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- [00:01]
Ed Ludlow
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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Ryan Vasilica
so there's
- [00:31]
Bloomberg Tech Host
a 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. Let's create smarter business. IBM Global we think about what can
- [01:04]
Public.com Advertiser
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Bloomberg Tech Host
Venture Global is not only building some of the largest energy facilities in the world right here in the United States, but delivering American energy at a fraction of the cost and a fraction of the time. So while others are busy talking, we're busy building. That's Venture Global. That's unstoppable energy.
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Ed Ludlow
Bloomberg audio studios podcasts radio news.
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Bloomberg Tech Host
Bloomberg Tech is live from the heart
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Ed Ludlow
of Silicon Valley with Ed Ludlow in San Francisco.
- [01:53]
Bloomberg Tech Host
This is Bloomberg Tech Coming up, SK Hynix is US listing is way oversubscribed priming the Korean memory maker for the biggest ever foreign first time share sale in America. Plus Micron boosts its spending on new American plants to $250 billion to meet surging memory demand and Meta unveils its latest AI model, pricing it aggressively and talking up its agent capabilities versus Google's Gemini. Mark Zuckerberg tells Bloomberg why semiconductors and memory chips continue to dominate the news cycle and the market action. Nasdaq 100 Philadelphia Semiconductor Inde Bloomberg reports that Korean memory maker SK Hynix is telling investors it plans to price its U.S. listing at $149 per American depository receipt. That would make it the largest ever first time US share sale by a foreign company, with demand for memory chips absolutely ripping. Then at the same time SK's great American rival Micron wants in on the act. The company from Boise, Idaho is boosting its planned spending in the US to $250 billion. Rapid infrastructure expansion is e up memory chips and Micron spending more to meet that. On the Equity Capital Market story Bloomberg's Bailey Lipschultz in New York leading Bloomberg's coverage of semiconductors in King and San Francisco. But I'm going to start with you. This is an issue of math. Right. Explain the ADR process where we think they're indicating right now they will price and why. This would be the biggest first time US share sale by a foreign entity.
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Bailey Lipschultz
Yeah, so at $149 per ADS that equates to call it a 3% premium from where shares closed at in South Korea on Thursday night. For them the math works out because every adr equates to 110 of one share. So there's your math problem there for you. And one thing to keep in mind, we did report and break that this was a deal that was over seven times oversubscribed. Small number at the headline but when you look under the surface, nominally that's north of $160 billion in demand. Similar to what we saw for Sarah Bras. Again would be a record setting and will be a record setting listing for a foreign issuer. The US So outpacing Alibaba but falling short of Saudi Aramco's domestic listing. The big question going forward now is do they stick to that price and how does the stock trade relative to those South Korean shares? As you know they normally will trade in terms of ADRs at a premium. So pricing it at 3% do we see that get closer to double digits? Certainly something top of mind is going
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Bloomberg Tech Host
to raise between 26 and 28 billion dollars for a reason. Bloomberg's in King, they need to boost capacity. But the history here is really important. SK Group bought Hynix in 2012 and the time in the memory landscape maybe they weren't taken seriously. Bring us forward to present day and explain where SK sits relative to Micron and of course its domestic rival Samsung.
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King (Bloomberg Analyst)
Yeah, I mean this is really a rags to riches story. This is a company that you know was in trouble and was quite likely to came very close to being bought by its competitor Micron and and Samsung refused to buy it as well. I mean it's come an incredibly long way and if you look at it from the investor perspective we've got revenue tripling to more than $200 billion this year at an 80% gross margin. So you know it's come so far and done so well in every memory chip.
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Bloomberg Tech Host
Also starts with a silicon wafer. And like big news story this morning was Micron boosting its US investment to $250 billion from $200 billion. So $50 billion more but it's a bigger story about reinsuring capacity. Explain that to us.
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King (Bloomberg Analyst)
Yeah, I mean the big story really and this is what ties SK to Samsung to Micron is how much capacity is going to get put in place, but more importantly how quickly. There's no doubt that demand is very, very strong right now. Nobody is saying that over the next two years or so that we're going to be in anything like balance or oversupply. But, but you know, this is an industry that's never got it right over the long term. They've never had a market like, like before but they've never been able to balance those things. So really what everybody is focusing on is how much gets spent when and if we see a massive flood of that 250 billion getting deployed in the US very quickly, then that is something that investors will pay close attention to.
- [06:20]
Bloomberg Tech Host
Very specifically we're talking about high bandwidth memory and later in the show we're going to get the analysis from beyond that very quickly. Bailey, what happens next? The mechanics of this US ADR listing.
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Bailey Lipschultz
So we'll start trading tomorrow at some point like a typical IPO. So it won't start right at 930. We'll see a bookmaking process. The interesting thing to keep an eye on, it's going to trade under a different ticker on Friday than relative to when it is formally listed on Monday. Again keeping a close eye on how it trades out with that premium relative to those Korean shares.
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Bloomberg Tech Host
Bloomberg's in King and Bailey Schultz, thank you both very much. Bain Capital has fully exited its investment in Kyoksha holdings completing a months long sell down of a direct stake. His Bain Capital managing partner David Gross speaking with Bloomberg.
