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Hi, I'm Lisa Mateo introducing you to the new Stock Movers Report from Bloomberg. These are short audio reports, five minutes or less, delivered right to your podcast feed. Throughout the day, Stock Movers fills you in on the day's winners and losers on Wall street and tells you about the news and data that's driving those gains and losses. If you want to stay plugged into the stock market but don't want to spend all day watching tickers scroll across your screen, then Stock Movers is a place for to get informed. Listen a couple times throughout the day to find out what's moving equities and why. Search for Stock Movers on Apple podcasts, Spotify or anywhere else you listen. Get the latest stock news and data backed by reporting from Bloomberg's 3,000 journalists and analysts across the globe. Subscribe to Stock Movers wherever you get your podcasts. Bloomberg Audio Studios Podcasts Radio News.
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Bloomberg.
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Tech is live from coast to coast with Caroline Hyde in New York and Ed Ludlow in San Francisco.
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This is Bloomberg tech. Coming up, U.S. pools TSMC waiver on essential gear to its China chipmaking facility, adding further curbs to its semiconduction production capabilities.
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Plus tech stocks slide to start September amid a global sell off with all Magnificent seven names in the red. We dig into the fourth day of losses for Nvidia and we speak with.
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The CEO of crypto.com about a new partnership with Trump Media.
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But first we check in on these markets which are under pressure. From a global perspective. This is in many ways the bond market. That is the tail that wags the dog when it comes to the equity market. Bond markets sell off worldwide, particularly in the uk. UK we're worried about ability of governments to repay debt at the moment, but we are seeing just a risk off tone to the September start and we're looking at big Tech off by one and a quarter percent. Magnificent seven last time I checked at all in the red in particular Nvidia.
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There's market sentiment and then there's news flow in the show. We're going to Talk about Tesla 3 pieces Data from China. Bloomberg reporting on India launch and master plan part four in vignette. Maybe it's a post earnings thing. There is anxiety broadly about the mag 7 names and concentration risk at the index level and then tsmc. We just broke the story. The US pulling a key waiver for TSMC to get key gear to a pretty much sole facility for chipmaking in China. I want to get the details. Let's bring in Bloomberg Senior Editor Mike shepherd and Mike, what's the need to know here specifically on TSMC in China?
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Well, this adds at another speed bump for TSMC and its suppliers in trying to bring equipment, chemicals and other things that they need for this facility in Nanjing. It is not a major portion of of TSMC's overall manufacturing picture, accounts for a relatively small fraction of the company's revenue. And yet it is symbolically significant because the move mirrors what the US Government announced on Friday and that is that Samsung and SK Hynix would face similar restrictions on their facilities in China going forward. All of this takes effect at the end of the year. They have until December 31st before these new restrictions snap back into effect.
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Fact.
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What happened in essence is that the companies lost what is considered really a blanket waiver, a validated end user agreement that they were trusted to be able to ship goods and material into those manufacturing facilities in China for chipmaking. That's ending and it's part of the US Government's broader effort to restrict China's access, even if it's foreign companies making things inside China, to restrict access by China overall to advanced technology.
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So Mike, an additional 1,000 or so licenses are going to have to be processed every single year by U.S. officials. But who does that hamper? Who is the supplier here? Is it the, I mean, I think of ASML in Europe, is that the knock on effect we see here?
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D
Well, we could see a knock on effect on those. We looked into the supplier question at the end of last week and it will be a little bit of a drag. It's unclear which companies will be affected because it's not just asml, it's even the chemical makers and other kinds of suppliers that may face some of those speed bumps. Now, as, as I mentioned, the facility that TSMC is operating in Nanjing is an older grade technology there. It's 16 nanometer chip technology that has been out in the market, Carol, for really a decade. So it may not be the most cutting edge of material. But what we're looking at overall is going to be some delays. This adds, as you noted, a thousand more per requirements that may need to be in the pipeline and approve by a government that is really under strain here in Washington from staffing and budget cuts and may not be as enthusiastic about issuing those kinds of approvals. We did see at the end of last week with the Samsung and SK Hynix announcement an indication from the Commerce Department that look, these approvals are not going to go to any sort of equipment or, or other supplies that may be used to upgrade or expand capacity at those facilities. So they are interested in keeping things where they are rather than allowing expansion or improvement in technology of those plants.
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The US vs China air race continues. Michael shepherd, we appreciate it. Look, let's get the wider context here of a tech sector that is facing another day of losses. The magnificent seven names in particular. Every single one is in the red. Let's get over to Bloomberg's equity reporter Ryan Vasilika for more in Chicago. The pressure point here is one of valuation. Is it, is it more the bond market that dictates or just a desire to be risk off at this moment?
