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Deloitte Narrator
The right technology can strengthen human judgment. That's why Deloitte brings together AI and data analytics with multidisciplinary teams who can help you connect the dots across your enterprise, from risk to operations to customer needs. So opportunities don't slip by and surprises don't spread. Because the smarter your systems, the sharper your instincts. That's how technology makes people better at what they do best. Deloitte Together makes progress. Learn more@deloitte.com TogetherMakesProgress
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AT&T Business Customer
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Brooke Dane
AT&T business Wireless connecting changes everything.
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Bloomberg Tech Announcer
Bloomberg audio studios podcasts, radio news. Bloomberg Tech is live from coast to
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Caroline Hyde
coast with Caroline Hyde in New York
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Bloomberg Tech Announcer
and Ed Ludlow in San Francisco.
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Ed Ludlow
This is Bloomberg Tech coming up. Energy prices tumble and global tech stocks rally after the US and Iran agreed to a two week cease fire.
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Caroline Hyde
Plus Anthropic's new Mythos model is so powerful it's giving tech firms and competitors early access to get ahead of possible cyber attacks that could wreak havoc.
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Ed Ludlow
And Apple's first foldable phone is still on track to launch in September despite reports of major manufacturing delays.
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Caroline Hyde
First check on those markets that you just pointed us towards, Ed. Extraordinary moves as we have a tentative moves towards a cease fire. We of course have up to the moment reporting of concerns that in some ways that's being inflated upon at the moment and Pakistan is speaking out. But I'm looking at 2 1/2% higher on the NASDAQ 100. We are off by a percentage point from the original highs as we worry about how this fire continues to unfold. I'm looking at Brent crude off by 13%. This is a record move at one point it had fallen as much as 17% on the international contract. But let's get out to the latest with Tyler. Kendall stands by in the White House. And Tyler, look, we are hopeful, but there are signs of concerns.
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Tyler Kendall
Yeah. Hey, Caroline. Well, at this point it does appear that the cease fire is very fragile. This White House has maintained that the US has achieved all of its military objectives, touting tactical successes as what led to this truce in the first place. But still, we heard from Secretary Pete Hegseth earlier today who said that the US Military remains ready to be redeployed and resume military operations if needed after The Vice President J.D. vance indicated earlier today that the cease fire at this point is something to watch very closely because there's already been these reports that attacks are continuing in the region. As a person familiar with the matter confirms to Bloomberg News that Saudi Arabia's key East west oil pipeline was hit by a drone earlier today. Though it appears that the damage is limited. But pair that with other reports about attacks against the UAE as well as Kuwait. Now Pakistan's foreign minister in a post just within the last hour said that Iran could be at risk of pulling out of the truce if operations against Lebanon continue. Keep in mind Lebanon was not part of this agreement as Israel continues its military campaign against the Iranian backed Hezbollah militant group. Ed and Caroline, Iranian state media is now reporting that traffic in the Strait of Hormuz has been halted amid Israeli attacks against Lebanon. This is going to be something to watch very closely considering we know that this White House's position has been that the strait needs to be reopened and there has to be freedom of navigation in order for truce to be maintained. President Trump is set to meet later today with the Naito Secretary General Mark Rutta here at the White House and no doubt securing the Strait of Hormuz will be the top topic of discussion.
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Caroline Hyde
Tyler Kendall with the breakdown, we appreciate it. Look, markets are certainly higher after the ceasefire has really boosted morale on Wall Street. Now the analysts take Dan Ives over at Wedbush says the recent geopolitical tensions had pushed tech into oversold territory, especially across the Max 7 software broader winners. He sees room for a rebound on the buy side. Let's get the take. Dane Goldman Sachs Asset management who is leading on the bullishness pointing to a capex saying stronger for longer. Brooke, I'm so happy to have you here because there is fragility that is also potential stop buying some beaten up stocks. What do you make of today's news?
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Brooke Dane
So first thanks for having me on. It's great to be here today. So, you know, our perspective is that investors need to be focused on the size and the magnitude of this shift that we're seeing. And our baseline forecasts, when we do our bottoms up work, continue to point to acceleration in capex spending and it being durable for much longer. So we feel like investors need to have exposure to the companies that are directly benefiting from that. I don't think there's any question in anyone's mind right now as you're seeing these latest models come out about how impactful they're going to be, how much they're going to change, how much they're going to be able to do. And so while there's uncertainty about how, you know, which sectors get impacted in which ways and how it all plays out, fundamentally right now we're in the start of what's going to be a multi year capex build out and investors need exposure to that. And so our baseline is, you know, you want to still be involved in the semiconductor names, the networking names like that that are the direct beneficiaries of the spending.
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Ed Ludlow
Brooke, the corners of the technology market that are rallying the hardest in this moment are memory, logic, storage. I'm talking right now in response to the ceasefire. But that would indicate, if you look at some of the names that return to the prices they were at prior to the start of the war in Iran, that this conflict has done nothing to divert the trajectory that you believe capital expenditures are on when it comes to the build out.
