Chips Tariff Probe, Nvidia's Fast Pass | Bloomberg Technology
FROM THE >>, AND POWER COLLIDE IN SILICON VALLEY AND BEYOND, THIS IS BLOOMBERG TECHNOLOGY WITH CAROLINE HYDE AND ED LUDLOW. >> LIVE FROM SAN FRANCISCO, THIS IS BLOOMBERG TECHNOLOGY. PRESIDENT TRUMP -- AND PHARMACEUTICAL IMPORTS, PLUS TRUMP PLEDGES EXPEDITED IMPORTS FOR NVIDIA AND OTHER -- EXPEDITED PERMITS FOR NVIDIA AND OTHER COUNTRIES EXPENDED IN -- OTHER COMPASS EXPERT -- IN THE U.S.. LET'S GET STRAIGHT TO MARKETS. OUR FOCUS IS THE CHIP INDUSTRY
WITH THE ADMINISTRATION PRESSING FORWARD WITH A PLAN TO IMPOSE SPECIFIC TARIFFS ON SEMI'S. IN THE LAST 30 MINUTES OR SO, EQUITY MARKETS FELL BACK. THERE IS SOME OUTPERFORMANCE. THE LOGIC I'M AM HEARING IS CERTAINTY. WE NOW KNOW MORE ABOUT WHAT IS HAPPENING. NVIDIA CONTINUES TO BE IN THE HEADLINES.
THEY PLEDGED TO PRODUCE 500 BILLION DOLLARS OF INFRASTRUCTURE IN THE UNITED STATES IN THE NEXT FOUR YEARS BUT THERE ARE QUESTIONS ABOUT CAPITAL EXPENDITURES. AMAZON IS ONE OF THE MOVERS TO THE DOWNSIDE, PARTICULARLY ON THE NASDAQ 100. ELLIOTT HAS TAKEN A STAKE. LATER, WE WILL GET FULL DETAILS
OF THAT. THE TRUMP ADMINISTRATION HAS INITIATED TRADE PROBES INTO SEMI CONDUCTOR IMPORTS, A PRECURSOR TO BROADER LEVIES ON TRIPS. GOOD MORNING. >> THE WHITE HOUSE ANNOUNCED ITS INVESTIGATION, WIDELY SEEN AS A PRECURSOR FOR THE ADMINISTRATION TO IMPLEMENT TARIFFS ON THE BASIS OF NATIONAL SECURITY CONCERNS.
THE INVESTIGATION STARTED ON APRIL 1, MEANING THE COMMERCE SECRETARY NOW HAS 270 DAYS FROM THEN TO RELEASE HIS REPORT, WHICH WOULD THEN SPUR TARIFFS INTO PLACE, BUT WE KNOW THE WHITE HOUSE IS LOOKING AT AN EXPEDITED TIMELINE. WE COULD SEE THESE TARIFFS IN THE NEXT ONE TO TWO MONTHS. THE INVESTIGATION INCLUDES CHIPS BUT ALSO COMMIT USED TO MAKE CHIPS AND CONSUMER ELECTRONICS THAT CONTAIN THEM.
THE COMMERCE DEPARTMENT SAYS THEY ARE LOOKING AT LEGACY CHIPS . THE WHITE HOUSE HAS TAKEN MORE OF A STICK VERSUS CARROT APPROACH. PRESIDENT TRUMP LONG CRITICIZING THE CHIPS AND SCIENCE ACT WITH SUBSIDIES AND FUNDING, SAYING HIS TARIFF PLAN WILL SPUR PRODUCTION IN THE U.S. YESTERDAY SAID IN RECENT NVIDIA MANUFACTURING ANNOUNCEMENT WAS A RESULT OF HIS TARIFFS. AS YOU HAVE REPORTED ON, PRESIDENT TRUMP IMPLIED NVIDIA WAS INVESTING $500 BILLION IN THE U.S. WHEN THE ANNOUNCEMENT WAS THEY ARE PLEDGING TO PRODUCE $500 BILLION OF GOODS IN THE U.S..
ED: THE PRESIDENT ALSO PLEDGED TO MAKE IT EASIER FOR NVIDIA AND OTHER COMPANIES COMMITTED TO THE UNITED STATES. I THINK WE NEED TO RECAP SOME OF THE NUMBERS FROM THE NVIDIA ANNOUNCEMENT YESTERDAY. >> $500 BILLION OF GOODS. THAT IS THE UPPER LIMIT OF WHAT IT IS TARGETING AS IT INVESTS MORE IN BUILDING IN THE U.S.. IT SAYS IT WILL MAKE CHIPS OUT OF PHOENIX AND SERVERS OUT OF TEXAS. THIS IS IN LINE WITH THE
ANNOUNCEMENTS WE HAVE IN FROM COMPANIES LIKE APPLE, THAT AS TARIFFS ARE HITTING COMPANIES FEEL THE URGE TO SHOW THEY HAVE ABILITY TO PRODUCE IN AMERICA AND I IMAGINE IT HELPS WITH THE MINISTRATION AS WELL. WE SAW THAT IN TRUMP'S TWEETS, THAT IF YOU ARE PART OF WHAT HE CALLS THE GOLDEN AGE OF AMERICA AND INVESTING HERE WE ARE GOING TO TRY TO HELP YOU OUT. HE SAID THEY WOULD EXPEDITE PERMITS AT THE LOCAL LEVEL, BUT IF SOMEONE AT THE TOP OF THE FOOD CHAIN IS TELLING YOU THAT LET'S GET THESE ON THE ROAD, A LOT ABOUT DATA CENTERS AND WAITING FOR UTILITIES AND PERMITS, THESE THINGS CAN SLOW DOWN PROJECTS. ED: BRODIE FORD WILL BE BACK LATER IN THE HOUR. WHAT IS THE TARIFF NEWS MEAN FOR TECHNOLOGY INVESTORS AND WHAT IS THE OUTLOOK FOR AI CAPEX? I THINK WE START THERE, WHICH IS THE NEWS UNCERTAINTY.
THE PHILADELPHIA SEMICONDUCTOR INDEX IS SLIGHTLY HIGHER VERSUS OTHER BENCHMARKS. SECTION 232 IS INTERESTING STRATEGY, BUT MAYBE THE MARKET KNOWS MORE NOW. >> AT THE BEGINNING OF THE YEAR, WE SAW A REREADING OF TECH COMPANIES AND SCRUTINY AROUND THE AI CYCLE DUE TO CONCERNS AROUND DEEPSEEK AT THE FACTS THOSE LEADING TECH COMPANIES WERE OVER OWNED, BUT NOW WHAT WE HAVE SEEN IS MARKETS SHIFT TO APPRECIATE HOW THESE COMPANIES ARE THE POSTER CHILDREN OF GLOBALIZATION AND EXPOSED TO TRADE WAR GOING ON RIGHT NOW, AT LEAST DIFFERENT TARIFF HEADLINES.
