TSMC Beats Expectations, Raises Revenue Outlook

Summary

Bloomberg Tech – TSMC Beats Expectations, Raises Revenue Outlook

Date: October 16, 2025
Hosts: Caroline Hyde (New York), Ed Ludlow (San Francisco)

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Episode Overview

This episode of Bloomberg Tech centers on TSMC's strong Q3 earnings, a bullish revenue outlook for 2025, and the broader implications for the semiconductor industry amid ongoing U.S.–China trade tensions. Discussion branches into rare earth element supply risks, the steady momentum of the AI industry and its impact on markets, as well as major movements in tech leadership (notably Apple and Meta). The episode also covers data center investments, fintech developments, and the latest in AI policy debates.

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Key Themes & Discussion Points

1. TSMC Earnings & Industry Impact

• TSMC’s Standout Performance:
  • TSMC reported earnings that beat analyst expectations and raised its 2025 sales growth outlook for the second time this year, buoyed by surging demand for cutting-edge chips used in AI applications.
  • Peter Ahlstrom (Bloomberg): "What they're seeing is that the demand for those chips is getting stronger. At this point they are watching the capital spending from some of the big customers out there, including OpenAI. They realize that Nvidia is going to have to supply those customers and the trends are going up from here." ([03:23])
• Capacity Expansion Pressures:
  • TSMC is supply-constrained and accelerating U.S. and Taiwanese manufacturing expansions to keep pace with high demand from Nvidia, AMD, Apple, and others.
  • Peter Ahlstrom: "They’re trying to add capacity in the US while they also build up their capacity in Taiwan right now. So it's taken a while for them to bring those fabs online and then meet this very strong demand." ([04:35])
• Market Reaction:
  • ADRs for TSMC saw volatility—initial gains faded amid broader market factors and high investor expectations.
  • Caroline Hyde: "Is it perhaps just a lot already priced in?" ([05:13])
  • Peter Ahlstrom: "There are a lot of factors going on... there are some high expectations going into this." ([05:22])

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2. U.S.–China Trade Tensions and Rare Earth Leverage

• Escalating Tensions:
  • Trade talks have become tense, with China threatening export controls on rare earth elements—a move that could impact global supply chains.
  • Treasury Secretary Scott Bessant expressed skepticism and frustration at China’s tactics.
  • Brody Ford (quoting a Chinese official): "China will cause global chaos if the port shipping fees go through." ([06:24])
• Global Stakes:
  • China’s dominance in mining and refining rare earths (critical for tech, automotive, military) creates vulnerability for the U.S. and allies.
  • Mike Shepherd (Bloomberg): "They own, they really hold more than half of the world's reserves and... production of these elements, which are critical across the economy in consumer electronics and automobiles and in military equipment." ([09:06])
  • The U.S. and EU consider coordinated responses, but skepticism remains on China following through on threats due to probable global backlash.
  • Mike Shepherd: "Jameson Greer, the US Trade Representative, said yesterday he doesn't think China will actually take this step owing to the geopolitical implications..." ([08:20])

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3. AI Market Sentiment and Earnings Outlook

• AI’s Resilience:
  • The AI “megatrend” remains “alive and well,” with no signs yet of a spending slowdown.
  • Angelo Cook (Edward Jones): "TSMC results and guidance provide some confidence in the durability of the AI theme. There's no AI related slowdown, at least not yet and is going to remain a key driver for markets." ([10:57])
• Investor Sentiment:
  • Hedge fund leaders like Ken Griffin note that "gen AI is not helping hedge funds beat the market with astonishing returns" ([11:17]), signaling AI’s impact is still maturing.
  • Cook urges caution but sees ample productivity gains ahead: "We are still in our view in the early stages of adoption... They're all rewiring their operating system to incorporate AI." ([11:47])
• Valuations & Market Cycles:
  • Cook recommends a balanced approach in portfolios—participate in AI’s secular growth, but diversify into neglected value names to mitigate potential overvaluation risk. ([13:32])

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4. Corporate and Market Dynamics

• Tariffs, Labor, and Profits:
  • Tariffs haven’t hit consumers heavily; companies absorbed costs, keeping inflation manageable. The labor market is "low hiring, low firing," with productivity gains sustaining high profit margins.
  • Angelo Cook: "So we do not expect a major uptick in unemployment... only a small part of that slowdown in the labor market is because of AI or, you know, tariffs for that matter." ([15:29])
• Salesforce and Oracle:
  • Salesforce shares spike on double-digit growth guidance but questions remain on whether legacy software firms can profit from AI. ([17:15])
  • Oracle’s deep relationship with OpenAI helps the latter navigate chip export controls, highlighting the strategic role infrastructure partners play. ([18:03])

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5. Tech Leadership Shakeups and Talent Wars

• Apple AI Departures:
  • Apple’s head of chat-GPT-like search is leaving for Meta, adding to a series of AI team exits. Speculation grows about Apple’s ability to keep pace in AI innovation.
  • Mark Gurman (Bloomberg): "This is probably the most significant or second most significant of that group... The core team developing the models underlying Apple Intelligence... they've been bleeding talent since July." ([19:15])
  • Apple is bringing in top execs Greg Federighi and Mike Rockwell to manage the shifting AI strategy.
  • Mark Gurman: "They have definitely have folks, but it's just about refueling the ranks and putting the right people in place." ([21:38])

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6. Data Center Arms Race and Power Demands

• Meta’s Gigawatt-Scale Texas Data Center:
  • Meta’s $1.5B+ commitment exemplifies the “data center gold rush” as hyperscalers scramble for enough power and infrastructure.
  • Commentators highlight Texas’ unique position and grid issues as new investments strain local capacity.
  • Nancy Tangler (Laffer Tangler Investments): "OpenAI has said they need 20 gigawatts of power at 16 billion per 2 gigawatts... And Texas already has a grid problem." ([29:43])
• Photonics and Quantum Bets:
  • Firms like Coherent and Quantus Services are seen as enablers for quantum computing and modernizing power delivery for AI needs.
  • Risk mitigation calls for balancing established leaders, enablers, and speculative bets.
  • Nancy Tangler: "We're trying to mitigate risk by existing build positions in existing technology... and then couple that with names that are speculative." ([32:23])

