Taiwan and China Tech Tensions, X Goes Dark in Brazil | Bloomberg Technology
>> THIS IS "BLOOMBERG TECHNOLOGY." CAROLINE: LIVE FROM NEW YORK AND SAN FRANCISCO, THIS IS "BLOOMBERG TECHNOLOGY." TAIWAN ACCUSING CHINA OF ILLEGALLY POACHING TALENT FROM ITS TECH FIRMS. WE DIG INTO THE TRADE TENSIONS. ED: X GOES DARK IN BRAZIL. A COUNTRYWIDE SUSPENSION ON THE
PLATFORM FORMERLY KNOWN AS TWITTER. CAROLINE: SHARKS ARE CIRCLING SOME OF AI'S GUEST QUESTION MARKS AS EARNINGS SEASON MARCHES ON. FIRST, A CHECK IN ON THE PRESSURE IN THE MARKETS. IT IS A RISK-OFF DAY. IT IS A MONTH THAT GENERALLY IS HARD TO WORK IF YOU ARE LONG STOCKS, BUT ON THE NASDAQ 100 WE ARE OFF ON -- AT 2.2%. -- 2.3%.
ED: THERE IS A LOT OF DOWNWARD PRESSURE IN THE CHIP SECTOR. THAT NAME THERE IS A BIG REASON WHY. NVIDIA DOWN 8%, ONTRACK INTRADAY FOR ITS BIGGEST DROP IN ABOUT A MONTH, ALTHOUGH AT TIMES IN THE SESSION ITS BIGGEST DROP SINCE APRIL. THERE IS NOT A CLEAR CATALYST. THERE MAY BE SOME HANGOVER FROM EARNINGS.
ABOUT HOW JEN-HSUN HUANG' IS OFTEN-RESOUNDING MESSAGE DID NOT GET THROUGH LAST WEEK. WE -- BUT MAYBE THERE ARE SOME MACRO THINGS. CAROLINE: LET'S LOOK BROADER FOR A MOMENT IN THE WORLD OF CHIPS. TAIWAN SAYS CHINESE CHIP COMPANIES ARE ILLEGALLY PUSHING TALENT AND TRADE SECRETS, UNDERSCORING A HEATED GLOBAL RIVALRY THAT IS DEVELOPING A KEY TECHNOLOGY USED IN PHONES, CARS, AND AI, AS WE BRING IN IAN KING. PERHAPS UNSURPRISING THAT TIT FOR TAT CONTINUES. WHAT DID YOU MAKE OF IT? IAN: THIS IS A RECURRING THEME.
WE HAVE SEEN U.S. COMPANIES DRAGGED INTO THIS, AND THE BIGGEST CONCERN IS THIS ISLAND IS OBVIOUSLY A HUGE CONCENTRATION OF TALENT, VERY IMPORTANT TALENT IN THIS INDUSTRY. IF YOU CANNOT GET THE EQUIPMENT BECAUSE OF U.S. TRADE SANCTIONS MAYBE THEY CAN
GET THE EXPERTISE AND BUILD THEIR OWN. THAT IS A CONTINUING CONCERN. SO YOU SEE COMPANIES IN CHINA BEING ACCUSED. ED: THE CASE STUDY BEING OUTLINED IS THAT SUPPLY IS CHINA'S BIGGEST SEMI CONDUCTOR MANUFACTURING INTERNATIONAL.
EXTRAPOLATE ON THAT CASE STUDY WHY THIS WOULD BE OF PARTICULAR GRIEVANCE TO TAIWAN. IAN: IT IS A WAY AROUND THEIR STRENGTHS, BECAUSE IT IS OBVIOUSLY A MASSIVE -- WOULD BE COMPETITOR TO TSMC. IT IS PROBABLY THE BEST CHINESE CONTRACT MANUFACTURER. WHAT TIME ONE DOES NOT WANT IS AN EROSION OF ITS OWN TALENT BASE FLOWING INTO MAINLINE CHINA. AND THIS IS OBVIOUSLY A CONCERN FOR THE U.S. AS WELL. ED:
THAT BIGGER CONCERN FOR THE U.S., IT IS LABELED AS BEING CHINA'S POTENTIAL ACCESS TO TECHNOLOGY THAT WOULD GIVE THEM AN ADVANTAGE FROM THE MILITARY CONTEXT. IS THAT THE CORE OF U.S. POLICY AROUND THIS? IAN: IT IS. THAT IS WHAT IT STARTED WITH UNDER THE TRUMP ADMINISTRATION. THE ARGUMENT IS THAT WE NEED TO STOP CHINA FROM GETTING ACCESS TO ADVANCED SEMI CONDUCTORS BECAUSE OF WHAT -- WHAT IT WILL DO FOR ITS MILITARY CAPABILITIES. SINCE THEN IT HAS FLOWED INTO OTHER AREAS AND MADE THIS A ROOF FOCUS OF ECONOMIC COMPETITION BETWEEN THE TWO COUNTRIES. CAROLINE:
NOT JUST TWO COUNTRIES, BECAUSE THE U.S. IS LEANING ON OTHERS. IAN: YOU ARE ABSOLUTELY RIGHT, CAROLINE. WHAT WE HAVE DISCOVERED ALONG THE WAY, AND IT HAS BEEN A LONG TWO OR THREE YEARS, IS THAT UNLESS JAPAN, UNLESS THE NETHERLANDS RESTRICT ACCESS TO CHINA OF THEIR KEY TECHNOLOGIES, AND PERHAPS THERE ARE WORKAROUNDS, WORKAROUNDS CHINA CAN MAKE, AND OBVIOUSLY WHAT WE ARE SEEING WITH THIS TAIWANESE SITUATION IS ANOTHER ATTEMPT AT A WORK AROUND. IF YOU ARE CHINESE IT IS A LEGITIMATE THING TO DO. THEY WANT THE TECHNOLOGY FOR THEIR ECONOMY, BUT FROM THE WESTERN PERSPECTIVE THIS IS A WORRYING DEVELOPMENT. ED:
IAN KING. THANK YOU. WITH TAIWAN'S GROWING DOMINANCE BLOOMBERG NEWS TOOK A DEEP DIVE INTO HOW THE BOOM IN THAT SECTOR IS AFFECTING ITS ECONOMY MORE BROADLY. HAVE A LISTEN. >> TAIWAN IS THE HOME OF OUR TREASURED PARTNERS. THIS IS, IN FACT, WHERE EVERYTHING NVIDIA DOES BEGINS. >> IT HAS BECOME A LINCHPIN OF THE GLOBAL ECONOMY. TAIWAN'S DOMINANCE IN ADVANCED CHIPS HAS GROWN, CREATING FORTUNES.
LOCAL INDUSTRY ARE 90% RICHER SINCE THE INTRODUCTION OF CHATGPT IN NOVEMBER 2020 TWO, WHILE STOCKS IN TAIPEI HAVE SURGED. PROPERTY PRICES HIT A RECORD HIGH IN MARCH. WITH THE BIGGEST GAINS IN THE HOME OF SEMI CONDUCTOR GIANT TSMC. THAT IS RAISING FEARS SOME MAY BE LEFT BEHIND. >> THERE IS A WORSENING OF INCOME DISTRIBUTION ACROSS THE BOARD. AND I DON'T SEE ANY MEASURE TO
IMPROVE THIS AT THE CURRENT JUNCTURE. IT IS NOT SUSTAINABLE BECAUSE THE NEXT GENERATION WILL NOT BE ABLE TO DO THIS. >> TAIWAN'S GOVERNMENT HAS SET AMBITIOUS GROWTH GOALS. WITH GDP PER CAPITA SET TO SURPASS THAT OF SOUTH KOREA NEXT YEAR. CAROLINE: BLOOMBERG NEWS.