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Brooke Dane
Yeah, and our fundamental belief is is that there's been nothing that's changed in that backdrop. That the plans and expectations that we had from these companies in terms of their levels of spending, where they were putting the capacity, how tight compute is right now, none of that has changed. And yes, the world is more uncertain today than it was four months ago and risk premia have probably moved higher structurally because of that. It doesn't change the, the direction and the magnitude of what we're seeing. You know, remember that in this cycle right now, compute and all the associated parts around compute are the most restricted and hardest to get thing in the marketplace. And if you want these models to perform better and to keep doing more and more, the key ingredient is compute and power and memory and all of the things that get pulled on by that. So you know, there's nothing that would change the outlook. You know, we're very close to the big spenders around this area. So when you think of the Mag 7 companies, we spend a lot of time Meeting with those management teams and understanding what their plans look like, none of them are wavering in their commitment and their belief in the opportunity in front of them behind us.
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Ed Ludlow
Brooke, just, just very quickly, did supply chains for chip and chip manufacturing prove to be more resilient in this moment than they were in the early days of the pandemic?
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Brooke Dane
Yes, but I still think that those supply chains are an area where there's a tremendous amount of focus in building more resiliency, creating more chip capacity, doing it in more geographies and that build out is likely to persist. But as of today and what we've seen through this latest geopolitical crisis, there hasn't been any material impact on supply chains there.
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Caroline Hyde
What's been really interesting is when we think about the semis, Nvidia, Marvell, Broadcom names that you're in, you like exposure to, is there any hit longer term to the margin or any viewpoint on how you get into the picks and shovels still? Because when we think about the energy prices for example, that does inflate at a little bit.
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Brooke Dane
Yeah. So our perspective is just like you said, like we need you investors need exposure to the picks and shovels and this build out because it's still early and still happening. You know, the margin structures right now are high relative to history but we think durable because of the fact that, you know, this relationship between your ability to put compute in the ground and generate revenue for the model companies and for the cloud vendors is still very tight. So you know, there isn't a big discontinuity event happening from either a supply or a demand side that would upset margin structures. So you know, you mentioned a couple of the names. One of them that we think, you know, right now the market hasn't fully gotten its arms around is what's happening with Marvell. And last year there was a lot of controversy around Marvell and their ability to hold share at Amazon and and some of their other big vendors. What we think the market's missing is around all of the ASIC business. Marvell has this great opportunity to, you know, attach xpu, attach products and grow substantially. So we think that's a specific company where there's a real opportunity around the upside.
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Caroline Hyde
I mean love the fundamental analysis and cutting through the noise of the moment from a macro perspective. Go, go to the anthropic news then. We started this conversation by you saying like look at the changes and the in step changes are seeing in models you like the likes of, well Palo Alto Networks. They're one of the key 40 companies that's helping stress test and understand what the cyber risk is from that.
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Brooke Dane
Yeah, so I describe myself a little bit as a reformed software investor. I grew up following the entire software suite and obviously softw has some headwinds right now that we can talk about. But within that whole industry set, we think that companies that are involved in cybersecurity have a massive opportunity in front of them. Some of the companies that are helping with data problems have really big opportunities in front of them. So, you know, the news from Anthropic last night is, you know, the power of those models is incredible and it is exposing a whole bunch of vulnerabilities out there that people didn't know existed that is really good for the cyber companies. You know, just from a business standpoint, there's going to be more vulnerabilities exposed. Bad actors are going to try and take advantage of that. Enterprises are going to need to be defended in the right ways. And so owning leading edge next gen security providers is a really good place for investors to be in.
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Ed Ludlow
Brook, I want to end this by going back to the cease fire and the war in Iran. You are an investor in some of the biggest hyperscalers and the deployers of capital expenditure. Right. And this president central policy was to deregulate, expedite permits and hold those names accountable to energy spending. Then we had the war in Iran. And so just from from the technology investors perspective, how your desk analysts and you are modeling for the wild card that is a president who on the one hand has an AI policy grounded in deregulation and letting them move quickly and then move to, to an escalated conflict in Iran.
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Brooke Dane
Yeah. So with every investment we're making, we're running lots of scenarios on different parts of the business and what can happen and what can change. So if you're talking about like changes in the fundamental input costs of creating compute to run these models and to do things as we project out where we think, you know, PNLs and cash flows can look like. That's one of the factors that we're stress testing and we're saying, look, if power, you know, goes up by X factor, what does it do to the ultimate return on a dollar of GPU investment and how does that get priced in similarly on other things like you know, on memory supply and if we can't get enough memory to fund these things, you know, what happens there and how does that impact stuff? So all of this comes into the fundamental frameworks and the risk reward that we're managing and we're looking through with every investment we make. And what I would just tell you as a guy that's been investing in the sector for a long time, I am skeptical of my ability to be precise. But I'm really good about my ability to understand ranges of outcome. And so we're always looking for when those ranges favor us and favor us putting capital to work. And so you know, just to sort of end where I started with, we still think this build out of Capex, that we're very early in it, that we're not late cycle, we're early cycle to mid cycle in this and that there's plenty of opportunity to continue to compound. Well and growth in the fundamental chip picks and shovels chip ecosystems of AI
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Ed Ludlow
Brook Dane of Goldman Sachs Asset Management doing the math for us. I really appreciate that. Thank you very much. Coming up, a massive Oracle data center could get roughly $14 billion of debt financing from Pimco. We have the details next. This is Bloomberg Tech.
