Loading summary
Transcript94 lines
- [00:00]
EY Consulting Representative
You have invested in artificial intelligence. Maybe you have pilots or even proofs of concepts that show real promise. The next opportunity is scaling that success across the business. At EY Consulting, we help organizations redesign how work gets done so innovation can move beyond the nascent stage. By addressing architecture, operating models and governance, we help AI deliver real, lasting value at scale. When AI fits how you actually work, that is EY Consulting.
- [00:30]
Microsoft Representative
Okay, before we get into it, little side note for the IT leaders listening in. I was reading up on a Microsoft Commission survey the other day and learned that teams using Windows 11 Pro PCs report 62% fewer security incidents compared to Windows 10 PCs, including three times fewer firmware attacks. Pretty significant. With security built in, you'll have AI ready it. That sets you up for operational efficiency and as well as long term resilience. Upgrade to Windows 11 Pro@WindowsMeansBusiness.com Never bet
- [01:05]
Caroline Hyde
against American Grit or American Energy through innovation.
- [01:10]
Mark Gurman
Venture Global is not only building some
- [01:13]
Caroline Hyde
of the largest energy facilities in the
- [01:14]
Mark Gurman
world right here in the United States,
- [01:17]
Caroline Hyde
but delivering American energy at a fraction of the cost in a fraction of the time.
- [01:22]
Mark Gurman
So while others are busy talking, we're busy building. That's Venture Global.
- [01:28]
Caroline Hyde
That's unstoppable energy. Bloomberg audio studios podcasts radio news. Bloomberg Tech is live from coast to coast with Caroline Hyde in New York and Ed Ludlow in San Francisco. This is Bloomberg Tech. Coming up, Taiwan weighs some of its toughest restrictions yet on chip sales to China will have the details the AI IPO raise. It heats up with Open Air joining its rivals with plans for a potential public listing later this year. And Apple lays the foundation for the era. How soon will it come as it hints that the company's upcoming foldable iPhone is on deck. But first a check on those markets. We're off by 8. 10 of a percent. We have been optimistic to start trade and then suddenly we've turned quite a leg lower into negative territory. And it is tech chip stocks in particular the drag us lower. But it's also the key player that is Apple Apple key player that is in video that drag us down. From a points perspective, I shine a light. What's happening in terms of hardware. The Philly Semiconductor index, the stocks as we call it 1.8% lower on the day after having reprieved some of the Friday sell off yesterday's trade. Apple off again, the juggernaut off by 2.7%. That's important in terms of points. It's important to the overall index and it drags the S&P 500 lower, as well as maybe there's some anxiety as to when really we will get Siri AI in our hands. But first, we also talk Taiwan, and it is weighing some of its toughest restrictions, restrictions yet on AI chip sales to China. A move will bring it closer in line with Washington amid mounting US Concern over technology leakage and national security. For more on what it means for the race and the US China tech tensions, we're joined by Bloomberg's global tech editor, Peter Elstrom. Is this significant, this move?
- [03:25]
Peter Ahlstrom
It's certainly significant. The most sophisticated chips in the world are made in Taiwan by tsmc, of course. And what we understand from our sources is that the Taiwanese government is now weighing the these restrictions on making it a crime to export advanced AI chips to China. Now, as you mentioned, this is in line with US Restrictions already where Nvidia can't sell its most advanced AI chips to China, for example. But why is this important for Taiwan? It is because they hold that place as the manufacturer of these key chips. But also Taiwanese authorities will be will be able to use more tools to be able to enforce these restrictions within Taiwan. They did detain their first person because of these export restrictions a while ago, but they had to do it because of falsifying documents, not because it's a crime right now to smuggle chips out of the country. So it gives them a few more tools to be able to enforce these restrictions. It's a sign that President Leither in Taiwan is taking a much harder line against China.
- [04:22]
Caroline Hyde
And what does that mean for relationships between the US And China? What does that mean in terms of mobiliose conversation coming from the leadership in China against Taiwan?
- [04:32]
Peter Ahlstrom
Well, you're alluding to the complexity of the situation. I mean, we just saw President Trump go and visit Xi in China. They talked about these very issues. There was a lot of discussion about many different things, including trade and technology in particular. So it's a moving playing field at this point. And the Trump administration has signaled that it would allow Nvidia to sell the H200 chips, for example, into China. China isn't sure that it wants that. It's, you know, they also would like to develop their own domestic semiconductor industry. They want to support Huawei and other companies like that that are trying to build in this area. So it's a complicated task. It certainly does mean that there are tensions that remain between the when it comes to these kinds of technologies, and there's not a resolution in the near future.
- [05:17]
Caroline Hyde
We just saw, in fact, China preparing 2 trillion yen of, of spending to really focus on its own domestic build out, whether that be data centers. In many ways that's going to be a focus on its own chips. But we also got that some interesting news that the Pentagon is really once again reamping some of the concerns about Chinese companies, tech companies and their relationship with the military. All of this spells that antagonism just remains.
- [05:44]
Peter Ahlstrom
Yeah, the first story you mentioned is a very important one. Again a people familiar story that we wrote about how China is weighing this plan to invest 2 trillion yuan, roughly $300 billion into data centers in the country. This is kind of the missing piece in the Chinese AI industry at this point. As we saw with Deep Seek, Alibaba's work with Gwen in particular, they've been quite successful at developing advanced models, but they've made nowhere near the kinds of investments in infrastructure and data centers seen in the US and now $300 billion works out to about $60 billion a year over five years. It's not nearly as much as the four hyperscalers are spending. They're aiming for $725 billion this year. So it's sort of a 10 to 1 ratio. But these data centers are much less expensive in China and it's a sign that they're going to compete on this infrastructure level as well as the model level. So that's a big step for them.