NOW MORE ON GEOPOLITICS. CHINA'S TOP TV MAKER SAYS IT WILL NOT ANNOUNCE A MAJOR PLANT INVESTMENT IN MEXICO UNTIL AFTER THE U.S. ELECTION. THIS AS SHIFTING AMERICAN POLICY FORCES GLOBAL BUSINESSES INTO WAIT AND SEE MODE. LET'S GET THE TECHNOLOGY INVESTOR'S REACTION.
ANNA RATHBUN IS WITH US. THIS IS A THEME. MORE COMPANIES FEELING A LACK OF CLARITY FROM THE U.S. RIGHT NOW. ANNA: YES. IT IS A BIT UNUSUAL TO BE THIS FAR INTO THE ELECTION CYCLE WITH THE ELECTION ACTUALLY JUST AROUND THE CORNER, ESPECIALLY IF YOU ACCOUNT -- IF YOU COUNT VOTING NOT AT THE BOOTH, EARLY VOTING.
TO NOT HAVE ANY CLARITY ON THE ECONOMIC POLICIES. OUR PARTNERS OUTSIDE THE U.S. ARE NERVOUS, JUST AS WE MAY BE HERE. CAROLINE: LET'S TALK ABOUT WHAT YOU HAVE BEEN SEEING DOMESTICALLY.
THE ELECTION HAS NOT HAPPENED, BUT THE POLICY LEANINGS WE ARE HEARING, FOR EXAMPLE, FROM NOW THE DEMOCRATIC TICKET, ARE YOU FEELING THAT COMPANY IS, ARE YOU YOURSELF AS AN INVESTOR, CHANGING HOW YOU LOOK AT COMPANIES BASED ON U.S. WANTING -- WELL, MORE GEOPOLITICAL TENSION WITH CHINA, NOT LESS? ANNA: CHINA, I THINK, IS A SPECIAL TOPIC. I THINK IT IS PARTY-AGNOSTIC. THAT IS ONE TOPIC WASHINGTON CAN AGREE ON HAS BEEN A BIT HAWKISH TOWARD CHINA AND IT HAS BEEN THIS WAY FOR MANY YEARS. SO, WHEN COMPANIES LIKE BYD SAY THAT THEY WANT TO WAIT UNTIL ELECTION IS OVER, I WONDER TO MYSELF IF SOME OF THAT IS JUST THE COMPANIES SAYING THAT THE ELECTION ITSELF IS A BIT OF AN UNCERTAINTY FOR THE MARKETS, OR IF IT TRULY IS -- BELIEVES THERE IS GOING TO BE A POLICY DIFFERENCE? FROM WHERE I SAID I DON'T THINK THERE IS. BOTH THE DEMOCRATIC PARTY, CERTAINLY WAS NOT HARRIS AT THE TIME, IT WAS PRESIDENT, AS WELL AS THE TRUMP CAMPAIGN, THEY HAVE BOTH BEEN VERY HAWKISH, ESPECIALLY ON EV'S THAT MAY BE COMING OVER FROM MEXICO. I THINK THIS IS MORE NOISE THAN IT IS SOMETHING THAT COULD BE SOLIDIFIED INTO ONE PARTY VERSUS ANOTHER BEING FAVORABLE TO BYD OR ANY OTHER COMPANIES.
ED: YOU SEE THE CHINA IT -- YOU SEE THE CHINA ISSUE AS BIPARTISAN. DIFFICULT, BUT IS THERE A CLEAR PRO-TECH POLICY PLATFORM OR PRO-TECH POLICY OUTCOME FOR EITHER IN THIS ELECTION IN THE U.S.? ANNA: I THINK THAT IS THE HARD PART. WE DON'T KNOW. THAT IS THE HARD PART. THERE IS SOME POLICY GENERALITIES THAT WE HAVE HEARD OF. FROM EITHER -- ACTUALLY, BOTH PARTIES. BUT THERE ARE NOT ANY SPECIFICS
THAT COULD MAKE INVESTORS SAY, OK, THIS IS PRO-TECH. IF ANYTHING I THINK THERE IS INCREASED PRESSURE ON TECH WITH AI AND CERTAINLY CHIPS, RIGHT? AI ENABLING CHIPS. THERE IS A LOT OF NATIONAL SECURITY CONCERNS.
AND WE HAVE SEEN THIS IN THE LAST FEW YEARS. THIS IS NOT ANYTHING NEW AND I DON'T THINK IT IS GOING TO BE SOMETHING THAT IS GOING TO BE NEW AFTER THIS ELECTION IS OVER. ED: IN MARKETS THERE IS SELDOM ONE SINGLE HEADWIND OR TAILWIND AT ANY ONE TIME. THERE ARE MULTIPLE. WHICH IS THE GREATEST FOCUS FOR
YOU RIGHT NOW? CENTRAL BANK OR NOVEMBER? ANNA: FOR US RIGHT NOW IT IS CENTRAL-BANK POLICY. BECAUSE THERE IS SO MUCH UNCERTAINTY THERE IS A LOT OF NOISE WE ARE TRYING TO IGNORE. THE FED, I THINK, IS MORE ON THE CLOSER DOCKET, ESPECIALLY WITH THE SEPTEMBER RATE CUTS THAT THE MARKET SEEMS TO BE EXPECTING. WE ARE DEFINITELY EXPECTING IT. WE HAVE NEVER BEEN IN THE 50 BASIS POINT CAMP. YOU'RE STILL IN THE 25 BASIS POINT CAMP. BUT WE THINK IT COULD BE THE
START OF THE CYCLE. ANY FIVE BASIS POINT IS NOT THAT BIG. IT IS NOT GOING TO MAKE OR BREAK A COMPANY THAT NEEDS TO BORROW. BUT CERTAINLY THE CYCLE WOULD BE A SIGNAL TO THE MARKETS. THEY COULD BE A TIDE THAT LEFT ALL BOATS.
TECH, CERTAINLY, BUT NOT JUST TECH, BUT OTHER AREAS OF THE MARKET THAT HAVE BEEN SUPPRESSED FOR ABOUT 18 MONTHS NOW. CAROLINE: ALL BOATS ARE NOT RISING TODAY. THEY ARE FALLING, BUT CHIPS THE HARDEST. YOU INVEST IN AI AND CHIPS AT THIS MOMENT? ANNA: I THINK THAT DEPENDS ON YOUR TIMEFRAME. IF YOU ARE A LONG-TERM INVESTOR
LIKE DUST CHIPS DEFINITELY HAS A PLACE, BECAUSE THIS AI THING IS NOT OVER. IT IS NOT HIGH. IT NEEDS TO BE CLEANED UP OVER TIME. BUT IF YOU ARE A LONG-TERM INVESTOR THAT IS THE INFRASTRUCTURE. THAT IS AT THE CENTER OF HOW YOU DEVELOP AI. I THINK IT CAN BE AN EXCITING.
IT MIGHT BE A BUYING OPPORTUNITY, BUT CERTAINLY FOR THE LONG TERM. ED: THERE IS ANXIETY IN THE MARKET THIS MORNING. WE ARE SHOWING IT ON THE SCREEN. WHEN YOU LEFT FROM IN VIDEOS EARNINGS WITH CONFIDENCE OR STILL LOOKING FOR MORE DATA ON HOW LONG THIS INVESTMENT CYCLE HAS TO RUN. ? ANNA:
CERTAINLY MORE DATA, BUT I WAS NOT PESSIMISTIC ABOUT IT. LOOK, THEY BEAT, RIGHT? IT WAS JUST NOT GOOD ENOUGH FOR THE MARKETS. THAT TELLS YOU MORE ABOUT THE VALUATIONS OF THE MARKETS THEN ABOUT THE COMPANY ITSELF.
