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Host
At CES.
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Bloomberg Reporter
Michael McDermott, EVP of Samsung, spoke with Bloomberg Media Studios about what the company calls its next AI chapter, your companion to AI living. It's a shift from AI as a feature to AI as a trusted partner in everyday life.
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Host
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Economist Natalie Gallagher
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Host
Work, building an epic fort with the.
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Economist Natalie Gallagher
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Host
Bloomberg Audio Studios podcasts Radio News. Bloomberg Tech is live from coast to coast with Carol Line Hyde in New York and Ed Ludlow in San Francisco. This is Bloomberg Tech Coming up, Disney shares sinking after giving a tepid growth outlook that says the market awaits news on who will be its new leader. Plus Oracle raising more debt as a software giant looks to raise 45 to $50 billion in bonds and equity for additional cloud infrastructure capacity and sources say Elon Musk is in advanced talks to combine Space X with X. I will have all the details but first we check in on these markets then in certain breathe some sighs of relief after sell off on the Nasdaq on the S&P 500. But you're seeing a bit more of the buying of the dip when it comes to stocks. Not so much when you're looking at commodities 7. 10 of a percent when you're looking at the Nasdaq now Bitcoin bounces but boy did it feel the pain over the course of the weekend we're only trading at 78,000 so still the pressure on on so called digital gold as we actually see that continued strain on gold and silver that really catalyzed on Friday and the decision of who will be the next Fed chair move on to the individual stocks. Nvidia is one of the biggest points drags to the downside off by 1.4% we're going to dig into what really its relationship with Open Air and how much it's committing to funding it is going to look like. We're looking at Oracle now up 2 percentage points. It's selling a whole wealth of debt and equity. But does this steady the nerves that it would in some way tempt junk status on its debt? We're getting into that a little bit later. Move on, because in the here and now we're looking at earnings. And it was tepid growth more broadly that we saw for Disney. And that particular seems to be being pointed forward to this fiscal quarter that we look at. What is the worry that people not traveling to as many of the parks in the year to come. We're currently off by 4%, as you say, on the intraday basis. But interesting news over the course of the weekend as well about management. Felix Gillette joins us now. Just going to the fundamentals of the business. The quarter they just reported was strong, particularly in streaming, but seems to be where we're going in parks, which is a slight nervousness.
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Bloomberg Reporter
Yeah. I mean, they just reported record sales in parks for the previous quarter. They hit $10 billion of sales in the quarter for the first time for but they offered this outlook today. That said, you know, in the current quarter there are some concerns. There's all this, you know, volatility in terms of the international market. Are they going to have as many international visitors to the parks? They're going to shift some of their marketing to try and attract more domestic visitors to the domestic parks. There's also increased costs. They're launching a new cruise ship. They have a new frozen exhibit opening in the parks in France. So, yeah, the park's outlook for this quarter is not as good. Coming off a very strong, strong quarter.
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Host
Interesting time for parks, though, and its leadership, because we understand there's a key vote going on at the board level this week.
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Bloomberg Reporter
Yeah. So the board is meeting. They're expected to vote on Bob Iger successor. We've been watching this for three years now. They are leaning towards Josh tomorrow, who's the head of parks. And we're expecting to see that vote this week. Disney had previously said they're going to announce a successor for Bob Iger sometime before the end of March. So things are moving forward and it makes sense that Josh tomorrow would be in the lead at this point. The parks and cruise division is providing, providing the vast amounts of profit that this company. And it sort of reflects where things are at. The experience is really working well for consumers right now. And as We've talked about the home entertainment is still somewhat tumultuous as we make this transition from cable to streaming.
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Host
Felix Gillette with the best run up. We so appreciate it.
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Bloomberg Crypto Reporter Isabel Lee
Thank you.
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Host
Meanwhile, Disney CEO Bob Iger did talk about their ip, saying there's no rush to acquire any more of it. Here he is in today's earnings call.
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Bloomberg Reporter
I think we have a great hand. I don't really feel that we have a need to buy more ip. We're just going to continue to create our own and we've got an unbelievable bedrock of stories already told to grow from.
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Host
Let's dig into Disney streaming landscape and more with Daniel Payne, his Slate Stone wealth cio. Just for a moment, we're just talking about how important the parks are. But from the streaming side, it had a really good innings in terms of profitability. Finally in terms of the previous quarter just reported on, but push us forward.
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Daniel Payne, Slate Stone Wealth CIO
Yeah, really good from the entertainment standpoint. And that's where they see a lot of their operating leverage, leverage in the company. But we do believe moving forward, there are a few catalysts out there on the experiences, which is their parks and cruises over the course of the year that really could be beneficial to shareholders. You know, the near term concerns which I mentioned for the first quarter because of international travel, you know, might be pressuring the stock today along with the management changing. So there's a lot going there, you know, under the hood. But bottom line is we got massive stimulus coming down the pipe in this country with the tax cuts, with the one big beautiful bill, we're going to have about $150 billion of tax refunds for consumers and the US consumer. They've proven over and over again that if they're halfway confident with their job and they have excess money in their pocket, they're going to spend it. So that could be a catalyst forward once we get into summer. And another thing that nobody's really talking about is that this summer we have a few events that are kind of unique for this country. We have the World cup here this summer and we have the 250th anniversary of our country, which is going to be a lot of stimulus in and of itself. I've seen some projections that the World cup is going to generate about 6.5 people coming for the event. It's going to generate roughly 17 billion in GDP for this country. And you know, with those kind of visits, reserves, who's not to say they might stay a little bit longer and bolt on a trip to one of the Disney Parks moving forward. So I think longer term, there could be some catalysts to get this stock out of the funk that it's been in over the past four years under the current management.