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Delian Asparouhov
Shari on we have wound on that.
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Ed Ludlow
How much has that helped in opening doors across Japan?
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Delian Asparouhov
Yeah, I mean I think it's been really important for the industry and for us because again this was a crown jewel of one of the top, you know, kind of technology driven, driven companies and conglomerates with an amazing history. Toshiba. You know a lot of parties and stakeholders were involved. So there were a lot of eyes on whether this was going to, was going to work. And it's worked spectacularly for really I'd say all the stakeholders involved.
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Bloomberg Tech Host
Bain says a special purpose investment vehicle is set up with 4 SK Hynix still holds a full 14% stake in Kyoshi. That's basically everything you need to know. In Chip news this morning, the trade is finding its footing again in the moment. Chip stocks rallying Micron spending, more investors appearing enthusiastic about SK Hynix's imminent US listing despite recent volatility. And we've been over that in great detail. Christina Dudley is with us. Franklin Templeton, senior investment strategist Very interesting week. Maybe that's what putting it mildly. It's good to see you. Is there any common thread to the volatility? Chip stocks have been going up and chip stocks have been going down. Why?
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Christina Dudley
So if I actually you look at asking Ask B of what's happening in the market and you ask it for the bear case on your infrastructure capex, there's seven different points that it brings up. So it's so prolific in terms of what the bear case is in terms of looking at inefficiency in the supply chain. Too much capex going into the market. You know, I can make a bear case and make it sound very robust, but interestingly, keep that in the context window and let's flip over to the bull case and I think that, you know, from our perspective, it's the bull case that really should be winning here in the sense that we look at these investments, we look at the infrastructure spending and we look at these announcements and we think the companies have been rational, we think that there's ROI that's supports these investments and so therefore we're in the bullish camp. But we do pay attention to that bear case.
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Bloomberg Tech Host
Bloomberg Tech audience For what it's worth, Ask B is Bloomberg's AI tool on the Bloomberg terminal currently in beta. Quite useful. Katrina. The durability of the AI cycle. When I go to rsp, I always ask, zoom out from, from the headline or the movement in the moment, what's the theme? What's the story? Durability is what always comes back.
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Christina Dudley
Yeah. And durability I do think is at least here through 2026. Yes. Kind of still got half a year to go 2027 and even well into 2028. But if you look at how fast AI and everything in the tech stack is changing and the technology is changing, I think anyone who can promise you visibility into 2028 and beyond is probably, you know, not really telling you the full, full story. If I look at, you know, even a year ago and I look at the AI narrative, we were talking about single agent infrastructure and we were encouraging our teams to develop single agents. Now we're looking at agents running on a multi stack, you know, a multi agent infrastructure, we're looking at agents running simultaneously. We're also now talking about you're not just prompting but how much is in the prompt. What is that context window. So the argument the narrative is continuing to change. I think it's really encouraging that the companies however are continuing going back to something which is we have free cash flow. Yes, I know Capex is exceeding free cash flow, but these are free cash. They are investing and they are very focused on roi.
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Bloomberg Tech Host
Another thing that kind of gets spit out at you is if you even if you just read the kind of markets commentary is what happened in semiconductors was technical and structural. There was a massive quarter that we ended yes, year to date. The gains are astonishing and then the market kind of pulled back a bit. Most people see that's healthy, don't they?
- [10:56]
Christina Dudley
A lot of people see it in healthy is healthy in terms of, you know, the markets trying to get things right and the fact and you know if I look at what drives market it's earnings growth. So I look at what type of earnings growth we're seeing at these companies and we are seeing a 19 fold increases in earnings. So its earnings growth growth that is driving. Yeah. And so and the thing is the question is what's the sustainability of that. And I listened to one of the podcasts that Bloomberg was hosting about sk, Hynix and Samsung and you're looking at the capacity numbers, looking at the spend, it seems like it's quite right.
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Bloomberg Tech Host
So let's end the conversation here. What is the most important metric? Right. The textbooks tell you that historically it's cyclical boom and bust on memory. If one of these companies goes comes out with a timeline for supply to improve, is that valuable to the market strategist? What is it you're looking to hear?
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Christina Dudley
I think we just want to hear that these, these are ROI positive investments because if as long as it's ROI positive it's going to be something that creates value in the long term. So that's what we think is the key message.
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Bloomberg Tech Host
Trina Dudley of Franklin Templeton here with me in New York City. Really appreciate it. Thank you very much. Coming up I think we're going to go to private markets Founders fund partner Delhi and Aspect Barohoff joins us from Sun Valley, Idaho. We're going to discuss the state of the space economy next source of course the chair of Varda. This is Bloomberg Tech. Base investing is booming just weeks after Space X is record ipo Bloomberg reports in the private markets. Jeff Bezos is Blue Origin is seeking outside capital for the first time at a roughly $130 billion valuation. Venture investors are also pouring billions into companies betting on the orbital economy. But there's one big bottleneck launch capacity Access has been limited, costs have been rising and getting to space is still hard. Joining us now is Delhi and Asparagus partner founders fund chairman of Varda Space Industries. But also thinking about manufacturing in space and Dell. That's where I wanted to start. What's the latest with Vada? Where are you at?