- [06:35]
Caroline Hyde
Fascinating. Bloomberg's Peter Ahlstrom with a wrap of all that Asian news. We so appreciate it. Look, as AI becomes increasingly tied to both geopolitics but investment strategy, investors are looking beyond the initial infrastructure build out potentially and actually applications of AI. Let's discuss that with late June Alliance Bernstein, head of Thematic equities, who sees adoption broadening as the focus shifts to long term competitive positioning. So at this moment, just to bring in the US and China perspective, how competitive is the US in the build out of AI data centers, the like, how solid is the supply chain? If we are worried about US China relationships and what it means for Taiwan,
- [07:15]
Late June (Alliance Bernstein)
yes, I think supply chain is important. But if you think about us holistically, I do think a lot of leading edge technology comes out of us. And if you look at the US companies, the tech giants, when you look at the billions and hundreds of billions, all of this spending, they're actually quite strategic about it. And the pace of innovation and the innovation in architecture itself is actually picking up pretty rapidly. So think about them, they're thinking about the cost per token holistically. And more and more companies maybe are taking the holistic view and be more vertically integrated and they think about whether it be Google introduces, the proprietary chips, etc. So they are thinking about different architectures, how to lower the cost per token. So that set them ahead in terms of competitive advantage. So because all the hyperscalers are all competing in it and in a way it's an arms race and everybody wants to get ahead because that actually bodes well for their long term competitive advantage and long term margin. So because the competition is so high that we do think the US at this moment, when you look at architecture, certainly US is quite ahead of most people in the world.
- [08:29]
Caroline Hyde
I think that vertical integration is being so clearly demonstrated by Space X at the moment. The fact that Elon Musk is deciding yes, I'm a space giant, I'm an AI giant, but also I'm a data center giant and actually I'm selling some of my compute to the likes of Alphabet and Google or indeed Anthropic. Is that the way in which you would like to see companies thinking themselves in a more vertically integrated manner or do you want to see more specific applications of AI and is that also attracting it?
- [08:55]
Late June (Alliance Bernstein)
I think it's both actually. It's at this point of the cycle it's certainly important to see more applications come out, but if we look back historically it's actually quite interesting. Vertical integration and that type of cost advantage is very hard to replicate and in this very compute intensive and capital intensive cycle, I think vertical integration is something that's very interesting towards and that's worth considering from an investment perspective. But that said, if you look in the past cycle, what happened is we built a massive comps infrastructure and then an entire ecosystem that's capital light ultimately monetized and that's created the tech giants as we know today. So it's probably too early to tell, but I certainly think vertical integration seems to be a direction that a lot of these companies are considering and we're watching very closely. It could be quite interesting.
- [09:48]
Caroline Hyde
Are you feeling comfortable with the capex still of a lot of these large companies and the industry writ large?
- [09:54]
Late June (Alliance Bernstein)
I think this year we always thought that it was going to be, this has to be the year of adoption and the fact that token is being utilized and adopted at such a rapid pace is certainly a good sign that is being adopted, it's being used. So that makes us feel better about the amount of capex that's going in to it. Because ultimately we do want to spend and build a road to somewhere and see the early signs of rapid Adoption is certainly very, very encouraging.
- [10:21]
Caroline Hyde
You're all about themes, you're all about long term perspectives and not single names. But at this point, is there going to be better entry points to the market? Does it ever worry you give you cause for angst at just how high we are in general trading on big benchmarks at big private market valuations, but public market valuations?
- [10:41]
Late June (Alliance Bernstein)
I think not all companies are created equal and I think we have to look at the company really one by one in terms of we really have to look out. And I think historically when we look back, sometimes the consensus street estimates, they get it right the near term, but they miss the long term. And it's the long term that gets revised up and up that ultimately determines how much a stock should be valued today. So in a way to look out actually allows you to make more money near term. So it's really about long term, total addressable market and more importantly the ability to hold your margin and get the long term profit. That's what ultimately determines whether a stock is valued fairly today.
- [11:24]
Caroline Hyde
Nature. We love having you on the show. Thank you for joining us of Alliance Bernstein there. Meanwhile, coming up, OpenAI does indeed join its AI rivals in the race to potentially go public. We'll have the details on that estimate. One is the bring back tech. So Open Air has joined the air rivals with plans for a public listing potentially later this year. The ChatGPT make confidentially filed its S1 with the SEC, but it said the timing of an IPO hasn't been decided because there were still things it wants to do as a private company. Bloomberg's reporter Shereen Khafari joins us with the details. So what would those things potentially be? Why make it still unclear if they're going to come as soon as the fall?
- [12:15]
Shereen Ghafari
Yeah, the company said this is really about optionality for them. Of course there are a lot of factors when a company is deciding to go public. There's the market, how they stack up to their competitors. So these could all be reasons, right, that, that a company has in mind when they're thinking about the exact timing of going forward with the filing, going
- [12:34]
Caroline Hyde
forward with the filing, going forward with the next phase of OpenAI. I thought it was really interesting. The same time as we learned that they've filed an S1 confidentially, they're also putting out a statement about the control of AI, about aligning it with humanity. That was coming from Sam Altman and the chief scientist. What did you make of the blog?