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Hey, good morning. Thanks for having me. I'd say there's probably some combination of all of those right now. I would just add that Most of these Mag 7 names have been very strong performers this year, especially over the past few months since the April low. It is a natural place for investors to be wanting to take profits, especially if there's any sort of broader sense of uncertainty or any kind of risk off sentiment. This is sort of the place you might go first in order to take profits just because of how well they've done. Now, you mentioned valuations. Because of how much they've risen over the past couple of months. We have gotten to a point where a lot of people are starting to feel maybe they're a little bit frothy, maybe there's some room for consolidation on the downside. There's a lot of sort of sentiment.
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About that right now. Ryan, let's focus on. Nvidia is down for a four straight day. Right. Longest streak of decline since. Since March, which on the face of it isn't really that big a deal. But there's a lot of focus on the terminal this morning about waiting of the s and P500 and how much of a contribution in video alone made to the gains we've seen in equity markets this year.
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Mm.
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So last week Nvidia came out with its report and it was broadly positive. But you did have some questions about China revenue. You have some questions about the sustainability of growth right now. And I'll say that the report was strong enough that we did see people increase their estimates, which had the impact of reducing the forward multiple. But I think, you know, like you said, this is a stock that's done very well this year. It is absolutely enormous in terms of market cap and its weight within the major indexes. So it does seem like a natural place for investors to be taking some profits, especially since we're now past the earnings catalyst and just Given the overall weight that it has in major indexes, it is kind of natural that we are sort of feeling the, the tremors of that just across the overall equity market.
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Bloomberg's Ryan plus Delica, thank you very much. Let's stay with Nvidia. Anthony Saglimban and Parise, financial chief market strategist joins us now. And I use the phrase concentration risk, Anthony, but there's two types of concentration risk. There's Nvidia's waiting in key benchmark indexes. Right. And then there's the concentration risk of where in video derives sales, the hyperscalers, which came up in the print last week. Of those two, which is the market most nervous about right now?
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I know, I would say, you know, I think it's the latter. I think revenue risk, when you heard in video report and you kind of think you guys highlighted it very well, the overall numbers were very good. There's some obviously uncertainty about the revenue that's being generated in China, which kind of brought some of the kind of the data revenue down. But at the end of the day, the Overall picture for AI and Nvidia's place in AI is very strong.
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Wrong.
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But it really is about execution. And when you kind of dig into the numbers and you see the hyperscalers having such a dominant role in driving their revenue, you know, mag seven companies accounting for 40% of their revenue or so you have to take a step back because if over time investors in those companies want a little bit more payback, they want to see return on investment, they're concerned about the capex that's being spent by these companies. Well, that's Nvidia's revenue. And so there is a little bit of unease around that. But I would point out the NASDAQ just finished August up for the fifth straight month. And as you guys highlighted, there's been a lot of strength in the magnificent seven names. And so September is Wall Street's hate us month or they hate the month of September. And that's what we're kind of seeing today. Our view is that technicals are not stretched. There is a little bit of risk that markets could pullback. But I do believe fundamentals for Nvidia and technology as a whole remain very solid.
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I mean, yes, Anthony, we're seeing Nvidia down on two weeks but over year to date up 25%. But the idea that you've got concentration in where the revenue comes from for Nvidia and then you've got concentration of Nvidia and those MAG7 names in ultimate rewards that every investor has felt right now, how many people are trying to trim that overall concentration in their business?
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You know, I think a lot of traders and institutional investors probably got ahead of the seasonal factors. They probably looked at some of the earnings or suspected that there could be a little bit of volatility around Nvidia's earnings. And so I don't think there's a massive repositioning happening around Nvidia, but as you mentioned, it's 8% of the S&P 500. We've seen the NASDAQ and the Magnificent 7 have very strong performance since the April lows. We're in a weaker seasonal kind of factor for the markets. And so I think it's just natural that you're seeing a little rotation out of Big Tech. I don't think that's bad for the market overall. What we saw in August is areas like financials and energy and materials actually did pretty well. And when you look at the earnings expectations over the third quarter, actual expectations for Nvidia and Big Tech and Magnificent Seven went up last month and actually have gone up over the last two months. So when we look at fundamentals, we think they're still strong in technology, but as I said earlier, it's about execution. And at these stretched valuations, investors should expect to expect a little bit more volatility around these really concentrated names that make up a lot of the major indexes today.