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Caroline Hyde
A flurry of datacenter related news today. First, Bain Capital's Bridge data center dropped Neo cloud supplier magazine from Malaysia. Computing hub now. That's according to the sources citing an internal memo. The changes follow a US Government probe into magazine over its ownership structure and allegations it smuggled advanced Nvidia chips to China. Meanwhile, here in the US A city in Wisconsin has passed the nation's first referendum restricting future datacenter construction according to the county's unofficial count. Now Port Washington is home to a 1.3 gigawatt project from opening and Oracle that won't be impacted by this vote. Still with the build out just getting underway, it's a signal of the growing tension between local communities and developers said
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Ed Ludlow
the buildout is still in early days. And over in Michigan, a massive Oracle data center could get roughly $14 billion of debt financing from Pimco. That's according to sources. The deal, if finalized, would make the bond giant a key backer of the project to mark its second jumbo financing for a data center within the past year. Let's get out to Bloomberg's Brady Ford Brody. Let's go to the details here. And something that's come up in conversation with you in the past is the debt backs the project. It doesn't necessarily go straight onto Oracle's debt load. Explain the mechanics of this and what we need to know.
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Brady Ford
Yeah, zooming out. You know, these centers cost an incredible amount of money that a company like Oracle, even with its its cash flowing database and SaaS applications, it needs to bring a Lot of partners in. So Pimco in this case would be providing some debt, essentially loans to get this thing built that would go onto the books of related digital, an intermediary who's actually building the site, who then Oracle is going to rent from. If this sounds like a lot of steps, it's because it is, because these projects are just so expensive and so Oracle and has been kind of testing the market's appetite for financing big data centers. And there have been moments where it looked quite rocky. But you know, getting a cosign from a company like Pimco which appears in the works, this is a good sign for their build out.
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Caroline Hyde
And as interesting as they name a new CFO that they brought over from Schneider Electric, but also as they tried to outline to the market and put to bed any anxiety that they were going to take on more debt themselves.
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Brady Ford
Right. They've been doing some pretty incredible financial maneuvering, right? I mean, they issued equity which nobody thought they would do, they laid out the exact amount they're going to borrow and they named a CFO from the world of heavy industry, not from software. I mean, that reflects that we're in a new era where software companies are acting more like GE or Boeing or industrial giants of the past because of just these incredible, incredible capital outlays.
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Caroline Hyde
Brady, Ford, as always, all across Oracle, we appreciate it. Now coming up, Anthropic. It launches a new program aimed at giving cyber defenders early access to its powerful new model.
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Reva Gujian
Why?
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Caroline Hyde
To help them spot new threats. More on that next is Bloomberg Tech.
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Deloitte Narrator
The right technology can strengthen human judgment. That's why Deloitte brings together AI and data analytics with multidisciplinary teams. People with deep industry experience who can challenge assumptions and help you connect the dots across your enterprise. From risk signals to operational pressure points to shifting customer needs, Deloitte helps you see what's coming sooner so opportunities don't slip by and surprises don't spread. It's not just dashboards. It's real clarity in the moments your decisions are made. When models reveal patterns, people can ask better questions. When data and people are connected, leaders can move faster with confidence. And when your teams are aligned, smart choices can scale from the frontline to the C suite. Because the smarter your systems, the sharper your instincts. That's how technology makes people better at what they do best. Deloitte together makes progress. Learn more@deloitte.com TogetherMakesProgress.
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David Gura
The news doesn't stop on the weekends.
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Bloomberg Tech Announcer
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Lisa Mateo
And now Bloomberg is the place to Stay at home on top of it all.
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David Gura
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Bloomberg Tech Announcer
I'm Christina Raffini. We'll bring you the latest headlines in depth analysis and big interviews, all the stories that hit home on your days off.
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Lisa Mateo
And I'm Lisa Mateo. Watch and listen to Bloomberg this weekend for thoughtful, enlightening conversations about business, lifestyle, people and culture.
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David Gura
On Saturday mornings, we put the past week's events into context, examining what happened in the the markets and the world.