SO, WE ARE NOT PESSIMISTIC BUT AT THE SAME TIME YOU SORT OF WONDER HOW LONG DOES THIS HAVE TO GO? RIGHT? AND THEY HAVE RATE MARKET SHARE RIGHT NOW. BUT UNDER THE COMPANIES LIKE FACEBOOK AND OTHER COMPANIES THAT THEY RELY ON FURTHER REVENUES SAY ENOUGH IS ENOUGH? THAT IS THE UNCERTAINTY I THINK IS COMING DOWN THE LINE MAY BE IN 2025, 2026. ED: ANNA RATHBUN, CBIZ INVESTMENT ADVISORY SERVICES. THANK YOU VERY MUCH. BRAZILIAN JUDGES RULING AGAINST ELON MUSK, UPHOLDING A NATIONWIDE BAN AGAINST HIS SOCIAL MEDIA PLATFORM. WE HAVE THE REPORTS FROM THE
ROUND NEXT. TAKE A LOOK AT INTEL. INVESTORS ARE BRACING FOR MORE INFORMATION. THE CHIPMAKER IS PRESENTING AT THE CITY GLOBAL TECHNOLOGY CONFERENCE TOMORROW, AND THE OPTIONS MARKET PRICING IN A SWING OF AROUND 5% IN EITHER DIRECTION ON WHATEVER IS SAID. LAST WEEK BERG REPORTED THAT INTEL ASKED ITS BANKERS TO FIND STRATEGIC OPTIONS, LIKE SEPARATING OUT ITS FOUNDRY BUSINESS. THE STOCK CAUGHT UP WITH THE CHIP SLUMP, DOWN MORE THAN 6% IN THE SESSION. WE WILL BE BACK.
THIS IS "BLOOMBERG TECHNOLOGY." CAROLINE: A QUICK CHECK ON THE MARKETS BECAUSE WE ARE IN SELLOFF MODE ONCE AGAIN. WE ARE DOWN SIGNIFICANTLY. ON THE NASDAQ AND AROUND SOME KEY CHIP PLAYERS WE ARE WIPING OFF 190 BILLION DOLLARS IN MARKET CAP. BROADCOM HAS ITS EARNINGS. YOU'RE DOWN MORE THAN 4.5%. APPLE OFF BY MORE THAN, LET'S CALL IT ALMOST 2%. BUT PRESSURE ACROSS THE MARKET.
LET'S DIG INTO SOME INDIVIDUAL STORIES IN THE TECHNOLOGY WORLD. JILL'S SUPREME COURT UPHELD AN ORDER TO BAN ELON MUSK'S SHOWS SHOW MEDIA NETWORK AT -- AS EFFORT TO COMBAT HATE SPEECH. BLOOMBERG'S DANIEL CAVALLO IS WITH US, COVERING FROM BRAZIL. THIS REALLY IS SUPREME COURT WINNING OUT HERE AT THE MOMENT, DANIEL. DANIEL: YES, WELL, HAPPY DAYS HERE IN
BRAZIL. LET ME TELL YOU HOW THIS STORY STARTED. SINCE THE BEGINNING OF THE YEAR -- HAS ORDERED THE BLOCK OF SOME ACCOUNTS THAT WERE SPREADING HATE SPEECH AND MUSK SAID HE WOULD NOT COMPLY WITH THIS ORDER. SO, [INDISCERNIBLE] BEGAN TO IMPOSE FINES ON X. THEY DID NOT PAY, SO BRAZIL'S JUSTICE WAS LOOKING FOR WHO THE LEGAL REPRESENTATION OF THE COMPANY WAS. THERE WAS NOBODY IN THIS POSITION, SO LAST WEEK THE JUSTICE SAID THAT WHAT IT WOULD HAVE 24 HOURS TO NOMINATE SOMEONE FOR THIS POSITION. IT DID NOT HAPPEN, SO FRIDAY
NIGHT HE ORDERED A BLOCK OF X IN BRAZIL. ED: THERE ARE SOME OUTSTANDING QUESTIONS ABOUT ELON MUSK'S OTHER COMPANIES, SPACEX AND STARLINK INTERNET SERVICE. TO THE CONSIDERATIONS FROM THE COURTS AROUND STARLINK AND WHAT THEY MIGHT DO.
DANIEL: THEY HAVE ORDERED A BLOCK OF STARLINK BECAUSE X WAS NOT PAYING FOR THE FINES THAT WERE IMPOSED FOR THE COMPANY. HE SAID, OK, WE ARE GOING TO BLOCK THE ACCOUNTS OF ANOTHER COMPANY IN THE COUNTRY, AND IT IS VERY CONTROVERSIAL HERE IN BRAZIL, BECAUSE THERE ARE TWO DIFFERENT COMPANIES. YESTERDAY THE PANEL OF THE SUPREME COURT, THEY CONFIRMED THE ORDER TO BAN X IN BRAZIL, BUT THEY DID NOT DISCUSS THE STARLINK PART OF THE PROBLEM. IT IS YET TO COME. ED: DANIEL CAVALLO, THINK YOU VERY MUCH FOR SOME ON THE GROUND REPORTING. ANOTHER BIG STORY WE ARE TRACKING IS IN THE WORLD OF SMARTPHONES.
APPLE UNVEILS ITS LATEST IPHONE LINEUP AND NEW TECH, BUT ONLY A FEW HOURS LATER HUAWEI DO EXACTLY THE SAME FOR ITS PRODUCTS, SETTING THE STAGE FOR A SMARTPHONE FEUD. LET'S DISCUSS WITH EDITOR DANA WOLLMAN. IN THE TECHNOLOGY REPORTER TOOLKIT EVENTS ARE KEY. THE DIFFERENCE WITH HUAWEI'S THIS IS ABOUT PRODUCTS LARGELY FOR THE CHINESE MARKET, BUT MY GOODNESS THE TIMING IS CURIOUS, ISN'T IT? >> IT IS. NORMALLY THIS IS THE SCHEDULE
APPLE WOULD TAKE, SCHEDULING AN EVENT ON THE HEEL OF A COMPETITOR EVENT. FOR WAY TO DO THAT IS ALMOST OUT-APPLEING APPLE. CAROLINE: SPEAKING OF, THEY TALK ABOUT AN EPOQUE-MAKING PRODUCT. HOW MUCH DOES THAT PLAY INTO THE CHINESE MARKET? DANA: THIS WOULD BE BUILDING ON TREMENDOUS MOMENTUM.
HUAWEI MADE IT INTO THE TOP FIVE FOR CHINESE SMARTPHONE SHIPMENTS, KNOCKING OUT APPLE, WHICH WAS EXTRAORDINARY. THIS WOULD BE BUILDING ON HUAWEI 'S SUCCESS IN ITS HOME COUNTRY. THE DEVICE IS RUMORED TO HAVE FULL DOUBLE CREASES IN NOT JUST ONE SPOT, BUT TWO SPOTS. THAT WOULD BE AN INTERESTING FORMFACTOR. IT WOULD BE A FIRST OF ITS KIND THAT SHIFTS TO THE PUBLIC.
