Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Intelligence with Alex Steel and Paul Sweeney.
The real app performance has been the US corporate high yield.
Are the companies lean enough? Have they trimmed all the fats?
The semiconductor business is a really cyclical business.
Breaking market headlines and corporate news from across the globe.
Do investors like the M and A that we've seen?
These are two.
Big time blue chip companies.
The window between the peak and cut changing super fast.
Bloomberg Intelligence with Alex Steel and Paul Sweeney on Bloomberg Radio.
I'm Paul Sweeney and I'm normal Linda filling in for Alex Steele.
Today's Bloomberg Intelligence Show we dig inside the big business stories from PACTE, Wall Street and the global markets.
Each and every week we provide in depth research and data on some of the two thousand companies and one hundred and thirty industries are analysts covered worldwide.
Today, we'll look at why the coffee giants Bucks has withdrawn its guidance for twenty twenty five plus.
We'll dive into the telecommunication space and look at earnings from AT and T.
But first we look at earnings from the shipping giant UPS.
This week, the company reported that it returned to sales and profit growth for the first time in nearly two years. UPS benefited from higher volumes, more profitable packages, and studying labor costs for more.
Nora and I were joined by Lee Klascow, Bloomberg Intelligence Senior Transport, Logistics and shipping analysts.
We first asked Lee for his take on UPS's most recent quarter.
Yeah, so UPS had a pretty good print. May also, you know, indicated that earnings might be a little better than expectations are in the fourth quarter. UPS has been kind of a show me story. They've been doing a lot of self help things, but a lot of those initiatives really haven't bubbled up to the bottom line or the revenue numbers, just given the difficult backdrop. And what we saw was earnings per share for growth finally inflected
positively after seven quarterly declines. So things seem to be working for UPS, and you know, we expect earnings expectations for the fourth quarter and probably next year to move higher on kind of the progress that they've made thus far.
Hayley, I mean, you mentioned that difficult backdrop as we're thinking about the future. I mean, how much of a move higher do you really anticipate as we're thinking about the year end, should investors start to see some gains here?
Well, we don't do buy hoole sell recommendations of Bloomberg Intelligence, but you know, what we can tell you is that the company are doing the right things to see their margins expand. And you know, our view is that margin expansion could be more than where where the market currently is at. And a lot of that has to do with a lot of the cost savings that they've been
able to generate. They've been able to you know, shut down various shifts, sorting shifts, They've been able to close some facilities and just do more with the network that they have. That and if you fast forward that, you know, maybe you know, volumes could start to improve a little more meaningfully from here. You know, they expect a better peak season this year, albeit probably not as robust as they were probably planning for three months ago, but the
peak season is expected to grow. And the reason for you know, them tempering the outlook for the peak season is given the fact that the peak season is condensed the peak season for those that don't know is from Black Friday to Christmas Eve and because of that condensed peaks time. You know, a lot of retailers think that some consumers might be going to the stores versus ordering online and making that gamble whether or not you get it under the tree in time.
Hay Lee.
We love talking to you for a variety of reasons, not the least of which is the companies you covered lead give us a real sense of how the underlying economy is doing, whether it's stuff's being shipped by rail or truck or air cargo. What's GPS telling you about kind of underlying activity that they're seeing.
Well, first and foremost, I love talking to you as well, Paul, But you know what I think they're telling us is the consumer is doing okay. You know, it's not doom and gloom going into the holiday season. I think that you know, you are going to see growth. Like I said earlier, that growth might be a little more tempered, but you know, we are seeing a return to kind of seasonality, which is really good because it's not just
going to impact the parcel providers. It's going to impact the truckload providers, you know, like the night swifts and the warners of the world. It's going to impact the intermodal providers like the JB Hunts and the hub groups of the world, and the railroads as well. So, you know what we're hearing about the consumer and the fact that B to B volume grew for the first time in a long time within their domestic business is also telling me, you know, that that things might be might
be a little better in twenty twenty five. So you know, we're pretty optimistic that demand should be increasing across most of the modes that we cover, and you know, twenty twenty five and our view was going to be a much better year than twenty twenty four was.