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7. Fintech Evolution: Upgrade’s Growth and Funding

• Upgrade’s Pre-IPO Raise:
  • Fintech startup Upgrade closes a $100M Series G round at a $7.3B valuation, planning ahead for public markets.
  • Unique multiproduct and multichannel strategy drives profitability and resilience compared to earlier neobanks.
  • Renault Laplanche (Upgrade CEO): "Indirect products are really turning into good source of customer acquisitions... These become Upgrade customers... benefit from all Upgrade products." ([39:05])
  • Regulatory environment for fintechs is still tight, as state regulation offsets federal relaxation. ([41:22])

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8. Anthropic’s Funding and AI Policy Debates

• Anthropic Eyes Middle East Money:
  • In pursuit of ever-larger compute budgets, Anthropic seeks additional capital from Middle Eastern funds, despite prior remarks around democratic values.
  • Carmen Reinecke (Bloomberg): "Not everything that they do will always be helping democracies, that it may help dictators." ([44:45])
• AI Regulation & Industry Divides:
  • Anthropic’s cofounder Jack Clark calls for thoughtful AI regulation, supporting California’s Senate Bill 53 as a step to transparency.
  • Accusations from figures like David Sacks (via X) suggest Anthropic is leveraging regulatory fears for competitive gain—a “regulatory capture strategy.”
  • Brody Ford (Bloomberg): "Anthropic was the only company to say, yes, we think this is a good idea." ([47:37])

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Notable Quotes & Memorable Moments

• On TSMC’s pivotal role in AI:
  • "They are the picks and shovels that are helping with this boom." – Peter Ahlstrom ([04:35])
• On China’s rare earth leverage:
  • "Think of night vision goggles. You can't run those without some rare earths." – Mike Shepherd ([09:06])
• On AI market sentiment:
  • "Of course from an investment standpoint, we need to be wary of complacency or euphoria... but the results speak for themselves, especially as we enter a key earnings season." – Angelo Cook ([12:55])
• On the evolving tech talent war:
  • "They've been breeding bleeding talent since July." – Mark Gurman ([20:29])
• On the data center boom:
  • "It's about the power, stupid." – Nancy Tangler ([29:43])

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Key Segment Timestamps

• TSMC Earnings & Industry Impact: [01:52]–[05:53]
• U.S.-China Trade & Rare Earths: [05:53]–[10:29]
• AI Market & Earnings Outlook: [10:29]–[13:32]
• Corporate/Market Dynamics, Tariffs: [15:01]–[16:44]
• Salesforce, Oracle, OpenAI Partnerships: [17:15]–[18:47]
• Apple Leadership Changes: [18:47]–[22:29]
• Data Center Race & Energy Needs: [28:56]–[34:55]
• Fintech Funding/Upgrade Story: [37:07]–[43:01]
• Anthropic, Middle East, AI Policy: [43:26]–[48:46]

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Summary

This episode paints a picture of an industry at inflection points: TSMC’s record-setting forecasts underpin bullish views on the durability of AI growth; however, supply constraints and international tensions—especially over China’s rare earth stranglehold—reveal vulnerabilities. Talent is on the move, as Apple struggles to retain key AI staffers while Meta and others rapidly scale up. Large-scale bets on data centers, energy infrastructure, and new fintech models signal both the promise and growing pains of a high-stakes technological transformation. And with AI regulation, the debate grows louder, with companies like Anthropic shaping—and challenging—the policy landscape.

The consensus: The AI megatrend is going strong, but beneath the exuberance lie challenges of supply, power, talent, and geopolitics that will define the industry’s next chapter.

Transcript

[Caroline Hyde]

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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.

[Ed Ludlow]

This is Bloomberg Tech. Coming up, TSMC reports third quarter results beating expectations and giving a positive outlook buoyed by strong demand.

[Caroline Hyde]

Plus, as trade tensions re escalate between China and the US Could President Xi's rare earth hardballs spark a global pushback?

[Ed Ludlow]

And yet another exact departure from Apple with its head of the chat GPT like AI search efforts going to matter.

[Caroline Hyde]

But first, Ed, we dig into the markets that are shaking off that trade anxiety and refocusing on the trade. Of course you discuss TSMC. We'll dig into it. NASDAQ up 3/4% with trading higher for two straight days people focus on that and indeed potential talks between President, President Putin and indeed United States President. But what are we looking at underneath the hood?

[Ed Ludlow]

Yeah, tsmc, the world's biggest and most important contract manufacturer semiconductors. The news is that it is hiked its sales growth outlook for 2025 for the second time this year. Then we look at the shop we open up 2%. We've given off some of those gains. If you read on the Bloomberg terminal some of the market stories the early part of the morning was TSMC driving us up positivity but the trade stories overtaking a little bit. Demand intact carry it is.

[Caroline Hyde]

Let's just talk about that being an impact. Bloomberg's Peter LSTRM who needs that tech coverage in the U.S. europe and Asia. And Peter, look TSMC did almost what ASML did. They said look I the megatrend still there even if China pulls away in terms of demand.

[Peter Ahlstrom]

Yeah, it's a little bit more than that CC way the CEO had this conference call after the earnings results and as you as Ed was talking about they hiked their their forecast for 2025 for the second time. Just three months ago they hiked their fore and now what CC is saying is that this megatrend is actually getting stronger. They of course are making the chips for in Video and for many others too. And what they're seeing is that the demand for those chips is getting stronger. At this point they are watching the capital spending from some of the big customers out there, including OpenAI. They realize that Nvidia is going to have to supply those customers and the trends are going up from here. So we're starting to get a fuller picture of what's going on in the chips business. We got preliminary results from Samsung earlier this week. Then we got asml, the chip equipment maker after that. And now we have tsmc, the biggest contract chip manufacturer, which is giving us a very strong forecast too.