THESE COMPANIES ARE TRYING TO FIGURE OUT WAYS TO SHOW THEY CAN EXPEDITE PROCESSES, BUT NOT ONLY ARE THE MAG SEVEN GLOBALLY EXPOSED IN SUPPLIERS AND REVENUE, BUT THEY ARE CYCLICALLY EXPOSED. YOU MENTIONED THE CYCLE. A LOT OF THOSE ASSUMPTIONS BECOME UNDER GREATER SCRUTINY IF WE HAVE A SLOWER MOVING ECONOMY. ED: DOES THE OUTLOOK FOR AI CAPEX GET CUT OR GROW BASED ON WHAT IS HAPPENING? STEPHANIE: FIRST WE NEED TO CONSIDER HOW SIGNIFICANT THE RATES OF GROWTH WE SAW WERE OVER THE LAST TWO YEARS. HYPERSCALERS GREW MORE THAN 50% IN CAPEX EXPENDITURES FROM 2023 TO 2024. IS THAT RATE OF GROWTH SUSTAINABLE IN AN ENVIRONMENT
WHERE WE ARE LOOKING AT A COOLER ECONOMY AND UNCERTAINTY? SOME OF THAT COMES DOWN. LONGER-TERM, THERE IS A LOT OF CAPEX THAT NEEDS TO BE SPENT ON AI, BUT IN THIS ENVIRONMENT OF UNCERTAINTY, MANAGEMENT TEAMS WILL BE FOCUSED ON DEFENDING MARGINS AND WAYS THEY CAN HELP THE BOTTOM LINE. ED: THERE IS A CALCULUS THAT CEOS OF THESE COMPANIES ARE DOING, WHICH IS IF YOU ONSHORE MANUFACTURING OR SIMPLY TO AMERICA IT IS PROBABLY MORE EXPENSIVE.
THE COST OF DOING BUSINESS IS GREATER BY 25%. BUT YOU FACE A CHOICE BECAUSE IF YOUR COMPONENTS COME FROM A MARKET WHERE THERE IS A LEVY OR TARIFF OF 25%, YOU HAVE A DECISION TO MAKE. WHAT IS MOST COST-EFFECTIVE AND DO YOU PASS IT ONTO THE CUSTOMER? HOW IS THAT IMPACTING YOUR VIEW OF MARKET? STEPHANIE: TARIFFS DO NOTHING TO STIMULATE DEMAND. THEY WILL INCREASE COST. IT IS NOT AS EASY TO PASS COST TO CONSUMERS BECAUSE THAT WILL TIGHTEN OR SHRINK THE AMOUNT OF DEMAND YOU ARE FACING AS WELL. SO I THINK THAT IS THE OVERALL RISK.
SUPPLY CHAINS CAN ADJUST. THEY HAVE BEEN OVER THE LAST MANY YEARS, BUT IT TAKES TIME AND COSTS MONEY. THERE WAS A REASON WHY THEY WERE SO GLOBAL IN NATURE TO BEGIN WITH. THEY WERE OPTIMIZED THAT WAY AND IT IS A REASON WHY THESE TECH COMPANIES HAVE BEEN ABLE TO DEFEND AND GROW PROFIT MARGINS ON A SECULAR BASIS OVER THE LAST THREE YEARS. ED: THERE IS A LOT OF DISCUSSION IN THE MEDIA ABOUT HOW FINANCIALS EDITIONS LIKE THE ONE YOU WORK FOR PUT MORE EMPHASIS ON GEOPOLITICAL ANALYSIS.
PERHAPS HISTORICALLY THE BALANCE HAS BEEN DIFFERENT. WE HAD A HEADLINE FROM THE EUROPEAN UNION ABOUT 40 MINUTES AGO THAT CAUSE MARKETS TO PULL BACK, WHICH IS THE E.U. DOES NOT THINK THERE WILL BE MOVEMENT ON TARIFFS AND TALKS ARE NOT GOING WELL. WHEN HE THINK ABOUT THE TECHNOLOGY SECTOR FROM AN EQUITY MARKETS PERSPECTIVE, HOW DO YOU FACTOR IN THE POLITICS OF THIS? HOW ONE JURISDICTION BEHAVES WITH REGARDS TO ANOTHER? STEPHANIE: THERE IS A LOT OF UNCERTAINTY IN THE MIDST OF THESE NEGOTIATIONS. IN THE MEDIUM TO LONGER TERM, THE CHIP INDUSTRY BUT ALSO A LOT OF OTHER SOPHISTICATED TECH SERVICES ARE GLOBALLY INTEGRATED AND IT IS DIFFICULT TO MEDIALLY DECOUPLE. WE WILL LIKELY SEE GREATER EFFORTS AROUND THAT, AS WE HAVE OVER THE LAST FEW YEARS, SO THAT MEANS A RISK BUT OF ALL THE SECTORS THAT ARE AT RISK OR EXPOSED TO THESE TARIFFS, THE TECH SECTOR WAS THE FIRST THAT WAS REALLY GRANTED THESE BROAD-BASED EXEMPTIONS AT LEAST TEMPORARILY AND I THINK THERE IS UNDERSTANDING THAT THIS IS MISSION-CRITICAL FOR THE U.S.
AND MAINTAINING ITS TECH LEADERSHIP AND MAYBE AT THE END OF ALL OF THIS, THEY ARE TOO BIG TO BE FACED WITH MASSIVE TARIFFS FROM THE MINISTRATION'S -- ADMINISTRATION'S POLICIES. ED: COMING UP, NAVIGATING THE TECH TARIFF UNCERTAINTY. WE WILL GO BACK AND HAVE MORE IN THE OFF AND ON OF TARIFFS. DO WE KNOW MORE? THAT CONVERSATION NEXT. THIS IS BLOOMBERG TECHNOLOGY. ED: TARIFFS COMING FOR THE CHIP SECTOR.
WITH NEW TARIFFS RESHAPING GLOBAL TRADE, TECHNOLOGY FACES RISING COSTS AND FRESH UNCERTAINTY. TO HELP US UNDERSTAND THE BROADER POLICY IMPLICATIONS, JOINING US NOW IS THE MILKEN INSTITUTE SENIOR ADVISOR, A FORMER PRINCIPAL CHIEF TECHNOLOGY OFFICER AND AMBASSADOR UNDER BARACK OBAMA. LET'S START WITH THE CERTAINTY OR UNCERTAINTY PIECE. AS IT STANDS, WITH THE SECTION 232 LAUNCHED, DO WE UNDERSTAND WHAT THE ADMINISTRATION TARIFF POLICY IS? >> THAT IS THE QUESTION OF THE HOUR. IT IS QUITE REMARKABLE THAT THIS SECTOR COME ARGUABLY THE CRITICAL SECTOR FOR OUR ECONOMY AND NATIONAL SECURITY, WE SEEM TO BE MAKING POLICY ON THE FLY, SO WHAT HAPPENED? FRIDAY, CUSTOMS PUT OUT A LIST AND IT BECAME CLEAR THAT ELECTRONICS, NOT JUST SEMI CONDUCTORS, WOULD BE EXEMPT FROM THE RECIPROCAL TARIFFS.