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Bloomberg Tech Announcer
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Lisa Mateo
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David Gura
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Bloomberg Tech Announcer
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Lisa Mateo
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Ed Ludlow
Anthropic is giving tech firms including Amazon, Apple and Microsoft access to a powerful but not widely released AI model known as methods. It's part of an effort to prepare for possible cyber attacks that could result from wider adoption of the technology. Bloomberg CyberSecurity reporter Maggie Murphy's with us yesterday just after after this news hit was on stage with Mike Krieger who co leads the labs at Anthropic and he basically explained me folks at the model level incredibly powerful relative to what's gone before it and they don't know if they'll release it. Generally that was a big question. So they have this set of limited technology companies and one capability is cyber. What do we need to know about the kind of rollout and what on earth these companies will do with it?
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Maggie Murphy
Correct. So they created this model, realized it was incredibly powerful and really, really good at finding bugs and flaws in a lot of open source software that's out that things that's been around for decades and that companies, you know, all the apps and services we use are dependent on. And they realized that not only could their model find these bugs, it could automatically exploit them. And so their concern was if we let that out into the general public that could be abuse, confused in some way. So we'll do a kind of limited release, get in the people who might be most affected by it and we'll allow them to play around, find some of those bugs, fix them and then feedback and then they'll figure out from that what they're going to do about A general release.
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Caroline Hyde
I mean it's interesting, there's cyber companies like Palo Alto Networks is also potential competitors to anthropic zone AI that are using it. What's interesting is a competitor, OpenAI had already as well sort of piloted the idea of, of getting its technology into the hands of defenders before the main public. How much is this something writ large that everyone has to think about?
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Maggie Murphy
Yeah, you're right. It's a really unusual agreement for competitors to be coming together for, you know, someone to be sharing their IP in this way, you know, and not, you know, claiming not to be profiting off it. But it shows this wider real existential threat not only to the cybersecurity industry industry, but to software at large. And I have just been hearing so much from my sources about how concerned they are about this incoming potential vulnerability apocalypse they're describing as, which could really impact so many of the things that we, you know, in our normal day to day use. And it's, it's, it shows a kind of coming together of cyber defenders and trying to do the right thing in this new age of AI and anthropic
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Caroline Hyde
continuing to work with the government, even though of course they're in a legal battle with part of it at the moment. Bloomberg's Margaret Murphy, thanks so much for the reporting. Let's stick with AI with cyber threats and bring in Teresa Payton. She's the CEO of Fortellis Solutions, which brings strategic cybersecurity services to leaders navigating high stakes environments. You're also with the White House Chief Information Officer during the George Bush administration. And Theresa, I mean, an apocalypse chips is what we just heard from Margie. Is that what you're thinking?
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Teresa Payton
I mean, I think it's interesting. So it could be from the standpoint of isn't it interesting that Anthropic self reported that they found thousands of vulnerabilities that could be fixed very easily in sort of the early release of this tool. That means that it was outpacing the ability of cybersecurity products, all the, the big names on the market which happen to also be now in this cohort. And so it is interesting from an apocalypse standpoint, it depends on I think your point of view. Is it apocalypse or do we now finally have a tool that in the hands of cybersecurity practitioners can make sort of this limited skill set even more powerful to be able to cover even more than they have in the past? I see AI as being an incredible assistant here. The one concern is if we don't have the right governance and guardrails, we could find that this tool or a tool like it could end up in the hands of the cyber operatives who have negative and criminal intent. And I think that's the concern here.
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Ed Ludlow
There is that that last point is key and it relates to what we've been talking about in the show. Right, the war in Iran. For many weeks we've been saying that Iran, as an example, has a competency in the domain where if you're on the defense or you use US Based technology for defense, there's every chance that those going on the offense have access to similar technology. Although, as Margie outlined, you know, Methos is at the cutting edge in terms of models. How do you see the field in that. In that conflict, offense versus defense?
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Teresa Payton
Yeah. Well, first of all, even though there is thankfully a cease fire has been announced, that does not mean that the Iranian cyber operatives have taken their fingers off keyboards. So we need to continue to have a heightened sense of vigilance and alertness around these issues. But what I will say is, you know, they are obviously leveraging AI and different types of tools to be able to carry off attacks like they did against Stryker and some of the other attacks that are ongoing against critical infrastructure in the United States. And a lot of bulletins have come out. If people are listening to the show right now and you're thinking, I don't feel like I'm in the know in this information, I certainly can't give it to you publicly. But you can contact your local FBI office and they will tell you all the things that you need to look for as it relates to Iran and some of the cyber attacks on critical infrastructure. What I would say is, you know, I would love to hear more from Anthropic once they have this cohort, do sort of an alpha pilot, I guess, is the best way to put it. What is the beta pilot and what is sort of a rollout to trusted, vetted, you know, smaller, maybe privately held firms look like to make sure that all offensive and defensive teams have these capabilities and are able to use them against the attackers. Time is of the essence. We're in a race and we want to make sure that everybody who is on the ethical side of cybersecurity is actually empowered, engaged, and has all the best state of the art tooling possible to fight back these attacks.