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Host
We'll talk about management and current management. How do you feel about maybe the person who's helped drive the Parks business becoming the CEO of the whole business again?
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Daniel Payne, Slate Stone Wealth CIO
Well, that could be the reason why we've seen some weakness today, because it could be like, you know, here we go again. Because if you Remember, back in 2020, we had the same thing happen when Iger placed his handpicked successor, Bob Chapek, in control. And, you know, unfortunately for Chapek, he was put in control of the entire operations in February of 2020. So we know exactly what happened a month or two later. It's kind of hard to run a company when the whole economy shuts down and discretionary spending comes to a halt. So, you know, that might be kind of unfair to judge Chapek on that, but there could be some nervous with investors by doing the same thing once again putting the head of the experiences, which again is parts and cruise line and gaming ahead at the charge of the company. So there might be some hesitancy there, but I will say Disney over the past four years has nearly doubled their eps, but yet the stock has been essentially flat. So we've had massive valuation contraction. If they get the right person in charge, that can pull the very various levers of this company, you know, so we can have a premium brand once again training, trading at a premium valuation. So right now the stock trades at roughly 17 times to 2026 earnings estimates about 660. You know, if a market multiple is placed upon this premium brand, the stock could get into the mid-150s with, with pretty much ease. And so that is significant upside potential if the right person can make the right decisions moving forward.
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Host
Board. If we hear it's Josh and we know the board is voting this week, and then they've promised us that we would hear by the end of March. If that's the case, then where do you think they can drive the realization that their IP is worth so much more, that the spending isn't having to just go up and to the right when they're trying to market the latest Avatar movie or when they're having to really pay top dollar for sporting events? I mean, you just went at length of what the soccer means for the US more broadly. But when you're trying to stream it or show it, it gets very expensive.
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Daniel Payne, Slate Stone Wealth CIO
And that's the problem with that side of the business, there's significant operating leverage with the variable cost. And you know, you spend all that variable cost money upfront and it's almost like you build it and you hope they show up. And so you know, if you get the formula right, you spend the money on the content and is success then that significant leverage for the earnings growth of the company. And that's kind of the the factor that that investors are weighing especially with this change in leadership could just add some certainty to the stock. But you know, once again, you know, uncertainty leads to opportunity and their opportunities, how you make money in the stock over over a market cycle.
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Host
DANIEL payne, A slate stone wealth appreciate coming on today. And coming up, the U.S. it aims to slash its reliance on Chinese earths and other metals. We'll tell you all about the plans for the first of its kind stockpile for the US Private sector. That's next is a Bloomberg Tech. President Trump well is set to launch a $12 billion stockpile of strategic critical minerals. The move set to counter US Reliance on Chinese rare earths and prices for related companies higher. It's all according to sources thus far. Let's bring in Bloomberg's tech editor in D.C. mike Shepard. Tell us about this first of its kind store for US Private sector. What do we know is set to potentially be announced?
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Mike Shepard, Bloomberg Tech Editor
MIKE well, what we're looking for is the US Export Import bank to take a vote later today on approving this package. The private sector will kick in about $1.67 billion as part of this seed money and the US Export Import bank will kick in another $10 billion. And this would be the biggest such deal in the bank's history by far. And it really is a sign of just how much the administration is pushing in this area of railro and critical minerals and trying to wean the US from its dependence on China as a key source for these inputs. They're so essential to the private sector to autos, to iPhones, to to gas turbines even. And without access to them, we risk seeing a manufacturing supply chain disruption akin to what we risk experiencing earlier last year when when the Chinese government started to impose some of those export controls on rare earths. So the US Is trying to diversify around and ensure both pricing stability and supply stability here.
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Host
CAROL Senior administration officials have been detailing what could be announced. But what's interesting, Mike, is which countries are we going to be sourcing from and what sort of backstops do these the Export Import bank needs need to know that they can sell this on correctly and not be landed with an awful lot of minerals.
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Mike Shepard, Bloomberg Tech Editor
Well, the idea is to ensure that US manufacturers have this access and it would create this stockpile akin to the Strategic Petroleum Reserve here that manufacturers here in the US could access as needed. They would have to pay into it to be able to eventually make purchases and then promise to replenish it down the road. But this is just one, one of several steps in the area of rare earths that the US government is taking right now. Later this week, there will be meetings with dozens of foreign ministers here in Washington to agree on trying to find some way to create a mechanism to stabilize prices and supply around the world, not just here in the US but with allies so that collectively they can reduce some of their dependence on China and increase extraction mining and refining in a number of other countries. While we call them rare earths, they are actually fairly common. It is just that they are not extracted or exploited in as many places as they are. And to the extent that China has come to dominate the market and Carol, the clock is ticking. Remember that the trade truce that the President signed with Xi Jinping late last year, it's only good for one year. So they have to start making these moves to ensure that supply won't be as disrupted as it risk being facing earlier last year before the trade agreement.