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Calm context, Anthony Segment many. It's great to have you on from Ameriprise. Thank you. Kicking off the September trade. Meanwhile, coming up, Klarna is preparing to go public. After delays earlier this year, we look at why the fintech company seeks a valuation as high as $14 billion. This is Bloomberg Tech. Klarna and its backers are looking to raise more than billion dollars in a highly anticipated IPO as soon as next week. No. Matthew Griffin is with us joining us for more. And a week of marketing kicks off formally ahead of what could be September the ninth, pricing trading, September the tenth. What are the key facts that we know about this business?
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It's a really interesting road that Klarna has taken to get here. They started as a sort of comparable to PayPal payments company. They rose to prominence during the pandemic in Buy now, pay later financing for consumer purchases. And now just in the last few months, they're really making a new push to become a digital bank, to offer debit cards, to offer bank accounts to people. So it'll be really interesting to see which peers they end up trading like who investors have in mind when they're thinking about this company and how each of these businesses fit together, how that banking push goes. As we get a little bit further out past the IPO.
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I remember covering with Caro 2021, that valuation in the private markets, 46 billion or something like that. So at the top end it's a $14 billion valuation. But there's a bigger story about IPO environment this week alone. What are you seeing?
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The we've had a really hot summer at this point in IPOs. I mean just today you've got filings from figure they're a blockchain based lending company. Also in financial technology you've got Gemini, which is a crypto exchange. And then you've also got Legends that's a an engineering and H Vac Co. Backed by Blackstone, which is a possible sign that the pipeline is broadening out a little bit. The reason that's important is, you know, a lot of IPOs were paused during the market volatility that we saw this spring because of tariffs. Things have bounced back. They're looking a little bit more like what investors hoped they'd see. But some of the first companies we saw go were for example, Etoro Fintech, you know, companies that aren't directly affected by tariffs. So now we're seeing more companies. We're seeing companies that offer physical goods and services prices. And so that's potentially a thing that investors are going to take as a sign of hope for the pipeline this year and for a broader revival.
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C
Right. Bloomberg's Matthew Griffin, great reporting. Thank you very much. Meanwhile, fintech firm Revolut has kicked off a process for some employees to sell their shares in the company at a $75 billion valuation. That's according to a memo seen by Bloomberg. The secondary sale would value each share at $1,381 dollars. And sources say staff of the firm would be able to sell as much as 20% of their personal stakes.
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Carry significant Meanwhile, coming up, the CEO of crypto.com is joining us. It's going to be talking about the company's latest partnership with Trump Media and a new focus on the growing sports predictions market. But before that and we get back to this market that is in sell off mode, NASDAQ 100 off by 1.4% in fact the worst two day sell off we've seen since April. Nvidia also for four straight days we haven't seen that since March of this year. Another 3% is gone. This is Bloomberg Tech. Hello, I'm Caroline Hoepke.
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And I'm Stephen Carroll. Every weekday morning we bring you the Bloomberg Daybreak Europe podcast.
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All the top global news stories, how they affect the economy and your finances. We have to understand the changing world when it comes to trade.
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Wage growth is still really, really high.
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The disinflation process is well on track these days.
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US exceptionalism is being questioned heavily.
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Subscribe today to get us in your feed by 7am it's time now for talking tech and first up, Amazon. Well, it's launched its cloud services in New Zealand, says it will Invest in invest $4.4 billion in data centers in the country. Now the move comes as the country is looking to attract more foreign investment. The construction, operation and maintenance of the data centers expected to add about a thousand full time jobs. Plus Lazad has appointed Dmitry Chevalenko the chief business officer Perplexity to its board, effective today. Now prior to joining Perplexity, Shevlinko previously held senior roles at Uber, at LinkedIn and at Matter. But Lazard CEO Peter Orszag says that Dimitri Industry's AI expertise will support its long term strategy and cryptocurrency exchange. Gemini Space Station, well, it seeks to raise as much as $316.7 million in its IPO. The firm of course led by the Winklevoss twins, plans to market 16.7 million shares, 17 to $19 each, giving the company a valuation of some $2.2 billion at the top end of the range.
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And let's stick with the digital currency space. And bringing Chris maslic, he's the CEO of crypto.com, which last week announced the partnership with Trump Media and a blank check vehicle to launch a new crypto treasury business. Its focus buying up Crypto.com's own token known as Chronos or Crow. I think Chris, it's one of those stories where we start with the basics. Where did the idea come from to do this of a Chronos treasury company? Where did it Originate.
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I think it's a little bit of a trend by now and. And pioneered by Mike seller of MicroStrategy. And I think every single blockchain from the top, say 20, will have a leading treasury company that will be focusing on driving demand for it and acquiring as much as physically possible. And we thought that partnering with Trump Media to do so is just the perfect match.