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Caroline Hyde
Theresa, you make a good point. And it's actually we've been hearing from Anthropic as they've outlined what Glasswing really looks like. And you can see what Certainly Newton Chang, who's the Anthropic Frontier Red team cyber lead has been talking about how this is an industry wide problem. You know, for the smaller companies that would like to be able to help, there is obviously a chunk of change being offered by Anthropic as well in terms of computing tokens. How much have you been working perhaps with OpenAI with its, well, prototype, it's been letting and working with others in the security space to try and ensure that defense has its tools ahead of others as well?
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Teresa Payton
Yeah, I think there's, there's a lot going on in this industry and so I have been talking to all of the different sort of leading AI providers to find out what are the best offensive defensive tools, what are some things that are yet to be built, what is on the roadmap and then what are really the best solutions depending on the size company you are, how much money you have. Because you're right, everything is token based. How can companies learn if they don't have a big technology team? How can they learn to optimize the use of the tools so that they're spending their tokens sparingly and get the most value out of the money that they're spent? And so there's definitely an arms race, you know, a healthy competition across the different AI companies and some of them are now cooperating as part of this anthropic rollout. The other thing I do want to mention is that Anthropolog did actually self report that Mythos went rogue. And so I think that's something also that we need to be discussing is that although it's going to help, it also has fine tuning that needs to happen happen.
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Ed Ludlow
Teresa paid and CEO for List Solutions. We'll have you back on the program and we'll discuss in more detail coming up. Apple is on track to launch its foldable phone later this year. Right now, markets off session highs but rallying this Bloomberg Tech. Welcome back to Bloomberg Tech Technology. Stocks are rallying. There is outsized performance particularly in chip names in memory and the chip names extend to logic as well. The other part of the story is that oil is down. Brent, the global benchmark below $100 per barrel. The story is that we are in a two week cease fire in the war in Iran brokered by Pakistan. There is still ongoing headlines about activity in the region and supply chain disruption. But that is what the main driver and main story is at this point. Moment we're off session highs when it comes to the NASDAQ 100 but actually the Philadelphia semiconductor index or stocks, those chip stocks continue to rally pretty hard, Carol.
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Caroline Hyde
They certainly do. And let's focus in on kind of area of supply chain right now because Apple's first foldable phone is still on track to launch in September. Now despite some reports of major manufacturing delays, Bloomberg's Mark Gurman is here with the latest reporting. Yesterday Apple was lower. Today of course we rise up with the rest of the market. But there is an anticipation here, Mark, that you're making clear they're still going to have that foldable phone on time.
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Mark Gurman
Yes. So a couple of days ago, the Nikkei out of Asia put out a report saying that there are major engineering and manufacturing snags related to the company's first foldable iPhone which could mean a several month delay. What I'm told is that the foldable iPhone will be introduced in September during the normal cadence alongside the iPhone 18 Pro and 18 Pro Max. And as of this week, there is a very strong likelihood that the foldable phone will actually even go on sale at the same time as the new 18 Pro models, which means no shipment delay. Now things are fluid. Mass production has not begun yet. But everything that I have been told by several people close to the situation is that there are no major engineering snags at this point point, things are moving as planned. Again, these things can change. But as of now, I do anticipate the foldable phone to go on sale either at the same time as the non new foldable models or very soon thereafter.
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Ed Ludlow
The other way of looking at it, Mark, is that come September we're going to get a foldable phone from Apple. You know, what do we need to know about features? If it's, if it's super exciting, if it's on track, how big is product is this going to be in Apple's evolution?
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Mark Gurman
Well, I think initially it's going to be quite niche. I anticipate this to be, in the words of one person, very, very expensive. Apple believes it has solved some of the quirks of the current foldable models. A few things I'll point out. One, some of the current foldables from other players, they have lots of durability issues. You get dust or sand in it, you could break the screen. Obviously Apple has very high specifications for durability and so the foldable phone meets that, I'm told. The other quirk related to displays, there are creases in many of the foldable phones today when you open and shut it, Apple has reduced that crease. Working with Samsung on some New display technology that Samsung of course is going to bring to its devices. The third, third thing, if you look at the phone, it looks like a small little reporter notebook. You open it up and it goes wider than the narrower foldable phones you see on the market today. Which means it's an excellent device for watching video and for gaming. But overall it's a foldable phone. Samsung has had these on the market since around 2019, 2020. All the Chinese phone makers have them. Google has it. But now that Apple's entering the market, it's going to get a lot more popular.
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Ed Ludlow
Bloomberg's Mark Gurman, thank you very much. What was driving Apple's stock in yesterday's session was that concern, manufacturing, engineering delays and how it impacted a foldable phone. The stock today is rallying for a very different reason. Right. And that is the cease fire with Iran. As geopolitical tensions rise in the context of that ongoing war in Iran, global tech supply chains and as well as US China relations are being tested. Let's bring in River Gush on director at the policy and economic research firm Rhodium Group. You know, I'm looking again, I'm going to go back to what's rallying. We're showing it on the screen. It's technology stocks that are pushing higher right now. And one of the reasons is okay, helium comes from the Gulf. Critical in stabilization, cooling in the etching and deposition process and chip manufacturing, Manufacturing energy prices have been impacted by this war in Iran. Why is it to your mind that the tech industry is seeing some relief from the idea of a cease fire?