[Ed Ludlow]

That's kind of the demand side, right Peter. But on the supply side there was lots of interesting information. The two headlines that jump out at me are they're massively supply constrained, capacity is tight, but they're moving really quick to expand manufacturing capacity here in the United States.

[Peter Ahlstrom]

That's right. Yeah. Well, it takes a while to build these chip plants. They begun construction in the US a few years ago and they've now said that they want to build. On top of that they want to expand even more than they have in the past. But they're trying to add capacity in the US while they also build up their capacity in Taiwan right now. So it's taken a while for them to bring those fabs online and then meet this very strong demand that they're getting from customers like Nvidia. Also from Apple. They're supplying a number. They also make the chips for AMD too as AMD tries to compete with Nvidia. So they're really the big beneficiary. They're kind of the picks and shovels that are helping with this boom.

[Caroline Hyde]

Look, we are looking at the ideas a little lower. Pizza. They were at a record high in trading over in Asia. Is it perhaps just a lot already priced in?

[Peter Ahlstrom]

Yeah, that maybe as Ed was talking about, there are a lot of factors going on in the market right now. The primary trading forum for TSMC shares is in Taiwan. So we'll see how they do tomorrow as they open up there. But the ADRs are getting buffeted bit probably. There are some high expectations going into this. I think investors did anticipate that there was going to be some pretty strong numbers from tsmc. But on top of that, there are a lot of trade factors that are playing into this. The US China tensions certainly kind of overlay a lot of what we are seeing in the market right now.

[Ed Ludlow]

Bloomberg's Peter Ahlstrom, thank you very much. Our next story is trade tensions between China and the U.S. listen to what Treasury Secretary Scott Bessant had to say about how negotiations are going and in particular about one top Chinese trade official.

[Peter Ahlstrom]

We've had four rounds of talks.

[Brody Ford]

Geneva, London, Stockholm and Madrid.

[Peter Ahlstrom]

And both sides approached them with great respect.

[Carmen Reinecke]

And this individual did not.

[Brody Ford]

He showed up uninvited and said, quote.

[Peter Ahlstrom]

China will cause global chaos if the, if the port shipping fees go through. So I don't believe that China wants.

[Brody Ford]

To be an agent of chaos.

[Mark Gurman]

And maybe, maybe they used to have.

[Peter Ahlstrom]

The wolf warrior diplomats.

[Brody Ford]

So, you know, maybe he thinks he's a wolf warrior.

[Carmen Reinecke]

We don't know.

[Ed Ludlow]

This is happening as China's decision to unveil export controls on the rare earth supply chain is now sparking a global pushback. Bloomberg Senior Tech Editor Mike shepherd joins us to break it all down based on what the Treasury Secretary was talking about and recent reporting, China sees its hand with rare earths as being leverage in a negotiation. There are two sides. And the question, Mike, is whether China is or is not overplaying that hand.

[Mike Shepherd]

Well, that is a big question right now in the market and certainly here in Washington where we're seeing the IMF and World bank meetings being held and so many global officials in town to watch these trade negotiations unfold on in real time between the US And China with so much at stake. And the question is how much of an impact there will be on other economies. And the US Is banking on other nations, other trading partners and other allies also feeling that pain and Joining the US and trying to counter whatever China may try to do in restricting the shipment and export of rare earth materials from China to buyers outside China. And that is something that will affect the European Union and other nations and Japan. And we have seen a push led by the US to try to get the Group of Seven to somehow counter and respond to China's intention here. And look what we're seeing is even as China is trying to exert some leverage, the US Is also expressing a little bit of skepticism about whether this will actually go through. Jameson Greer, the US Trade Representative, said yesterday he doesn't think China will actually take this step owing to the geopolitical implications and the fallout it would have on the global economy. And we can see a sign of that skepticism in the counteroffer that the US Made at the US Was really only stepping forward, forward with a longer pause in tariffs. And that's not nearly enough for what Beijing had been hoping for. They have been really angling to get a relaxation of years of export controls as a result of that leverage.

[Caroline Hyde]

That did seem to be real anger coming from Treasury Secretary Scott Bessant that Mike and I'm interested as to reminding us how important the hand is that China has when it comes to technology. The fact that they mine an awful lot of the rare earth, but the main point is they also produce and refine most of the rare earths.

[Mike Shepherd]

Well, they do. They, they own, they really hold more than half of the world's reserves and they dominate the refining and production of these elements, which are critical across the economy in consumer electronics and automobiles and in military equipment. Think of night vision goggles. You can't run those without some rare earths. And so the importance of this is something that hits a nerve with trade officials around the world, but especially with the. Because American officials had thought the rare earths issue had been settled during the last round of trade talks. And here China goes, in their view, reopening it and trying to use it as a last minute bit of leverage heading into this all important meeting between President Donald Trump and his counterpart Xi Jinping at the end of the month. And rather than seeing a narrowing list of trade issues to be resolved heading into that meeting, we're actually seeing a growing list. I mean, you heard the Treasury Secretary talk about the sensitivity around shipping. And there is also the question, Carol, of the U.S. move to expand coverage of sanction firms to include subsidiaries. And that's something that hits some of the Chinese champions like Huawei and smic. And that is something that Beijing also has objected to and we've seen this all play out just in the last few weeks and it raises questions, Carol, about whether the two leaders can actually sort all of this at the end of the month if and when they sit down.