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Host
We'll see how Project Voltage is known continues. Bloomberg's Mike shepherd, thanks for detailing all of this. Let's get the broader economic picture now. Let's talk about what's moving. Tech stocks in particular. Nelson Gallagher's with us Principal economist and director at board. Just going back to that rare earth suggestion. Is that positive do we need is supply chain a real headache for the businesses out there right now?
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Economist Natalie Gallagher
Yeah, absolutely. You know, what we're seeing is a fundamental, fundamental shift and how the US has really been addressing supply chain resilience over the past few years. And absolutely top of mind, following the export control measures by China back in 2025. You know what in essence we're doing is we're creating a strategic reserve of rare earth metals for the digital economy, which means that we're less at the behest of foreign entities as we try to continue to move forward right in AI innovation and all the potential for the economy that that really houses.
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Host
A lot of the focus has been not so much on supply chain of rare earths as well as that, but also really just the bottlenecks that we see in delivering the hope and euphoria that is built into the market, whether that's Power, that's energy, whether that's land. Natalie, where do you stand in terms of the reality of AI and what has been thus far driving a lot, a lot of stock share and shares higher this year?
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Economist Natalie Gallagher
Yeah, absolutely. I mean, 2025, we saw a really intense increase in valuations. There's a lot of hope in what I can deliver. We heard that at the Davos Economic Forum, also loud and clear by many key tech and political leaders as well. Now, in order for these valuations to hold in 2026, and what we're really going to have to see, and it's going to sort of earmark the year, is a close right in the gap between how much is being spent on AI and the ROI that we're actually going to achieve. If we get those productivity gains, then this is absolutely a great story of foresight. If we don't see those productivity gains, then we're going to have a conversation much more housed around capital misallocation.
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Host
But, Natalie, how's that going to show up as an economist, Are you looking at jobs data? I mean, because at the moment all we're seeing is jobs cut upon jobs cut, which in some way seems to be going back to AI.
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Economist Natalie Gallagher
Yeah, I mean, it's fascinating, right, what we're seeing in the overall jobs data, I'll first sort of approach that and then tell you as an economist, what I'm looking at. We look at the jobs data, there's not a whole lot of evidence that the jobs that are currently being cut is due to AI. Right. We know that that's what companies are saying. At the same time, it's not really showing up in a clear way in the data. On the other hand, what we do really need to see is almost a discontinuous jump in the productivity data. Right. So if we're sort of on this level increase, what we really want to see with AI is we're jumping up and then we're on a totally new level, level playing field. When we see that, and there should be early adopters in some key industries. I'm thinking, you know, health care, consulting, finance, we should see those early signals and they should be showing up in.
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Host
The data as soon as 2026. You think that?
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Economist Natalie Gallagher
I firmly believe that's going to need to happen in 2026 in order for these valuations to be deemed worthwhile.
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Host
We're going to be getting into these big stories that are in the market today of how at the moment, we continue to fuel the ever needing expansion of AI infrastructure, whether it's Oracle selling debt and equity. Whether it's, well, whether or not Nvidia is going to be giving up to $100 billion or not to open AI, how are you seeing that narrative continue in 2026? Are we going to have to see a pullback in the amount that companies are committing?
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Economist Natalie Gallagher
You know, I think it's more so we're really going to have to see the ROI in a meaningful way that we can go back to. And again, that gets back to productivity. So. And the risk really is as we sort of pull all of these levers and they get more and more complex, it becomes a much more opaque environment. Right. For investors to really operate in. And so the risk of those valuations maybe being artificially bolstered goes up.
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Host
Just from your perspective, the narrative of circular deals is that actually in many ways we often put it in a negative context. Hex. But is exactly what Nvidia should be doing, investing in its own clients to be able to foster the potential ROI that we might see in this jump?
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Economist Natalie Gallagher
Yeah, I mean, absolutely. Right. So if we see this truly meaningful transformation in the economy that's sort of promised with AI, then we're in a great spot, right? These circular investing schemes, that is excellent foresight by these companies. If we don't see that, right, that's the real risk of pretty significant market correction. Right. Because that investing scheme, it is bolstering the overall revenue numbers that we're seeing.
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Host
What therefore are some more of the headwinds other than waiting for roi? We're also still tackling tariffs. We're still worried about South Korea's relationship with the United States, for example, in the here and now, let alone China. What could be the headwind that you're looking out for?
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Economist Natalie Gallagher
You know, one head, when I'm particularly interested in tracking is actually jobs. Right. So we're in a labor market. Overall, when we talk about the macro economy, that's quite soft.
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Host
Soft.
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Economist Natalie Gallagher
But when we speak specifically to AI, machine learning, sort of these high powered tech jobs, we have a little bit of a bottleneck there. And so something really interesting that came out of the US Taiwan trade deal just a few weeks ago was this goal, right, of onshoring significant supply chain efforts from Taiwan to the US in order to do that, we're also going to need significant changes in our workforce development. And there's a risk there, right, because we've had meaningful policy changes over the last year alone.