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Reva Gujian
Well, because we're not going to all out war is the short answer. And so I think everyone is taking this bit of good news that there's a two week cease fire and running with it. But the reality is that the Pandora's box in the Persian Gulf has been opened. And by that I mean, you know, even if we have an extended cease fire and cessation of hostilities that lasts longer term here, we have now seen Iran demonstrate capability and political will to strike critical infrastructure across this region to include very high value targets like data centers, multibillion data centers, including its explicit threats against OpenAI's Stargate project in the UAE, not to mention the number of US sites that have been struck already in Bahrain and UAE. So that's just a completely different investor climate overall for this region. But coming to supply chains though, as you said, when we talk about helium supplied bromine, just energy supply overall. Iran also has an interest in allowing transit through the strait. But that's where we come back to political conditions that will be attached to the cease fire.
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Ed Ludlow
Caroline and I discussed in detail the vulnerability of datacenter assets in the Gulf as it relates to China. For example, there is a long term threat to Taiwan and the concentration of semiconductor manufacturing. With that taken all into account, how conscious are companies like Apple on now changing where they plan to build future products and have a footprint in the future for their manufacturing operations?
- [33:04]
Reva Gujian
Well, there are multiple drivers in play here. Not just geopolitical risk obviously, but also the evolution of US Trade strategy which is still in play. As we know, there is a pending section 232 still on semiconductors that could contain component tariffs. Right. That implicate the devices that contain those semiconductors. Not to mention looking beyond tariffs content requirements. Right. So so far, for example, we have regional value content requirements for automotive parts. Imagine that applied to electronics more broadly. So I think, you know, companies like Apple are looking at these, these issues in parallel to say yes, there is a lot concentrated still in, in Taiwan device manufacturers also in China that that geopolitical risk is, is only amplified. But at the same time there are going to be a lot of disruptors coming from the US to try to, to drive more not just onshoring but more regionalized trade and bring more of that manufacturing base to, to the Western hemisphere as well.
- [34:11]
Caroline Hyde
I want to just go a little bit further with where Ed took us in terms of, of China because there's a lot of really well read stories on the Bloomberg today thinking about how maybe the US has reduced its overall, well, power among allies and adversaries at the moment because of what's happened in Iran in particular when it comes to China. And the Iran campaign has been quote, a serious setback for Trump is what one particular Chinese Foreign Ministry adviser had told us. What does that mean for unique China relations? What does that mean about access, chip access, the relationship that we have?
- [34:46]
Reva Gujian
Yeah, absolutely. So if you contrast where we are today in the wake of this Iran miscalculation on, on part of the US and then compare it to where we were late last year when the Busan truce was struck. Back then the US was caught flat footed by Chinese export controls on critical raw materials. And so the US was in a very reactive mode when it went to Busan. Those truce terms were set. And I think the whole intent going into the next summit in Beijing was to come with a more assertive position with China to say look, we're doing things to re industrialize the U.S. protect critical infrastructure. We're not explicitly calling out China in these measures. So you know what, you don't get a vote on these areas. And, and the U.S. is going to be forging ahead now because of the Iran dynamic. That certainly tamps down the confidence, right, that the ability of the US to, to assert itself in the same way. And Beijing sees that. Beijing certainly is in a more confident position going into the summit. It has very explicit demands, for example, not just to, to reduce, you know, maintain tariff levels at the Busan truce level, but to reduce them, not just to restrain US Technology controls, but to actually roll them back. And this is where the US has been doing more country agnostic measures as well, trying to say, look, China, we're not out to get you. But Beijing's message is I see what you're doing here and it's got to stop. And so their interest is to make everything a red line, which means that we have a number of friction points heading into the summit, not to mention the where, where the status of the Iran issue is, is also going to consume a lot of oxygen going into that meeting.
- [36:33]
Caroline Hyde
This has such broad implications and you help break down many of them today. Reva Gujian, thank you. Director of the Rhodium Group. Now coming up, let's return to all things AI because that's all they're talking about. At the human conference in San Francisco, we speak with the snowflake CEO Sudha Ramaswamy is Bring back tech.
- [36:52]
Francine Lacqua
I'm Francine Lacqua, an award winning journalist and I've got a new podcast, Leaders with Francine Lacqua from Bloomberg Podcasts. I've interviewed everyone from heads of state to fashion icons about the news of the moment. But I've always been curious, who are these people as leaders?
- [37:09]
Bloomberg Tech Announcer
I don't think there's one right way to be a leader.
- [37:12]
Brady Ford
Make decisions.
- [37:13]
Sridhar Ramaswamy
A poor decision is always better than no decision.