[Caroline Hyde]

If is a big if right now. Mike Shepard, thank you very much indeed from D.C. look, amid this geopolitical tension, you are still seeing the markets relatively calm. I'm looking at the tech markets up 7.10percent on the NASDAQ 100. We've been whipsawed a little bit about the concerns on resurgence, trade frictions more broadly. But the AI real feel factor is still there. Angelo Cook office is with us Senior Global investment strategist at Edward Jones Today is AI winning out?

[Angelo Cook]

It is a good day for a good day for technology. The TSMC results and guidance provide some confidence in the durability of the AI theme. There's no AI related slowdown, at least not yet and is going to remain a key driver for for markets.

[Ed Ludlow]

And so one of the most read stories today on the Bloomberg terminal and on the website is Ken Griffin, the founder of hedge fund in Citadel saying that Jenny is not helping hedge funds beat the market with astonishing returns. We're going to pull up what it is that he said. But as somebody that is in the markets, as a strategist, your reaction to that news story and also what gen I better than you in strategy?

[Angelo Cook]

I don't think we're quite there yet. We are still in our view in the early stages of adoption. Of course there's a lot of spending going in now to make this technology incorporated. But thinking about major technology firms and really many different businesses, including in finance, they are all rewiring their operating system to incorporate AI. So it will take a little bit while to see productivity gains. But we do think that these gains are on the way. Of course from an investment standpoint, we need to be wary of complacency or euphoria. At some point there's going to be increased competition, some overbuilding, overcapacity. We are not quite there yet but something to watch out for. And I think the reaction in the TSMC results in the stock today. The new reaction reflects the high expectations.

[Ed Ludlow]

So there are two very distinct story, right. How market participants use AI and then the impact of the story on markets. But you went there with tsmc. So what did that, that sort of outlook from them tell you about the staying power of this cycle?

[Angelo Cook]

Yeah, I do think it provides confidence that this will continue, especially thinking about the next 6 to 12 months only the direction of travel for spending is higher. And there's a lot of push for many different businesses and industries to incorporate AI. So I think that the mega trend of adoption remains alive and well. And yes, we can debate all day about valuations, but the results speak for themselves, especially as we enter a key earnings season.

[Caroline Hyde]

We don't have all day, but let's debate where would you go if valuations are high for some of the big names?

[Angelo Cook]

So we favor a varble approach. So having continued to participate in this, a long term secular theme as I would call it, but at the same time for especially new capital start to complement portfolios with areas of the market that have been left behind. And that could include value style investments, small cap stocks that may benefit from the Federal Reserve rebooting its rate cutting cycle. So having this balanced approach and again avoid chasing some of the unprofitable, more speculative parts of the market, what is.

[Caroline Hyde]

The catalyst for those speculative parts of the market to actually be pop? Do you think that we can remain irrational for a little bit longer? If you see it that way.

[Angelo Cook]

You know, as they say, you can only tell a bubble kind of with a benefit of hindsight. But at the same time there are some key differences between now and the late 90s. A lot of these companies that are doing all this heavy spending, they are financing that from their own cash from operations. So not debt financed. They are very mature, profitable businesses and they have a diversified stream of revenue. So we're not quite there yet. Valuations are not at extremes. But at the same time, markets are going to be sensitive to any news about return on investment from all these spending that is taking place. And also paying attention to signs of euphoria which we do not see yet in this environment.

[Ed Ludlow]

Andrew, I think we should continue to talk about tariffs. The idea when the President took office in January was that consumers would would take on the burden of tariffs. Right. Because companies would raise prices across all sorts of domains. That hasn't really materialized supplies. What has been impact impacted is the labor market in different ways. Either people cutting back. How are you reading that that play out right now?

[Angelo Cook]

Yes. So a couple of things here about prices. As we navigated the very period of high uncertainty, especially in April and May, companies really try to absorb a lot of that and not pass these increased costs to the consumer. Now that we have a little more clarity, we may see a little more even distribution of this increase in costs. We have seen goods prices increase, but at the same time the increase, the uptick in inflation remains manageable. Now as it relates to the labor market. We remain in a low hiring and low firing mode. The labor market remains balanced. Company corporate, corporate profits remain at record highs even as we've seen a significant slowdown in hiring, which to me implies productivity gains. So we do not expect a major uptick in unemployment. Companies remain very profitable so they have really no pressure to continue to cut costs to protect margins because margins again are at all time highs. But something to monitor. There's going to be some disruption from AI but so far it seems like only a small part of that slowdown in the labor market is because of AI or you know, tariffs for that matter.

[Ed Ludlow]

And I take, I ask you that that takes us nicely into earnings season that's about to hit us hard next week. Angelo, call us of Edward Jones. Thank you very, very much indeed. Okay. Coming up, Salesforce looks to reinsure. Investors worried the company could lose out in the AI boom. We have more on Salesforce next. This is Bloomberg Tech.

[Caroline Hyde]

Salesforce shares, as you can see they spiked this morning after chief financial and operating officer Robin Washington had said the company expects to return to double digit revenue growth in the coming years. More on the company's outlook. Let's bring in Bloomberg's Brody Ford who covers enterprise software companies. It's still down a quarter so far this year in terms of its market cap. But some reassuring points that to reacceleration of growth.

[Brody Ford]

Exactly. I mean this is a stock that.

[Renault Laplanche]

Was beat up 30% year to date yesterday and so it's up 7 today and that's pretty cool. But it's still investors are a little anxious whether these kind of traditional application leaders like Salesforce are going to be the ones to successfully sell AI products. We got a decent outlook from Salesforce yesterday. Yesterday. But you know, it's not a resounding celebration at this point.

[Ed Ludlow]

You've been reporting on the close relationship between Open AI and Oracle and how maybe the publicly traded and at this stage slightly bigger of the two is helping that company navigate chip export controls. What do we need to know?

[Renault Laplanche]

It's interesting. I mean Oracle is kind of a famous lobbyist, right? They, they know Washington. They're pretty tight with the Trump admin right now. And yesterday OpenAI said when we're having trouble getting ships into UAE or Argentina, we call up Oracle and they're the ones that have kind of been able to help us get our chips around the world. And we found that pretty interesting because Oracle is playing an increasingly large role in open air for a build out.