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Host
Fascinating. Take Natalie Gallagher. Come back soon, we hope. Principal economist over at board. Coming up, Elon Musk. Will is in advanced talks to combine Space X with X. I have all the details next. This is Bloomberg Tech.
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Mike Shepard, Bloomberg Tech Editor
How do you shift AI from being.
- [19:42]
Host
A flashy feature to a trusted partner.
- [19:44]
Bloomberg Reporter
In consumers everyday lives on the ground at CES Bloomberg Media Studios, asked Michael McDermott, EVP of Samsung. Our 2026 vision is built around an AI companion. It understands you and responds intuitively. This intelligence works quietly in the background across TVs, home appliances and mobile devices. By putting AI at the center of everything we do, we're simply improving everyday life for everyone everywhere.
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Host
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Bloomberg Reporter
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Host
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- [20:41]
Economist Natalie Gallagher
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- [20:42]
Host
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Economist Natalie Gallagher
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- [21:16]
Host
Checking in on Tesla shares well, we're seeing the impact of European sluggishness again. You saw it throughout 2025, down two and a half percent. As we understand, European car sales of Teslas in particular slumped into 2026 in particular absolutely plummeting. French sales down 42%. They only sold 661 cars. Norway registrations plunging 88%. But that says we hear specific changes in policy over in Norway in particular. But look, generally EV registration are going higher in Europe, but just not for Tesla. Whether it's a political read across or whether indeed it continues to be something around the brand and slower adoption of older models versus the Chinese one. But let's move on to other areas of Elon Musk's empire right now because we understand that he is in advanced talks to combine Space X with xi. According to sources, a deal that would combine of course two of the largest closely held companies in the world. Just think xia is valued $200 billion. Space X is currently worth $800 billion at the last count. Bloomberg Deals team managing editor Vienna Baker joins us more. There've been a lot of conversation about somehow his empire combining forces. Whether it's Tesla and Space x or X SpaceX, it looks like the latter is the more likely at the moment.
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Vienna Baker, Bloomberg Deals Team Managing Editor
That's the idea that's gained traction and you know, late last week and over the weekend that it looks like these two private companies, Space X and Xai, which also owns X, would come together. It's possible in the future Tesla could be involved. There's a lot of theories that one day there's just going to be one huge Elon Musk conglomerate. But for now at least it looks like this is the plan and that Space X would still go public later this year.
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Host
I can see that the benefit for X is that it needs a ton of money. What is in theory the benefit to investors of both these companies? Buyer by a combination?
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Vienna Baker, Bloomberg Deals Team Managing Editor
A lot of this is future futuristic. If investors in Space X want to see these data centers in space one day, which there's been some filings that could indicate, maybe that's something they're working on, this is a way to bring that together. But definitely, you know, is it a bailout of Xi, you know, compared to Space X? Hard to say. We don't know any details on what is the structure right now, what shares will be transferred or exchange or swapped for each other. So those details still need to come out to see, you know, how shareholders.
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Host
Make out and what sort of approvals do they need because we understand a lot of this has got investors support, but do they need to. Can it just be done? Because Elon Musk thinks it's the right thing to do?
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Vienna Baker, Bloomberg Deals Team Managing Editor
It's hard to say, but last year when X and X I merged, it kind of just happened in an ex post and, and that's reality. A lot of this, especially when there's private companies, the M and A is very much, much behind the scenes. Maybe an investment bank gets brought on for a fairness opinion or there's certainly law firms, but it's hard to say. It's not like a public shareholder deal or, you know, there might be committees, but a lot of it's done behind the scenes. And if Tesla had been part of this merger, then you might see more public information or independent board shareholder votes and whatnot. But this is all going to be happening, happening kind of under the radar briefly. Who would run it That's a great question. You know, Xi has brought on Anthony Armstrong, a former investment banker and who worked in the government. You know, Space X has leadership in our reporting, you know, doesn't have the answers. But there's certainly a few people in Elon Musk's sphere that could, you know, potentially run this. Apparently all his executives do everything at all the companies. So maybe it's just everyone.
- [24:46]
Host
Certainly there's cross pollination already. The Annabaker is a great scoop that came out earlier today. We so appreciate it. Meanwhile, coming up, Oracle, it's racing to build out its infrastructure with plans to raise up to $50 billion on that next. This is Bloomberg Tech. Welcome back to Bloomberg Tech. We check in on these markets. A bit of a reprieve if you're in stock stocks and the dollar today, not so much if you're in gold and silver. We're up 9, 10% on the NASDAQ 100 is we get a bit of a bounce back after a couple of days selling on big tech stocks. We're looking at Bitcoin at 79,000. Look, it's up on the day but boy was it sold off hard throughout the weekend. Once again, we're questioning people's desire for risk assets more broadly at these sorts of valuations. Digital gold has not been particularly loved. Meanwhile, gold got absolutely hammered on Friday and continuing into Monday. But let's look at some of the other areas of focus when it comes to individual stocks on the moon because underneath the hood and video has been one of the ways down in terms of points. We're going to dig into why Nvidia is perhaps reassessing how much could be committing to OpenAI's infrastructure. Build out how it commits to that as well. Do we also see how Oracle is up 2 and a half percent having brought a little bit more transparency as to what they need to raise for its own infrastructure, largely for open air bonds. Stock, stock. The sales are upon us already. Bloomberg's Brody Ford joins us who was working hard all weekend because it was on the Sunday that we learned that here's a company that's looking to raise up to 50 billion in a mixture of equity and debt.