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C
So there are a number of initiatives between Crypto.com and Trump Media or the broader Trump family. Where did that relationship start? Who did you first meet and how long have you held those relationships?
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F
So I think it dates back a couple of years. And, you know, we always look forward to working with people who are pro crypto who want to help drive this industry forward. And I think it has to be said that both the current administration and specifically Trauma Technology Group has already done it out in this space. We've helped them execute on their Bitcoin treasury strategy with a multibillion dollar Bitcoin purchase. We help them custody the coins, so we provide infrastructure. And this new play on CRO is just an extension of the relationship.
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A
Extension of a relationship that broadens out to ETFs, that broadens out to payments and subscription creation, but it also broadens out the conversation that people are having about more broadly, benefits to the Trump's fat, broader family when it comes to crypto. Chris, when you're having those conversations with friends, with family, how do you talk about whether or not there might be any conflicts of interest, which I will reiterate rate the family and indeed, spokesman for the administration would say there are none.
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F
And, you know, you have to agree with those statements because everything is held in bright trust. And this is a publicist company that operates independently. And, you know, we are still a privately held company, but we love partnering with people who want to really take this industry forward. So I think people need to understand that the administration has set a certain agenda which places cryptocurrency industry at the very center of it with setting out a very ambitious role for America in this space. And anything we can do to help will do, so we'll support it.
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A
What's interesting is you say you're still privately held. What are the plans of crypto.com more broadly? We're just hearing of IPOs of Gemini and the like. Would you ever think of an ipo? Would you ever think about selling parts of the business?
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F
Right. You know, I have to admit, it's quite tempting to consider these options given how richly the market values crypto companies these days. We Certainly have the numbers to, to do so. We've done about 1.5 billion in revenue last year, about a billion in gross profit, reinvested about 700 million of it. So let's say 300 million in that profitability this, this year I think is going to be better, especially if we see the Fed rate cut and a strong Q4 falling. So we have the numbers and we've been approached by all the top names in terms of the investment banks. We want to be a very well run company so we are working on preparing everything but no decisions have been made at this point. We think that we actually enjoy operating as a private company. It allows us to move really fast. We've got a solid, solid balance sheet so we don't have to make any decisions in the short term.
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C
Some breaking news this morning that you're looking at starting sports prediction markets, particularly for the NFL that's so interesting. There was market reaction from some of the established players in that, in that space. Right. Explain how it's going to get. It's going to work, but why?
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F
Look, we think that prediction markets are going to be huge and sports is a part of it, but it's not the whole thing. And if there is any company out there, a large business that wants to build out a prediction market operation, we are the perfect infrastructure partner. We are regulated by the CFTC. We've got bottle test trading technology, very robust APIs, all the best market makers. We want to be the liquidity center for prediction markets onshore in the US So we'll play very aggressively in that space.
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A
And you're someone who's comfortable perhaps in markets that regulation is always trying to catch up with. Chris, it's interesting that the CFTC federal courts are still debating whether ultimately sports prediction markets, counters gambling. How do you think about the regulatory process having given what you've lived through when it comes to crypto?
- [22:48]
F
I think it's new space and it's going to evolve and the regulatory setup is going to have to evolve with it. We've gone through this journey of cryptocurrency so we are used to being the role of being in the role of a trusted counsel to regulators and helping them understand how they can, can do their job effectively while allowing market participants to make use of these wonderful instruments.
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C
Just very quick, Chris, do you expect that this could be some sort of meaningful contribution to revenues this year? You kindly gave us your financials for last year. Just model it out for us.
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F
I think it's still, it's not going to be a massive contributor this year. But we're also very aggressive in pricing for our partners. Like it's all about building liquidity right now. But if you look at what's it going to be in like five years time, I think it's going to be a massive business line for us.
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Crypto.com CEO Chris Masalek, it's great speaking with you. Come again soon. Meanwhile, coming up, Tesla, well it underwhelms in its India debut. So much more news on that particular company. But we are more broadly looking at Tesla shares up by one and a half percent. In fact at every single Magnificent seven name is in the red today we are looking at a market that is under pressure as we head into a pretty tumultuous month of September. Checking out max seven off by two more than 2%.
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C
And yeah, the Tesla one. So interesting. Like there's three stories out there, Bloomberg breaking the numbers on what's a pretty soft launch for them in India. But again there's this like macro level. Macro level. Yeah, it's a macro level thing. Anxiety about how much concentration risk there is right now, particularly within video. We've had some great conversations about that. Our earlier guest saying that September the most hated month.