[Ed Ludlow]

Bloomberg's Brady Ford, across a lot of stories. Thank you very much. Another top, top story. Apple can't catch an AI break. The executive. The executive who is in charge of developing a chatbot like search feature within Apple is heading, stepping down and heading to matter. That's according to sources. For more, Bloomberg's Mark Gurman who breaks that story joins us now. Who is this executive and how significant is it, Mark, that he's jumping to matter?

[Mark Gurman]

Yeah, this is keying. And to give you an idea of how significant this is, we've talked about maybe a dozen Apple AI departures over the last few months. This is probably the most significant or second most significant of that group. This person was a direct report to John Gianna, the senior VP who runs all of AI at Apple. This person was actually put into their role only a few weeks ago when his predecessor Robbie Walker left Apple. Walker had been in charge of Siri, but he was removed from being in charge of Siri in March after the major delays and the blowback against Apple Intelligence. And then he started a new team called Aki Answers Knowledge and Information and that team is focused on AI powered web search tools. So basically adding chat, GPT, perplexity, Gemini like functionality to Siri and other parts of the Apple operating system. And Yang, he became in charge of that program just a few weeks ago. Before that he was running the search related functionality. Then he was running the whole thing. And so now Apple's AI team is going through another major reorganization in light of that significant departure.

[Caroline Hyde]

And a key line in your story is several of the Apple team members think that this is going to continue to happen.

[Mark Gurman]

More departures to come, this is going to keep happening. I mean the, the core team developing the models underlying Apple Intelligence, it's a team called AFM or Apple Foundation Models. They've been breeding bleeding talent since July. The creator of that team and the person who ran that team, Roman Peng, he left for a $250 million multi year pay package and is now a senior executive at Metta. Since his departure they've lost about a dozen people. I'm told there are several other people on that team continuing to interview. Other people are going to matter still other people are going to startups OpenAI and Google. We've been reporting this out as these departures have been happening and these new companies have been hiring these folks and this is going to continue given the pay packages that these competitors are offering and given the embarrassment that Apple's efforts have become for some of these people actually working on them.

[Ed Ludlow]

Mark, you've you've come on Bloomberg Tech and you've broken all these stories about people departing Apple. A reasonable question and we just have 60 seconds is is there actually anyone left to Apple of notes working on AI?

[Mark Gurman]

Oh, Apple has tons of tons of folks. They're working on acquisitions to try to refuel the ranks there. John G. And Andrea despite there being re rumors and discussions about him stepping down or being pushed out of the company for several months now, he remains in charge. He may not be there for long as I'm told that Apple has been looking for outside replacements for him, but for now he's there. Greg Federighi, who runs all software engineering, has now taken an ownership role over all the AI strategy at Apple. Mike Rockwell, who created the Vision Pro, he's heavily involved in the strategy there now too. So yeah, they have definitely have folks, but it's just about refueling the ranks and putting the right people in place. But certainly this is another considerable setback to met his gain potentially.

[Caroline Hyde]

Mark Gurman as always, we thank you so much for joining us. Memo Coming up, potentially catastrophic breach of a US based cybersecurity firm is being blamed on Chinese state backed hackers. That detail and the fallout next. This is Bloomberg Deep Bloomberg Tech when your business evolves, so does your risk of data loss. But with Veeam, your data is always on the map. Partner with Veeam for coverage that keeps you moving and get protection for workloads of all shapes and sizes, even the ones you haven't created yet so you can stay resilient as you scale. With Veeam, it's all good. Get workload coverage that works for your [e-mail] that's V E E A M.com.

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[Mark Gurman]

So time with our pets is extra precious. That's why we started Dutch. Dutch provides 24. 7 access to licensed veterans with unlimited virtual visits and follow ups for up to five pets. You can message a vet at any time and schedule a video visit the same day. Our vets can even prescribe medication for many ailments and shipping is always free. With Dutch, you'll get more time with your pets and year round peace of mind when it comes to their vet care.

[Caroline Hyde]

And it's time now for talking tech. And first up, US cyber security provider F5 disclosed that nation state hackers from China breached its networks and gained long term persistent access to certain systems, including source code. Now the breach prompted warnings from US and UK authorities describing the attack as significant cyber threat that could be used to exploit vulnerabilities. Plus, Uber is giving some drivers in the US the option to earn money by completing tasks related to the company's new data labeling business. This is an area where the rideshare giant sees an opportunity to shine in the AI boom and Microsoft is pushing Windows users to talk to their computers. The company is rolling out a new voice feature activated by saying hey Copilot. It's part of a broader effort to rebuild Windows around AI including expanding use of tool including Copilot Vision which lets software see what's on a user screen.

[Ed Ludlow]

Ed okay, coming up, we've got a riddle for you. How does IT stocks get weaker and more valuable? More on how the booms impacting equity dilution next. Also a quick look at markets right. The story has been split between the early part of the day where TSMC Outlook was really boosting us but TSMC usage shares at least have fallen away. The market is modestly higher. There was some sort of nervousness and now calm about what is happening in trade talks between the US And China will continue to track those stories throughout the range of the show. This is Bloomberg Tech. Welcome back to Bloomberg Tech. Our top story is tsmc, the world's biggest, most important contract manufacturer of semiconductors. Its US listed shares are now down a percent. They had opened up 2% and quickly fell away. The story is that they have for the second time this year hiked their sales growth outlook to the mid 30% range for 2025. And the writing on the Bloomberg terminal is really clear. That's given the market at large a lot of optimism about the outlook for AI and demand. Remember, TSMC is the contract manufacturer of Nvidia chips as an example, not doing much for their own US Listed shares, though it's an important one that we'll stick with.

[Brody Ford]

Cara.