- [12:52]
Shereen Ghafari
That's right. You know, there's been a lot of talk, talk lately in the world about the idea of self improving AI, that these AI models are getting so good that researchers at the top labs are actually using them to program the next model. And that's caused both excitement, but a lot of anxiety. We actually saw in Anthropic last week come out with a blog post even calling for a potential pause if this turns out to really be the case that these models are sort of of improving so quickly and getting out of control. So I think, you know, Altman's post is in a way in conversation with that and acknowledging this idea that the AI is starting to automate itself and weighing some of both the opportunities, but also risks there.
- [13:35]
Caroline Hyde
And I think that's so interesting that of course, again, just by outlining that blog post, we're thinking about anthropic timing, Open Air timing. One puts a blog, the next was a blog. One's gone file confidentially, the next one has. How much is their anticipation, how much is their worry that they're coming at the same sort of time?
- [13:52]
Shereen Ghafari
It does feel like a race on every level right now between these two sort of top AI firms, both at the technological level, with them releasing new models sort of neck and neck every few months now, even every few weeks on the, you know, sort of ideological level about the direction that they're going to go in balancing the risk of risks and the benefits as well as just this IPO timeline. So I think it's one of the closest races certainly that I've ever covered in the tech industry and extremely competitive right now on every level.
- [14:22]
Caroline Hyde
And you cover it brilliantly. Thank you, Bloomberg. Sharing Ghafari on all things Open Air. And let's stick with that IPO pipeline. Look, the AI names that we've just talked about, if you add in space X has $3.6 trillion of market cap that might be coming to the market in the next few months. But according to PitchBook research, OpenAI may end up being the most expensive bet. Harrison Rollfuss is with us, senior analyst at PitchBook's private company coverage joining us now. Look, we can't see the detail of the revenues and the numbers that's been filed confidentially with the sec. But you take a great crack at it with an eye on open Air or late stage company research. And you think that OpenAI is expensive in some of your frameworks. Can you talk us through it, Harrison?
- [15:04]
Harrison Rollfuss
Well, yeah. So OpenAI has essentially built the most widely used AI product in history, but they rely on so much capital intensive compute that their profits aren't necessarily going to cover their costs. So when, when looking at OpenAI, we want to see their Microsoft terms, we want to see how their accounting works, we want to see how the enterprise revenue as a share total and their net revenue retention, the annual compute obligation and the related party disclosures to really figure out exactly where they stand as a true business as opposed to the hype that's surrounding them. My framework that I've created is AI business quality, essentially looks at OpenAI on five different dimensions. Is revenue quality, computing independence, moat, durability, governance, optionality as well as just capital efficiency. When you look at a company who really doesn't, who really has a strong AI mind share, but isn't focusing on the true business qualities that make a business successful in the public markets.
- [16:15]
Caroline Hyde
Right.
- [16:15]
Harrison Rollfuss
It's, it's something hard to evaluate right now and that's why they score the lowest on my scoring system and 4.8
- [16:23]
Caroline Hyde
one of the highest valuations, 4.8 out of 10 on your IB Key IBQ framework. Now I'm interested in that sort of other party's perspective because the Microsoft relationship is one that you drill down on and perhaps some of that revenue sharing is something investors should really be thinking about.
- [16:42]
Harrison Rollfuss
Absolutely. The Microsoft share aspect is very unique by, by capping how much they owe Microsoft, it frees up some sort of revenue. However, it's still unsure about what's going to happen after 2030. And that uncertainty is going to make it very hard for investors to look past 2030 and see if they're going to succeed.
- [17:06]
Caroline Hyde
Until then, can you talk a little bit about what you anticipate for governance structures coming from these companies? We're going to dig into it a bit at the end of the show about questions people have about Space X's governance and the control troll Elon Musk has how much are you starting to see how much control might be had by Open Air? For example, Sam Altman, we understand, doesn't own any significant portion of equity.
- [17:29]
Harrison Rollfuss
No, he is interesting. From going from a nonprofit to this just new PBC structure, he's essential. He's essentially trying to find a way to be the good guy, but at the same time he's already dealt with such backlash from his, from the board and other parties involved and other investors where they are even unsure whether or not they want to deal with this sort of, these sort of issues. However, Sam Altman still finds a way to make it happen. And now people are really relying and betting on his future and his aspirations to bring OpenAI to number one.
- [18:09]
Caroline Hyde
Number one is in a race. We keep talking about it as feeling like some sort of race, but it is about mind share, it is about oxygen in the room and it's about money that's going to be able to be allocated to these companies when they go public. Is there a worry that they file confidentially last and we're getting Space X as soon as this week.
- [18:29]
Harrison Rollfuss
I think by filing last actually gives Open Air the opportunity to learn from their competitors. OpenAI can actually see where anthropic is going wrong, exactly how they can adjust.
- [18:42]
Caroline Hyde
Are they going wrong? Where are they going wrong?
- [18:45]
Harrison Rollfuss
You know OpenAI could be going wrong with their gross margins. They don't really break down exactly the tier and the compute cost associated to it. And we'll really get a sense of the HyperScaler involvement with OpenAI and just the overall reliance on them to take them to the next step. And then in relation to Space X, we're going to get a sliver of the AI aspect from xi. However, that's not going to tell us enough of what it takes to be a leading frontier AI model. So the public markets are going to be the ones to determine how much it truly costs to run an AI business. And they have, they have SpaceX as a somewhat of a comparison, even though they're they're a space company.
- [19:29]
Caroline Hyde
Harrison Rollface of Pitchfork, thanks for bringing the analysis. We appreciate it. Coming up, Apple unveils a series of updates at wwdc, but says it isn't able to launch them in the EU due to a standoff with the bloc's antitrust watchdog. More on that next. This is Bloomberg Tech.