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Carrie.
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Notable. Whether we'll see or not, some of the pressure continue on Nvidia. It's so good to have your voice back on this show as we enter the month of September. Four straight days of colossus for the company. This is Bloomberg Tech.
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C
Welcome back to Bloomberg Tech. And we'll get right to markets and right to Nvidia. It's kind of the biggest drag right now down for a fourth straight session, which is the biggest run of decline since March. Which actually, let's be honest, it's not much to write home about other than we just had a long weekend following Nvidia's earnings print, which was last Wednesday. There's this macro level anxiety of concentration risk because of Nvidia's weighting and other Mag 7 weightings at the index level. There's still some kind of unpicking thinking of what happened at earnings. And thankfully for us, Bloomberg's Ian King, who's led semiconductor coverage at this company since the 90s, joins us on set. And that's the thing. I don't think anything's really changed since Wednesday or Thursday of last week. But the market is moving in that general downward direction. Yeah, I mean their earnings was kind of a non event in many respects.
- [25:49]
D
There was a lot of left in.
- [25:51]
C
The kind of TBD category. We still really don't know what's going to happen, happen with China, when that revenue is going to come back, how much of it is going to come back. But we believe there probably will be some China revenue. So that was a kind of a mixed message. We know that Nvidia is still concentrated on a few extremely big customers, but again, nothing surprising there. And fundamental demand, as they said, was, was okay.
- [26:13]
A
And though the broader context that leans into the China story is again another headline that hits TSMC ability to get chip equipment, for example, in the country. So the US China tension, not to mention of course China really leaning into its own domestic creative creativity, whether it's innovation on chip design or indeed manufacturing. Is that speaking to some of this weakness?
- [26:36]
C
It could possibly, I mean what it's.
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Reminding us of, as if we could.
- [26:40]
C
Forget, is that this is a very volatile situation and that the trend is towards decoupling, that China goes its own, own way and tries to wean itself of American technology. That's something that's been happening and this kind of event is a reminder of that. And obviously long term that is not good for Nvidia or any other US technology stock. Thank you very much. Let's turn to Tesla. Loads of news out on Tesla China data. Month on month change, year on year drop. Customers switching to local rivals, rivals Tesla struggling elsewhere in Asia. It's Indian order numbers disappointing investors. A story that Bloomberg broke. And then Elon Musk is downplaying the car business. He says Tesla will derive 80% of its value from the optimist robot that's still in development. A trio of stories. Bloomberg's Craig Trudeau joins us from London. Actually, I want to start with the India piece of it, if we can. That's a story that Bloomberg broke and we have specific numbers about initial orders that India has for Tesla. Just explain that to us. Great.
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J
Yeah, just a little over 600 orders at this point. And you know, just to put that number into perspective, Tesla delivered roughly that number of vehicles around every four hours in the first half. So really, really tiny. And this is not necessarily a shock, right? India is a very price, price conscious, price sensitive market. There's not a lot of demand for, for more expensive vehicles. And part of that of course has to do with, you know, tax treatment and tariffs. Tesla is getting some relief from that perspective, but not a whole lot. And you know, I do think that even with the sort of relief being, you know, only so helpful, I think there was still some, some hope or some, you know, prayers that maybe you know, India would be a source of growth for this company, company, and it's looking like, you know, a pretty slow start for them there.
- [28:37]
A
Meanwhile, China's not a source of growth. We've seen yet another dismal monthly numbers in terms of 4% lower in terms of units being shipped, not to mention Europe's number last week, which was very ugly. Craig, all of this just speaks to an ongoing weakness in car sales for Tesla.
- [28:54]
C
Yeah.
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J
And I do think, you know, the U.S. of course, will be very interesting to see over the next few weeks. We'll get quarterly deliveries at the beginning of next month. I think everyone is, of course, counting on there being a big pull ahead of people in America wanting to take advantage of the tax credits before they go away. And Tesla really kind of utilizing that for all it's worth. But the big question for me is, what's on the other side of that? And also, you know, even. And even if we see, you know, a strong US number, will it be offset by the fact that, you know, the China slowdown is substantial and the Europe sales, I think it's safe to refer to them as an out and out collapse at this point.
- [29:37]
C
Craig, Tesla's published master plan part four in the last 24 hours. But the bit we're paying attention to was some commentary from Elon Musk on X about the future of the business. And it's not coming cars or robotaxis. It's humanoid robots. Yeah.