And I do know back in about April, I remember that UPS became USPS's primary air cargo provider. Is that still a topic of conversation. How much has that really added to the business if at all?
Yeah, So it is a great business win for them. You know, FedEx walked away from it for various reasons and UPS decided to pick it up. It's going to be consistent volumes at a consistently good margin. And you know what they're doing is they're really restructuring their overall business they've been getting out of businesses that are a
lot more volatile. They just sold their freight brokerach business, which was called Coyote to RXO, and then that was earlier last month, and then in twenty twenty one they sold their less than truckload business UPS Freight to TFI and those were not great businesses for UPS. And now
UPS can really focus on being a parcel provider. And to answer your question, what the US postal service business can also do, It's going to build density and density is the name of the game in any transportation company, and so they can build off that density with other volumes.
Our thanks to Lee Klasgow, Bloomberg Intelligence Senior Transport, Logistics and Shipping analyst.
We move next to earnings from ev giant Tesla.
Tesla's expectations for earnings in the third quarter. The company also forecasted as much as thirty percent growth in vehicle sales next year. This reflects the rebound and demand for Tesla's electric vehicles.
For more, Paul and I were joined by Craig Trudell, Bloomberg Global Autos Editor. We first asked Craig for his take on Tesla's most recent.
Results Oftentimes it's not necessarily the case that you can count on both earnings and the vision to be positive. In this case, both were working in Musk's favor. I think the earnings were much better than expected. I do think that those expectations came down quite a bit over the last year year and a half, but they sort
of they did exceed expectations by pretty significant measures. And the profit margins in particular, or something that everybody keeps a very close eye on their automotive profit margins when you back out the credits that they sell to other automakers for regulatory purposes, those in particular, I feel like, are you know, just quarter in and quarter out what everybody looks at? That was a big beat. And then I think Musk was as self assured as I've ever heard.
He's never won lacking in confidence. And for him to throw out, you know, twenty to thirty percent sales increase for next year, I think was very surprising. For nine ten months into the year, and they've delivered fewer vehicles in twenty twenty four than they did in twenty twenty three.
Hey, Craig, So when I'm walking around New York City every so often I will see, to my surprise, a cyber truck. What is the leadst on that? What do they say in earnings? What can we expect there?
They said that it was gross margin positive for the first time in the recent quarter, and so we're almost we're roughly a year into the launch of that vehicle. I would say that's a little on the early side, just relative to how Tesla has you know, done with with new vehicle launches in the past. So that is another another positive I think, you know, in terms of volume, it's it's still quite low relative to the Model Y
and the Model three. That is still where you see the vast majority of Tesla's deliveries, so much so that Tesla has even yet to break out that that vehicle. And in terms of you know, quarterly results, and so I think we have a rough idea of how many they've sold. Ironically, based on the recalls that the company
has had to do with the vehicle. It's it's as of the latest recall was, which was just a few weeks ago, it was around twenty seven thousand units, I believe, So you know, that's that's pretty small for a company that you know, may sell somewhere in a one point eight million vehicles this year.
Where is the focus from the company here in terms of they seems like they have a lot of balls in the air, obviously, the car business itself, robotaxis, artificial intelligence, what are they? What does Elon want investors to focus on?
Do you think? I think that's actually really one of the most interesting things here. And I think Liam Denning's column for Bloomberg Opinion, you know, does a great job of laying out this idea that you know, Musk's emphasis has really been on, you know, don't bother with the here and now, forget the near term earnings. The sort of big potential for this company has to do with, you know, selling self driving cars and humanoid robots and things that you know, we've heard Elon talk about time
and time again, but not actually deliver. And I think, you know, if if you're sort of looking at this company sort of class half full, it's I'm less concerned than I am today about the here and now of this company and the earnings power of Tesla and it's it's current business and therefore, you know, more encouraged that that they have, you know, the ability and the time and the financial wherewithal to go out and pursue those you know, big stretch goals that Musk has stepped for
the company, and you know, depending on who you ask, you know may or may not be able to actually follow through on his various predictions.
Well, from an equity perspective, this stock has been all over the place this year. What's the goal case here? What are people saying? How much legs do they have to run? Can the stock go much further? What's the consensus there?