- [19:53]
EY Consulting Representative
You have invested in artificial intelligence. Maybe you have pilots or even proofs of concepts that show real promise. The next opportunity is scaling that success across the business. At EY Consulting, we help organizations redesign how work gets done so innovation can move beyond the nascent stage. By addressing architecture, operating models and governance, we help AI deliver real lasting value at scale. When AI fits how you actually work, that is EY Consulting.
- [20:24]
Microsoft Representative
And pause really quick. Wanted to also mention that not Only is Windows 11 Pro designed to help unlock operational efficiency and build long term advantage for your business, it can seriously level up your team's productivity. And since I know you all love stats, guess what? I got Microsoft commissioned stats. Compared to Windows 10 PCs, Windows 11 Pro users reported on average 50% faster workflows and collaboration, 42% faster completion of demanding workloads, and on average 61% longer battery life. Windows 11 Pro chip to Cloud Security is designed to help employees stay protected and uninterrupted at the office, at home, the coffee shop, wherever they work. Speaking of uninterrupted, you IT managers are going to love this one. The Microsoft Commission survey also reported Windows 11 Pro PCs having a 62% drop in security incidents compared to Windows 10 PCs. Because Windows means business, upgrade to Windows 11 Pro at windows means business.com support
- [21:25]
Public Investing Representative
for the show comes from Public. Public is an investing platform that offers access to stocks, options, bonds and crypto, and they've also integrated AI with tools that can assist investors in building customized portfolios. One of these tools is called Generated Assets. It allows you to turn your ideas into investable indexes. So let's say you're interested in something specific like biotech companies with high R and D spend, small cap stocks with improving operating margins, or the S&P 500 minus high debt companies. Chances are there isn't an ETF that fits your exact criteria. But on Public you just type in a prompt and their AI screens thousands of stocks and builds a one of a kind index. You can even backtest it against the S&P 500. Then you can invest in a few clicks, go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market ad paid for by Public Holdings Brokerage Services by Public Investing Member FINRA SIPC Advisory Services by Public Advisors SEC Registered Advisor Crypto Services by ZeroHash Sample prompts are for illustrative purposes only, not investment advice. All investing involves risk of loss. See complete disclosures@public.com Disclosures.
- [22:43]
Caroline Hyde
Apple used its Worldwide Developers Conference yesterday to lay the foundation for the era, unveiling a range of products, including iOS 27 Siri AI within that. The company still has to overcome, though, investor skepticism about this strategy. Bloomberg's Mark Gurman joins us now with more details. Look there. So the skepticism is there. If you're looking at the share price, we're down again. It traded lower yesterday. Is there some anxiety about the pace at which Syria will be unfolded? To us all?
- [23:13]
Mark Gurman
Yeah, thank you for having me. Well, there are concerns about the pace, obviously. They said that it will launch in English later this year, but Siri is real. If you're on the developer beta. If you're not me, I guess you're able to get off the waitlist and try these new Siri features out. I think the response has been mostly positive at this point. As I said before the event, what Apple's doing here is they're going from completely subpar to completely adequate. We're not seeing whiz bang AI features that you're right now seeing from Google OpenAI anthropic per se, but you're seeing Siri work. And so Apple was finally able to do was take something that has so much promise for over a decade and finally make it work by recreating their underlying models, using technology from Google Gemini, using some new AI under the hood techniques and actually presenting users with something they think they're going to be able to use on a daily basis. And so the concerns that should be out there really are what happens to chat GPT anthropic on the Apple platform because a lot of people now are going to have a real LLM built
- [24:22]
Caroline Hyde
in and what happens to other rivals, maybe even matter. What's interesting is as we've been speaking, there's been some breaking news that matter. Platforms have been ordered by the EU to temporarily halt policies that allegedly block AI firms from operating on the WhatsApp messaging service for businesses. This is the EU once again basically saying you need to make everything available to all your rivals at all times. This is something Apple's spoken about. They were sort of mudslinging with the EU earlier today about whether somebody, Siri AI is going to get to the EU users slower and whether it's Apple's fault or the EU's fault.
- [24:54]
Mark Gurman
Yeah, I mean you've seen other features be held back due to the negotiations between Apple and the EU, iPhone mirroring being one of them. There were a few other features on the operating systems last year, Apple intelligence being one of them, that eventually expanded to the European Union. So I'm confident this will eventually work out. But yeah, you're seeing a public war of words play out between Apple and the EU right now and we have to just see who's going to fold first. These are two big entities, two big personalities, and Apple rightfully so does not like the way the EU is inserting themselves into product development and the way features need to be introduced and implemented. And quite frankly, as a consumer, I'm not in the eu, but I do feel bad for my friends in the EU and my developer friends in the EU who are not able to roll out the newest features to their customers and if they are a customer, not being able to use the newest feature because these rules are in place. So I don't actually think what the EU is doing is a positive at all.
- [25:54]
Caroline Hyde
Fold first, to get any hint of a foldable phone quickly.