WHAT THAT MEANS IS YOU COULD GET A TABLET, LAPTOP-SIZED SCREEN THAT CAN COMPRESS WHEN FOLDED INTO THE SIZE OF A REASONABLY-SIZED SMARTPHONE. ED: I HAVE BEEN INVITED TO THE APPLE EVENT HERE IN CALIFORNIA ON SEPTEMBER 9. IT HAD BEEN, ACCORDING TO OUR REPORTING, SEPTEMBER 10. YOU HAVE THE FIRST U.S. PRESIDENTIAL DEBATE ON THE 10TH. IT IS A CHOCKABLOCK CALENDAR. RECAP THE APPLE SIDE, WHAT IS
BLOOMBERG REPORTING THAT TELLS US ABOUT THE PRODUCT LINEUP? DANA: ACCORDING TO MARK DERMAN THE DEVICES WILL NOT PHYSICALLY LOOK MUCH DIFFERENT FROM PREVIOUS IPHONES. TO SOME CONSUMERS THAT MAY COME AS A DISAPPOINTMENT. THE IPHONE HAS NOT SEEN A MAJOR REDESIGN SINCE 2020. A LOT OF PEOPLE WOULD THINK THE IPHONE IS DUE FOR SOMETHING MORE STRIKING LOOKING.
BUT ONE OF THE BIGGEST SELLING POINTS WILL BE THE SUITE OF NEW AI FEATURES. THOSE WILL HAVE A SLOWER ROLLOUT PLAN CONSUMERS MAY HAVE LIKED AND POSSIBLY EVEN APPLE WOULD HAVE PREFERRED. CAROLINE: DANA WOLLMAN KEEPING US UP TO SPEED. COMING UP, HP CONTINUING ITS 4 BILLION DOLLARS LAWSUIT AGAINST MIKE LYNCH FOLLOWING HIS FATAL ACCIDENT. THAT CONVERSATION IS UP NEXT. ED: WE ARE NEAR SESSION LOWS, AND IT IS IN THE SEMI CONDUCTORS WHERE THERE IS PAIN. THE PHILADELPHIA SEMICONDUCTOR
INDEX DOWN MORE THAN 5%, ON DROP FOR ITS BIGGEST DROP SINCE AUGUST 1. NVIDIA A BIG PART OF THAT STORY. HOW MUCH OF IT IS A HANGOVER FROM LAST WEEK? NOT TOO SURE. BROADCOM REPORTS LATER IN THE WEEK. LOOK AT MICRON. JUST GENERAL ANXIETY AFTER A LONG HOLIDAY WEEKEND IN THE UNITED STATES. THAT IS WHERE WE ARE AT. CAROLINE: HEWLETT-PACKARD ENTERPRISE SAYS IT INTENDS TO PURSUE THE $4 BILLION DAMAGES CLAIM IN LONDON AGAINST THE ESTATE OF THE RECENTLY-DECEASED TYCOON MIKE LYNCH. JONATHAN BROWNING IS HERE FOR
MORE. THIS IS A CONTROVERSIAL AND DIFFICULT DECISION, I IMAGINE. MIKE: -- JONATHAN: IT IS, AND YET HEWLETT-PACKARD ENTERPRISE, WHICH IS THE ENTITY THAT HAS RESPONSIBILITY FOR THE BRITISH CASE, HAS SAID IT INTENDS TO PURSUE THIS CLAIM TO THE END. JUST TO DISTINGUISH BETWEEN THE TWO CASES, THERE WAS A U.S.
CRIMINAL CASE THAT MIKE LYNCH WAS FOUND NOT GUILTY IN. AND THEN THERE WAS THE BRITISH CASE IN LONDON. IN THE LONDON CASE HEWLETT-PACKARD SUED MIKE LYNCH AND HIS FORMER CHIEF FINANCIAL OFFICER OVER THE COLLAPSE OF AUTONOMY, THE SOFTWARE COMPANY. AND THEY FOUND AND THE JUDGE FOUND THAT MIKE LYNCH HAD FRAUDULENTLY BOOSTED THE VALUE OF AUTONOMY. WE ARE NOW AT A POINT WHERE WE ARE WAITING TO SEE IF THOSE DAMAGES CAN BE COLLECTED, AND HP YESTERDAY SAID THEY INTEND TO DO SO. ED:
IT IS LITTLE MORE THAN ONE WEEK SINCE MIKE LYNCH'S BODY AND THAT OF HIS DAUGHTER WERE RECOVERED FROM THE SUNKEN YACHT OFF THE COAST OF ITALY. IT IS AN EXTRAORDINARY STORY. COULD YOU EXPLAIN PROCEDURALLY WHAT IS HAPPENING AT THE MOMENT WITH THE INVESTIGATION OF WHAT HAPPENED AND THIS LEGAL CHALLENGE AT THE SAME TIME? JONATHAN: YEAH, SO, IN ITALY THE PROSECUTOR HAS OPENED A PRELIMINARY INQUIRY. THEY ARE LOOKING AT POTENTIAL MANSLAUGHTER CHARGES RELATING TO THE FOUNDERING OF THIS LUXURY YACHT, THE BAYESIAN, WHICH SANK IN SUCH A SHORT PERIOD OF TIME WHEN SEVERE WEATHER STRUCK. THEY WILL BE LOOKING AT HUMAN ERROR AND ALL HOST OF OTHER ISSUES. AS YOU SAY, IT IS JUST A FEW DAYS SINCE THAT HAPPENED, AND THEN HP COMES OUT WITH THEIR OWN STATEMENT. THAT IN LONDON THEY WILL CARRY ON THE CASE.
AND LAWYERS WILL TELL YOU IN THE BRITISH CASE THE CLAIM CAN FALL TO THE ESTATE IN THE EVENT OF A DEATH. IN THIS CASE HPE WILL BE PURSUING THE CLAIM AGAINST THE ESTATE OF MIKE LYNCH. THAT IS HIS RECENTLY-BEREAVED WIDOW. WHO WAS ON THE BOAT AND MANAGED TO ESCAPE, AS WELL AS HIS DAUGHTER, WHO WAS NOT ON BOARD. CAROLINE:
AS YOUR STORY SAYS, LIKELY TO FACE CRITICISM GOING AHEAD WITH THE CLAIM, BUT HEWLETT-PACKARD ENTERPRISE HAS ITS EARNINGS -- I HATE TO BRING IT BACK TO THAT, BUT HAS ITS EARNINGS THIS WEEK. THEY ARE LIKELY TO FACE QUESTIONS. MAYBE THEY ARE GETTING AHEAD OF THAT. JONATHAN: I THINK THAT IS PROBABLY THE LIKELY REASON WHY WE KNOW THIS NOW. BECAUSE THE SIMPLE FACT IS THAT THE ACTUAL COURT CASE IS STILL WEEKS FROM CONCLUSION. ED: BLOOMBERG'S JONATHAN BROWNING. THANK YOU FOR YOUR REPORTING. COMING UP, THE SHORTS ARE CIRCLING SOME OF AI'S BIGGEST QUESTIONS IN THE MARKET. THAT CONVERSATION IS NEXT, AS
WELL AS REGULATION WITH SAMA CEO WENDY GONZALEZ. THIS IS "BLOOMBERG TECHNOLOGY." CAROLINE: WELCOME BACK TO "BLOOMBERG TECHNOLOGY." I'M CAROLINE HYDE IN NEW YORK.