You're absolutely right. I mean back in April, this was a stock that was down forty three percent for the year, and so for for them to have you know, come all the way back, they it's sold off quite a bit, you know, after the Robotaxi unveiling just a few weeks ago, and you know, we we've now seen the shares to go positive again for the year. I think whether or not the the company can can actually grow next year
with deliveries, I think is really important. Because even Musk, who's you know, sort of perpetually said, you know, next year will be our year for autonomy, even he is saying, you know that this cyber cab that they showed a couple of weeks ago isn't going to be ready in twenty twenty six, and so we need this company to bring, you know, more affordable vehicles to market, to make teslas more accessible to more consumers and get back to when
it's you know, growing again. To put it simply, and you know, I think it's still unclear what exactly they have to offer that's going to help them get there.
Thanks to Craig Trudell, Bloomberg Global Autos Editor.
Coming up, we'll discuss what we can expect and Walt Disney's succession planning.
You're listening to the Bloomberg Intelligence on Bloomberg Radio, providing in depth research and data on two thousand companies and one hundred and thirty industries. You can access Bloomberg Intelligence be a b I go on the terminal.
I'll Paul Sweeten and I'm normal. DUP, this is Bloomberg.
You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on Affle Card Playing and broud Otto with the Bloomberg Business app. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
I'm Paul and I'm normal. Enda, filling in for Alex Steel.
We move next to earnings from the coffee chains Starbucks. This week, the company reported sales that plunged for the third consecutive quarter.
Starbucks also pulled its guidance for twenty twenty five. This comes as a new CEO, Brian Nichol, tries to assess his business and develop a turnaround plan for more.
Guest host Emily Grafao and I were joined by Michael Halen, Bloomberg Intelligence Senior Restaurant and food service analyst. We first asked Michael what exactly is going on at Starbucks.
They played catch up a bit once the hiring of Brian Nichol was announced. You know, Brian Nichols started last month, and you know he's moving quickly.
Man.
He's making a lot of management changes, and he's.
Aggressively making moves to simplify operations. You know, they're going to rationalize menu items, make it easier to execute, and try to bring.
Hospitality back to the coffee shops right.
They want to free up their employees, their partners as they like to call them, to get back to knowing the names of their customers right and being able to greet them with a smile and friendly service, right, and so's that's going to be job one, and then from there they're going to expand on the marketing side.
You know, Starbucks has historically.
Only marketed to its rewards members, right, and Brian nicol wants to expand that to everyone, right.
And we think that's a smart plan.
We think they've been under investing in marketing for a long time and we expect it to pay dividends as early as fiscal twenty twenty five.
What is the company said to explain the seven percent decline in same store sales? Because before you came on, we were talking about how you have to wait in a really long line to get your Starbucks.
There's less foot traffic.
Right every doing it.
There's I guess, well maybe some teams in the store, but there's less people in the store. What have they said about really what's driving that decline?
You know?
Part of what new CEO Brian Niccholas said is is like it's largely about the experience. You know, it's become largely transactional. Right, They've lost that customer service feel. They've had the trouble executing the orders. You know, a big part of it is, you know. And then he also mentioned that, you know, all of these new menu items that they added to try to bring people in didn't work, right. And then pricing has gotten ahead of itself at Starbucks as well.
And then China, China.
There's a huge price gap between the prices that they're charging. Sometimes they're charging three times as much as as some of their smaller.
Competitors like Luck and Coffee and k Coffee.
So, you know, prices has also been a big part of their issue, and it's something that they're they're going to address right away.
You know, I've seen some crazy graphics in various articles showing the permutations of the different orders that one could have, and if you're bar barber, it's virtually impossible to learn all these Is there a sense that they got to simplify just the menu a little bit.
Yeah, they issued a video and that was a big point of emphasis. It was like making the jobs of their bearistas a lot easier and their employees a lot easier, right, and so you know, when an employee stressed, it's very hard for them to provide the customer with a good experience, right, So this all flows downhill.
So making the Barista's jobs easier.