- [25:58]
Mark Gurman
Yeah the foldable phone is coming in September. We've been talking about this for a while in iOS27 is chock full of hints to this. So really looking forward to this launch. Big deal for Apple and I think this is going to be a really product. This is one that I've been looking forward to for a while and the
- [26:14]
Caroline Hyde
one that you brought us news on for a very long time. Always first Bloomberg's Mark Gurman, we so appreciate it. Thank you. Now meanwhile Apple is also expanding its child safety tools as a governments around the world increasingly clamped down on youth social media usage. Now features unveiled yesterday at WWDC will hand parents much tighter control this fall, allowing them to better control on devices when kids use the apps, what content they can access and with whom they can communicate. Now coming up we'll come back on OpenAI's S1 filing discuss the AI IPO landscape Song Yun Yoon of Principal Venture Partners this is Bloomberg Tech. Welcome back Bloomberg Tech. We are seeing a rollover in stocks. We started trading higher on the day and that optimism has since faded and faded hard for the tech names in particular. If you look under the hood of the S&P 500 it's far healthier and more stocks are in the green NASDAQ 100 they were off by more than 2% is Apple, Micron, Nvidia, AMD, some of the chip hardware names that really tug from a points perspective. This is as companies well banks, bank of America for example saying there are too many red flags right now take profits and people are doing that. Maybe they're getting some dry powder ahead of some massive IPOs. Let's take a look at today's big number. $3.6 trillion. That's the total market cap of the three big upcoming IPOs if indeed they do come OpenAI getting itself optionality anthropic too. They filed confidentially with the sec but space X on deck for this week. This as these AI companies are racing they're raising tens of billions of dollars to buy chips, data centers, build more advanced AI systems. But look historically mega cap IPOs they have a rocky start in the first few months of trade. Look, stocks often slump in the first year. Could these upcoming listings be big enough? That just doesn't really apply here. The rules are off. Let's discuss the Bloomberg equity reporter Carmen Reineke who's trying to with an unprecedented IPO the end of this week trying to see there's any historical precedent here you go back to some Truest found data 30 mega tech IPOs compared to space X, how they performed in the last 15 years.
- [28:36]
Carmen Reineke
So the majority of them after one year of trading have been down. They've slumped a little bit in that first year of trading. But overall the entire group has a maximum drawdown or, sorry, an average drawdown of 55% in that first year of trading, which is really incredible if you think about it. That's a huge amount of money. One rushing into these stocks and then coming out as investors sort of assess all the information that they're getting as, you know, lockups expire and more shares come online. So this, it could be different. It's such a huge ipo. And we know there's so much hype that retail investors are being focused on in Space X coming to the public market and that people are excited. They really want to buy into this. So we could see something different happen here.
- [29:22]
Caroline Hyde
I mean, maybe there's the silver lining. If you end up feeling that you haven't got the access that you wanted and you're forced to wait, maybe there's a better entry point. Look, we're looking at, particularly at a story of the core we founders. They've understandably sold $2.3 billion in stock since the IPO. Is that the sort of supply side wait that you get on these new company public companies companies?
- [29:41]
Carmen Reineke
It definitely is. And Core Wave was really a poster child for extreme volatility in the year after. Its IPO kind of just hit that threshold in March and It was up 400% at one point, and then it had a drawdown of 65% from that point. And we saw Magnetar offload half of its position. And these insiders sell. I mean, the stock is still up more than 150% from its IPO price. But you do see these kinds of pressures. They've also had some earnings report ports that investors balked at. So all of these catalysts really add up to choppiness in that first year as the market kind of assesses where the valuation is going to be going forward. And I think that's something that people are looking at with Space X as well. If you look at price to sales, it's not profitable yet. It's a really high valuation. That's something people have been looking at in the, you know, AI, in the tech, in the space space overarchingly. So investors might want to wait for a better entry point then.
- [30:38]
Caroline Hyde
Like timelines are everything you shine a light on. Tesla, for example, and Facebook, which of course is now known as Matter Matter had like a really torrid first year, down 30% and now it's up 1400% since the IPO. And if you look back to Tesla, what up 25,000% since its listing.
- [30:53]
Carmen Reineke
Exactly. So that's, that's kind of the catch 22 here. You know, do you want to try to buy in on the first day where you could see a huge pop, right. And then maybe you're buying at a more expensive price or do you want to wait and see what happens overarchingly? It seems like if you're a longer term investor, the data show that these IPOs do really well. Right. These stocks have gone up astronomically. So it's just all about finding that right entry point, finding that right time, that time horizon, when to get in
- [31:23]
Caroline Hyde
and how much business model models evolve and how much we have to understand about these business models as they go public. Bloomberg's Carmen Reineke. It's a fantastic story. Go read it. Let's discuss this and more now with Song Yi Yoon, Founder, Managing Partner, Principal Ventures Partners. It's a Silicon Valley based early stage venture firm focused on native companies. But why you're so interesting, Song Yi, is also because you serve on the advisory council for the Institute for Human Centered AI at Stanford University. You've been an operator at big gaming companies and tech songs. The business models we're about to get our heads wrapped around in the public market. Should we be as excited about them as we are with Space X, with anthropic with OpenAI?
- [32:02]
Song Yun Yoon
Yeah, I think this is a really tremendous moment. If you think about the total market cap that we are talking about. It's, it constitutes about 10% of the NASDAQ and we already talk about how concentrated NASDAQ market is where those like big top 10 companies is taking about 40, more than 40% of the total market cap. Adding this to on top of it make the McNastic even much more concentrated and expose the risk of the volatile volatility and kind of secular, secular risk of the, of the technology in the market.
- [32:36]
Caroline Hyde
How much is there an anxiety that not only they're going to be an outsized waiting in, well, just passive funds more broadly, but they're also also all related to one another in some way. The fact that Anthropics buying compute of Space X, the fact that we're starting to see this circular deal making come ever more present into the public market.