ED: AND I'M ED LUDLOW IN SAN FRANCISCO. CAROLINE: IT IS A DOWN DAY. WE ARE RISK-OFF. YOU'RE GOING TO MOVE TO WHAT IS HAPPENING ON THE NASDAQ OR BROADLY, BECAUSE WE ARE OFF BY MORE THAN 2% ON THE NASDAQ 100, AND IN LARGE PART IT IS THE CHIP NAMES THAT ARE DRIVING A SLOWER. I'M LOOKING AT A SELLOFF THAT MEANS MONEY FLOWS INTO THE BOND MARKET. 10-YEAR YIELDS HAVE COME DOWN FIVE BASIS POINTS.
WE ARE DOWN BY 2%. THE INDIVIDUAL MOVERS I'M HAVING A LOOK AT, ARE SOME EUROPEAN NAMES. EUROPE HAS JUST CLOSED AND WE SEE SAP UNDER PRESSURE.
OFF BY .8%. THE CEOS DEPTH DOWN FOR SOME INAPPROPRIATE BEHAVIOR, WE UNDERSTAND, AT A PREVIOUS ROW. WE SEE DELIVERY HERO DOWN. THIS IS A GERMAN COMPANY THAT HAS A MIDDLE EASTERN UNIT IT IS LOOKING TO, A BE IPO IN DUBAI, AND BANKERS HAVE BEEN TALKED TO. NVIDIA, THOUGH, FRONT AND CENTER. HE MUST KEEP SHOWING THIS, THE FACT THAT NVIDIA IS DOWN 7%. NEARLY EVERY PLAYER IS ON THE
DOWNSIDE. ED: GIVEN NVIDIA'S MARKET CAP IT IS IMPORTANT. COME BACK ON THE MARKET -- THE MEGA-CAP NAMES, IT IS A SIMILAR STORY. THE ASSOCIATION AND BROAD
MARKETING VARIETY -- MARKET ANXIETY. I DON'T SEE ANY NEWS OUT THERE. I DON'T SEE ANY CATALYST. THE LEAD OF THE GLOBAL MARKETS RAP IS FIRMLY ON NVIDIA. BUT THESE ARE NOTICEABLE DECLINES.
WE JUST TALKED ABOUT APPLE AND ITS EVENT NEXT WEEK. EXPECT SOME VOLATILITY IN THE INTERIM. LET'S GET TO ONE OF THE TOP STORIES. WALL STREET IS GETTING INTO SHORTS AS TRADERS HUNT FOR WINNERS AND LOSERS IN THE AI RACE. CHECK OUT SUPERMICRO, LUMEN, AND SYMBIOTIC.
THEY WERE HIT BY BEARISH RESEARCH REPORTS QUESTIONING THEIR VALUATIONS, AND THE SHARES AS A RESULT GETTING PUNISHED. BAILEY LIPSCHULTZ HAS BEEN WRITING ABOUT THIS, AND FRESH IN THE MIND AS WE COVERED IT ON THE SHOW, BUT HINDENBURG'S SHORT-SELLERS REPORT ON SUPERMICRO IS THE LATEST HIGH-PROFILE EXAMPLE. JUST EXPLAIN WHAT YOU ARE TRYING TO OUTLINE IN YOUR PIECE. BAILEY: WHEN YOU MENTIONED SUPERMICRO, THIS IS A COMPANY THAT WENT FROM ABOUT $2 BILLION IN MARKET CAP UP TO $66 BILLION IN JUST ABOUT TWO YEARS. WE ARE SEEING A NUMBER OF AI IN A FISHY AREA -- AI BENEFICIARIES. THEY PITCHED THEMSELVES AS AN AI-RELATED.
NEWMAN HAS SEEN SHARES RALLY, GIVEN THEIR POSITIONING WITHIN THE AI TRADE AS WELL. WE ARE SEEING TO AN EXTENT A NUMBER OF ACTIVIST SHORTS, WHETHER IT IS HINDENBURG AND SOME OF THE OTHERS, KIND OF CALLING OUT AND DIVING DEEPER INTO THESE COMPANIES, INTO WHAT THEY ARE ACTUALLY DOING. THIS IS SOMETHING THAT IT SEEMS LIKE WITH THESE MANIAS, WHETHER IT IS BITCOIN, WHETHER IT IS HOT STOCKS OR AI, WE SEE WALL STREET MORE THAN HAPPY TO PILE INTO THESE STOCKS.
A NUMBER OF GOOD COMPANIES. CAN WE HAVE SEEN THAT WITH NVIDIA. BUT WHEN THE SCRUTINY GETS RAMPED UP IN AN RISK-OFF TONE, THAT IS WHEN COMPANIES CAN FALL UNDER PRESSURE AND THAT IS WHAT SHORTS HAVE CALLED OUT.
FOR VERY DIFFERENT REASONS, BUT NONETHELESS EACH PRETTY MUCH DOWN 20% SINCE THOSE REPORTS WERE PUBLISHED. CAROLINE: IS ANYONE WILLING TO BUY THE DIPPY ARE? SUPERMICRO IS ON THE UP TODAY. ONLY BY 1%. BAILEY: THE CONCERNS FROM LAST WEEK, FROM THE HINDENBURG REPORT, FROM THE DELAYED FILING, KIND OF CAUSED PEOPLE TO RETHINK AND RECALIBRATE SOME OF THOSE BETS. AS THE COMPANY COME TOO HIGH
TOO QUICKLY? IT WAS TRADING NORTH OF $625 JUST A FEW WEEKS AGO. ED: WE ARE SEARCHING FOR SEPARATING WINNERS AND LOSERS IS ONE OF THE QUOTES IN THIS STORY. I THINK WE HAVE DWELLED ON THE LOSERS. WHO ARE THE WINNERS, IF YOU
HAVE BEEN ABLE TO FIND THEM? BAILEY: WE HAVE SEEN A NUMBER OF THEM. EVEN WITH NVIDIA'S FALLOFF TODAY OF 70% IF YOU BOUGHT IN OVER THE PAST TWO YEARS THE STOCK IS ABSOLUTELY RIPPED. IT STILL SEEMS LIKE INVESTORS RIGHT NOW ARE TEASING OUT THE PICKS AND SHOVELS. WE SEE ON THE PRIVATE MARKETS, OPENAI, LATEST FUNDING ROUND. THAT IS A TREMENDOUS VALUATION. THE BIG CONCERN WHEN I TALK TO
FOLKS, WHETHER IT IS LATER STAGE INVESTORS OR GROWTH AND CROSSOVER INVESTORS IS, WE ARE YOU FINDING THAT VALUE? AS WE SEE COMPANIES STAY PRIVATE FOR LONGER AND RAISE SOME EYE-POPPING VALUATIONS, THAT IS WHERE PEOPLE ARE PUTTING MONEY TO WORK. BUT WE ARE STILL SEEING WITH THE SUPERMICRO'S OF THE WORLD, AND NVIDIA'S OF THE WORLD, THAT THERE STILL IS A LOT OF MONEY TO BE MADE. THE QUESTION IS, WHAT IS THE PROPER VALUATION AND WHEN DO YOU BUY THE DEBT AND HOW DOES THAT FIT INTO A BROADER PORTFOLIO? CAROLINE: BAILEY LIPSCHULTZ, IT IS A GREAT STORY. WE THANK YOU. A KEY QUESTION IS REGULATION. IN CALIFORNIA THE LEGISLATURE HAS IMPROVED -- APPROVED AN AI-SAFETY BILL LATE LAST WEEK WHICH REQUIRES COMPANIES TO MAKE SURE THEIR TECHNOLOGY DOES NOT CAUSE MAJOR HARM. IT NOW FACES ITS BIGGEST TEST
IN FRONT OF CALIFORNIA GOVERNOR GAVIN NEWSOM, WHO HAS STATED HE DOESN'T WANT TO OVER-REGULATE THE SECTOR. THE BILL HAS DRAWN CRITICISM AND PRAISE FROM A SERIES OF NATIONAL FIGURES. WENDY GONZALEZ IS HERE SHE IS THE CEO OF SAMA, WHICH PROVIDES DATA TO POWER AI TECHNOLOGY, AND I WOULD HAVE THOUGHT YOU WOULD BE DOING WELL AS ALL COMPANIES SUDDENLY WANT TO LABEL THEIR DATA AND USE LARGE LANGUAGE MODELS. WHAT DO YOU MAKE OF THIS REGULATION GOING THROUGH CALIFORNIA? WENDY: SO, AI CAN BE A FORCE FOR GOOD, BUT IT DOES NEED SOME SAFETY GUARDS AND GUARDRAILS PUT IN PLACE.