[Caroline Hyde]

We will. Let's just turn our attention back to that riddle that you left us with. That because unusually. Well, usually we see a company's equity gets diluted. We tend to see investors sour on the stock. But the boom has turned that on its head. Take a look at intel shares. August is when the chip maker began selling new equity to the US government, SoftBank and Nvidia. According to Bloomberg calculations, that waters down the stake of existing investors by around 14%. So why are shares shares up so much? Bloomberg markets reporter Carmen Reinecke has been answering the riddle. And it's just all about the boom.

[Carmen Reinecke]

Yeah, it really is. So it basically boils down to, you know, intel was really not doing very well. Its stock was very beaten down. There was a lot of worries about how the company was going to turn itself around. And this new influx, this new cash on the balance sheet is really positive. And investors are saying basically we'd rather own 8, 85% of something then, you know, 0% or 100% of nothing. Right. So it's basically this idea that this is going to help the company grow more, that it's going to do better in the future. And so taking a little bit of dilution on the profits is okay for now.

[Ed Ludlow]

Coming. This is about hype and the golden tickets of AI, right? You write in your story about AMD gets its partnership with OpenAI, intel gets its partnership and investment from Nvidia. The stock story is history from that point.

[Carmen Reinecke]

Yeah, it's so true. And AMD shares are up just as much, 43% since that deal was announced. And you know, intel's been up 90% just since the end of August. So we're seeing so much enthusiasm about AI and all of these deals, even though they're in such rapid succession, have been really beneficial. Investors are excited about it. They want to be buying into these shares and they want to see the growth going forward.

[Ed Ludlow]

Bloomberg's common Ryan Key, thank you very much. MATTER has announced plans to build a new gigawatt scale data center in Texas, committing more than $1.5 billion to the project. The investment marks the social media giant's 29th data center and underscores its push to keep pace in the rapidly evolving race. The news comes amid a wave of major data center announcements yesterday, including a Microsoft N Scale partnership, a new collaboration between Core Weave and poolside, and a $40 billion consortium acquisition of aligned data centers. Here to discuss the identity center further Nanta Nancy Tangla Laffer Tangla Investment CEO who says quote it's about the power stupid. Okay, hit me with that thesis.

[Carmen Reinecke]

Oh and you always find the right nuggets to pull out. Yeah, well I mean look there's, there's expected to be. I mean OpenAI has said they need 20 gigawatts of of power at 16 billion per 2 gigawatts. That's, that's a fair amount of change. And then you have all of these just using Texas as an example you have all of these companies opening data centers in Texas. It's kind of the perfect place. Horizon is the only one that comes with its own power source which is natural gas on the Mitchell family Longfellow ranch. And so that's great news but power's a lot of power is going to be needed for the rest. And Texas already has a grid problem so we are looking at Laffer Tangler at names to names that can solve some of the data center problems and some of the grid problems that are coming with this major build out and photonics is a hub. Hope it's not yet, we're not yet there in, in reducing power consumption and build outs are, are critical. What we heard from Oracle recently from the CO CEOs was that you know, it's not about demand demand, it's about supply. They can't get these data centers built fast enough.

[Caroline Hyde]

Let's go to the promise of photonics because you're already looking at a particular company cohere. Remind us of what the thesis is there Nancy and, and how quickly you think it can become a reality.

[Carmen Reinecke]

Yeah, so that's the question Caroline. I mean Coherent is you know really focused on building photonics around the quantum computing needs which is just going to add another layer onto this whole power question. And so what we've done, we've launched a new strategy called Macro cycle opportunities and we have four themes Space, robotics, Quantum and nuclear. And in that we are trying to identify the companies that are going to drive the next wave of transformation overlaid with AI because it's essential to many of those themes or most of those themes. So Coherence one, one of the other names that is important to us is not a photonics name but is Quantus Services. We own that in our 12th best. We own it in macro cycle and we own it in our growth portfolio. They've got a $36 billion backlog in, in modernizing existing grids or power power providers.

[Caroline Hyde]

Nancy, you're doing what so much of the market is having to do right now, which is have a lot of hope baked into these forward looking not only promises of the actual returns on investment in AI, but promise of photonics, promise of quantum. What is the fundamental research you bring to bear to be like these are good bets?

[Carmen Reinecke]

Well, so what we've done, and I didn't answer your question on timing, I don't know, Caroline. I mean it could be, the expectation is it could be a decade but we've seen things accelerate so quickly. And the Exelon CEO at AI World yesterday said we're going to see more transformation in the next 10 years in the last hundred. But what we've done in constructing the portfolio is we've established leaders and they are about for 40 to 50% of the portfolio. So thinking Quantum, IBM, which is a pretty low risk business model and then the enablers, which is a coherent and then the speculative names and that would be Ionq, Rigetti, all of those names. So the objective is and that's 10 to 15 to 20% and the enablers are 20 to 25. So we're trying to mitigate risk by existing build positions in existing technology technologies that are already producing earnings and then couple that with names that are speculative.

[Ed Ludlow]

Nancy, we started this conversation about the news of Matter's latest or 29th data center, a gigawatt in Texas. You have the small if my Bloomberg terminal data is correct position in Matter, but they are not a hyperscaler. Right. So how do you view that build out that they're doing and the attractiveness in the broader thesis you've just outlined to us?

[Carmen Reinecke]

Well, so we, we do own a very small bit and but we, if you recall we've talked about this in the past where we sold the majority of our holdings because we felt like the business model and we were wrong by the way. We felt like the business model of advertising was not where we wanted to be and then they pivoted to AI. And I think that's what's driving these investments and they've been pretty successful at attracting a number of high level executives from many companies, but in particular Apple. So I think that that for us is, you know, we pivoted to Spotify. I think we actually did better with Spotify. But the point is that we've, we missed the meta run and I think the question now is can they convert it to revenues? And I think that's going to be the challenge. However, Mark Mahaney just published a piece that shows EBIT per employee and revenue per employee at Metta, Amazon, Microsoft and Google is up massively and that goes to the bottom line. So I think the jury's still out on how they're going to monetize all of this, but we'll, we'll see. I mean they're making the investments in people and in, in Capex.