- [37:16]
Francine Lacqua
Listen to new episodes every other Monday. Follow Leaders with Francine Lacqua. Wherever you get your podcasts,
- [37:28]
Caroline Hyde
It's time now for talking tech. And first up, results. Resolve AI it's going straight to shareholders with a hostile bid for commerce.com this after negotiations with the board, our management broke down. According to a letter to investors seen by Bloomberg, Resolve is now offering one of its own shares for every two commerce.com shares and says his earlier one for one proposal it gave to the board is no longer valid. Plus, Morgan Stanley has become the first Wall street bank to launch its own Bitcoin tracking etf. Now the Morgan Stanley Bitcoin Trust is Debuting under the ticker MSBT Bitcoin touching three week highs today of course because the US and Iran tentatively agreeing that ceasefire and prompting a surge in risk assets. And Supermicro says a committee of independent directors hired an outside law firm to investigate the circumstances tied to last month's indictment of two employees and a contractor of alleged service sales to China. In a statement, Supermicro said it will share an update once the inquiry is complete. I won't comment further until that at okay.
- [38:24]
Ed Ludlow
Human X is underway here in San Francisco bringing together industry leaders focused on turning AI into real world results. Snowflake CEO Sridhar Ramaswamy is set to speak at the conference and says it's not about big bets but execution. He joins us now. There's something I want to take up with you, Sridhar, and you and I have discussed this before. You have Project Snow Work.
- [38:46]
Sridhar Ramaswamy
Yeah.
- [38:46]
Ed Ludlow
And the idea is that you have this big company customer base that goes from running agents that give you answers to running workloads. And I go back to is an agent that only gives answers actually an agent, Is it a real piece of agent? Ok. That acts with autonomy? It seems like now we're getting to that part.
- [39:06]
Sridhar Ramaswamy
Yeah. I mean agent is a loose term for what it is.
- [39:09]
Ed Ludlow
A loose.
- [39:10]
Sridhar Ramaswamy
It's all about. It's fundamentally about AI models using tools and learning from how they are using it. And for example, our first generation of agents was Snowflake intelligence, which gave analytic insights into data and then cortex code made acting on Snowflake a lot easier. Snow work is a natural culmination. What it's able to do is take the 100 tabs that you have open on your computer and create a single environment that brings together things like that. So not only can you get information about something you want, how is the customer doing? You can also take an action, send them an email or make a recommendation for them. It's that power that's increasing by the day as a models get stronger and stronger.
- [39:52]
Ed Ludlow
The idea, you know, every time you go to an event like Human X, you're trying to say what is the thing that people are excited about what they're talking about? And one of the concepts is you go to bed and you leave your computer to do work overnight and you wake up to tangible results. Is that the idea with this?
- [40:08]
Sridhar Ramaswamy
That can be. It's one of the consequences. We've always had scheduled things like scheduled reports. I'm sure you get something in the morning that's like a summary of all of the things that you should know you can think of agents that summary
- [40:19]
Ed Ludlow
hasn't taken an action, it hasn't performed a piece of work on my behalf.
- [40:24]
Sridhar Ramaswamy
That's right, that's right. But with these agents, absolutely you can. I have people that are writing code 24 7. They just like set the agent on the task of writing new code to get some feature done and they give it some instructions, come back, check in the morning. I think absolutely these agents are getting better and better at taking actions on your behalf. But part of the magic is how do you do that in a government way? How do you have like a control plane that says these kinds of actions are fine, but those have large outside world consequence. They really need to be subject to human scrutiny. Increasingly that's going to be what is needed to make, to make AI succeed
- [41:00]
Caroline Hyde
at the scale outside world consequences. You are the man to speak to today about. Well the furor, the concern, the anxiety of the latest anthropic model that is being stress tested by 40 tech companies because it's so powerful, it can't get into the hands of us mere mortals. What do you make about the step changes that we're seeing in models right now and how powerful they're becoming?
- [41:23]
Sridhar Ramaswamy
I think the impact that they're having on software is profound. Software is getting easier to create and this also means that people can create value faster. I think anthropic is doing an incredibly responsible thing by taking a model like that which has breakthrough capabilities especially in co generation and giving it to a set of their closest partners to ensure that when it comes to security, for example, we are able to plug gaps. Security has always been a difficult hand done, human led kind of motion. And actually think of this as a big advance where we can systematically make all of our systems that are so critical for our nation, for our own survival a lot more stronger. I actually see this as a positive outcome.
- [42:09]
Caroline Hyde
You're at the cutting edge of models, of course. You were the co founder of niva, you came on to Snowflake and worked for a long time at Google. I'm interested actually in how you're finding the narrative narrative around Snowflake right now. We actually had the top of the show, Brooke Dane on from Goldman Sachs Asset Management. They love Snowflake and in particular they're liking and wanting to see from application names and from software companies, well, more cost optimization, more capital return. Is that something you have to think about when you've got some of your coders working 24 hours because they're able to just plug and play while they sleep. How is that affecting your costs?
