property management. Lagora and even up are doing it in the legal field. Bridge is doing it in health care and it's just an extraordinary group of businesses.
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Bloomberg Tech Host
Smith Delakia, partner at Bessemer Venture Partners, back on Bloomberg Tech, thank you very much indeed. Coming up very quickly, Tesla is trailing in its AI spending compared to its big tech peers and that's worrying investors. They want to see the EV maker put its money where its mouth is. We'll get the preview next. This is Bloomberg Tech. As big tech rushes to pour trillions into AI investments, Tesla is lagging behind despite setting lofty goals. The company just spent just $2.5 billion of the $25 billion in 2026 capex and investors are growing a little bit concerned. Joining us, Bloomberg's Jordan Fitzgerald. This is the mindset going into Tesla's earnings this week. They want to see Tesla spend money.
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Bloomberg Tech Reporter Jordan Fitzgerald
They do. This is a bit of a show me the money situation here. In prior years, Tesla spent about a little under $10 billion annually in capex, which is in line with, you know, More traditional automakers like Ford and gm. But as Tesla rebrands as not a car company but an AI company, the market really wants to see it spend
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Bloomberg Tech Host
like 1 20, 26. Capital expenditures, we should point out at $25 billion are way beyond anything Tesla has even attempted before. What's the metric that we judge then? We just want to know that spending in this quarter is tracking ahead of that. In line with that.
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Bloomberg Tech Reporter Jordan Fitzgerald
Yeah, we just want to see progress here. If Tesla is not spending, then investors have reason to doubt that they're making progress on their robotaxis and robots and other linked projects. And given that Tesla's valuation is the price of as if it's a growth stock and AI stock, that it really needs to start delivering on those benchmarks. There's also added pressure here since Space X went public. Now investors, if they're not happy with Tesla, they have another way into Elon Musk. And so Tesla really, really needs to start delivering on those promises or at least indicating that it's on the way there.
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Bloomberg Tech Host
Jordan really quick tees up when a Tesla earnings. What else are we looking for?
- [44:35]
Bloomberg Tech Reporter Jordan Fitzgerald
Tesla earnings tomorrow after the bell. I'm sure you and I will both be head down on that. Other than that, commentary from Elon Musk is always the most important thing in any Tesla print. The past few quarters we've seen the print come out and the shares initially rise post market and then Musk starts talking on the call and we see a little bit of a dip. Things really, really move off of his tone, off of the words he uses. There's a, there's a lot that's not in the direct report that we can get a hint on from Musk and I'm sure many are hoping for any sort of color he can give on the potential for a merger.
- [45:08]
Bloomberg Tech Host
I am braced. I am going to participate and hopefully my voice will last that long. Blue Jordan, thank you very much indeed. That does it for this edition of Bloomberg Tech. Again, stocks kind of tech stocks at session highs or just off them after the President of the United States was speaking. But generally the rebound in chip stocks continues to gather momentum. Some really top conversations across public and private markets today. Recap them on the podcast. You know where to find it. It's on the Bloomberg terminal as well as online on Apple, Spotify and Iheart. This is Bloomberg Tech.
- [45:46]
Optum Representative
Health care doesn't always work great. If you've ever waited on a refill or couldn't schedule an appointment, you get it. That's the kind of stuff Optum is changing. They're using data and technology to integrate patient care, pharmacy and everything else. So healthcare is connected, not complicated. What's that look like? Cheaper prescriptions that are easier to get and care that looks at the whole person how you need it. Optum is helping make healthcare work as one for everyone. Learn more@business.optum.com these days it seems like
- [46:17]
Public.com Disclosures Announcer
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