I THINK THIS IS REALLY A SIGNAL THAT THE UNREGULATED ERA OF AI IS OVER. I THINK THAT FIRST STEP WAS WITH THE EU ACT THAT HAPPENED AND WAS OVER -- OVERRIDDEN BY THE MAJORITY OF THE EUROPEAN UNION. CAROLINE: THE WARRIOR FOR SOME, OPEN EYE HAS BEEN A VOICE FOR THIS, IS THAT THE REGULATION COMING THROUGH WELL HARM IN PARTICULAR SMALLER COMPANIES. AND ALSO OPEN-SOURCE LARGE LANGUAGE MODELS.
IS THAT SOMETHING YOU AGREE WITH OR IS THIS THE NECESSARY STEP TAKEN TO ENSURE THAT AI REMAINS FOR GOOD? WENDY: IT IS A TRICKY REGULATION TO PUT IN PLACE. IT WAS ALWAYS THIS BALANCE OF MAKING SURE WE DO NOT STIFLE INNOVATION WHILE TRYING TO REDUCE HARM AND CREATE TRANSPARENCY IN AI. WITHIN THE REGULATION ITSELF THERE ARE SOME PARAMETERS RELATED TO THE AMOUNT INVESTED IN AI. THEY ARE TRYING TO FIND A
BALANCE OF THIS IS A LARGE-SCALE MODEL THAT HAS OVER 100 MILLION DOLLARS OF INVESTMENT OR 0 MILLION TO DEPLOY, THAT IS WILL BE SUBJECT TO THIS, AS WELL AS AI THAT COULD BE USED TO ENABLE CYBERATTACKS TO CRITICAL INFRASTRUCTURE SUCH AS ENERGY, YOU KNOW, NUCLEAR, YOU KNOW, CHEMICALS AS AN EXAMPLE. IT IS A BALANCE. ED: WE SPOKE TO ACADEMICS WHO SAID THEY WERE CONSULTED BUT NOT -- DID NOT LIKE THE CONTENT OF THE BILL. WE SPOKE TO SENATOR SCOTT WIENER WHO SAID HE SPOKE TO EVERYONE HE COULD AND TRIED TO GET INPUT FROM AS MANY PEOPLE AS POSSIBLE. AND YOU HAVE MATTER THAT IS AGAINST IT FROM THE OPEN-SOURCE PERSPECTIVE. WHY COULD WE NOT FIND A BUILDER BASICALLY WORKED FOR A BROAD COALITION, GIVEN ALL OF THE TALK ABOUT IT? WENDY: IT IS TRUE THAT IT IS SOMEWHAT INCOMPLETE. I THINK ONE OF THE THINGS THAT COULD BE DONE IS THAT PUBLIC-PRIVATE PARTNERSHIP, WHERE COMPANIES LIKE OPENAI AND OTHERS ARE ON THE LEADING EDGE OF DEVELOPING THIS TECHNOLOGY. THERE ARE A FEW THINGS THAT
WERE BASICALLY INCOMPLETE IN THIS. ONE WAS THAT, YOU KNOW, IT IS THE NOTION OF KILL SWITCHES. THE OTHER IS THIS NOTION OF HAVING THIRD PARTIES TEST. THAT
BECOMES DIFFICULT FOR A PROPRIETARY AI, RIGHT? YOU ARE OPENING YOURSELF UP TO A THIRD PARTY, AND THAT IS A REASON COMPANIES MIGHT NOT WANT TO PUT DISSIPATE. THEN THERE ARE IMPORTANT ITEMS LIKE SANDBOXES. IN AI RESEARCH AND DEVELOPMENT IS A CRITICAL PART OF THIS. IF WE DO NOT HAVE CONTENT AROUND HOW SANDBOXES CAN BE LEVERAGED TO TEST OUT WHETHER THERE ARE ACTUAL HARMS I THINK IT COULD BECOME VERY CHALLENGING. SO, REALLY AT THE END OF THE DAY WHAT I THINK EVERYBODY IS VOICING SOME CONCERN ON HIS DO NOT WANT TO HAVE ANY UNINTENDED CONSEQUENCES, WHETHER IT IS IP, STIFLING AS IT -- STIFLING OF INNOVATION, YET WE COULD ALL AGREE AND MOST CALIFORNIANS AGREE THAT SOME SAFEGUARDS ARE NECESSARY. ED:
SAMA PROVIDES DATA LABELING AND EVALUATES MODELS. HOW IS THE BILL AND ITS CONTENTS GOING TO IMPACT YOU IN PRACTICE? WENDY: ONE OF THE MOST CRITICAL THINGS ABOUT DEVELOPING RESPONSIVE AI -- RESPONSIBLE AI IS HAVING HUMAN-CENTRIC VALIDATION. I BELIEVE THIS WILL DRIVE FORWARD ADDITIONAL MEASURES FOR HUMAN-CENTRIC VALIDATION, QUALITY MANAGEMENT SYSTEMS SO THEY COULD BE AN INCREASE OVER TIME, BUT WHAT WE DO SEE IS THAT A LOT OF COMPANIES PROBABLY DO A LITTLE BIT MORE THAN THE PUBLIC IS AWARE OF IN TERMS OF TRYING TO PROVIDE THESE SAFEGUARDS. NOW IT IS REALLY ABOUT PUTTING FORWARD A REGULATION THAT BALANCES THAT AND REALLY CREATES TRANSPARENCY. WE HAVE SEEN IT HAPPEN BEFORE. CERTAINLY WHETHER IT WAS GREEN EMISSIONS STANDARDS SET UP BY CALIFORNIA FOR LAWS LIKE GDP IN EUROPE WHERE THEY DID SET FORTH A WAVE OF ACTIONS THAT ULTIMATELY COMPANIES HAD TO COMPLY WITH. WHILE I WOULD NOT SAY WE ARE
SEEING IT IN DROVES, I DO THINK OVER TIME COMPANIES ARE GOING TO NEED TO THINK ABOUT THIS, BECAUSE, AS I MENTIONED, I THINK THE UNREGULATED ERA IS COMING TO AN AND. CAROLINE: WENDY GONZALEZ, CEO OF SAMA. YOU WANT TO STICK ON THE THEME OF AI I'M UP AT THIS SELLOFF WE ARE SEEING. THIS IS DEJA VU OF THE START OF AUGUST ALL OVER AGAIN.