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Bloomberg Reporter
Sunday night. It's time to raise more money. Yeah, it was kind of a unique situation to have this kind of large announcement from a company as mature as Oracle on a Sunday. But what that really underscores is how Oracle has become this poster child of all the AI financing fears. It's expected to be negative free cash flow for the next Couple of years as it builds massive data centers. And the big question has been how much money will they have to borrow to do that? Will they be able to maintain their investment grade? And they essentially were trying to respond to these concerns and say that no, we have a solid plan.
- [26:56]
Host
And it's interesting, maybe they've been learning from past haste with a previous bond sell at the end of last year where bondholders are now suing because they felt that they didn't get enough clear transparency that this was a company that will be tapping the debt market a lot. When we're looking at what we're getting Today though, there's three year floating rate notes as 3A fixed 5 year fixed, 7 year fixed was a long 7 year, 10 year, 30 year, 40. How much they having to pay for the debt side of the equation, which they actually say is the only time they're going to be tapping the bond markets this year.
- [27:24]
Bloomberg Reporter
Well, they're going to be, they're expected to get a ton of free cash flow once you look a couple of years out, once those OAI contracts and others start flowing. And what's particularly interesting today is to see them issue equity. And often when that happens, investors don't like dilution and the stock goes down. So it's funny to see the stock go up on an equity issuance. And what that means is that the company is willing to do what it takes to keep investing investment grade. It does not want to get saddled with some incredible interest rates. We've heard a lot of concerns on these loans and so they're trying to show that they're going to do what it takes to maintain a good rating.
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Host
And actually that was really what we heard from the analyst space coming out here saying this should be positive sign that they are really committed to avoiding junk.
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Bloomberg Reporter
Absolutely. And I think what it is too is just clarity. I mean there's been so much on certainty about hey, is Oracle going to be able to get all of the loans it needs? Is it going to be able to complete this build out seamlessly? Is open air going to pay its bills? That's a lot of the questions that have been weighing on the stock. And so kind of any new information that shows a specific plan, almost whatever that plan is, as long as it seems reasonable, is going to be read as good news.
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Host
We'll see how the up to $25 billion bond sale goes today and indeed some of those convertible notes as well. Freddie Ford all over the Oracle story. And let's stay with the AI related debt Story now because the cost of data center build out it is expected to top $3 trillion. And Oracle isn't the only tech company borrowing to finance their plans. Bloomberg's senior private credit reporter Paula Silkson joins us now who you've been looking across the board at the panacea all ways in which companies are trying to finance finance an extraordinary amount of build out right now. How much are they leaning on public bond markets or indeed the rest of the debt system?
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Paula Silkson, Bloomberg Senior Private Credit Reporter
So the best way to think about this is they are tapping all debt markets. So we have obviously the typical on balance sheet corporate borrowing which you see like with the Oracle deal today that can be an investment grade bond, a high yield bond or a leveraged loan, or even a private credit direct loan. But there's a lot of off balance sheet borrowing happening as well. I know that sounds a little bit bit scary when you first hear the words off balance sheet, but what it simply means is that instead of an investor lending to the company, they're lending to the actual datacenter project itself. So they create a special purpose vehicle that is the actual builder and owner and borrower to create the data center. When you tap that, that opens up a whole other realm of markets. So for example the bank project finance construction loan market has been heavily involved in this space. You're seeing private placements which are typically insurance companies. You're seeing structured finance investors in the form of commercial mortgage backed securities and asset backed securities. You're seeing private credit, you're seeing GPU finance for the chips. It is touching all parts of the debt markets.
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Host
And we think about Corey was very much thinking about financing of the chips to begin with. We saw that deal between Blue alumhta was a real pin up in the private part of their business. What are they having to pay for all of this?
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Paula Silkson, Bloomberg Senior Private Credit Reporter
It really depends. And it can range from just a little bit overinvested investment grade all the way to double digit teens mid teens yields. It just kind of depends on the structure. There's also a big difference between something that is a hyperscaler borrowing or ultimately backed by a hyperscaler versus some of the more risky things where maybe it's a small early stage company that needs to borrow money that's all in on AI.
- [30:43]
Host
We've had a lot of new neo clouds popping up for example. Just tell us about the need for transparency though. What's so interesting is the equity market's response to Oracle today is just few. You're telling us a little bit more when we have so much private credit getting involved. Do investors feel they have enough information about just how broadly the borrowing is going from certain issuers?
- [31:05]
Paula Silkson, Bloomberg Senior Private Credit Reporter
I think it depends on the issuer. So Oracle for example, while it is doing this off balance sheet borrowing, it is still tied to those data centers through lease commitments and that does show up up publicly in their financial statements. But I think for, for a lot of these deals it's actually pretty much all private. It's also a lot of times private companies doing it. So then the investor base is just a very different investor base and I hope they're getting disclosures but it's unclear and I think what makes it nerve wracking for the markets is even if those private company investors are learning about it, maybe the rest of the market doesn't know and that can just cause unease and uncertainty around the absolute scale of the debt being borrowed right now.