THEN OVER THE WEEKEND THE COMMERCE SECRETARY SAID THAT IS ONLY GOING TO BE A REPRIEVE AND ONLY TEMPORARY. AND STEPHEN MILLER, THE PRESIDENT'S DEPUTY CHIEF OF STAFF, SAID THEY WOULD BE SUBJECT TO A NATIONAL SECURITY REVIEW AND THE PRESIDENT REITERATED THAT, SAYING THE TARIFFS WOULD BE 25% PLUS. SO MAKING POLICY FOR THIS INCREDIBLE SECTOR OVER THE WEEKEND. AND WHAT IS SO INCREDIBLE IS THIS IS THE SECTOR THAT IS, ESPECIALLY IN THE MAG SEVEN, THEY ARE 10% OF GDP. THEY ARE A HUGE PROPORTION OF THE S&P AND HERE WE ARE MAKING POLICY LIKE THIS. ED: YOU HAVE HELD OFFICE IN THE WHITE HOUSE IN THE FIELD OF TECHNOLOGY. YOU HAVE BEEN IN ABBASID OR AND
UNDERSTAND GLOBAL TRADE. THE COMMUNICATION FROM THIS ADMINISTRATION, HOW IS IT RECEIVED AND ACTED ON BY OTHER JURISDICTIONS LIKE THE EUROPEAN UNION OR CHINA, FOR EXAMPLE? >> TO MAKE POLICY AND CHANGE IT LIKE THIS IS DIFFICULT FOR OTHER COUNTRIES TO ADJUST UP. WE JUST SAW THIS WITH EUROPE TODAY. I THINK YOU SEE NOT ONLY SOME COMPANIES LIKE APPLE SEEMS TO HAVE BEEN PLANNING FOR A LONG TIME FOR THIS KIND OF -- THIS LEVEL OF DISRUPTION, BUT SOME DISRUPTION. BUT STILL, AS YOU KNOW, THE GLOBAL SUPPLY CHAINS ARE -- INVOLVE SO MUCH INVESTMENT, SO MUCH TIME. THIS KIND OF DISRUPTION IS DIFFICULT FOR THEM.
AS YOU ARE ASKING ABOUT COUNTRIES, GOVERNMENTS ARE NOT THAT FAMILIAR WITH INNERWORKINGS OF THE SECTORS SO THEY ARE LEARNING ON THE FLY AS WELL WHAT IS IMPORTANT AND WHAT IS NOT IMPORTANT AND WHAT IMPLICATIONS OF ALL OF THIS ARE. FOR THEM TO DO THAT KIND OF HOMEWORK AND THEN RESPOND IS DIFFICULT. ED: WHAT IS THE END GOAL OF USING TARIFFS AS A TOOL OF POLICY FOR THIS ADMINISTRATION? KAREN: AT THE RISK OF SANE WASHING WHICH IS A TERM THAT HAS BEEN USED WHEN PEOPLE TRY TO INTERPRET TRUMP ADMINISTRATION POLICIES, IT SEEMS THE TARIFFS ARE FALLING INTO THREE MAIN BUCKETS. ONE IS ABOUT RAISING REVENUE,
THE 10% ACROSS-THE-BOARD TARIFFS . SECOND ONE, WHERE WE SEE THE SEMI CONDUCTORS, IS MACHINERY AND ELECTRONICS AS WELL AS STEEL , ALUMINUM, MAYBE TIMBER, NATIONAL SECURITY. IN A THIRD ONE IS OVERALL COMPETITIVENESS AND JOB CREATION WHERE WE SEE RECIPROCAL TARIFFS THAT LOOK LIKE THEY ARE NEGOTIATING DOWN TARIFFS OVERSEAS. >> THE BIG HEADLINE OF THE LAST 24 HOURS IS THE COMMITMENT FROM NVIDIA TO BUILD $500 MILLION OF AI INFRASTRUCTURE. WE ARE TALKING GOODS, NOT A CAPEX COMMITMENT, IN AMERICA.
THE CRITICISM OF THE PAST ADMINISTRATION, WHICH YOU SERVED IN, WAS THE CHIPS ACT ON PAPER WAS ONE THING BUT UNLOCKING FUNDING FROM IT AND GETTING PEOPLE MOVING ON SHORE DID NOT HAPPEN. IS TRUMP NOW ACHIEVING THAT WITH A DIFFERENT TOOL? >> IT REMAINS TO BE SEEN. THERE WERE ANNOUNCEMENTS MADE UNDER TRUMP OF A HUGE AMOUNT OF INVESTMENT AND THERE WAS INVESTMENT NEED UNDER BIDEN AS WELL. SO FAR, THESE ARE ANNOUNCEMENTS MET THE APPLE ANNOUNCEMENT AND NVIDIA ANNOUNCEMENT. TSMC IN THE PAST HAS MADE
ANNOUNCEMENTS AND INVESTMENTS, BUT THEY HAVE NOT BEEN ABLE TO FIND WORKERS THAT THEY NEED. WE ARE AIMING TO SEE NOW, FOR ALL THESE COMPANIES, THEY MAY MAKE ANNOUNCEMENTS, BUT PRICES ARE GOING TO GO UP. THERE WILL BE A DELAY IN BEING ABLE TO GET EQUIPMENT AND THERE IS A WORKER SHORTAGE. IF WE WANT TO SEE ANY OF THIS, WE ARE GOING TO HAVE TO LOCK DOWN THE CERTAINTY. WE CANNOT BE DRIVING PRICES UP AND THERE NEEDS TO BE SERIOUS WORKFORCE TRAINING.
ED: ARE WE STEPPING BACK FROM THE BRINK HERE? OR IS THIS JUST A PAUSE ALL THE ADMINISTRATION WORKS OUT THE MOST EFFECTIVE METHOD? KAREN: THE SECTION 232 INVESTIGATION, THE NATIONAL SECURITY INVESTIGATION, IS GOING TO HAPPEN FOR THE ELECTRONICS. THEY PUT A DEADLINE ON COMMENTS FREMONT FROM NOW AND THEY WILL MOVE QUICKLY. I THINK THE PRESIDENT HAS REALLY STUCK HIS NECK OUT. HE HAS SAID TARIFFS WILL BE 25%
PLUS, SO I THINK WE CAN EXPECT TO SEE THOSE AND WE THINK ABOUT THAT PLUS PERHAPS FENTANYL TARIFFS OF 20% FROM CHINA. I THINK YOU WILL STILL SEE VERY HIGH TARIFFS AND UNCERTAINTY. SO I HOPE AS THEY ARE MAKING POLICY ON THE FLY THAT THEY REALIZE HOW CRITICAL THE SECTOR IS AND ADDRESS VULNERABILITIES IN THIS POLICY OR THEY CANNOT REACH THE RESULTS THEY WANT TO REACH. ED: GRATEFUL TO HAVE YOU ON THE PROGRAM. THANK YOU. MARK ZUCKERBERG TESTIFIES IN FEDERAL COURT ABOUT FACEBOOK'S ACQUISITION OF INSTAGRAM. WHY THE FTC ARGUES THE PURCHASE
WAS MADE TO ELIMINATE COMPETITION. THIS IS BLOOMBERG TECHNOLOGY. ED: MARK ZUCKERBERG TOOK THE WITNESS STAND YESTERDAY IN A HISTORIC ANTITRUST TRIAL IN WHICH THE FTC ALLEGES META'S PURCHASE DESTROYED COMPETITION. DROWNING US NOW, CURRENTLY WITH AN OUTPERFORM RATING ON META.