- [29:52]
J
And I do wonder how much of this is, you know, an effort on Musk's part to kind of paper over and distract from. From how much of a challenge they're having on the car side. And the question, of course, with, with this potential for Optimus is when is this thing actually going to be ready for, you know, actual revenue generation? You know, when, when anyone's been able to pin Ellen down on a sort of rough sense of a date. He talked back in January about maybe the second half of next year. This thing is effective for really cool videos, for little demonstrations. But in Elon terms, you know, this thing is not necessarily doing something useful yet. And until and unless we see that, it's really hard to kind of take him at his word that this valuation of the company is going to be tied to something that that is still just an internal developmental project at this point.
- [30:44]
A
We're watching those little cool videos as you're speaking. Craig Trudeau, thanks for breaking down all of those stories for us. Let's keep the conversation going because Pierre Ferrague is with us, New Street Research head of global tech infrastructure who has I think it's 465 price target on Tesla. You clearly see 40% upside from here. But when you're hearing the master plan part four, are you seeing the Optimus could really be 80% of revenue?
- [31:10]
I
Well, Optimus is about you know, creating like humanoid robots that could take billions of jobs on the planet. So as long as you remain vague on timeline and what the scenario looks like, yes, it's very easy to imagine that Tesla would be first like expanded in terms of valuation with like a successful robotaxi operation. And then of course like a fleet of like hundreds of millions of human in robots would dwarf actually the economic value of even a robotaxi business. So you have to remember that you know this, this plan Tesla publishes and even likes to comment on is really like a vision, like a French vision is always been managing, managing his businesses, bringing up like his very long term visions and he has his way of presented, presented his visions very often with like a slightly distorted time, time scale, you know, when he talks about like Mars and the conquest of Mars on the SpaceX and things like that. So you have to put the comments in the right context. So today we know that the robotics business, in the most bullish case, which should be Tesla, can scale out with robotaxis, doesn't really have significant competition given like the quality of their cause base. That business would be worth multiple trillions and would be already like a multiple of the existing auto business. And yes, on top of that, a human aid robot book is where Tesla dominates the space again and human aid robots can take over hundreds of millions of jobs. You can easily get like, you know, to like a large number of trillions, like close to $10 trillion of valuation. Does that mean this is what I have in my model and what you should bang on bet on today? Maybe not.
- [33:07]
C
I spent a lot of time reading the document. It's like an economic theory, right? They're basically arguing that because Tesla can scale, if they do build all of these things, things, there will be this sort of great economic impact around the world to people of all class. Economic classes. Is that something that is an analyst covering a specific name, a specific stock that you kind of model for? You go, okay, in the future Tesla is going to change the world economy as we know it.
- [33:34]
I
Yeah, it's a very good question. So let's look at, you know, like what is tangible at Tesla today? That's the auto business. And let's look at what good and do covering Tesla. You Understand, Tesla is technological, you know, leadership, you know, how early is it coming to the market with what kind of performance, what kind of features. And then you measure also the performance of Tesla's cost base, like their cost efficiency. And so that's what we've done over the last five years looking at Tesla and what you've seen is that Tesla came into the market five years ago in large scale with really like a cause base that was not that nobody could approach and also with like a performance, like a quality of innovation that nobody could approach. Today, as you see in China, local Chinese competitors are actually capable of being very competitive with Tesla in terms of innovation and in terms of cost as well. We've done very detailed analysis of the cost of manufacturing a car, BYD and others versus Tesla. And what you see is that they are about on par. So that type of analytical where you can do it on a business that is actually ramping today, if you look at it like in the longer term it's more difficult to do. But what you can get from Tesla is this very interesting perspective that by having a very, very proactive and very integrated model and vision, they can actually hit technological and innovation leadership with by far the most advanced coast base, which is exactly where they are today. On the robotaxi front. They have the cheapest platform and the platform that today is, you know, the Jurist is slightly out, but probably like the highest performing platform as well. And then of course Elon's bet is to put Tesla in the same position with a human robot in two, three years from now.
- [35:28]
A
You mentioned China several times. I just want to brought out out the conversation briefly. When you're looking at TSMC being limited for what equipment it can get in, you cover kla. I see you cover Tokyo Electron, you cover LAM Research. How much of these companies could be impacted by U.S. china?
- [35:45]
I
Well, they're all going to, you know, be sitting on their hands waiting for like directions of how the negotiation and the relationship between the US and China is going to be, is going to be handled. If you take specifically semicap equipment players, they are generating a lot of their revenue. Still above 20% of their revenues is coming from China today. And to us it's an overhang, it's a concern. It's probably coming down, normalizing over time. So we see that as a potential, you know, headwind on, on their financial performance. But you have to take things back to where they are. It's only 20% of the of their business. Yeah, that's kind of like a peakish at a peak. So it's not like a game changer for them, of course.