Making it more enjoyable environment for them is going to flow down to the consumer and then it's going to result in better traffic and same source sales.
I was curious to get your thoughts, you know, Brian Nichols said. The company said that they're pulling back this guidance because the CEO needs more time to kind of think through all this. How unprecedented is that just thirty seconds?
Uh?
No, it would be This is very common.
Any any good CEO worth his soult is going to suspend guidance so they have more time to get their initiatives in place.
This is huge.
Companies can take a long time for momentum to start building in the right direction, and this is a wise.
Move our thanks to Michael Halen Bloomberg Intelligence senior restaurant and food service analysts.
We move next to the Median entertainment space and Walt Disney.
This week, Disney named a former Morgan Stanley CEO, James Gorman, chairman of the board. The company also said it will appoint a new CEO in early twenty twenty six.
Nor and I were joined by Githa Rong Andathan Bloomberg Intelligence analyst on US Media. We first asked Githa for her thoughts on the latest with Disney's succession plan.
So I think this is the number one issue for this company right now. I mean, succession planning has obviously not been Disney's strong suit. You know, they had botched succession attempts now multiple times, this is important. I mean, you have arguably one of the best executives in the business in James Gorman, who led such a smooth, orderly transition, you know, in his own CEO transition, just did it
in five months with all internal candidates. So if it's going to be orchestrated by him, I think obviously he's been on the succession planning committee. It's his number one priority, and I think it definitely gives investors a lot of confidence. The one thing, though, that you know, you have to mention here is that the early twenty twenty six time frame that they have announced in terms of the new CEO appointment, I think that's a little bit later than
what investors were expecting. I think most investors were expecting it to happen in twenty twenty five.
I mean, things have really been tumultuous as we think about succession plans. What are investors looking for from a successor here?
So right now, all that we know is that you have the four internal chiefs, you know, So you have the parks chief Josh Tomorrow, you have ESPN's Jimmy Pittaro, and you have the two big creative heads on the TV and the film side, Dana Walden and Alan Bergman,
who are all front runners. So, you know, leading a company like Disney is really really challenging because you know, you had a parks guy in Bob Chapek who was leading the company, and obviously that turned out not so well because you know, the creative side was completely neglected. And now you have Barbiger kind of coming back in and cleaning up all those relationships that were broken with the Hollywood community. So it's going to be interesting to
see whom he really picks. Obviously, the two front runners here are Dana Walden, who is a very well known, very well respected TV executive. She has deep, deep ties in Hollywood. She actually came over from Fox. She has built a lot of credibility within the industry, but she has absolutely no experience with the parks business. And remember, parks brings in almost fifty five to sixty percent of Disney's profits, so this is critical to the future of
the company. Josh Tomorrow on the other side, of course, he's an out and out parks guy, has absolutely no experience with creative so this is where it gets really really challenging. So it's going to be interesting to see whether Barbiger things having that creative element is more important or whether it's again going to be a parks pick like Bob Schapeck.
So Githa, you know, probably the end of the day, only one person counts, and it's not James Gorman, It's not the board, it's Bob Eiger. What do you think he wants to do? Will he be ready to go when this happens.
I think he will be ready to go. The question is does he want to stick with an internal candidate? I mean we you know you know this very well, Paul. He's been doing this now for a very very long time. You know, there was first, of course the Jay Rozzulo thing. Then of course there was Bob Japek. There's always kind of been this proclivity towards an internal candidate. But having said that, for the CFO, they did look outside with
Hugh Johnston. So again it's it's going to be interesting to see what happens and what he really wants to prioritize. If he thinks this time around the creative element is going to be more important, or whether he wants more of an operations kind of person. But I think yes, he will, he will go. His contract ends in December twenty twenty sixth.
Our thanks to GEETHA. Rogenathan Bloomberg Intelligence analysts on US media.
This week we focused on a Bloomberg Big Takes we're entitled Cracked Skull, Broken Bones show Rivian's Plant Danger.
You can find it on Bloomberg dot Com and The Terminal. The story looks at how interviews with factory workers show serious safety issues at Rivian's only US plant.