WE ARE BASICALLY FLAT IN THE SESSION. WE'LL GET TO THE DETAILS OF THIS TRIAL, WHAT IS THERE OR IS THERE NOT ANTITRUST RISK? >> I THINK THERE IS. IT WOULD BE DIFFICULT TO SAY NO GIVEN THERE IS AN ONGOING CASE, WHICH I THINK WILL STRETCH FOR SEVERAL WEEKS NOW AND THE BIGGER QUESTION ALSO IS IF THERE IS A LIKELIHOOD OF A SETTLEMENT. IF THE PROBABILITY OF SETTLEMENT INCREASES, MAYBE IT IS GONE, BUT OTHERWISE THERE IS REAL RISK. ED: WHEN MARK ZUCKERBERG APPEARS ON DAY ONE OF THE TRIAL, WHAT DOES THAT TELL YOU? SHWETA: THAT IT IS VERY IMPORTANT FOR THE COMPANY AND FOR HIM PERSONALLY AND THE FACT THAT HE HAS SPOKEN WITH PRESIDENT TRUMP WALKABLE WILL TIMES SINCE HIS INAUGURATION TELLS US A LITTLE ABOUT HOW IMPORTANT THIS IS FOR HIM. ED: THE ARGUMENT THE FTC MAKES WAS LARGELY BASED ON EMAIL DOCUMENT EVIDENCE THAT SHOWED ZUCKERBERG HAVING CONCERNS PRIOR TO THE ACQUISITION OF INSTAGRAM THAT THEY WOULD BE A THREAT TO FACEBOOK IN THE DOMAIN OF PHOTO IMAGES. THAT IS AN INTERESTING
ARGUMENT. IS IT A STRONG ONE? >> I DO NOT THINK SO. I THINK THE FTC HAS A WEAK CASE. FIRST, THEY ARE SAYING THAT META IS A MONOPOLY. THIS IS A BACKWARD LOOKING CASE FROM 2020 AND INSTAGRAM WAS NOT THAT BIG A PLATFORM, WITH ONE MILLION USERS AT THE TIME. SUCCESS WAS NOT GUARANTEED. THEY APPROVED THE CASE OVER A DECADE AGO AND THEY ARE REVISITING THE SAME CASE.
THIRD IS THAT THEY ARE ONLY LOOKING AT SNAPCHAT. THE FTC IS. AND THE COMPETITION HAS EVOLVED MEANINGFULLY. ED: SO THE COUNTERARGUMENT THAT
META IS GIVING AS THEY FOCUS ON TIKTOK AND YOUTUBE. FORGET THE CONTEXT OF A TRIAL. IF YOU WERE ANALYZING THE STOCK IN THIS MARKETPLACE, HOW DO YOU ASSESS THE COMPETITION FROM TIKTOK AND YOUTUBE THAT COMES META'S WAY? SHWETA: TIKTOK AND YOUTUBE ARE COMPETITIVE. TIKTOK, YOUTUBE, ANYWHERE A USER SPENDING THEIR TIME.
WHAT I THINK IS MISSED IN THIS CASE IS THE META PLATFORM HAS EVOLVED FROM CONNECTING FRIENDS AND FAMILY TO HOW PEOPLE ACTUALLY SPEND TIME FOR BROADER ENTERTAINMENT. OVER 50% OF TIME SPENT OF USERS TODAY IS VIDEO, WHICH IS COMPETING WITH OTHER PLATFORMS. ED: MANY PEOPLE WERE CONFUSED. META IS AN AR COMPANY, SO WHY IS THAT NOT TAKEN INTO ACCOUNT IN THIS SPACE? SHWETA: THE MONETIZATION OF THE PLATFORM TODAY IS PREDOMINATELY AD BASED MONETIZATION AND THAT IS THEIR BREAD AND BUTTER THAT THEY ARE COMPETING ON. ED:
WITH EARNINGS SEASON AROUND THE CORNER, WHAT YOU EXPECT META TO TELL US? >> THAT THEY ARE REITERATING CAPEX AND THEY WILL PROBABLY GIVE A CONSERVATIVE GUIDE FOR THE SECOND QUARTER. ED: THANKS. COMING UP ON THE PROGRAM, TECH STOCKS AND TRADE UNCERTAINTY. HERE TO BREAK DOWN HIS THOUGHTS IS THE CEO AND PRESIDENT OF GERBER KAWASAKI. WE WILL BE RIGHT BACK. THIS IS BLOOMBERG TECHNOLOGY. ♪ ED: WELCOME BACK TO "BLOOMBERG TECHNOLOGY." I’M ED LUDLOW IN SAN FRANCISCO. THIS IS WHAT FINANCIAL MARKETS
LOOK LIKE RIGHT NOW. EARLIER IN THE SESSION THE STORY WAS OUTPERFORMANCE FROM SEMICONDUCTORS. THE PHILADELPHIA SEMICONDUCTOR INDEX IS STILL THERE, BUT IT’S MUCH MORE MUTED. ONE OF THE BIG FACTORS OF THE
LAST HOUR WAS A HEADLINE FROM THE EUROPEAN UNION EXPLAINING THAT THE E.U. EXPECTS TARIFFS TO REMAIN IN PLACE, BUT THE TALKS BETWEEN THE E.U. AND THE UNITED STATES HAVE MADE VERY LITTLE PROGRESS. THEN WE THINK ABOUT THE INDIVIDUAL MOVERS, STILL IN THE HEADLINES IS NVIDIA, FOR EXAMPLE, BECAUSE OF THAT COMMITMENT TO BUILD MORE A.I. INFRASTRUCTURE 100% IN AMERICA. AMAZON IS A BIG MOVER TO THE DOWNSIDE IN THE BROAD CONTEXT OF THINGS. WE HAVE QUESTIONS ABOUT CAP EX,
AROUND A.I. GOOGLE ALSO LOWER AS WELL. I WANT TO GET TO THE BIG PICTURE HERE ON TECH STOCKS AND WHAT’S DRIVING THIS MORNING’S SESSION. LET’S BRING IN OUR REPORTER OF BLOOMBERG NEWS.