- [36:32]
A
Pierre Ferragu, keeping us honest on what's game changing in China. New street research. We so appreciate it. Meanwhile, coming up, Andreessen Horowitz partner Olivia Moore joins us to discuss the top 100 Jenny consumer apps. Let's see how many you're using. This is Bloomberg Tech.
- [36:49]
B
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Want it with Bloomberg News Now. I'm Amy Morris.
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B
And I'm Karen Moscow to tell you about our new on Demand news report delivered right to your podcast feed. Bloomberg News now is a short 5 minute audio report on the day's top stories. Episodes are published throughout the day with the latest information and data to keep you informed.
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Yes, there are other products like this from a variety of news organizations, but they usually rerun their radio newscasts throughout the day. That's not what we do. We create customized episodes that can only be heard on Bloomberg News now.
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- [37:35]
A
Get the reporting and the context from Bloomberg's 3,000 journalists and analysts. We're all over the world. Listen to the latest from Bloomberg News now on Apple, Spotify or anywhere you listen. Andreessen Horowitz has again released its top 100 generative AI consumer apps, 50 AI first web products and 50 top AI first mobile apps. And for that to discuss, we have Olivia Moore joining a 16Z partner on the consumer team focused on. We are so thankful because like many in the world, we are awash with the latest, latest, greatest gen app that we should download and when we should use it. What's interesting with your list is that we're starting to see basically stability. We're not seeing a whole host of new names each iteration now.
- [38:23]
B
Exactly. Yeah. On this version of the list, we only had 11 new names of the 50 on web, which was a real marked divergence from the last list when it was 17 new names on web. And perhaps most striking to me, we've done this list five times now. We do it every six months. And there were 14 names that have made every single list, which for the fact that we're only two years into AI means that we're starting to see some really exciting stability.
- [38:47]
C
Olivia, Mr. Elon Musk has put in the spotlight recently. App Store methodology says, to the avoidance of any doubt, would you just go through the methodology of how Andreessen Horowitz has put this list together for the fifth time I believe.
- [38:59]
B
Yeah, it's all objective data. So for our web list we use a provider called Similar Web Web. We rank every single website globally by the number of monthly visits and then we take the first 50 that are generative AI native and then on the mobile app side we use another provider called Sensor Tower. We rank them by monthly active users and we take the first 50 again that are AI native.
- [39:19]
C
So there are some takeaways. Right. Chachi Beat still dominates as you can see on the left hand side of the screen. Google is making progress. The way I explained this to Caroline this morning and how I approach it is is I'm starting to see these tools like streaming subscriptions. I use all of them, some of them I pay for. Bloomberg gives me a corporate access to chat GPT. Some of them are free but at some point I've got to decide which I don't want anymore. Does the data show any of that like short term use moving to others?
- [39:48]
B
Yeah, it's really interesting. There's a lot of cross app usage, quite a few general LLM products made the list and you might expect that can consumers would pick one of these like Chat CBT or Perplexity or Cloud or Deep Seek instead. What we're seeing in the early days is consumers are using all of them but maybe for different reasons every time. But we're also seeing the emergence of things like consumer subscriptions that cost $200 a month to use the best version of ChatGPT and Perplexity. And so if we're moving towards that version of the world we might expect to see them have to make a choice. So you're not paying thousands and thousands of dollars dollars per month across your AI subscriptions.
- [40:23]
A
So blend this with a16z's own perspective here on whether there will be a an LLM to rule them all, whether we'll all end up defaulting to ultimately ChatGPT or whether it's Gemini or Grok or whether actually we will be specific and we will see that there are lanes for different apps for different use cases and they will have different benefits.
- [40:44]
B
Yeah, I think the UT the interesting thing about this list is ChatGPT is definitely in the lead. So the number two Gemini has about 12% of the traffic on web. So it's a very big drop off between number one and number two. But there's also an incredibly long tail here. There's apps on this list that have never raised funding. There's apps on this list that have millions of users but maybe do something as specific as removing a background from a photo or generating a PowerPoint presentation. So I think our view as a firm is that we have have the best models in the world from OpenAI, Google and many other companies that they're making available through API. Some of them are even being open sourced. And that allows companies and developers that are more opinionated about products to build things that will serve customers for more specific use cases. And in many cases those customers are probably more likely to pay versus maybe using the free version of something like a chat cbt.