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Delian Asparouhov
You know, I think we've had a pretty exciting announcement that my co founder brewery came on for about a month and a half ago. We announced the first ever commercial space manufacturing partnership with United Therapeutics. United Therapeutics is a $25 billion publicly traded company. They make compounds that are treated for rare pulmonary disorders. Think things that affect your lungs. They announced a deal of auto. We're going to be working on 10 different drug products with them where we're going to be taking them up to space, improving basically how that drug gets administered to patients and bringing them back down here on Earth. So think a patient that can now take something that used to be an oral tablet and instead they make it into something that's inhalable. And so now it's much more efficacious is a much simpler experience for the patient. And the patient is not thinking about like, oh, this is a space drug. They just pick it up from their pharmacy. And one step in the supply chain happened to be in space.
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Bloomberg Tech Host
Capital is flowing into space.
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Delian Asparouhov
Space.
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Bloomberg Tech Host
But like more specifically, both as. As an investor dao and as a founder and leader of a space startup. How would you sort of describe the asset class that is the orbital space economy?
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Delian Asparouhov
Yeah, I think what people are waking up to is that the space economy can influence many different aspects of the economy down here on Earth at a truly massive scale. Right. We've seen you call it the first generation of the space economy. Telecommunications and Earth observation become quite large. Right. Starlink is effectively now one of the most dominant telecommunications companies on the planet that I describe is like generation one. And it was enabled over the past couple of years, especially by the reusable orbital rockets that Space X built. They were effectively the railroad to space. I think a lot of investors now are thinking about what is that next generation of the space economy that is now longer defined just by what we're doing up in space space. But what is that value that is brought down here on Earth? And that requires two ways of a railroad.
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Ryan Vasilica
Right.
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Delian Asparouhov
You need the railroad that takes you up to space with the rockets, but you do also need to start to build the railroads that take you back down to Earth. That's a lot of what we build at Varda for our Own use cases, our reentry sort of vehicles. As investors, we're also really studying the broader supply chain to enable the space economy that are all the subcomponents that are down here on Earth. You know, and we've spoken before about one of my portfolio companies, companies based out in Bulgaria, Enduro Sat, they build satellite components for a lot of major U.S. companies where, you know, the U.S. company may be the system integrator and the mission operator, but they're building the underlying GPS chips, the solar panels, the satellite components. Another one that's come on your show recently that's doing quite well, Hadrian, they basically operate these automated factory facilities where they build a lot of the parts that go into a Space X rocket and Anduril drone, Avarta, capture Seoul. And they just announced a huge deal with the Navy. So you're seeing just all these tailwinds. SpaceX is obviously the like, you know, sort of leading sort of company in the space, but you're seeing tailwinds and that's just showing up. And Rocket Lab now being a $70 billion company, you know, Hadrian, you know, you know, having a ton of, you know, sort of momentum, impulse space. There's just a whole suite of logos that are doing quite well.
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Bloomberg Tech Host
We're showing pictures of the view from the VADA capsule in space. Right. And what you were just talking about is the bit of most interest with a future orbital economy. It's bringing the payload back to Earth. Of course, SpaceX has just demonstrated starfall. You know, how much of a disruption is that for vada? How much is a boost for Varda seeing Space X? Look at a similar plan, a similar piece of technology.
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Delian Asparouhov
Yeah, you know, I've had a lot of people ask me, you know, whether or not we see this as hugely disruptive. And honestly, counterintuitively, I've mostly seen it as a huge tailwind. Why? One, in the Space Access one, they listed orbital manufacturing of pharmaceuticals as a use case that they wanted to pursue. Two, we have had to rely on only our own internal railroad back down from space versus now Space X. Entering that market validates the value of that railroad and honestly offers me also potentially an alternative supply in 2029, when I'm going out and doing a super large manufacturing campaign for a pharmaceutical trial. There's a world where my own internal railroads might not give me enough supply. And now I have an alternative in Space X. And at the end of the day, Space X is just building that capsule. They're just building that reentry platform that Brings things back down. If you look at why United Therapeutics is working with Varda, it is not just because we provide that railroad back down. There's the whole pharmaceutical platform around that. How does microgravity affect their particular drug? What is the regulatory approval? And how do we get the FDA on board with that, the pharmaceutical processing equipment? How do you actually take the drug that they make, process it in microgravity in a way that allows it to be inhalable. And so fundamentally, Varda provides this whole pharmaceutical platform where one aspect of it is this railroad. And now you're telling me I have the largest company on the planet, Value validating the value of that railroad and offering me an alternative supply and marketing, my business model, their S1, and through their, like, sort of tweets online, all I can say is that has validated it with our customers, our investors, and it's provided a ton of momentum here at Varda. And so God bless Elon Musk and God bless Starfall.
- [18:09]
Bloomberg Tech Host
We are kind of doing this in reverse, but I wanted to talk about launch. I said at the top, launch has been a bottleneck. What I see is Falcon 9 rideshare capacity tightening. And then there's the transition to Starship.