WHAT ARE THE MAIN DRIVERS OF THE MARKET? >> AGAIN, AS ALWAYS, THE FOCUS IS ALMOST ENTIRELY ON TRADE POLICY, ON TARIFFS. YOU MENTIONED THE HEADLINE OUT OF THE EUROPEAN UNION. THERE’S SO MUCH UNCERTAINTY, SO MUCH BACK AND FORTH. PEOPLE ARE REALLY HAVING A HARD
TIME GLEANING OUT WHAT THE ULTIMATE TARIFFS ARE GOING TO BE, WHAT EVERYTHING IS GOING TO LOOK LIKE, HOW COMPANIES ARE GOING TO REACT. THERE’S SO MUCH UNCERTAINTY, AND THAT’S DRIVING VOLATILITY IN BOTH DIRECTIONS, AND WE’RE SEEING THE SAME TODAY. ED: ONE OF THE BIG OUTPERFORMERS IS NETFLIX, UP MORE THAN 5%. THERE WAS A REPORT IN THE JOURNAL ABOUT SOME OF THEIR FINANCIAL TARGETS LONG TERM, SOME OF THEM EYE-WATERING ON MARKET CAP TARGET, ON WHAT THEY WANT TO DO WITH THE TOP LINE. WHAT HE WANTS THE STORY THERE -- WHAT’S THE STORY THERE? >> "WALL STREET JOURNAL" REPORTED THEIR 2030 TARGET IS EXPECTED TO DOUBLE REVENUE, TRIPLE OPERATING INCOME, HAVE A LOT MORE SUBSCRIBERS, AND REACH ONE TRILLION IN MARKET CAP, JOINING THAT VERY ELITE CLUB. THIS IS A STOCK THAT’S BEEN
PERFORMING PRETTY WELL THIS YEAR. THEY HAD VERY STRONG RESULTS IN JANUARY. THEY REPORT AGAIN ON THURSDAY AFTERNOON AHEAD OF THE HOLIDAY. THERE’S A LOT OF OPTIMISM, BECAUSE THIS IS NOT REALLY A STOCK THAT IS AT RISK FROM TARIFFS.
IT’S ALSO A STOCK THAT IS SEEN AS PRETTY RESILIENT IN THE FACE OF AN ECONOMIC CONTRACTION OR RECESSION. IF YOU’RE GOING CUT BACK ON SPENDING, I THINK YOUR NETFLIX IS ONE OF THE LAST THINGS YOU CONSULT, BECAUSE THE ARGUMENT GOES YOU GET A LOT OF BANG FOR YOUR BUCK AS FAR AS THE BREADTH OF THEIR LIBRARY VERSUS THE MONTHLY FEE. ED: RYAN WITH HIS FINGER ON THE PULSE OF TECH STOCKS THIS MORNING, THANK YOU VERY MUCH. TIME TO DIVERSIFY. THAT’S THE WORDS OF RECENT REFLECTIONS FROM GERBER KAWASAKI. ONE OF THE KEY THINGS THIS YEAR HAS BEEN THE VALUE OF DIVERSIFICATION. U.S. STOCKS HAVE RECENTLY PULLED BACK. MANY OF THE DIVERSIFIED
STRATEGIES WE’VE IMPLEMENTED ARE PROVIDING BALANCE. THAT’S ALL IN THE CONTEXT OF TRADE, TARIFFS, AND TECHNOLOGY. FOR MORE LET’S BRING IN ROSS GERBER, KAWASAKI’S C.E.O.
I POINT THAT POINT INTERESTING, BECAUSE YOU ARE SOMEONE I’VE ENJOYED HAVING ON THE PROGRAM WITH A VERY SORT OF HIGH CONVICTION THESIS ON SPECIFIC TECHNOLOGY NAMES. IN THIS ENVIRONMENT, WHAT DOES DIVERSIFYING MEAN FOR YOU? GOOD MORNING, ROSS. >> FOR US, FIRSTLY, I’M TRADITIONAL A U.S.-BASED
INVESTOR, AND WE GET OUR INTERNATIONAL EXPOSURE THROUGH BIG CAP TECH AND OTHER CONSUMER COMPANIES THAT ARE GLOBAL, LIKE APPLE. SO WE’VE ALWAYS DONE SUBSTANTIALLY BETTER FOR OUR CLIENTS, INVESTING IN U.S. COMPANIES THAN FOREIGN COMPANIES. BUT FOR THE FIRST TIME IN AT LEAST FIVE, MAYBE EIGHT, 10 YEARS, I’M INVESTING IN EUROPE AND IN ASIA. AND I THINK THERE’S A LOT OF OPPORTUNITIES GLOBALLY. IF YOU ACTUALLY LOOK AT THE
GLOBAL MARKETS, THEY’RE ALL PRETTY MUCH UP, EXCEPT FOR THE UNITED STATES. SO THIS HAS BEEN A GOOD WAY TO DIVERSIFY ASSETS IF YOU WANT TO OWN STOCKS. BUT IN GENERAL, STOCKS AS AN ASSET I THINK HAVE A MUCH HIGHER RISK LEVEL FOR THE RETURN THAT YOU CAN EARN THAN IT’S HAD IN THE LAST FIVE YEARS. SO INVESTORS NEED TO LOOK AT DIVERSIFYING IN OTHER AREAS, LIKE GOLD AND BITCOIN FROM THE SENSE OF HAVING ALTERNATIVE ASSETS, REAL ESTATE, AND RITES LOOK INTERESTING HERE, AS WELL AS PRIVATE INVESTMENTS. ED: LET’S TALK ABOUT EUROPE AND THE EQUITY MARKET, IF WE CAN. I THINK ASML IS A REALLY INTERESTING EXAMPLE, RIGHT? IT IS THE SORT OF DARLING OF EUROPE, BUT IT IS RIGHT AT THE CENTER OF WHAT IS HAPPENING WITH TARIFFS AND THE ADJUSTMENT OF GLOBAL SUPPLY CHAINS. I ALSO ASKED THE TEAM TO SHOW
S.A.P., BECAUSE THERE ISN’T MUCH BIG TECH OUT THERE IN EUROPE, AND I KIND OF HAVE A LIFE TO SAY THAT, HAVING MOST OF MY LIFE AND CAREER IN EUROPE. >> AND YOU LOOK AT SIEMENS RECENTLY, WHICH IS EXCELLENT. THE WAY WE’RE PLAYING IT RIGHT NOW, BECAUSE I’M NOT REALLY AN EXPERT IN EUROPEAN SECURITIES LIKE U.S. SECURITIES. IT’S REALLY THROUGH THE
INDEXES, WHICH I THINK GIVE YOU EXPOSURE, BECAUSE S.A.P. AND SIEMENS, NOVO, WHICH IS REALLY CHEAP AS WELL, ARE ALL BIG COMPONENTS. THAT’S ONE WAY TO PLAY IT. WE JUST TRIMMED ASML A LITTLE BIT, BECAUSE I KIND OF FEEL LIKE THEY’RE JUST IN THIS CROSSROADS OF THE TRADE WAR BECAUSE THEY MAKE THE MOST IMPORTANT CHIPS. BUT WE ALSO WANT THIS PERSON TO GET IT, THAT PERSON TO GET IT. ASML HAS SOME CHALLENGES THAT
ARE POLITICAL, BUT THEIR PRODUCT IS CRUCIAL TO THE DEVELOPMENT OF ADVANCED CHIPS. ED: BITCOIN, YOU MENTIONED A MOMENT AGO. IS THERE A KIND OF GERBER KAWASAKI THESIS AND STRATEGY AROUND BITCOIN, ROSS? >> I’VE BEEN INVESTING IN BITCOIN FOR OVER A DECADE, SO FOR ME BITCOIN IS A LONG-TERM, HIGHLY VOLATILE ASSET THAT’S RELATED TO RISK. WHEN RISK ON, BITCOIN GOES UP. WE LOOK AT IT SIMILAR TO GOLD. GOLD ACTS OPPOSITE OF BITCOIN
WITH INFLATION, AND IT’S A RISK OFF ASSET. SO WE LIKE THEM PAIRED. YOU MIGHT FIND I OWN A MUCH HIGHER PERCENTAGE OF GOLD NOW THAN BITCOIN, BECAUSE I THINK GOLD IS A BETTER BET TODAY THAN BITCOIN. BUT I THINK HAVING ALTERNATIVE ASSETS LIKE THIS IN YOUR PORTFOLIO MAKES A LOT OF SENSE. AND WE HAVE IT IN MY ETF. WE’RE THE ONLY ETF THAT ACTUALLY OWNS GOLD AND POINT: ED: I’M GOING ASK ABOUT YOU TESLA. FIRST WE TALK ABOUT TESLA, BECAUSE YOU’VE BEEN A VOCAL TESLA SHAREHOLDER. AND WHEN I POSTED ON SOCIAL
MEDIA YOU WERE COMING ON, THERE WERE MANY THAT POINT OUT, WELL, WHY YOU IS GETTING HIM ON? HE IS TOO EMOTIONAL. JUST HEAR ME OUT. HE’S TOO EMOTIONAL ABOUT TESLA. HE’S ANTI-ELON. THERE ARE THOSE THAT THINK YOU’RE TOO COMBATIVE WITH THIS RETAIL TESLA SHARE HOLD NEITHER AUDIENCE, THAT’S THE CONTEXT. ACTUALLY, THERE’S SPECIFIC QUESTIONS IN THAT, WHICH IS, HOW FOCUSED ARE YOU ON ELON’S INVOLVEMENT AT DOGE AND THE ASSUMPTION THAT YOU PROBABLIMENT HIM TO STOP DOING THAT AND FOCUS BACK ON TESLA? >> WELL, THERE’S A COUPLE OF THINGS TO ATTACK HERE.