[Ed Ludlow]

Nancy, just very, very quick, is Elon's pay package going to get voted through?

[Carmen Reinecke]

I think so. I hope so. I like to be aligned with the CEO as a shareholder, Nancy Tangla.

[Caroline Hyde]

We appreciate it so much. Lafar Tangla Investments Great to have you on the show. Coming up, the CEO of Startup Upgrade joins us to discuss the company's latest funding ground and what changed in the fintech market since his days running Lending Club. This is Bloomberg Tech.

[Peter Ahlstrom]

From providing extra support during busy seasons to replacing vacant roles, you need Express employment professionals on your team. Express can handle everything from contract placements to finding the right full time team member. Solve your workforce challenges when you let Express deal with the workers compensation, payroll, benefits and more so you can concentrate on what really matters growing your business. Go to expresspros.com if you've never used a staffing company, here's how Express has helped businesses like yours balance their workforce to meet production demands Reduce stress and burnout which reduces turnover Access a local talent pool ready to work for all types of jobs and a variety of reasons. Choosing Express Employment Professionals is the move to make this year with more than 870 locations. Find the one near [e-mail] that's expresspros.com Join Bloomberg in Houston or via livestream on November 4th for the future. Finding the Opportunities this 2025 event series will examine how companies are investing in their businesses to create efficiency, innovating their products and services and improving the customer experience. This series is presented by Invesco Q. Q. Q. [e-mail] FutureInvestorHouston that's Bloomberglive.com FutureInvestorHouston.

[Ed Ludlow]

Fintech startup upgrade has just closed a 100 million Series G funding round that gives the company a $7.3 billion pre money valuation. Upgrade, which offers mobile banking, credit card and other financial services, was founded by former Lending Club CEO and co founder Renault Laplanche. He joins us now in San Francisco. Over the last couple of years actually Caroline and I have tracked very closely the valuation of private I would wouldn't even say just fintech. You know, it's more specific modern banking services, multi platform offering. But just to start, why raise that money? What do you need it for how does it help out with growth now?

[Renault Laplanche]

So we're in the fortunate situation of being cash flow positive, so we didn't need that.

[Ed Ludlow]

Yes.

[Renault Laplanche]

But as we think about the evolution of the company, we're sort of getting closer to taking the company public. This probably our last sort of pre IPO raise. So it is a good opportunity to sort of check on where we stood in terms of building up shareholder value and also create an opportunity for a, for liquidity for existing employees prior to an ipo.

[Ed Ludlow]

That's quite a definitive statement. Our last pre IPO raise. So you have a plan in place and a roadmap to do that?

[Renault Laplanche]

Yeah, I mean no certainty obviously it always depends on, on the market and on our own sort of growth in the next 12 to 18 months. But we're. Yeah, we're feeling good about the direction.

[Caroline Hyde]

Renault. What's so interesting is the way in which Upgrade gets new customers. In many ways your cash flow positive because in many ways looking for that profitability metric because you don't have to spend loads of marketing because you partner with big businesses. Just tell us about how the business model has helped you weather what has been a real downturn for other Neo banks during the 2021 earlier era as well.

[Renault Laplanche]

That's right, Caroline. That's really what makes Upgrade unique. It's our multiproduct, multichannel strategy. So we are, we're fortunate to have six different products. Mobile banking, credit cards, personal loans and then sort of indirect products like bnpl, home improvement financing and auto loans where we work with partners to deliver financing at the point of sale. And increasingly these sort of indirect products are really turning into good source of customer acquisitions where we can acquire a customer for another loan at a local dealer or through a home improvement financing at a local call roofer or person who installed new windows. And then these become Upgrade customers and they can sort of in turn so benefit from all Upgrade products including credit cards, including mobile banking. So we really created that sort of ecosystem that benefits from multiple products.

[Caroline Hyde]

And many know you from lending club. Was it those relationships that helped you on the other side? Side because you repackage these loans, perhaps sell them in bulk to well a community bank if it's relatively risk free or onto a private equity house if it's relatively risky. And I think auto loans come to mind when we're thinking about risk at this moment.

[Renault Laplanche]

That's right. So we've I think helped provide 45 billion in loans seen since we started. It's all, it's not all on our balance sheet. So we are certainly sort of sort of setting loans to loan buyers and that includes a very broad range of buyers from small banks and community banks and credit unions that are going to focus on the sort of safest loans to sort of private credit funds, securitization structures where you can allocate the risks differently and where some investors might, might be sort of more willing to, to chase higher yield.

[Ed Ludlow]

Renault, jurisdictionally, would you just reflect on, on the experience of leading this company in this startup. What is it like being a NEO bank under the Trump administration, for example, are they friendly and cooperative in the things that you want to do versus their governance of traditional banks?

[Caroline Hyde]

Right.

[Renault Laplanche]

So yeah, it's certainly a very business friendly environment right now. But some of that translates into maybe a little bit less stringent of regulations at the federal level. But lending is also regulated at the state level and I think whatever, relax relaxed standards, we were getting on the federal stage where we're not getting at the state level. So, so, so state regulators I think field that vacuum left by federal regulators to, to, to a certain point. So I don't think there's a meaningful change in, in how sort of tight the regulatory environment is.

[Caroline Hyde]

Renault, memories are short, but I just want you to reflect for a minute on Lending Club and what you learned that briefly because there were issues then you did have to step down. I'm interested as to what you've learned from it.