- [31:41]
Host
Well said Bloomberg's policy and got to go and read her offers throughout all about the debt markets. Really interesting stuff. Meanwhile, let's go to other build out. Nvidia CEO Jensen Huang says the company's proposed $100 billion investment in OpenAI was quote, never a commitment. Speaking to reporters in Taipei over the weekend, Huang reiterated his Support for the ChatGPT maker but did not disclose the total investment. Just take a listen.
- [32:07]
Daniel Payne, Slate Stone Wealth CIO
Sam is closing the round and we will absolutely be involved.
- [32:13]
Paula Silkson, Bloomberg Senior Private Credit Reporter
How much?
- [32:15]
Mike Shepard, Bloomberg Tech Editor
We will invest a great deal of money.
- [32:17]
Daniel Payne, Slate Stone Wealth CIO
Probably the largest investment we've ever made.
- [32:19]
Host
The large.
- [32:20]
Mike Shepard, Bloomberg Tech Editor
Yeah.
- [32:21]
Host
So it's not going to be over 100 billion.
- [32:23]
Bloomberg Reporter
No, no, no, no, no, no, nothing like that.
- [32:27]
Host
Seth Fegeman joins us now for what was a busy weekend as always for Mr. Wang over in Taipei. Look, are we meant to be surprised that when you've inked some sort of deal and said look we're good for up to $100 billion that actually that hasn't been fully ironed out and agreed and it's up to each megawatt coming online a little bit.
- [32:46]
Bloomberg Reporter
I mean I think it's important to step back. Remember when this deal was announced a few months back, it was a monumental moment for both companies. One that attested to the scope of the build out. That opening I had in mind and Nvidia's role in that and also like the circular deals concern returns to your point, there are a lot of daylight there. They've ever set a firm timetable or a fixed amount and so there was room to imagine maybe it wouldn't be $100 billion. But now I think it's a question of just how Far away is it from that? And again over what timetable?
- [33:12]
Host
Some of the reporting from other networks and outlets has been that actually Nvidia is getting uncomfortable with the competitive landscape, uncomfortable with the so called discipline of open AI. Is that something that we're hearing in our reporting or is this more. This is a company that that's maybe is aware of the criticism around circular financing and is just being questioning a little bit more.
- [33:30]
Bloomberg Reporter
Yeah, I mean it's unclear and it's a delicate balance here between these two companies. Even if Nvidia is maybe having those concerns that you laid out. Opening is still very central both to a larger landscape and to Nvidia's own deployment of chips. It's clear that the relationship between these two firms has not broken down. As Jensen said, will probably be the largest investment they've ever made and will probably be the largest funding round we've ever seen. But it's possible there is some daylight there.
- [33:53]
Host
Let's just go to that funding round because that's what's currently under negotiation. We know that Middle Eastern investors has been eyed up. We know that Amazon is interested in the round. So what sort of scale are we talking and, and how will it be related to using certain companies, equipment or gigawatts coming online?
- [34:09]
Bloomberg Reporter
Yeah, so I mean we've reported that up to $100 billion in this funding round which again would be the largest that we've ever seen trumping opening eyes prior $40 billion funding rounds. We've seen that Amazon SoftBank, Nvidia each willing to potentially commit billions or tens of billions of dollars to this round, does not currently feel like OpenAI is hurting for money in that one respect remains to be seen. And then to your question, not just in video, but certainly Amazon, Microsoft like these are all if not circular relationships then continued examples of the companies using the suppliers to fund their ambitions.
- [34:42]
Host
Well, we'll keep a track of it. Seth Fiegeman breaking it all down on that relationship between Nvidia and open AI. Meanwhile, coming up, let's talk about crypto exchanges. They're under pressure. Plunging trading volumes is really the issue at the moment. We're off by just a couple of percent. We've cooped some of our losses on the day, but we'll dig into it next. This is tech. Why choose a sleep number?
- [35:03]
Vienna Baker, Bloomberg Deals Team Managing Editor
Smart bed.
- [35:03]
Economist Natalie Gallagher
Can I make my site softer?
- [35:05]
Daniel Payne, Slate Stone Wealth CIO
Can I make my site firmer?
- [35:07]
Bloomberg Reporter
Can we sleep cooler?
- [35:09]
Host
Sleep number does that cools up to eight times faster and lets you choose your ideal comfort on either side. Your sleep number setting Enjoy personalized comfort for better sleep night after night. And now during our President's day sale, take 50% off our limited edition bed. Shop now for a limited time only at a sleep number store or sleep number.com. Bearish sentiment in crypto. It is weighing on the exchange changes as investors pull back on trading platforms like Coinbase and Gemini. Well, they're seeing stock prices and trading volumes drop more on the entire ecosystem. Let's bring in Bloomberg Cross asset reporter Isabel Lee. And no wonder companies exposed to trading and volume are going to be feeling the pain when everyone probably takes a bit of a step back at this moment.