WE ARE DOWN BY 2% ON THE NASDAQ. WE ARE LOOKING AT NVIDIA BEING THE BIGGEST POINTS DRAG AGAIN. $200 BILLION BEING WIPED OFF ITS MARKET CAP. ED: AT LEAST IN AUGUST THERE WAS
SOMETHING TO POINT TO. THERE SEEMS TO BE ANXIETY FOR NO SPECIFIC REASON OR CATALYST IN THE MARKET. THE GLOBAL RAP ON THE BLOOMBERG POINTS OUT THAT AUGUST AND SEPTEMBER, HISTORICALLY PRETTY TOUGH. CHIPMAKERS ARE DOING BADLY. THERE ARE OTHER SECTORS AT PLAY, LIKE THE ENERGY SECTOR. I DON'T KNOW WHERE ELSE WE COULD LOOK. CAROLINE:
BOILED DOWN IF YOU ARE LOOKING AT BRENT, BUT HERO HAVE COME OUT SAYING, I AM WORRIED ONCE AGAIN ABOUT A YEAR IN SHOCK. MAYBE IT IS THE SAME ROOT CAUSE OF ANXIETIES WE SAW IN SEPTEMBER BEING A TOUGH MONTH IF YOU ARE LONG EQUITIES. WE ARE GOING TO STICK ON THIS THEME, BUT ANOTHER BUSY SLATE OF EARNINGS WITH AI IN FOCUS. LOOKING AHEAD TO RESULTS, BROADCOM. THAT CONVERSATION COME UP NEXT. THIS IS "BLOOMBERG TECHNOLOGY." SPOTIFY, AND IHEART THIS IS BLOOMBERG.
ED: TIME FOR TALKING TECH. FIRST UP, DIRECTV SAYS CUSTOMERS LOST ACCESS TO WALT DISNEY PROGRAMMING TODAY AFTER THE COMPANIES FAILED TO REACH A NEW LICENSING PACT. THE COMPANY ALSO SAYS DISNEY SAW A WAIVER TO ALL CLAIMS THAT ITS BEHAVIOR IS ANTICOMPETITIVE AS PART OF ANY NEW DEAL. PLUS, SOUTH KOREAN STARTUP REBELLIONS IS PLANNING TO GO PUBLIC AS EARLY AS THE END OF 2025, SEEKING TO CAPITALIZE ON BOOMING DEMAND FOR THE CHIPS USED TO POWER GENERATIVE AI. PLANS TO SELECT GLOBAL BANKS FOR A DOMESTIC LISTING AROUND MARCH. AIRBNB IS URGING NEW YORK CITY OFFICIALS TO SCALE BACK A LOCAL REGULATION THAT OUTLAWED MOST OF ITS SHORT-TERM RENTAL LISTINGS AND HE CAME INTO EFFECT NEARLY A YEAR AGO, SETTING IMPACTS ON TRAVELERS AND HOSTS. THE COMPANY SAYS THE REGULATION
IT -- HAS FAILED TO DELIVER ON THE PROMISE TO COMBAT THE HOUSING CRISIS. CAROLINE? CAROLINE: LET'S RETURN OUR ATTENTION TO EARNINGS. HP AND BROADCOM ARE SET TO REVEAL PRETTY HEALTHY GROWTH IN QUARTERLY REPORTS THIS WEEK THAT WILL ALSO BE SIFTED FOR CLUES ON THE LONGEVITY OF PRETTY HEAVY CORPORATE SPENDING ON AI. LET'S BREAK IT DOWN. MANDEEP SINGH, I'M GOING TO
START WITH BROADCOM. THE MARKET IS ANXIOUS TODAY. IT SEEMS TO BE A REPORT COMING FROM THE SEMICONDUCTOR ASSOCIATION SEWING BELOW-SEASONAL TRENDS, BUT WHAT CAN WE DISSECT FROM BROADCOM? MANDEEP: THEY ARE A DIVERSIFIED COMPANY. THE SOFTWARE SIDE IS RECURRING IN NATURE. THEY TEND TO FOCUS ON CYBERSECURITY. AS WE KNOW FROM THEIR CROWDSTRIKE OUTAGE CYBERSECURITY SPENDING HAS ACTUALLY DONE PRETTY WELL ON AND IN FACT OUR SURVEY SUGGESTS THERE SHOULD BE AN UPTICK AS A RESULT OF THEIR OUTAGE. ON THE SEMICONDUCTOR SIDE,
LOOK, EVERY HYPERSCALERS HAS TOLD US THEY ARE OVER-INVESTING IN AI INFRASTRUCTURE BUILD UP. GRANTED, YOU KNOW, 60% OF THE DOLLARS ARE GOING TO NVIDIA, BUT THE REMAINDER, I WOULD SAY, BROADCOM, MARBLE, WE SAW THE PRINT FROM MARVEL WAS STRONG. BECAUSE ALL OF THESE HYPERSCALERS ARE FOCUSING ON CUSTOM CHIPS. AT THE END OF THE DAY, WHETHER
IT IS AMAZON OR GOOGLE, THEY WANT TO DO THEIR IN-HOUSE CHIPS, AS WELL AS A LOT OF THE ENTERPRISES FOCUSED ON COMPLIANCE ASPECTS OF GEN AI . THEY DON'T WANT TO BUILD EVERYTHING ON THE CLOUD. A COMPANY LIKE -- LIKE BROADCOM THAT IS GIVING YOU ALL OF THE BASIC INFRASTRUCTURE YOU NEED, WHETHER IT IS ON THE NETWORKING SIDE OR THE CUSTOM CHIP DEVELOPMENT, THEY SHOULD BENEFIT FROM THE TREND AND CAPEX SPENDING WE ARE SEEING. ED:
BROADCOM MAY NOT SEE -- SAY IT EXPLICITLY, BUT BROADCOM HELPS GOOGLE WITH ITS TPU. ABOUT HEWLETT-PACKARD ENTERPRISE? IN THIS STAGE IN EARNINGS SEASON HISTORICALLY IT MIGHT'VE BEEN HARD TO GET YOURSELF PUMPED UP FOR THIS, BUT LOOK AT THE ANXIETY IN THE MARKET. IT IS ANOTHER PRINT WE NEED TO WATCH. MANDEEP: I LOOK AT IT THIS WAY. ALL OF THE COMPANIES THAT
REQUIRE, YOU KNOW, AI-READY SERVERS, THERE ARE NOT MANY PLACES THEY CAN GO TO. IT IS DEALT, SMC I, AMID ALL OF THE THINGS THAT HAPPENED WITH THEIR 10K FILING. AND HPE. I THINK ALL OF THESE COMPANIES HAVE RAZOR THIN MARGINS WHEN IT COMES TO THE AI SERVERS, BUT STILL IT IS THE GROWING PART OF THEIR BUSINESS. RIGHT NOW WE HAVE HEARD FROM EVERY SEMICONDUCTOR MAKER THAT THE MARKET IS UNDERSUPPLIED. THAT IS WHY, YOU KNOW, WHETHER YOU ARE A SERVER COMPANY OR CHIP COMPANY YOU STILL RIDE THIS TREND.