- [32:56]
Song Yun Yoon
That's right. I mean that's, that's one of the reasons why people kind of point out and there is some Kind of the bubble element in kind of today's market marketplace. And in addition to that, I think it's another thing to, to think about is that technology is kind of at its nascent stage. A lot of the technology, I mean this AI has is a real technology and it was in the phase of tech demonstration that we have seen tremendous potential. But by no means that in terms of engineering that need to go into it for optimizing and making, bring it down to the right price point and etc. There's a lot of work to be done. So in terms of the kind of technology and infrastructure and how it's formed, it's not near its kind of the end state and there's a lot of the improvement to be done. And I think that the improvement could be current big giants or it could be come from the other startups, they're working on solving the specific problems. So there is a lot of innovation to be ahead. And I think that's an interesting moment because another thing to think about is that these, this kind of the access to the capital and building this capital moat around this company has become part of the feature of the, of their service and their business. And I think there's a lot of kind of the circular deals that you mentioned and it's kind of creating this demote against new entrants. And I think that that's kind of one of the reasons why that there is a rush into this like IPO and access to large sum of capital.
- [34:31]
Caroline Hyde
I mean you were previously a member of South Korea's Presidential Advisory Council on Science and Technology. I mean this exuberance and hype hasn't just been US alone. We've seen extraordinary growth of South Korean stocks, SK Hynix and the like. Is this a global moment of reckoning? Do you think that there is a so called bubble and it needs to come down?
- [34:50]
Song Yun Yoon
I mean I think it's a, is an interesting, interesting technology because when as soon as we say artificial intelligence that name itself really kind of sparks imagination of a lot of people and people tend to anthropomorphize like what AI can do. And I think that also fuels into this kind of that high P behavior and like over expectation and extrapolating what this technology can do because I mean I think because of the, the global dominance of the US tech market, tech companies over the past decades, I think the growth of this giant AI company is affecting the supply chain outside of the US and like semiconductor companies, infrastructure companies, not just in the US but but elsewhere. And I think that's, that's also feeding into the other markets excitement.
- [35:42]
Caroline Hyde
I mean you see innovation at the public level, sitting on the board of HP at the private level. When you're investing for Principal Ventures Partners, where is exciting you? Where do you think is undervalued right now if you're going to be putting capital to work privately?
- [35:55]
Song Yun Yoon
I mean there is a lot of innovation to be made. I think it's a, if you think about airline industry, right. I mean I think there are only a small number of companies that can make engine. But if you think about where all the business happening is taking place, there are, companies are making airplanes, are making kind of, they're operating airlines and there are a lot of businesses hospitality around that. So I think it's a, we have, we have found this like kind of tremendous engine technology that can, that can, that has a potential to build whole new businesses and open up the whole new possibilities. But like a lot, there are a lot of businesses and applications to be built on top of that. And where the, where the more value is going to be created, where the value is going to be captured and held, I think it's yet to be determined.
- [36:43]
Caroline Hyde
Fascinating song yeah. Principal Ventures Partners, thank you for walking us through your thinking. We hope to welcome you back soon. Meanwhile, Elon Musk has unveiled a more detailed look at an initial version of an AI data center satellite space X plans to build that's as part of a roughly 1 million satellite network that will do complex computing for AI in Earth orbit in space. So during a 30 minute video shared on X, Musk really laid out other plans for the future of this company, including the continued development of its Starship rocket and joint Terraform facility with Tesla that aims to manufacture computer chips in the United States. Coming up, well, we've got more on AI and this time it's all about robotics. The company Standard Bots is just raising $200 million in a new round of funding. Its CEO Evan Bates going to be joining us next next. But let's get back to markets because there's been a huge like a thousand point swing on the NASDAQ 100. Right now I'm looking at this going from peak of 29,800 down to now 28,800. In the course of half an hour or so is trading. We're seeing money being pulled out of chips, of hardware, in particular of Apple. We're seeing The S&P 500 now down by a percentage point. The semiconductor index up by almost 4%. It is a volatile session and a volatile few trading days. Here's the Bloomberg Tech.
- [38:02]
Microsoft Representative
And Pause really quick. Wanted to also mention that not Only is Windows 11 Pro designed to help unlock operational efficiency and build long term advantage for your business, it can seriously level up your team's productivity. And since I know you all love stats, guess what I got Microsoft commissioned Stats Compared to Windows 10 PCs, Windows 11 Pro users reported on average 50% faster workflows and collaboration, 42% faster completion of demanding workloads, and on average 61% longer battery life. Windows 11 Pro chip to Cloud security is designed to help employees stay protected and uninterrupted at the office, at home, the coffee shop, wherever they work. Speaking of uninterrupted, you IT managers are going to love this one. The Microsoft Commission survey also reported Windows 11 Pro PCs having a 62% drop in security incidents compared to Windows 10 PCs. Because windows means business, upgrade to Windows 11 Pro at windowsmeansbusiness.com support for the
- [39:04]
Public Investing Representative
show comes from Public Lately it feels like there are two types of investing platforms. Some are traditional brokerages that haven't changed much in decades, and others feel less like investing and more like a game. Public is positioned differently. It's an investing platform for people who are serious about building their wealth on public. You can build a portfolio of stocks, options, bonds, crypto without all the bugs or the confetti. Retirement accounts?
- [39:28]
Microsoft Representative
Yep.
- [39:29]
Public Investing Representative
High yield cash? Yes again, they even have direct indexing. Public has modern design, powerful tools and customer support that actually helps go to public.com market and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com market ad paid for by Public Holdings Brokerage Services by Public Investing member FINRA SIPC Advisory Services by Public Advisors SEC Registered Advisor crypto services by ZeroHash all investing involves risk of loss. See complete disclosures@public.com disclosures whether you're planning
- [40:02]
4imprint Representative
a big tech event, launching a new campaign, or just stocking up on team gear, finding the right promotional products makes all the difference. 4imprint offers thousands of options from on trend apparel and premium drinkware to tech totes and giveaways so you can find the right fit for any audience, purpose or budget. You can customize it all. Your logo, your message, your look and many items come with no setup charge to help you save. And if you're really watching the bottom line, you'll find standout choices at every price point so you can make a real impact while staying on budget. Plus, you'll get expert help fast turnaround times and their 360 degree guarantee. So you can be four imprint certain your order will arrive on time and look exactly right. Whatever your goal, 4imprint makes it easy to find your perfect promo match. Explore the possibilities today@4imprint.com for Imprint for certain.