- [36:00]
Bloomberg Crypto Reporter Isabel Lee
Definitely a step back. I was sitting in my sofa nicely over the weekend and then bitcoin fell. It fell to its lowest since April. The tariff driven volatility. So it may made a lot of investors panic. Granted, thin liquidity over the weekend and fewer traders, fewer online. And we know that when bitcoin falls, it triggers a wave of liquidations. We saw billions and billions of long and short positions liquidated. But still investors have been increasingly becoming a little unhappy with bitcoin because macro factors that used to help it before haven't been really helping like a weaker dollar that's supposed to be good for bitcoin, but it's not really helping right now. So now we're seeing January decline and it's really one of the long longest streaks. I think it's a fourth straight monthly decline, the longest streak since 2018.
- [36:37]
Host
I mean Bitcoin shed nearly 11% in January. one point it was trading the lowest since President Trump's return to the White House. Much had been hoped for regulatory changes, in particular what might get through Congress. That seems to have been put on ice, is that also an issue?
- [36:53]
Bloomberg Crypto Reporter Isabel Lee
Definitely. It's put on ice because if this president, which is supposed to be the most crypto friendly president, can't help it, what can? And you also see it in flows. Flows are drying up. I mean sure, it's just a bucket and this, we still have more than $1 billion in assets, but you see flows drying up. I think investors have been spoiled because it used to be always green on the screen, inflows after inflows. When Bitcoin ETFs launch in 2024, which is crazy, it's two years ago it made records after records and now, I mean, some would say it's consolidation, some would say, oh great, now I can buy it at an attractive entry point because for a while bitcoin has been too high. It' if it's too high. I mean, how will that be an attractive entry point? So it's a mixed sentiment out there. But for now, you can't deny that there's some gloom in crypto world, some.
- [37:33]
Host
Blue for Michael Saylor in particular. I mean, just talk to us about these digital asset treasury companies and how much this pain must be hurting them.
- [37:42]
Bloomberg Crypto Reporter Isabel Lee
Just like bitcoin, I think digital asset treasuries are, whether you love them or you hate them. But today, headlines are making for Michael Saylor because for the first time, the plunge challenge token's price fell below the purchase cost of Michael Saylor's leverage Bitcoin proxy and strategy. So that's really something. There are no margin calls yet. I want to make sure there's no immediate financial stress, no expectation to sell Bitcoin. But it's just something worth noting. Could this be the beginning of something? Maybe. But maybe it's also just like a bad day, a bad week, a bad month. But it's definitely worth noting because he is the biggest, biggest bull of bitcoin and Wall Street.
- [38:15]
Host
And the company's cost basis is about 76,000. And we went below that for a moment. I mean, we see the shop stock price just get off of its lows, but still under pressure once again, Isabel Lee across this asset class for us. We appreciate it. Now coming up, Palantir earnings come up after the bell. We're going to discuss what to expect. This is Bloomberg Tech. Earnings still coming. All eyes on Palantir reporting after the closing bell today. And actually for the first time in two years, Palantir shares are not rallying into a quarterly earnings report. Let's break it all down. Bloomberg's tech equity reporter Carmen Reineke on the day. They're up just a little bit yet to date. It's been brutal, right?
- [39:00]
Bloomberg Crypto Reporter Isabel Lee
It has.
- [39:00]
Economist Natalie Gallagher
And if you look even further back to November when they hit the record high ahead of their last earnings report, the drawdown is about 25%, which is pretty significant for Palantir for any stock. And a very different setup that that we've seen going into earnings from previous reports. So it's definitely looking like, you know, the stock could get a little bit of help. Its valuation is still very high, even though it's come in a little bit with the, you know, the stock's decline. So investors are looking for some very key things. I mean, Palantir is expected to put up another great quarter. The guidance will really be paramount and there's a lot of volatility in this name. So we could really see big swings in either direction.
- [39:37]
Host
I mean revenue is still meant to be 61% growth, 50 more than 50% for the fiscal full year. But Dr. Karp's got to be aware of how in many ways is deemed a bit of a mean stock. And as we've just been discussing with crypto and bitcoin, we've seen a lot of changes in where people have been wanting to allocate. Is that anything to do with it is more about just a terrible time for software in general.
- [40:00]
Economist Natalie Gallagher
I think it's a little bit more tied to the software, you know, sell off. We've seen a couple ants analysts commenting on that. It's just gotten weighed down with the rest of the sector. I think there also could be, you know, there's been some of a rotation away from, you know, the most expensive tech names. This definitely is in that camp. And you know, a source said to me, if you're looking to rotate in, something's over 100 times forward earnings, that's not really maybe the place that you're going to be looking to buy. So yeah, we'll just really see. I think Dr. Karl Karp as well. You know, he's such a passionate CEO. People will definitely be listening for his comments on the call. And that could really go either way as well.
- [40:39]
Host
We always get some pretty Choice words from Dr. Karp. Pretty much come in. Reinicke, great to have you on today. Thank you. Look, Palantir isn't the only big tech name reporting earnings this week. Look how many we've got coming. And please to say Fiona Sinclass, a senior analyst at Citi Index Financial can talk us through. We've got AMD on Tuesday, Qualcomm, Alphabet Wednesday, Thursday. You've got the big one that is a of Amazon. How do you brace for some of these numbers? Because look, Microsoft last week wasn't a bad set of numbers. Absolutely beaten up when people were worried about the capital expenditure.