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Kurt Wagner
Right.
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Bloomberg Tech Host
You guys have relied on Space X to get to orbit. Reflect on that experience and what you see in the market for launch.
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Delian Asparouhov
Yeah, I'm very grateful that, you know, in this current moment, where launch is starting to become constrained, Varda is a very scaled entity. You know, we have our launches booked for all of our internal capacity needs fully through Q1, Q2, 2029. So it's not something that provides us a ton of immediate concern in that time frame, for sure. We're obviously working with our sort of partners at Space X, understanding what is that potential transition to starship look like. What do the future Falcon 9 rideshare, you know, basically payload start to sort of look like in that later time frame. And over that time frame, while it's been a very constrained field, with really Space X being the only player that is, you know, sort of reliable, low cost, consistent cadence, and obviously, you know, certain other players got some setbacks over the sort of past year. I do think by 2029, between Rocket Lab now being a $70 billion company and investors really wanting to deliver on Neutron, you know, Bezos clearly taking Blue Origin very seriously. And while they've had their setbacks with New Glenn, I do believe that Rocket will get back online. And they have shown reusability. Right. They are the only people on the planet other than SpaceX that have shown their ability to go land a stage one and go reuse it and stoke space as well. And there's a handful of others behind them.
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Bloomberg Tech Host
We just have 30 seconds. I want to talk reentry. The U.S. looking at offshore sites outside the U.S. how it goes with that relationship to get reentry approvals real quick.
- [19:51]
Delian Asparouhov
Yeah, you know, for now we're landing all of our capsules out in Australia. You know, Starfall, they just landed off the, you know, sort of coast. The United States in an ocean. At the end of the day, in order to make this railroad back to space super consistent, we're going to have to find an area in the United States that the FAA basically designates as the RE entry railroad landing area. We're working with our regulators and partners here in the United States to find a path back. For now, we're still planning on landing in Australia. Turns out the West Australian desert super empty, great for reentering vehicles, but it's obviously not the ideal long term path. US companies should launch in the US and land in the US daily.
- [20:26]
Bloomberg Tech Host
And as for half partner at Founders Fund Chair at Varda. Thank you so much. Back on Bloomberg Tech now coming up, Mark Zuckerberg unveils Matters next AI model and we have the details. This is Bloomberg Tech.
- [20:39]
Ed Ludlow
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 at IDA Ireland Invest in Extraordinary.
- [21:08]
Public.com Advertiser
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- [22:04]
Kalpen (Cal) Modi
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 hey everyone, it's Cal Penn, host of Irsay, the Audible and iHeart Audiobook Club. This week on the podcast, I'm sitting down with Divergent author Veronica Roth to talk about her sprawling new no seek the Traitor's Son. It's a sci fi fantasy epic about two protagonists on opposite sides of a war and a prophecy neither of them wanted.
- [22:38]
Bloomberg Tech Host
My first book was Divergent, and when that came out, like, because it was so popular, I think it attracted like, mostly positivity, but the negativity I sucked in like a sponge. And I think it was like, critiques of things I liked when I was like, you know, I was 23 and I wrote this book and it had all my, like, dorky little cheesy or maybe unrealistic loves in it. And I started to feel a lot of shame about those things. And so for the rest of my career, I steered away from those little things that, like, make you feel pleasure when you read. But I also was like, saying no to these parts of myself that I then was like, screw it.
- [23:20]
Delian Asparouhov
Yeah, so that's this book.
- [23:22]
Kalpen (Cal) Modi
Listen to Earsay, the Audible and iHeart Audiobook Club on the iHeartRadio app app or wherever you get your podcasts
- [23:31]
Louis De Palma
matter.
- [23:31]
Bloomberg Tech Host
Unveiling its latest AI model, moving closer to delivering a personalized AI assistant to the masses. CEO Mark Zuckerberg telling Bloomberg News, Spark 1.1 includes a new paid tier for developers. I want to get out to Bloomberg's Kurt Wagner, who did the interview with Mark Zuckerberg. And this is all about how aggressively Metta is pricing access. You discussed that with Mr. Zuckerberg about at length. What did he say?
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Kurt Wagner
Yeah, he was critical of pricing from other AI labs, saying that they were basically, you know, taking too much margin and that his goal is to make this as affordable as possible because he wants to reach as many people as possible. You know, I think this is sort of a classic Meta thing. They try to get their products into as many hands as they can and then sort of worry about making money after the adoption is there. I also think there's an element here of trying to lower the price of tokens industry wide. You know, if meta comes out with a very low competitive pricing option, maybe some of those other companies are going to have to lower their prices as well. Met is also a consumer of those tokens from other companies. Right. So this could lower their, their pricing as a customer in some ways. But yes, essentially he's very much trying to undercut the competition here with this API pricing.
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Bloomberg Tech Host
So then there's also like the question is about, is 1.1 any good? You know, prior models from Metta have just underperformed on a benchmark basis against the big, the big guys and frozen open AI. What did Zuckerberg say about what 1.1 can actually do and how it stacks up against, I don't know, Google's Gemini, for example?