- [42:42]
Sridhar Ramaswamy
Well, I think the return that we get from investing in AI comes back to us many, many, many fold. Used to be last year we had maybe a dozen demos that we would show our customers. They were all kind of cookie cutter. But today I and my sales team is a lot more capable. Can generate a demo for you in 10 minutes if I want. But and that is a lot more personal, it's much more relevant to your business. Is making a real difference in how we show people what is possible with Snowflake. And we are getting huge returns in areas like support or even our, what we call our SRE team. There's a team that keeps Snowflake the system up. They're using the part of Agent Ki to be a lot more effective as AI has cost, but the returns we get from it problems that used to take multiple days to debug and get to the bottom. We can get answers now in 10 to 15 minutes. There is cost, cost, but I think the returns are more than worth it definitely for us and for a lot of our customers that are able to do things that honestly were just inconceivable. Just like a year ago where companies like United Rentals basically just released an App to their 1600 branches and whatever questions these branches have about the current state of the business, they can just get it interactive. That is game changing for that.
- [43:57]
Ed Ludlow
That's Bloomberg Intelligence, our in house research arms thesis that as company use of agents grows, you will benefit just very quickly. Where are you seeing that ring?
- [44:06]
Sridhar Ramaswamy
True, the most beautiful part right now is it's across the data lifecycle. It's increasing migrations because getting data into a place like Snowflake where the data is AI ready has an added impetus because of AI, it's also automating the process of migration. So people are bringing in more data sets, they're building more more with products like Snowflake Intelligence because they can get value faster distributed more broadly. Just here I was, I wanted to look up what exactly is United Rentals doing in other areas. That was just a single question into my Snowflake Intelligence app. That's right on my phone. That's value when I want it, where I want it. That's the kind of thing that every CEO that I show this to wants because they want those insights to be available at their fingertips. So it's actually a broad acceleration across many, many things that we do. And as models like metals come along, we are able to take advantage of them in our products and get our customers to do even more with Snowflake.
- [45:05]
Caroline Hyde
Snowflake CEO Shudder Ramaswamy ahead of your talk over at Humanex. We so appreciate you joining the show now. Coming up, social media companies are trying their hand at a rebrand and it work as a Bloomberg Tech.
- [45:22]
Ed Ludlow
TikTok plans to invest $1.2 billion in a second data center in Finland. It's part of the company's Project Clover effort to move data storage for European users to the continent. The company says earlier this month, Tick Tock abandoned plans for a second data center in Ireland.
- [45:38]
Caroline Hyde
Car Meanwhile, there's more on big tech's new spin in social media. The new big tobacco tech giants like matter, TikTok, YouTube are trying to redefine themselves to escape the social stigma. Bloomberg's Alex Levine is here to talk about your story, your tech in depth today. That really builds upon a narrative that maybe was started by Snapchat almost a decade ago, but basically a lot of companies trying to tell us that they're not actually social media companies at all.
- [46:04]
Alex Levine
It's striking because 15 or 20 years ago social media was a sexy thing to be the way that today now everyone is an AI native this or an AI power that. As sentiment has soured and we've entered this moment where it's common vernacular we talk about social media as brain rot and doom scrolling and we say going analog is very in vogue. The sentiment has soured and now the social media companies want to be known for something other than either what they started as or in some cases we could argue what they actually are.
- [46:33]
Ed Ludlow
Right, Alex? Reinventions possible. I remember 2021 being at number one hack away and the top is pulled off and Facebook is then meta. There's some case studies you've looked at in your tech in depth.
- [46:46]
Alex Levine
Yeah. So I mean we looked at how Metta, as you said, was trying to rebrand to the Metaverse company and since then we've seen them get into chipmaking, into into AI, into consumer tech. YouTube very much wants to be known just as TV or as really an entertainment and streaming company company. TikTok similarly also wants to be known as an entertainment company. Snap has said in the past that it's a camera company. I think all of these are it's understandable why the companies want to move in this direction, but the corporate spin is just not seemingly working.
- [47:15]
Ed Ludlow
Bloomberg's Alex Levine with a must read tech in depth. Thank you very much. That does it for this edition of Bloomberg Tech. But this is the story. We have a two week cease fire with the war in Iran brokered by Pakistan, tech stocks pushing higher, particularly chip stocks, infrastructure, hardware, memory, etc. Bitcoin also pushing for the upside carry. But you know, we still see continued activity in the region.
- [47:38]
Caroline Hyde
Yeah, we do. Kuwait's air defenses, for example, have been dealing with intense attacks from Iran since 8am Wednesday, and it's still ongoing. The country's army says in a post on so we keep abreast on the latest when it comes to geopolitics and the effect on tech and supply chains, you have to bring it back to that to a certain extent. Don't forget to check out our podcast. Find it on the terminal as well as online on Apple, Spotify and Iheart. From New York and San Francisco, this is Bloomberg Tech.