[Renault Laplanche]

Oh yeah, so much. Yeah. So I think the Lending Club was really the first sort of phase of fintech. Right. It was really sort of building up an entirely new industry with some very uncertain regulatory and compliance framework. Upgrade 10 years later has really been part of that sort of second phase of the industry where there's more sort of established framework, established rules on of the game and I think we've, we've all been benefiting from, from that and the fintech industry has been sort of able to, to grow and not really sort of be a sort of strong challenger to the sort of more traditional banking industry.

[Caroline Hyde]

Appreciate the answer. Renault laplanche Come back CEO of Upgrade. We thank you. Now coming up, Anthropic reportedly looks to raise even more money, money particularly from the Middle east on that next. This is Bloomberg Tech.

[Ed Ludlow]

Anthropic is reportedly in talks about based investment firm MGX to raise additional capital just weeks after completing a funding round that valued the AI startup at $180 $83 billion all according to sources. CEO Dario Amodei met with MGA executives during a recent tour of the Middle East. Joining us is Bloomberg sharing Ghafari. This is something you and I've been reporting out together. The way I'd summarize it, you give us the details is need money, need compute, make some friends across the Middle East.

[Carmen Reinecke]

That's right. It's never too early, I think for these companies to start thinking about the next funding round even if they're weeks before they've closed the last one. And you know, we're talking about the billions at this point. Anthropics last round they raised 13 billion at 183 billion valuation. If you're thinking about what kinds of pools of capital are out there at that scale, the Middle east is increasingly sort of one of the only remaining pools that's going to make those kinds of investments at that level in the still unprofitable, still somewhat seen as risky right companies.

[Caroline Hyde]

Shereen, what's interesting and as you and Ed make clear in the story, is Qatar had been a pool of capital for them previously, but they had to make amends for previous choice words when it came to other Middle east pools of capital.

[Carmen Reinecke]

That's right. So Anthropic CEO Dario Amadi has, you know, in the past made comments, there was a memo to his own staff saying that acknowledging that sort of fundraising in or that they would be taking money in the Middle east and that there are trade offs there and that the company would sort of have to come to terms with the fact that not everything that they do will always be helping democracies, that it may help dictators. And so of course with the Middle east, you know, having a different sort of set of governments, that is a new reality, I think for these CEOs of AI companies that they may be making deals with countries that have different and maybe more undemocratic systems. Right.

[Caroline Hyde]

Than here in the US Shrink Fari, we thank you very much. And let's just stay with Anthropic because the startup founded by former OpenAI executives, of course we just mentioned Daria, there's also Daniela Amadi and a handful of others is under new scrutiny from the White House as it doubles down on its mission of building safe, steerable AI. White House isa, that's David Sachs took to X accusing Anthropic of running a sophisticated regulatory capture strategy based on fear mongering and blaming the company for fueling a state regulatory frenzy that's hurting startups. Topic of Dave Lee's latest Bloomberg Opinion article and he joins us now. And David Sachs was responding to a recent essay written by another co Founder of Anthropic could come from OpenAI. And let's just talk about what Jack had been posting.

[Brody Ford]

Yes, this is Jack Clark, one of the co founders, their current head of policy as well. And in this essay, you know, he goes over some of his fears about AI and he makes a lot of metaphors around sort of being scared of the, of the dark essentially as a kid and sort of comparing the future of AI in some ways to the dark and not quite knowing what shape it's going to take, what the risks are. And it seems, you know, this is, this isn't the first time time David Sachs has kind of spoken badly of Anthropic. And what it's doing is scratching this itch that David Sachs and it seems the White House has the Anthropic is, it's kind of separate from the tech world in a lot of this. You know, we're not seeing anthropic leadership at many of these White House events. They're not going to, you know, the been a lease with Trump in the same way that Jensen Huang has. And we, you know, they're certainly not handing him a small trophy like Tim Cook did in the, in the Oval Office recently. And that now has kind of put a bit of a target on their back, I think, is this sort of standalone AI company that likes to think it has perhaps stronger principles on safety than Open Air and some of the others.

[Ed Ludlow]

Dave, this is a story that's in the Zeitgeist to borrower Tom Keeneism. It's playing out on social media. There are other people beyond David Sacks weighing in on it. Again, it's a little bit repetitive, but just explain the grievance evidence. The issue here that these kind of tech figures have with Jack and his essay and Anthropic.

[Brody Ford]

Well, there was for the longest time these sort of two camps in AI that one would say, you know, slow this down, let's do this deliberately this, do it safely. The other say, no, let's be accelerationist, let's just innovate as quickly as we can and treat the problems as they come and solve some of these problems with AI. And the way that's kind of manifested in a more practical sense is that you have states like California that have recently made into law several bills related to AI. One in particular with Senate Bill 53, which is about transparency, is about protecting whistleblowers. Anthropic stood alone in endorsing that that bill open. I sort of begrudgingly said they could live with it after the fact. But Anthropic was the only company to say, yes, we think this is a good idea. Now, their preference would be for a federal law that would stop there being individual laws in different states around the, around the country. And that's obviously what David Sachs wants as well. But Anthropic is saying, look, if you want to do a federal law, let's see it. Let's have it in Congress. Let's see what that is. Until then, we're happy to back what little legislation is happening in California, even if that means it might make things more complicated for the companies.

[Ed Ludlow]

Bloomberg opinion columnist Dave Lee with the latest. Thank you very much. That does it for this edition of Bloomberg Tech Car. What an addition it was.

[Caroline Hyde]

It was. And yet more focus on data centers and indeed on growth of AI. Do not forget to check out our podcast. Find it on the terminal as well as online on Apple, Spotify and Iheart from New York. From San Francisco, this is Bloomberg Tech. There are two kinds of people in the world, people who think about climate change and people who are doing something about it. On the Zero podcast, we talk to both kinds of people. People you've heard of, like Bill Gates.

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And the creative minds you haven't heard of yet. It is serious stuff, but never doom and gloom. I am Akshat Ratty. Listen to Zero every Thursday from Bloomberg.

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