- [25:07]
Kurt Wagner
Yeah, he was, he acknowledged that they're still not quite in the same tier as Anthropic, probably open AI on most things. But he was very proud of the fact that for the first time Meta's models benchmarked higher than Google Gemini. And he went out of his way to kind of point out, hey, we tested better than all of Google's models and this is a milestone for us. So for a company that a year ago essentially scrapped their AI plan and started everything from scratch, I think he feels like the progress is there. Obviously they still have a long ways to go to catch the frontier, which is something that we talked a little bit about in our interview. But I think he was trying to hammer home this idea that in one year they made some leaps and bounds and Google, Google is certainly in his sights right now.
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Bloomberg Tech Host
It's so interesting. You know, this morning Metta was down pretty significantly. There was a Reuters report about them pulling forward their own in house silicon plans. And then the story from your interview published now the stock's flat. It's pushing just into positive territory as people have had time to understand what, what matter is trying to say here about its models. Reflect on that.
- [26:13]
Kurt Wagner
Well, I think the narrative around Metta for six months, even a year has been they're spending very, very aggressively on AI. They' to build all these data centers, buy this, compute. But where's the payoff? You know, where does this ultimately come back to recoup that investment? And I think today is a step towards showing that, you know, they have this API for the first time, developers are going to be paying Meta to access their LLMs.
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Delian Asparouhov
Right.
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Kurt Wagner
And I think, you know, that is a step in a direction that investors I'm sure are happy with.
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Bloomberg Tech Host
Right.
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Kurt Wagner
When you couple that with business side that charge consumer subscription for their AI chat bot, when you know where they're talking about a cloud business. We had that report last week at as you know that they're looking into cloud enterprise stuff. I think the combination of all that things shows that they're serious about a business day.
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Bloomberg Tech Host
Wagner, thank you very much. Coming up, Space X shares are hovering around their trading debut price. But analysts super bullish as more coverage gets initiated. We have one of those analysts. Welcome back to Bloomberg Tech. Chip companies, semiconductors are the story, particularly in financial markets. Look at the NASDAQ 100 up 1.4%. The outperformance on the Philadelphia Semiconductor index in part because we are literally imminently going to get SK Hynix's US listing and those 80 hours will be the biggest US first time share sale by a foreign entity. A lot of coverage of that still to come in the program. Then there's Micron. Micron significantly gaining as it expands its US investment commitments to spend $250 billion. That's up from $200 billion. Also investing $3 billion into its supply chain. Thinking about for every memory chip it always starts with that silicon wafer. That's boosting the market to chip. Stocks are rebound bounding right now but it's been a rough ride. Investors remain wary of how much of the trillions being spent on Capex is going to bear fruit. Meanwhile, software stocks are kind of coming back to life after fending off fears that I will erode those companies growth. Bloomberg's Ryan Vasilica has been writing about exactly that and joins us with more. You know again one, one session a market does not make. But zooming out a little bit that that's kind of the summary of your report this morning.
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Ryan Vasilica
Yeah, we've seen a real sort of push pull between software and chips throughout the year to the point that the correlation between the two subsectors actually turned negative last month. That is the first time ever that we've seen that. And it all really comes down to AI with these two subsectors on different sides of the technology. Basically if AI continues to proliferate and it continues to improve, that is seen as good for chip makers in terms of their demand, in terms of their growth. And it's seen as bad for software to the extent that AI disrupts the sector. So we've really seen a huge divergence between the two this year. Now there has been some back and forth recently. Like you said, software seems like it was doing a little bit better. Chips seemed like they were coming back a little bit. Today of course scramble set some but really the trend has been very intact in terms of the divergence between these two groups.
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Bloomberg Tech Host
Yeah, that chart shows it right. Still massive outperformance on a longer period for semiconductors There's a story on the Bloomberg today. Starbucks taps AI to cut reliance on Microsoft and IBM software in the moment. Software is taking a hit on this report. Explain it to us.
- [29:41]
Ryan Vasilica
Yeah, well I think this really sort of exemplifies what people view as the bear case scenario, which is that customers, instead of using, you know, legacy software providers for all these different kinds of functions, will instead be creating their own sort of services through these AI tools. The ability to sort of vibe code, you know, your own kind of program to track inventory or handle sales or deal with customers. All these different kind of functions that have really made software such a powerful outperforming sector over the previous decade or so. The whole, you know, software is eating the world kind of argument that is really being thrown by AI and the idea that some of these legacy software companies, they're going to really see their growth eroded, their pricing power eroded, their margins pressured because of offerings from these AI native companies. So the fact that Starbucks is doing this and kind of able to do it well enough that it may not need Microsoft or IBM, I think that really just speaks to the underlying fear that people have had throughout this year.