- [41:36]
A
I think what's interesting is for the last couple of weeks we've been obsessed about how enterprises adopting or not adopting to efficiency. The MIT report the fact that 95% of pilots are ultimately not bringing ROI. When you're thinking about consumer perspective here, that some of them names are sort of enterprise in nature. Are people getting return on their investment to the amount that they need to?
- [41:57]
B
Yeah, we're seeing a big kind of what I call the great expansion of consumer software, which is really, really new in the air, which is that previously you would see consumer companies take years if not decades to actually transition their software to enterprise. Think about Canva. It took them eight plus years to even have a teams plan. Now we have companies like 11 labs that are going from zero to hundreds of millions of revenue in two years or less. And many of these companies are actually making much if not most of their revenue from enterprises, which is really exciting. We do take a look at the retention data and our data shows that for generative AI products there's a lot of tourism. So if you're a free user you're. You're probably less likely to retain than you would be on a comm or a duolingo or pre AI subscription. But if you're a paid user, you're just as likely as to retain. So that suggests that the ROI is there at least for those consumer and prosumer users.
- [42:49]
C
Olivia, we've told you what we're up to. Which apps are you using and how are you using them?
- [42:54]
B
I have a lot of apps I use. I published my whole stack recently. I am a power user of ChatGPT. I'm also a power user of Google on their Ultra subscription. I'm a big fan of VO3 and the new Nano Banana Photoshop esque video editing image editing model that they launched. I also use a lot of products like Kriya for creative tools Gamma I use to create almost all of my presentations. There's everything as specific as a product now called Happenstance that lets you of sort search through your network much more easily than LinkedIn. I would say my my top advice for anyone interested in AI is just to try the products because it's absolutely the easiest way to learn when you're thinking about investing.
- [43:31]
A
I look at, you know, some of the names on here Midjourney is a fascinating case study which had never taken money and been able to scale and hold on and retain use users. Where do you think the best dollar is allocated from an AS16Z in the.
- [43:46]
B
Yeah, it's a good question. We invest both in the model companies themselves, many of which have grown extremely quickly, and then at the application layer companies. I think we're very focused to your earlier point about companies that are vertically oriented and are building for specific users. We talk about founders that have kind of an earned secret or a special insight and are almost maniacal about building for a specific user. And so often these are not the extreme, extremely general, broad based products that you can do anything on, but are products that are really, really specific for one or two things that users might want to do and almost become their system of record or a new core workspace or canvas for them to get things done.
- [44:23]
C
Olivia Moore, Partner, Andreessen Horror it's great to have you on Bloomberg Tech. Thank you very much. So coming up, these beautiful images are from the Hubble telescope, but plans for telescopes that could give us an even deeper view of space release could be delayed following U.S. budget cuts. We'll talk about that next. Stay with us. This is Bloomberg Tech.
- [44:54]
A
Cuts by the Trump administration are threatening to delay construction of a new powerful telescope, one that scientists say can fastly expand our understanding of the universe. Universe US Astronomers warn the setback may give China an edge in space research. Let's bring in Bloomberg's Bruce Einhorn, who's been covering this story. It's a beautifully written sort of deep dive into what these funding cuts could mean. But why US vs China? Why is this a worry from a national security perspective?
- [45:19]
G
BRUCE well, the U.S. has long been a leader in astronomy, dating back to the end of World War II. And that's part of a broader.
- [45:31]
D
Pushed.
- [45:31]
G
By the United States to invest in science. And there are lots of spillover effects from having those sorts of investments. China is making big investments in science. Now there is concern among many scientists that Trump administration's plans to reduce spending, say by the National Science foundation, will have an effect not just on the projects that themselves, but also on the scientific ecosystem of postdocs and graduate students and all the people who are there to make sense of all the data that gets generated.
- [46:06]
C
Bruce, just really quick, is there any evidence that the US Government kind of heeds the warning from the scientific community here in America?
- [46:14]
G
Well, we're still waiting to find out just what the budget allocation will be. Of course, the budget process is still very much underway. The administration had proposed a pretty big cut, more than 50% to the national Science foundation as part of its budget proposal. There's there has been some pushback from Capitol Hill about that, and.
- [46:37]
C
Right.
- [46:38]
G
We're still waiting to see just how much money will get allocated.
- [46:42]
C
Bloomberg's Bruce Einhorn, thank you very much. That does it for this edition of Bloomberg Tech. Caro markets in focus because of the MAG7 declines. But what an episode it has been. To start a short week, only 12.
- [46:54]
A
Stocks, 11 now in the green on the NASDAQ 100. Don't forget to check out all of our coverage on our podcast. You find on the terminal as well as online on Apple, Spotify and Iheart. Great to have you back, Ed. This is Bloomberg Tech.