- [40:56]
Caroline Hyde
New York based startup Standard Bots has raised $200 million in a new round of funding to scale its AI powered robots. As the company tracks to secure 10% actually of all robots deployed in the United States, its CEO is actively advising Congress on banning Chinese competitors over national security risks. We can talk it all now with Standard co founder CEO Evan Baird. Congratulations on the raise. Let's start there. Series C, $1 billion valuation. What do you mean the 200 million for?
- [41:23]
Evan Baird
Thanks so much. Thanks for having me back. So we're using this funding to quadruple our manufacturing footprint. We've got a huge backlog of demand. We're growing, growing very quickly. And to also invest in more R
- [41:33]
Caroline Hyde
and D. So it's going to be in Long Island, I understand. How much sort of square footage, what sort of talent and R and D hardware do you need?
- [41:42]
Evan Baird
Yeah, so we have an engineering office in New York City and our manufacturing space is 70,000 square feet. It's about an hour outside New York City, but we think is the best city on earth, the best place to build robotics business. And Standard Bots now we believe is America's largest native industrial robot manufacturer. So, and we're just getting started by stealth almost.
- [42:00]
Caroline Hyde
How many do you already have deployed? How many are out there in the wild? What makes you such a significant force in robotics already?
- [42:07]
Evan Baird
Yeah, well, I can say we have basically in every state, we have small and medium businesses using our robot and we have iconic companies in aerospace, automotive, oil and gas data centers. So really we're working with the full gambit of folks that use robots. My, my favorite customer makes parts for the Long Island Railroad. And the reason I pick favorite children, yeah, they were our first customer. Still a customer after a few years. And it's really emblematic of everyone uses our robot, which is they're making the things that make America, whether it's the infrastructure or the products that we use.
- [42:39]
Caroline Hyde
So the railroad, are they kind of playing using robots and understanding how they're going to work with them in the future. Are they really giving an awful lot of hard duty work to these humanoids? Are they able arms that you make? Are they able to hire less, for example?
- [42:54]
Evan Baird
Yeah, it's a good question. Investors ask that. But 85% of our robots are doing Production work. So these are not pilots, these are not just testing things out. These are, they're actually doing a job. And we think of robots as the power tool of the 21st century. So they really enable a worker to do much more work before they improve the efficiency of our country and our workforce. And the problem that we see, and what we said to Congress was the United States right now is not competitive in manufacturing. If you look at the United States against China and other countries, it can be 5 to 10x cheaper to make your parts in those countries. And so we think robots are this foundational technology that we as a country need to be more competitive to be able to compete and to ultimately bring back jobs and bring back our manufacturing base.
- [43:35]
Caroline Hyde
Foundational technology. Now you need the models to be able to drive these robots. I'm interested as to what you've done. I mean, many would say in video, in particular, saying that we're not quite there yet with physical AI, we're going to have this chatbot moment. But how are you seeing these models evolving or indeed your robots able to change and diversify?
- [43:54]
Evan Baird
Yeah, it's a great question and it's a reason why the US can take a lead in robotics right now. And, and the answer there is we're focused on training robots through demonstrations. So you show them what to do. We have a handheld device for that, and you can just prepare, perform the task, and you don't have to be an expert. And what it allows us to do is take an average assembly worker, a manufacturing worker, and they can now program a robot and train an AI model. And this allows the robots to handle variability that they couldn't before. It allows them to do jobs that you just couldn't automate before. Because today's robots, most people don't know, they really just replay motions. You program them millimeter by millimeter, and they can play through and paint and weld that way. But they're so limiting. And so this is a fundamental change in what's possible and what you can automate with your robots.
- [44:33]
Caroline Hyde
And so many would say, well, you're, you're getting people to train their replacements. How are those that are working at the railroad feeling about helping train robots? What do you see as the future of manufacturing workforce?
- [44:45]
Evan Baird
It's a fair question. It's one we think about a lot. And my favorite anecdote in this regard is really from Milton Freeman. And he visited a job site in the 70s and he asked, why aren't they using Earth moving equipment? It was in a developing country country and they were digging with shovels and they said, well this is the jobs project. So if we gave them shovels, if we gave them earth moving equipment, it would create way fewer jobs. And he said, well why don't you just give them spoons? And the point that Milton was making was you earned the right to create high paying jobs by creating something of economic value. And I think the United States in this next transition wants to be on the right side of that. And we want to use the tools which are in the physical world, it's robots and it's, we really view them as this power tool like a drill for workers to be more efficient and be able to do more. And we want to be on the right side of that.
- [45:28]
Caroline Hyde
Right side of that with $200 million to keep on expanding here in the state of New York. We appreciate your time. Thank you indeed. Standard Box co founder and CEO Evan Bid there now the Mizuho Technology Conference is underway here in New York as well bringing together top tech executives, industry leaders. Speaking earlier with Bloomberg's Romaine Bostick Synopsis CEO Sassoon Ghazni really weighing in on the tightening restrictions targeting China. Take a listen. We're assuming China will remain the way it is currently, meaning our China business specific to IP was one of our fastest growing regions that had significant headwinds due to all the restrictions. I don't believe these restrictions are going to change.