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Bloomberg Tech Host
Bloomberg's Ryan for Celica. Thank you very much indeed. Take a look at the Space X and where we're trading on Elon Musk's space company right now. Kind of interesting on the stock because we are very close to that debut trade. $150.20 is where we're at right now. The opening trade of the the biggest IPO in history was $150 flat. The underwriter quiet period is now over. So Wall street is weighing in on Space X. William Blair's Louis De Palma initiated coverage with with a bullish outlook, raising his expectations for the company after news that rival Blue Origin is seeking outside funding. The story we did earlier, Louis joins us now. It's dynamic, right? Capital is flowing into the space economy. Just start with the basics of your thesis on Space X. Right. How much in your target, your price target for this stock you assigned to the space launch business with the bigger longer term AI story behind it, it fantastic.
- [31:37]
Louis De Palma
Thanks for, for having me on. In terms of the specific question, we use the general formula Starlink Starship equals Starbucks. You were just talking about Starbucks on the previous segment. Previously we assigned a $300 billion valuation to space X's launch business which was only a fraction of the total, roughly $2.2 trillion total company valuation. I think the company went public at around 1.8 or 1.9 trillion. But Starlink and the data center business right now are what's producing the Starbucks here in that Starlink has quite honestly taken over the entire telecom industry. We have for the past decade covered satellite communications providers such as Viasat, Iridium, Gogo and ast. Space Mobile and Starlink has won a ton of customers across the in flight connectivity sector, residential and, and for data centers. It was widely reported that Space X won the leases with Anthropic and Google. So they're, they're firing on, on all cylinders or nearly all cylinders I should say.
- [33:10]
Bloomberg Tech Host
Louis, I'm sure you did and many did study the prospectus very closely. And all of those future business lines, be it Orbital, Data center and things even more further afield on that are predicated on Space X getting Starship A to work, B, human payload rated and be reusable. My question to you and all of the sell side going forward is every time there is a Starship test launch, how closely is that going to impact the stock and be tracked for its success?
- [33:44]
Louis De Palma
Yeah, the, so they've done 12 Starship launches. I think they're going to do the 13th. And every time they launch Starship they learn something and there's iterative improvement. The goal here is for rapid reusability and full reusability over the next several years. So this isn't something that's expected in the next few months. And given how Space X is a full decade ahead of the competition here, we don't think, you know, the stock price is going to be that sensitive for, you know, each, each trial. We think, you know, there will be, you know, learnings from each trial and you know, progress will be made in terms of developing the satellites which are expected to debut in I believe the second half of 2028. So I don't think there's going to be very high sensitivity. I think there will be more sensitivity, you know, if Google or Anthropic were to suggest that, you know, they wanted to terminate their data center leases with SpaceX indecs, given the huge dollar volumes.
- [35:07]
Bloomberg Tech Host
It was musk in the first instance that was suggesting those were short term and sort of disputed the longer term nature of the money. You also write about Blue Origin in the private markets. What did that signal to you and how do you see the gap between Space X and Blue right now?
- [35:22]
Louis De Palma
Yeah, so I mean quite honestly in terms of New Glenn, it has launched three times and the priority mission with AST Space Mobile didn't work out very well. Whereas Space X has launched its, its Falcon 9 rocket over 650 times. So you know the scorecard 650 to 3. And SpaceX is already on, on Starship which is you know, a generation ahead of, of new Glenn. So I think there is, you know, an appetite for a competitor to starship and Falcon 9 and Blue Origin as well as Rocket Lab. They represent, you know, the most, you know, competent and capable and innovative competitors. But the fact remains SpaceX has a 90% plus market share. They're a decade ahead. And so you know, the launch business for SpaceX should be valued at, at more than triple the rest of the market combined.
- [36:27]
Bloomberg Tech Host
Louis, we're running short of time here but how do you model for Elon Musk? Key man risk?
- [36:33]
Louis De Palma
Yeah, it's, it's a double edged sword you would say. Elon Musk is also, you know, the key man like virtue here in that Elon Musk is the greatest, you know, innovator of, of this century. And, and we, we think Elon Musk is highly aligned to the company. So you know we don't consider, you know, a, a major risk here. We, you know he sleeps on the floor at, at Starbase. He puts his heart and soul into, you know, these, these business endeavors. So you know, we think he's fully aligned and you know he's going to be on board. And SpaceX has a very deep bench with Gwynne Shotwell and you know, Mila Cousteau, Brett, Brett Johnson as the CFO who's, who's awesome. So you know, they were very deep bench and we got to meet everybody at, at Starbase and in Hawthorne, right,
- [37:31]
Bloomberg Tech Host
Louis De Palma, William Blair initiating coverage. Space X thank you very much indeed. Space X has shown the might of American space technology and financial muscle with its record breaking ipo. Here's Joseph Aspacher, Director General of the European Space Agency on exactly that.
- [37:49]
Josef Aschbacher
We see now of course with the IPO of Space X that the support of NASA and the space force really
- [37:56]
Bloomberg Tech Host
leads to world dominating space companies. And this is something of course where
- [38:01]
Josef Aschbacher
volume is just as important as excellence.
- [38:03]
Bloomberg Tech Host
Catch more of that interview on the next episode of Bloomberg Tech. Europe as Tom Mackenzie looks at where Europe Europe is lagging in the space race and how it can secure some space Autonomy. That's tomorrow 8:30am London time now coming up as midterms loom, some Republican candidates have joined their progressive counterparts in pushing anti datacenter campaigns dividing the GOP on its AI stance. More on that next. This is Bloomberg Tech.