FIRST OF ALL, I UNDERSTAND WHY RETAIL INVESTORS AT TESLA ARE FRUSTRATED WITH ME FOR VOICING MY VIEWS AS A RETAIL TESLA INVESTOR AND A CYBERTRUCK DRIVER. I FIND IT HORRIBLE, THE FACT THAT PEOPLE ARE WORRIED ABOUT HAVING THEIR VEHICLES VANDALIZED, INCLUDING ME, BECAUSE OF ELON. I DON’T KNOW WHY I’M GETTING ATTACKED WHEN I’M THE ONE -- I’M ACTUALLY GETTING ATTACKED BECAUSE OF ELON’S BEHAVIOR. I THINK YOU’D HAVE TO BE A BLIND PERSON NOT TO SEE THAT ELON’S BEHAVIOR IS HIGHLY POLITICAL AND HIGHLY DAMAGING TO THE BRAND, AND ALL THE NUMBERS ARE SHOWING THAT. I’M A SHAREHOLDER.
IF YOU GO BACK TO 2021, THAT WAS THE HIGH OF TESLA, AROUND $400, UNTIL THAT BRIEF RALLY DURING THE ELECTION. NOBODY HAS MADE ANY MONEY IN TESLA FOR A LONG TIME. TESLA STOCK IS DOWN 40% THIS YEAR. THE PERFORMANCE IS, I THINK, DIRECTLY RELATED TO THE C.E.O., A, NOT WORKING AT THE COMPANY, AND B, HIS OUTSIDE ACTIVITIES, I GUESS YOU CALL IT. I DON’T LIKE ELON’S PERSONAL, THE WAY HE DOES THINGS. THAT’S TRUE.
AND I DON’T ALIGN WITH HIM MORALLY. BUT THAT IS IRRELEVANT OF MY INVESTMENT IN TESLA, WHICH I HAVE A SUBSTANTIAL AMOUNT OF MONEY IN FOR MY CLIENTS THAT DESERVE CORRECT REPRESENTATION BY THEIR C.E.O. AND THE BOARD OF DIRECTORS’ RESPONSIBILITY TO RUNNING THE COMPANY, AS EVERY OTHER COMPANY IN AMERICA IS RUN. BUT WE ALL KNOW THAT THIS IS THE REALITY, AND I’M JUST THE ONE WILLING TO SAY IT. PEOPLE CAN ATTACK ME ALL THEY
WANT, BUT WHAT I REALLY CARE ABOUT IS WHAT’S BEST FOR TESLA AND TESLA SHARE HOLDERS. IF THESE PEOPLE DON’T GET IT, THEY DON’T GET IT. WHAT AM I GOING TO DO? ED: WHAT HAPPENS IF TESLA OUTPERFORMED? ONE USER GAVE THE EXAMPLE, WHAT IF IT 10X’S? I THINK A MORE MODEST MODEL, BUT YOUR OPEN-MINDEDNESS TO ADD TO THE POSITION AND CONTINUE TO SEE THE LONG-TERM STORY AROUND A.I. AND ENERGY. >> I STILL OWN TESLA. WE OWN A LOT OF TESLA AT MY FIRM, A LOT LESS IN MY FUND, BECAUSE I THINK THE SHORT TERM AND THE MEDIUM TERM LOOK PRETTY BAD FOR TESLA RIGHT NOW.
BUT WE STILL OWN IT IN MY FUND, AND I CAN’T REALLY EVEN JUSTIFY OWNING IT. BUT FOR CLIENTS WE OWN TESLA, BECAUSE I DO THINK SOMETHING FUNCTION ITSELF AT SOME POINT, AND THEY HAVE THE BEST PRODUCTS. I WAS JUST IN THE NEW MODEL, IT’S A GREAT UPGRADE. IT’S WAY BETTER THAN THE OLD
MODEL Y. AND WHY THEY’RE NOT ADVERTISING TO CONSUMERS THAT THEY HAVE A NEW PRODUCT IS MIND-BLOWING TO ME. SO I HAD ENOUGH OF THE B.S. THAT ELON KNOWS WHAT HE’S DOING AT TESLA. IT’S CLEAR HE JUST DOESN’T CARE. AND HIS NEXT MOVE IS XAY, AND BY THE WAY, I’M INVESTED IN THAT TOO. I OWN XAI STOCK, AND THE TRUTH
OF THE MATTER IS ELON IS GOING BACK TO XAI. SO IF YOU HAVE ANY CONFUSION HE’S COMING BACK TO TESLA, HE’S NOT. THAT’S NOT WHAT HIS PASSION OR FOCUS IS, AND THERE’S A GREAT ARTICLE FROM I THINK THE INFORMATION THAT CAME OUT TODAY ABOUT BASICALLY JUST DOESN’T CARE. AND I BELIEVE THAT. 10 I’M SORRY I’M GOING TO STAND UP FOR TESLA BECAUSE I CARE ABOUT CLIMATE. I JUST SURVIVED A HORRIBLE FIRE THAT WAS CREATED BY CLIMATE. AND I CAN TELL YOU, FIRSTHAND, AFTER SEEING AND FIGHTING IT MYSELF, IF YOU’RE NOT CONCERNED ABOUT WHAT CLIMATE CHANGE IS GOING TO DO TO YOU, YOU’RE JUST BEING FOOLISH HERE, AND TESLA IS ONE OF THE MOST IMPORTANT TO SOLVING CLIMATE.