- [41:10]
Fiona Sinclass, Senior Analyst at Citi Index Financial
Yeah, that's right. I mean we're definitely seeing this sort of division between those tech that are in favor and those that are not. And I think that's going to be even more under the microscope as these earnings things come through. The market is very much more selective about where they're looking to direct capital. You know, before, as we said, it was just very much more jump on that tech trade and ride it higher. There really wasn't too much in it. But that's just not the case anymore. And we're seeing, you know, even numbers that come out relatively good like we said with Microsoft, end up with, you know, a 10% drop in the stock and at the same time we saw matter driving, driving 10% higher. So it does feel a little bit more unpredictable in that respect. And it also means that the bar, I would say is even higher on these companies to impress than it has been before. Even though valuations in some cases have come down a bit given that sort of sell out of tech that we had seen since the November highs.
- [42:11]
Host
So let's just start with Palantir, for example. What would a software company that is going to deliver more than 60% earnings per share growth, more than 60% revenue growth have to articulate, you think, to change the sentiment on the name?
- [42:25]
Fiona Sinclass, Senior Analyst at Citi Index Financial
I mean, I think forward guidance is going to be absolutely key and I feel that's where sort of, you know, Microsoft might have just sort of let, let the side down a little bit compared to Matter, for example. So I think for guidance is going to be massively impressive in order to support this valuation. I mean, as we spoke about, you know, the valuation Here is what, 140 times expected earnings. So you know, it really has a lot to live up to. And given that we've seen all these questions about the spend capital expenditure, what's the monetization? This does mean that investors do actually want to see that something's coming through now. And for that reason I think forward guidance. Guidance is going to be key here.
- [43:09]
Host
Yeah, if anyone can show productivity and articulate what is doing, Palantir could likely do that. Meanwhile, Alphabet's that one stop shop, vertically integrated, showing what it can do with its own chips, doing what it can do with its own tech and hardware and the whole shebang. Fiona, what do you anticipate? Alphabet has had a lot of mood music to the positive of late. Will that hold?
- [43:30]
Fiona Sinclass, Senior Analyst at Citi Index Financial
Yeah, so I mean I think this is definitely one of the stocks that to be, seem, seems to be in the favored few. I mean if we look, it's up 8% across January, which is, you know, pretty good returns for, for a tech stock in January, up 68% year on year. But I think, you know, Amazon and again with, sorry, Alphabet, again with Amazon are going to be very much a litmus test as far as that whole sort of, you know, I theme is concerned. Obviously with Alphabet you're looking at a $4 trillion valuation valuation. So you know, investors are really going to want to see whether there's momentum in that Google cloud and advertising to support that valuation. So you know, focus, as I said, will be on that Cloud growth will be on initiatives, monetization of that and also spending. I mean this is what, you know, the market has been getting very nervous about is, you know, what is that spending, what are we looking at, how much is it expected to go up and, and what are the returns on.
- [44:27]
Host
The back of that? What's interesting is both Alphabet and Amazon will be a bit of a tell for Nvidia, maybe AMD as well, which is coming out beforehand of how well are they producing their own chips. How much does that matter to Nvidia in the future? I mean we don't get their earnings until later in February, as always, Fiona. But do you think semiconductor concerns should be start to build in, in terms of companies being able to build their own and just turning to a Broadcom for example?
- [44:56]
Fiona Sinclass, Senior Analyst at Citi Index Financial
Yeah, I mean it's definitely a question that's on the table and a focus that will be there. And I mean if we do see that happening then obviously that will move attention away from Nvidia and that sort of, you know, first to market momentum that that stock had. I don't think we're necessarily there yet, but I think it is right to put expect that to slowly start creeping in. So attention will be on that as well. As you said, you know, Nvidia, not for a little while yet, but it's always a massive focus as we get past these earnings this week.
- [45:30]
Host
How many calls are you taking? Also about the private side, the question marks around OpenAI's fundraising and what that really means to the rest of the ecosystem, to your public investors for a.
- [45:40]
Bloomberg Crypto Reporter Isabel Lee
Moment.
- [45:42]
Fiona Sinclass, Senior Analyst at Citi Index Financial
Is definitely a question question and it's that question that we had and it was very much a concern, I think, you know, around October, November time where there seemed to be a lot of deals going on and there was that sense of what all that question. Is this sort of an ecosystem that's growing or is it just circular investment? And I don't think that was ever really resolved. The market does seem to be a little bit calmer about those questions for the time being. But I wonder if we, as we move towards, towards Nvidia's, whether those questions will start to appear again. And especially after we've had the earnings.
- [46:15]
Host
This week, the same course bracing us for a big week at Citi Index Financial markets. Thanks so much for your time as always. Meanwhile, that does it for this edition of Bloomberg Tech. Do not forget to check out our podcast find on the terminal as well as online on Apple, Spotify and Iheart from New York, this is Bloomberg Tech.