WHAT THE NEW BLACKWELL RELEASE WILL DO, WHO KNOWS? BUT CLEARLY WE KNOW FOR FACT THAT ALL OF THESE COMPANIES ARE LOOKING TO BUILD THEIR AI INFRASTRUCTURE AND I THINK BECAUSE THESE COMPANIES FIT IN THE SUPPLY CHAIN THEY SHOULD BENEFIT FROM THAT TREND. CAROLINE: THERE HAS BEEN MUCH SAID OF WILLS VERSUS BEARS. NOW SOME OF THE BEARISH LINE OF ARGUMENT IS JUST VALUATION. WHAT DO YOU MAKE OF SOME OF THESE VALUATIONS ON SOME OF THESE COMPANIES? MANDEEP: I THINK WITH NVIDIA YOU COULD ARGUE THE MULTIPLE IS RICH, BUT CAN YOU FIND ANOTHER COMPANY THAT IS GROWING SALES AT 50%-PLUS? THAT IS WHERE, YOU KNOW, AS LONG AS THEY KEEP BEATING AND RAISING THE WAY THEY HAVE, IT IS HARD TO BE BEARISH ON VALUATION. AT THE SAME TIME THERE IS A RISK THAT WHEN THE GROWTH TAPERS -- AND IT WILL TAPER.
EVERYONE EXPECTS THAT. IT IS A QUESTION OF WHEN THAT WILL HAPPEN. WHEN IT HAPPENS THE MULTIPLE WILL BE CUT IN HALF OR MORE. NOW WE ARE IN THAT PHASE WHERE
NOBODY KNOWS HOW THESE LARGE LANGUAGE MODELS WILL KEEP SCALING. THERE WILL BE A PLATEAU IN TERMS OF THE SCALING FOR LLM'S. WE HAVE NOT HIT THAT YET. MARKET WILL LOOK 12 TO 18 MONTHS AHEAD. RIGHT NOW THE BET IS IT IS PROBABLY A LITTLE FURTHER ALONG. I THINK UNTIL THEN THE VALUATION IS SUSTAINABLE BECAUSE WITH TECH YOU PLAY THAT -- YOU PAY A PREMIUM FOR GROWTH.
ED: WE ARE QUICK, IF CAPITAL EXPENDITURES WAS THE WATCHWORD FOR THE HYPERSCALERS, WHAT WATCHWORD DO YOU LOOK FOR THOSE OTHER NAMES LEFT REPORT? MANDEEP: I THINK WHEN IT COMES TO BROADCOM OR HP BROADCOM IS MORE DIVERSIFIED, BUT TOPLINE GROWTH IS WHAT YOU CARE ABOUT, AND GROSS MARGINS. WITH NVIDIA WHAT EVERYONE WAS SCARED ABOUT WAS THAT PEAK IN MARGINS. FOR BROADCOM IF YOU HEAR A SIMILAR STORY THAT IS WHEN YOU GET WORRIED. ED: BLOOMBERG INTELLIGENCE SENIOR ANALYST MANDEEP SINGH, THANK YOU VERY MUCH. COMING UP, IT STARTED WITH TAYLOR SWIFT, BUT THIS TIME AWAY SIS FANS ARE CAUSING A STIR OVER TICKET PRICE SURGES. DAY TUNE.
CAROLINE: FANS OF OASIS ARE LOOKING BACK IN ANGER. DO YOU GET A CHECK UP AT TICKETMASTER, THANKS TO PRICES SKYROCKETING FOR THE GROUPS REUNION TOUR. THE TICKET PLATFORM WAS USING DYNAMIC PRICING, WHICH OF COURSE ADJUSTS PRICES BASED ON REAL-TIME DEMAND. PRICES JUMPED BY MULTIPLES WHEN TICKETS WENT ON SALE, PROMPTING HUNDREDS OF COMPLAINTS TABLET TIES AND REGULATORS. CHARLIE WELLS JOINS US NOW.
YOU ARE THE BOYS WHEN IT COMES TO PERSONAL FINANCE. YOU HAVE BEEN BRACING FOR THIS, PEOPLE PLAYING THE SYSTEM AHEAD OF IT, CHARLIE. CHARLIE: YES THEY HAVE. I HAVE BEEN COVERING THIS SINCE LAST WEEK.
I HAVE BEEN TALKING TO FANS UP AND DOWN THE U.K. AND IT IS STRIKING HOW THE ENERGY HAS CHANGED FROM LAST WEEK WHEN THERE WAS A SENSE OF JUBILATION. I WAS TALKING TO FANS WHO ARE WILLING TO DO ANYTHING TO GET ON THESE TICKETS JUST TO GET HANDS ON THESE TICKETS, TO FRUSTRATION, THOSE SAME FANS UNABLE TO GET THEM DO TECH ISSUES AND DYNAMIC PRICING ISSUES AS WELL. ED:
THAT FRUSTRATION IS PLAYING OUT ON INSTAGRAM, X NUMBER FORMERLY KNOWN AS TWITTER. I SEE LIAM'S FACE EVERYWHERE. IS THERE NOTHING THEY COULD HAVE DONE FROM A TECH PERSPECTIVE OR IS TECH BLAME? CHARLIE: ON THE ONE HAND THERE IS A SORT OF COMMUNICATIONS AND MARKETING SIDE TO THIS, WHERE, YOU KNOW, DYNAMIC PRICING IS NEWER IN THE U.K. THAN IT IS IN THE U.S. AS FAR AS CONCERTS. WHEN YOU THINK ABOUT THINGS LIKE UBER, OF COURSE THERE IS SO PRICING.
I HAVE ACTUALLY BEEN TALKING TO A NUMBER OF FANS AFTER THE WEEKEND AND THEY SAID THAT SOME TECH WITCHES WERE ALMOST MORE FRUSTRATING. SO WHEN NIKKI BENTLEY SAID SHE WAS ACCUSED OF BEING A BOT BY THE WEBSITE, THEN I SPOKE WITH SOMEONE NAMED ROB HARLOW WHO SAID HE MADE IT TO THE FRONT OF THE CUBA BY THE TIME HE GOT THAT HE WAS KICKED OUT AND ENDED UP AT NUMBER 250 THOUSAND IN LINE. SO A MIX OF THAT COMMUNICATIONS ISSUE, BUT ALSO SOME TECH GLITCHES HERE. ED: CHARLIE WELLS, ALL OVER THIS
STORY. THANK YOU VERY MUCH. WE ARE GOING TO GO STRAIGHT TO MARKETS. WE HAVE TO. I DON'T KNOW WHERE TO LOOK OTHER THAN THE INDEX LEVEL. NASDAQ 100. TECH IS UNDER PRESSURE. THAT IS AN UNDERSTATEMENT. NVIDIA IS THE PROBLEM. WHEN YOU SEE A NAME LIKE APPLE
DOWN MORE THAN 2% YOU START TO ASK, WHAT IS THE BIGGER THING HAPPENING HERE? IT IS PROBABLY THE CHIPS, RIGHT? CAROLINE: WE ARE IN BACK-TO-SCHOOL MODE. WE HAVE VOLUMES HIGHER. WE ARE UP SOME 7% ON THE NASDAQ. YOU ARE SO RIGHT. IT IS CHIPS. WE ARE DOWN 7% ON NVIDIA. BROAD SEMI CONDUCTOR INDEX IS UNDER PRESSURE.
ONLY ONE NAME WAS ON THE GREEN -- IN THE GREEN. IT IS IMPORTANT WE LOOK AHEAD TO BROADCOM IN TERMS OF ITS EARNINGS. ED: AND INTEL SPEAKING TOMORROW AS WELL. CAROLINE: THAT DOES IT FOR THIS EDITION
OF "BLOOMBERG TECHNOLOGY." ED: A SHORTER WEEK, BUT A LOT TO TALK ABOUT AND RECAP. YOU KNOW THE PODCAST. YOU CAN FIND ON APPLE, SPOTIFY, THE BLOOMBERG PLATFORMS. BUCKLE UP. I THINK IT IS GOING TO BE A BUSY ONE. THIS IS "BLOOMBERG TECHNOLOGY."
2024-09-04 20:50