- [38:32]
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Kalpen (Cal) Modi
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 hey everyone, it's Cal Penn, host of Irsay, the Audible and iHeart Audiobook Club. This week on the podcast I'm sitting down with Wil Wheaton, who played Gordie Lachance in Stand by Me 40 years ago and now narrates Stephen King's the Body, the novella that inspired it all. We talk about what it's like to return to a story that shaped his life, channeling his memories of River Phoenix in the recording booth and why the friendships you have at 12 might be the most important ones you'll ever have. I know Gordie lachance.
- [40:15]
Delian Asparouhov
I am Gordie Lachance.
- [40:17]
Louis De Palma
Like, I mean, even when I was
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Delian Asparouhov
a little kid, I was Gordie Lachance when I didn't know it.
- [40:22]
Kalpen (Cal) Modi
Listen to Earsay, the Audible and iHeart audiobook club on the iHeartradio app or wherever you get your podcasts.
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- [41:05]
Bloomberg Tech Host
Little and Washington Washington is bipartisan these days, but both the Trump administration and Vermont Senator Bernie Sanders see AI as a way to finance a new sovereign wealth fund. Bloomberg's tech editor in D.C. mike Shepherd's with us. We've been talking a little bit more regularly about the idea of a US Sovereign wealth fund previously shaping connection with whether the US should or should not take stakes in AI companies. But there's this, this deeply reported Businessweek piece out. There is agreement here.
- [41:37]
Josef Aschbacher
There really does seem to be some common ground on the idea in general terms, but both politically and in terms of practicalities that there are a lot of hurdles. You know, this is an idea that actually predates Donald Trump taking office. When he was a candidate in September 2024. In a speech at the New York Economic Club, he called for creating a sovereign wealth fund that would be the seeded with actual the revenue from the tariffs he was talking about at the time. But that has evolved. Some of the thinking now is now aligning with proposals that have been on the table from Sam Altman and others in the AI industry for the government to take stakes in their businesses, to have some skin in the game, to feel some responsibility at the government level for the process and the progress in terms of developing this cutting edge technology, but then also also find a way to redistribute those returns. But the common ground really ends there. President Donald Trump has panned this idea from Bernie Sanders, which would call for taking up to 50% stakes in these companies and then handing back a 5% dividend to the public on an annual basis. The president has said I had the idea first and he just doesn't think it would work.
- [42:47]
Bloomberg Tech Host
Right. The president also said, well, everyone else has a, a sovereign wealth fund, so the United States should have one as well. And when I look at that chart and I reflect on like some of my prior beats, Tesla, for example, or some of the deals that are happening in the air space, Norway at the top. But some of the Gulf sovereign funds are very active in that sector. What do we know?
- [43:07]
Josef Aschbacher
Well, certainly when you think about a sovereign wealth fund, you really look at it in terms of, you know, the nations that you just mentioned, Norway, Saudi Arabia, Qatar, these all have and Singapore, of course, have all really, you know, kind of laid the table for how a sovereign wealth fund should be run fed by natural resource income, especially if you think about energy rich states like Norway and Saudi Arabia and then using that money to support projects and diversifying the economies as we, as we have seen in both those countries. The difference here though, Ed, is that, you know, the US really is running just off the charts, deficit numbers every year and a debt load overall that really raise A lot of questions about the practicality of a sovereign wealth fund. And then there are also just the logistics. Who would run it? How would it be seeded? We've talked about AI, we've talked about tariffs, possibly. And so far, the president who did sign an executive order in February 2025 to try to set this whole thing in motion, we really have not seen much progress toward this since then. And so the conversation is happening there. But the two sides, Republicans and Democrats, are really far apart. But in the meantime, we have seen the government through various agencies, including the Pentagon, the Treasury Department, and the Development Finance Corporation, have been investing in companies. Of course, we've talked so much about the intel investment, but they have also acquired stakes in a number of rare earths, refiners and other companies in that space. So we may not have sovereign wealth fund with capital letters, but we sure have the makings and shape of one at a smaller scale.
- [44:45]
Bloomberg Tech Host
Bloomberg's Michael shepherd, thank you very much. The GOP is divided over data centers. As the midterm elections loom, some Republican candidates have joined their progressive counterparts by running anti datacenter campaigns. Despite, despite President Trump's big tech alliance, not everyone's on board. Bloomberg's Emily Birnbaum joins us with the details. It is so interesting that we've tracked this early, I feel like early in the cycle, but it is an issue. And now the campaigns are responding, it seems, to the sentiment of the American public.
- [45:16]
Emily Birnbaum
Yes, exactly. So poll after poll shows that Americans do not want data centers built in their back backyards. They're skeptical of the enterprise. They don't like it at a local level. They don't like the sound, they don't like what it does to their utility bills, and they also don't like what it means symbolically. So I spoke to a lot of experts for this article who said, you know, data centers have become sort of a symbol of an unfettered elite that rigs the system in their favor, runs roughshod over local regulation, and, you know, things of that nature. And so candidates are picking up on that grassroots fervor on both sides of the aisle.