TO I WANT TO SEE TESLA SUCCEED, AND THAT IS WHY I SAY THESE THINGS AND GET CRITICIZED. ED: I WANT TO GET TO NETFLIX AND THIS. >> BUT I AM EMOTIONAL ABOUT IT BECAUSE I LOVE TESLA. ED: NOTED.
YOU’VE BEEN A HOLDER OF DISNEY, WE TALKED ABOUT IT A LOT, BUT THE NETFLIX NEWS ON THE 2030 TARGET, HOW DO YOU SEE BOTH NAMES? >> IT’S FUNNY, BECAUSE I FIGHT ABOUT DISNEY ALL THE TIME WITH MY CO-WORKERS, BECAUSE I STILL THINK DISNEY IS WILDLY UNDERVALUED. AND AFTER THE NETFLIX ANNOUNCEMENT, WE OWN NETFLIX AND WE’VE OWNED IT FOR A LONG TIME, AND IT’S BEEN A GREAT INVESTMENT. THE TEAM THERE IS INCREDIBLE. THEIR GOALS ARE GREAT AND ACCURATE, AND IT’S A GREAT STOCK TO OWN. BUT THEN YOU LOOK AT DISE DISNEY, TRADING AT THIS DISCOUNT, WITH HULU REALLY DOING WELL.
HULU HAS GREAT CONTENT. ESPN IS ABOUT TO BECOME A FREE AGENT FROM THE CABLE COMPANIES THIS YEAR, WHERE IT CAN BE A STAND-ALONE SERVICE. THEY HAVE SPORTS SERVICES COMING OUT. THEY’VE DONE VERY WELL, I THINK, WITH MOVIES. NOT AS GOOD AS I WISH, BUT MUCH BETTER THAN BEFORE. AND THEN THEME PARKS, AND I
THINK THERE’S THIS GLOBAL UNCERTAINTY WITH TRAVEL, WHICH IS WHY WE’VE LOWERED OUR POSITION A LITTLE BIT. AND I’M NOT SURE HOW THIS SHAKES OUT WITH CHINA, BECAUSE DISNEY AND CHINA HAVE A VERY CLOSE RELATIONSHIP. SO THERE ARE SOME HEAD WINDS WITH DISNEY THAT NETFLIX DOESN’T HAVE, BECAUSE THEY DON’T HAVE PHYSICAL LOCATIONS.
BUT WITH DISNEY AND THE CRUISE SHIPS, I SEE THIS AS A CASH COW. SO I’M VERY BULLISH ON DISNEY. I THINK THE VALUATION IS WAY CHEAP. BUT I’M ALSO VERY BULLISH ON
NETFLIX. ED: ROSS GERBER OF GERBER KAWASAKI, THANK YOU VERY MUCH. COMING UP ON THE SHOW, IS TAIWAN BRACING FOR DIGITAL THREATS? ONE U.S. SPACE STARTUP HAS A BOLD PLAN THAT STARTS IN ORBIT. JOHN GEDMARK JOINS US NEXT.
THIS IS BLOOMBERG. ED: TAIWAN IS TEAMING UP WITH U.S. STARTUP ASTRANIS TO KEEP ITS INTERNET ONLINE NO MATTER WHAT. A SATELLITE LINK WOULD LIKELY BE CRUCIAL FOR TAIWAN TO MAINTAIN ITS COMMUNICATIONS IF A POSSIBLE CHINESE ATTACK WERE TO DISRUPT ITS NETWORK. JOINING US NOW IS JOHN GEDMARK
HERE IN THE SAN FRANCISCO STUDIO. LET’S START WITH THE BASICS OF THE TECHNOLOGY. >> THIS IS THE FIRST TIME THAT TAIWAN HAS HAD A SATELLITE DEDICATED JUST TO THEM FOR BROADBAND CONNECTIVITY.
WE’RE ABLE TO DO THAT BECAUSE WE’RE IN THIS SPECIAL ORBIT CAUSE GEO STATIONARY WAR BIT. THIS IS MUCH HIGHER THAN LOWER ORBIT, SATELLITE YOU MIGHT HAVE HEARD ABOUT. THIS ALLOWS US TO PARK OVER A SINGLE COUNTRY AND PROVIDE NONSTOP SERVICE WITH JUST THAT ONE ASSET. ED: THE LAUNCH PROVIDER? >> WE’LL BE LAUNCHING THIS SATELLITE ALONG WITH A NUMBER OF OTHER OF OUR SATELLITES ON A SPACEX ROCKET LATER THIS YEAR. ED: ONE OF THE QUESTIONS I GOT FROM THE AUDIENCE WAS ABOUT THE ORBIT.
THE QUESTION WAS ABOUT THE VULNERABILITY. YOU KIND OF WENT THROUGH THE BENEFITS OF THAT GEOPOLITICAL ORBIT, BUT WHAT ARE THE RISKS INVOLVED IN THAT LEVEL? >> WELL, I’M NOT GOING TO GO INTO DETAILS ON TECHNIQUES TO COUNTER THE KINDS OF THINGS I THINK YOU’RE TALKING ABOUT. ED: I THINK THAT IS AT THE ROOT OF THAT QUESTION, YES. >> WHAT I WILL SAY IS RESILIENCE COMES FROM STRENGTH IN NUMBERS. SO THIS SATELLITE IS ACTUALLY
JUST THE BEGINNING. WE’RE GOING TO BE LAUNCHING MANY SATELLITES. IT’S WHY WE’RE SPOOLING UP PRODUCTION OUT OF OUT OF FACTORY HERE IN SAN FRANCISCO TO LAUNCH MANY DOZENS OF THESE SATELLITES IN THE YEARS TO COME, AND THEN YOU CAN RELOCATE THOSE SATELLITES, LOOK THEM AROUND, BRING MORE TO BEAR IN A PARTICULAR ISSUE, REGARDLESS WHAT HAPPENS. I THINK THE OTHER THING I’D ADD IS SPACE IS ACTUALLY A MUCH BETTER REGIME TO BE IN THAN ON THE GROUND OR UNDER THE SEA. IF YOU THINK ABOUT HOW
DIFFICULT IT IS TO REPLACE, SAY, AN UNDERSEA CABLE THAT MIGHT GET CUT, SPACE IS A VERY DIFFERENT QUESTION, MUCH EASIER FOR TO US BRING IN ONE OF THE MORE ADDITIONAL SATELLITES IF NEEDED. ED: THIS SEEMS LIKE A REALLY BIG DEAL FOR YOU. THE CONTRACT IS WORTH IN EXCESS OF $100 MILLION. HOW DO YOU EXECUTE HERE? >> YEAH, SO THIS IS A CONTRACT WITH THE LARGEST PROVIDER IN TAIWAN. THEY HAVE A $30 BILLION MARKET CAP. THIS IS A TOTAL VALUE OVER THE SERVICE LIFE OF THE SATELLITE. WHAT WE’RE FINDING IS THAT A