- [46:09]
Public Investing Representative
If they change, fantastic.
- [46:10]
Caroline Hyde
If not, we have plenty of opportunities out there outside, outside of China to capture the growth coming up. Also in New York, well the city's comptroller slams Elon Musk's near total control of Space X ahead of the IPO excluding the company won't be easy for the city's pension fund or others. We'll have the details. And look, let's get back to these public markets. The Space X is about to enter the down the down pretty hard. The NASDAQ 100 rolling over 1.9%. We were higher at the start of trade S&P 500 off by percentage point. We've got Apple, you've got the likes of big tech. Tesla's in the red at the moment. We've got Micron pulling down in a points perspective and that's why we mean see the semiconductor index. Also under pressure is the Bloomberg Tech. New York City controller Mark Levine says Elon Musk's unprecedented control control will have over Space X serves as a new level of disregard for regular shareholders rights. In an interview Naveen said he quote, understands that we're in an era of founders wanting more control. But that what Musk is planning with Space X is way beyond what we've seen. This is of course in reference to the stipulation that buying into Space X requires accepting a governance structure, giving Musk roughly 80% of voting rights. New Mexico on Monday is one one of the key reporters that have just gone global with this story. And let's start with New York, New York State as well. There are a lot of people managing pension fund money who are worried about this level of control.
- [47:41]
New York City Controller Mark Levine
Yes, Caroline, absolutely. I think that the controller's main concern is about having shareholders voices be heard when they invest in a public company and to have leadership and executives in those companies. Companies be held accountable to the concerns that their shareholders have around different issues related to the governance structure of a company. I think what Levine wanted to explain to me is that he wants shareholders to still be empowered with their ability to vote in a one vote, one share type of structure.
- [48:15]
Caroline Hyde
So is he saying I'm going to boycott it? Is he saying I can vote with my feet or my money and make an impact? Or does he have to kind of go along with what is the biggest IPO ever?
- [48:24]
New York City Controller Mark Levine
That's a great question. And based on my conversation that I had with him last week, I do not think the goal right now is to divest from the company or to exclude any type of exposure. He explained to me that with the pension system's own governance structure that would be difficult. They have done sector based exclusions before for the oil and gas industry. But to eliminate one company, he said, for their own own governance structure would be unprecedented. What he wants to do is he wants to engage with Elon Musk. He reached out to Musk in a letter co signed by CalPERS and the new York State pension funds. They want Musk to engage with them and to work with them so that they can make changes from within rather than just saying we're not going to invest.
- [49:08]
Caroline Hyde
Thus far, no response. This is a global issue though and in some pension funds in Europe there actually are are saying I don't want anything to do with this.
- [49:15]
New York City Controller Mark Levine
We've had pension funds and investors in Denmark and the UK say that they are going to sit out from the ipo that they will be willing to adjust their their funds so that they are not exposed to Space X. One UK focused investor specifically said that they called the governance structure catastrophic and that it would not be prudent to have their investors investors exposed to it.
- [49:41]
Caroline Hyde
Fascinating. Well, we can go in a lot into that story about some of the reticence and the reasons why Olivia, I mean, go read her story. It's a real deep dive into the governance of this business. Meanwhile, we're looking at live pictures of NASA, which is just about to introduce its next Artemis crew. Two months after sending astronauts on a record setting lunar Flyby, NASA says Artemis 3 launched four astronauts from the Kennedy Space center in Florida aboard the Orion spacecraft on the Space Launch System rocket. The mission is going to last two weeks. Now that does it though for this edition of Bloomberg Tech. As we await that news from Artemis 3, we see that the market's really taking a turn. Look, we're plunging to new lows of the day. Nasdaq 100 off by 2.2%. Let's call it a thousand point swing. This is as you see, really big tech names take the brunt of the hit with got money coming out in particular of Apple, of Micron, of Tesla. In fact, The S&P 500 is off by a percent, let's call it. But actually underneath the hood is doing rather better from a cross industry perspective. It really is tech in the line of fire as many feel that perhaps we've run too far too fast. There's a lot of volatility in the market and a lot of red flags. The bank of America been saying to clients. Too many red flags. Take profits while you can. The semiconductor index off by 4.54% after we clawed back some of Friday sessions losses just yesterday. Look, you can recap all of this. Don't forget to check out the podcast. You'll find it on the terminal as well as online on Apple, Spotify and I Heart from New York. This is Bloomberg Tech. Game Night Rush or any night of the week.
- [51:14]
Evan Baird
Really. Genius keeps every order moving from online ordering to your kitchen to the front counter.
- [51:21]
Microsoft Representative
Big league reliability for any business.
- [51:24]
4imprint Representative
That's genius Travel smarter, not Harder at America's Best Value Inn by Sonesta with convenient locations from coast to coast and value packed comfort at every turn, it's a practical choice for road trips, quick getaways and everyday travel that keeps things simple without sacrificing comfort. And when you're a Sonesta Travel Pass member, staying at America's Best Value Inn means earning points toward free nights, upgrades and more every time you stay. Go to Sonesta.com to book your stay and unlock the best rates with Sonesta TravelPass here today, Rome tomorrow. Join now@sonesta.com terms and conditions apply. Whatever your goal, trade show giveaways, client gifts or team gear. 4imprint has the promo products to match with thousands of options from apparel and drinkware to tech and totes, it's easy to find the right fit for your brand and budget. With standout choices at every price point and with their 360 degree guarantee, you can be four imprint certain your order will show up just right, right on time. Explore more@fourimprint.com for Imprint for certain.