- [45:57]
Bloomberg Tech Host
Within reading your report, and again, so detailed, there is different approaches. The hard line approach, some Republicans taking a middle ground approach. What would be the distinction between a hard line and a middle ground approach on datacenter?
- [46:12]
Emily Birnbaum
So hard line would be no data centers in our state. I'll protect you from data centers. And then there's sort of a middle ground approach taken by Florida gubernatorial candidate Byron Donald. He's very aligned with President Trump. And his whole tact is I will make sure that they pay for their own energy. They're not going to drive up your electricity bills. They're not going to make your life worse. So accepting data centers as a reality, even inviting them, but saying, you know, you'll be protected from the excesses of them. And you know, it's very interesting in the Donald's case, he got a lot of flak earlier in the cycle for coming out in favor of data centers. So he's sort of tempering his tone a little bit. And I think a lot of candidates are having to do that right now.
- [46:57]
Bloomberg Tech Host
Bloomberg's Emily Birnbaum, thank you very much. Now, coming up, we're going to have more on SK Hynix ahead of its US Listing. It's of US adr. We're going to discuss that next. This is Bloomberg Tech. One big story making waves in the gaming world. Microsoft's Xbox is doubling down on one of its biggest franchises, Fallout. As part of a broader restructuring, Obsidian Entertainment is canceling several projects, laying off about a quarter of its workforce and shifting its focus to eight new Fallout game. It will be the franchise's first new title since 2018, Fallout 76, which has reached more than 23 million players. The move comes as Xbox CEO Asha Sharma refocuses the business on its biggest blockbuster franchises following sweeping job cuts across the gaming division. Microsoft shares are under pressure. But remember that story earlier Starbucks tapping AI is hitting some of the software names. Let's get back to to SK Hynix and that blockbuster US Listing. And ADR Mandeep Singh of Bloomberg Intelligence is with us. And look like B is taking different tracks in its research of sk. I just wanted you to come on the show and kind of set us up for how you see SK having ideas and its place in the memory market.
- [48:16]
Mandeep Singh
I mean, overall I see it as a big positive that, you know, you've got a big player which American investors investors didn't have access to in a market that has got really strong fundamentals, at least for the foreseeable future. And so from that perspective, I think it's the timing seems to be perfect. The drivers of the memory market and we just had a webinar yesterday where we are talking about, you know, how longer contact lens for the all these models has been a big driver of KV cash and HBM demand. And that seems to be something that will stay for a while. I mean, if you're talking about using more frontier models and you know, all these models need longer context and cash, then I don't see how that changes until you've got a new player that can add more supply, which we know is not going to happen anytime soon.
- [49:09]
Bloomberg Tech Host
You've also been focused on the sovereign story of Korea. You and I have exchanged messages about that. Korea seems massive, massively committed to its domestic industry. Just quickly, why does that interest you?
- [49:19]
Mandeep Singh
Because, you know, if they have the backing of the government and there was talk about $880 billion over, you know, multiple years, that's very similar to how TSMC build its fabs and you know, its moat over time. And you know, having the backing of the sovereign is huge in terms of both setting up factories in Korea and also abroad. And I think that's where doing it at the leading edge, which is what these companies have been doing. Remember, they manage their own fabs. That's been a huge mode, which is why we don't hear about new entrants getting into the memory market.
- [49:55]
Bloomberg Tech Host
And as a reminder, Bloomberg reporting $149 per ADR. So they're going to raise about 26 to $28 billion capacity, but also reputation. Bloomberg intelligent analysis analyst Mandeep Singh, thank you very much. And a lot more to come. That does it for this edition of Bloomberg Tech. But don't forget, in 24 hours time, we'll be speaking with SK Group's chair Che in a critically important conversation. And we've set up that listing. Recap the whole show on the podcast. You can find it on the Bloomberg Terminal as well as online on Apple, Spotify and Iheart. It is the chip stock stocks that are driving not just the news cycle, but this market today as well. From New York City, this is Bloomberg Tech.
- [50:52]
Ed Ludlow
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Kalpen (Cal) Modi
hey everyone, it's Kalpen. I'm inviting you to join the best sounding book club you've ever heard with my podcast, Hearsay, The Audible and iHeart Audiobook Club. Every episode I nerd out with amazing guests and dive into the best new audiobooks available on Audible. It's the book club for your ears. Listen to Earsay, the Audible and iHeart Audiobook Club on the iHeartradio app or wherever you get your podcasts. Sometimes the butt goes through a lot. When the butt speaks, you listen. Preparation H is the butt care expert known for helping people care for their hemorrhoids, offering relief in different forms that adapt to needs and moments. Medicated wipes formulated with witch hazel, aloe and vitamin E to help keep things calm, cool and collected. Rapid relief spray with maximum strength Lidocaine provides fast relief from itching, burning and swelling. There's also a multi symptom relief cream. When brought or support is needed, Preparation H treats the issue rather than just masking it. No shame here, only solutions. So if a butt has been begging for a little kindness, wipe and treat for better relief with the Number one Doctor Recommended brand Preparation H.