CERTAIN TYPE OF CUSTOMER, THEY REALLY WANT THIS DEDICATED SATELLITE, AND REALLY, IT’S A DEDICATED NETWORK. SO THEY GET THE SECURITY, THEY GET THE ENTERPRISE CONNECTIVITY, AND THEY GET INSIGHT AND TRANSPARENCY INTO EXACTLY WHAT’S HAPPENING IN THEIR NETWORK. AND THIS IS SOMETHING THAT WE FOUND CUSTOMERS REALLY ARE LOOKING FOR NOW, SORT OF THIS AGE OF HEIGHTENED GEOPOLITICAL TENSIONS AS WELL. AND THEY’RE WILLING TO PAY A PREMIUM FOR THAT. ED: THAT’S WHERE WE HAVE THE COMMUNICATION. THE COMMUNICATION SATELLITE,
WHAT HAPPENS IF TAIWAN IS SUBJECT TO AGGRESSION FROM CHINA IN THE POSSIBLE EVENT. IS ASTRANIS A COMMUNICATIONS SATELLITE COMPANY OR IS IT A DEFENSE TECHNOLOGY COMPANY? >> CERTAINLY I WOULD SAY WE’RE A LITTLE BIT OF BOTH. WE ARE DEFINITELY A COMMUNICATIONS SERVICE PROVIDER, AND WE NOW HAVE A NUMBER OF CONTRACTS WITH THE U.S. MILITARY AS THEY BECOME INTERESTED IN OUR TECHNOLOGY AS WELL. SO IT IS A TRUE DUAL-USE TECHNOLOGY, AND TO THE BENEFIT OF BOTH OUR COMMERCIAL CUSTOMERS AND TO THE U.S. MILITARIER WE GET THE BENEFIT FROM THE SHARED INVESTMENT AND SHARED INFRASTRUCTURE. ED: THERE’S A LOT OF INTEREST IN
AMERICA’S COMMERCIAL SPACE INDUSTRY. COULD YOU JUST EXPLAIN THE BASICS OF YOUR SUPPLY CHAIN AND YOUR FOOTPRINT, WHERE ALL OF YOUR CENTER ACTIVITY IS HERE? >> YEAH, WE ARE AN AMERICAN COMPANY WITH THE VAST, VAST MAJORITY OF OUR SUPPLY CHAIN IN THE UNITED STATES. WE HAVE VERY LITTLE INTERNATIONAL FOOTPRINT ON THAT, ACTUALLY. AND NONE OUT OF CHINA, IF I
SUSPECT THAT’S WHERE YOU’RE GOING WITH THAT. SO YEAH, THIS IS SOMETHING WE’VE BEEN THINKING ABOUT FOR MANY YEARS NOW. ED: JOHN GEDMARK ON A BIG DEAL WITH ONE OF TAIWAN’S LEADING TELECOMMUNICATIONS COMPANIES, THANK YOU. COMING UP ON THE PROGRAM, ELLIOT IS SET TO TAKE A $1 PILLION STAKE IN HB ENTERPRISE.
THAT’S NEXT. THIS IS "BLOOMBERG TECHNOLOGY." ED: WE’RE ABOUT TO FIND OUT HOW TARIFFS AND DOUBTS ABOUT A.I. DEMAND ARE HITTING THE CHIP INDUSTRY. THE WORLD’S BIGGEST CONTRACT MANUFACTURER OF CHIPS, AND ASML, THE LEADING CHIP EQUIPMENT OWNER, BOTH REPORT EARNINGS IN THE NEXT 36 HOURS. BOTH HAVE BORNE THE BRUNT OF
THE BROADER MARKET SELLOFF THAT’S FOCUSED ON TRADE WARS AND A.I. WALL STREET EXPECTS SALES AND INCOME TO RISE SHARPLY AT BOTH COMPANIES. HOWEVER, IT’S THE OUTLOOK AND GUIDANCE YOU WANT TO FOCUS ON. THE MAIN METRIC TO WATCH, MSMC WITHDRAWING ITS GUIDANCE AND ASML MISSING ESTIMATES.
LET’S LOOK AT SHARES OF HPE. ELLIOTT MANAGEMENT PUT MOAN INTO THE COMPANY, ACCORDING TO SOURCES. BLOOMBERG IS BACK WITH MORE. THIS IS AN ACTIVIST PLAY. WHAT DOES ELLIOTT WANT FROM AND WITH HPE? >> WHAT DOES ELLIOTT WANT? THEY WANT MORE MONEY. IT APPEARS THAT ELLIOT NOTICES HPE HAS HAD A ROUGH YEAR.
IT’S UNDERPERFORMS PEERS LIKE DELL OR SUPER MICRO. IT APPEARS THEY SEE IT’S A GOOD TIME TO INVEST AND ADVOCATE FOR CHANGES. WE HAVEN’T HEARD FROM ELLIOT OR HPE. BUT GENERALLY, THE PLAYBOOK HERE IS TO FIND A COMPANY THAT HAS SOME PRETTY GOOD KIND OF BONES TO IT. BUT IS APPARENTLY BEING MISRUN OR IT’S NOT REALLY LIVING UP TO ITS POTENTIAL. OFTEN THAT MEANS THINGS AS DRASTIC AS LET’S GET A NEW C.E.O., SWITCH UP THE BOARD, DO
SOME LAYOFFS, THINGS OF THAT NATURE. ED: THERE’S TARIFFS IN THE EQUATION. I THINK HPE SAID PROFIT WILL BE BELOW WHAT PEOPLE HOPED. BUT I’M ONE OF THE FEW PEOPLE THAT’S RIPPED APART A SERVER. I KNOW HPE IS DEEPLY INVOLVED IN THE INFRASTRUCTURE BUILDOUT. WHY DO THEY NOT GET THAT CREDIT FROM ELLIOT? >> WELL, THEY COULD BE. PART OF THE CALCULATION COULD
BE THAT THE MARKETS REALLY BEAT UP THIS FLAME, BUT THEY HAVE A PRETTY GOOD POSITION WITH THEIR NETWORK AND WITH THEIR SERVERS. I THINK THE BIG QUESTION FOR INVESTORS WITH ALL THE HARDWARE NAMES IS HOW MUCH WILL THEY BE IMPACTED BY TARIFFS, SO IT’S NOT TOTALLY CLEAR. HPE HAS A LOT OF MANUFACTURING IN MEXICO. I DON’T BELIEVE THEY HAVE QUITE THE LEVEL OF ASIA EXPOSURE. THAT COULD BE A BENEFIT. BUT THESE TARIFFS KEEP CHANGING EVERY DAY, SO IT’S HARD TO SAY. ED: TO BRODY’S POINT, THE STOCK IS DOWN 30% YEAR TO DATE, A GAIN OF 4% IS KIND OF NOT REALLY REGISTERING IN THE CONTEXT OF RECESSIONS.
BRODY FORD, BIG SHIFT ON THE SHOW TODAY, THANK YOU VERY MUCH. THAT DOES IT FOR THIS EDITION OF "BLOOMBERG TECHNOLOGY." DON’T FORGET, CHECK OUT THE PODCAST, YOU CAN FIND IT ON THE TERMINAL, AS WELL AS ONLINE ON APPLE, SPOTIFY, AND IHEART. A LOT GOING ON IN THE WORLD OF TECHNOLOGY. THANKS TO EVERYONE WATCHING. THIS IS "BLOOMBERG TECHNOLOGY."
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2025-04-17 15:15