For more, guest host Emily Grafao and I were joined by Kyle Porter, Bloomberg Industrials reporter. We first asked Kyle to discuss his findings at Rivian.
They're really struggling to build a safety culture that they can be proud of. In short, there's been numerous incidents, some of which you start that in the headline, or those which we didn't put into the story. Or this, which I haven't been investigated by OSHA. If you talk to people out there in normal Illinois, a lot of them go to work every day because it's the best paid employer in the region, but they don't feel safe.
So I mean again, they only have one plant here. I'm wondering, how did Rivian like if I were starting up a new hotalk cup and I'd just go over to Ford or GM or Stalantis steal a bunch of their factory people and say, hey, guys, start building my car here. How did Rivian do it? How is Rivian kind of I guess learning on the job if you will.
Well, Rivian got a deal. The original the plan that they have they purchased the sixteen million dollars been abandoned by Mitsubishi when they were trying to make an electric car in the US, so it's sort of all fell into place. There were still workers from the time that it was owned by Mitsubishi that could come in and work, so they felt that they could get some muscle memory. And then at the start they you know, it was designed to be a very niche comaker, and then they
got the Amazon deal. Things exploded and they had to ramp up.
So what's the company responding, like, how they've kind of respond to this and do they have any policies in place to try to address this, because I'm just looking at another great graphic. Get you having a story that just shows a number of serious violation sited and Ruvin's at the top of that list.
Yes it is, and as you pointed out, it's only one factory with eight thousand staff. Most of the companies on that list have multiple sites and tens of thousands of workers.
I just want to know kind of have the companies responding here.
They're responded in great detail to us. It's fair to say. They pointed out that most of the serious citations that they were issued were ultimately downgraded or in a couple of cases, dismiss which is true of most people that go through the citation process. And they pointed as to things that they've done to improve their safety processes. And indeed, Osher itself has commended the company for being open and looking to improve itself in safety.
So is any materially different than say a Tesla factory or you know the other EV makers.
Well, it currently only builds two types of vehicle. You have the Amazon truck, and then you have the R one, which comes into several bottles. It's a ne SUV in a truck, and they're looking to ramp that up with an expansion with the R two next year. So it's smaller. It's I think it's aiming to produce now. They actually cut their forecast this year about fifty thousand vehicles, so the scale of it is much smaller.
Does Rivin have the money to invest in their plants into the safety because well, you look at the the stocks of some of these companies that are just so volatile, and I wonder if they even really have the money to invest in safety protocols.
It's a question to ask the company that they say that they have a real commitment to safety and they are investing in it.
Is it is making an evy?
I don't know.
It seems like they're not building an internal combustion engine, so they're not actually building an engine.
There is it?
I would think the process is a lot different. Is it any more or less dangerous as the industry said versus say, a you know, traditional guess assembly plant.
Given that you're building this thing from scratch, you know, from the engine upwards there's a lot of process that has to be learned. There's a lot of things that need to be learned. Indeed, one of the things that the company was cited for was a movement vehicle that the engineers are designed and you know, wasn't safe for employees to use. They were telling employees to be careful until I she cited them and they figured out a
way to do it differently. And you could replicate that across a thousand examples, from how you attach the doors to how you put the glass in. You could go on and on and on, and Rivian's had to work out new and different ways of doing all these things for these new bespoke vehicles.
But the employees, I guess they are. Are they aware of the hazards when they take these jobs.
That's a very good question. It's rapidly becoming a company town. Most of the people that we spoke to for the story are one of several family members who work at the plant. They all talk about how when the plant first opened, it was very small, very welcoming. You saw members of senior management. It felt like a family. And as production as ramp up, that's gone away and there's been a pressure just to produce.
Our thanks to Kyle Porter, Bloomberg Industrials Reporter and.
Coming up on the program, well look at where we stand with nuclear reactor technology.
You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in depth research and data on two thousand companies and one hundred and thirty industries. You can access Bloomberg Intelligence via b I go on the terminal, Paul Sweeney.
And I'm normal. Dup, this is Bloomberg.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on applecar Play and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa, play Bloomberg eleven thirty M.
Paul Sweeney and I'm Normalinda filling in for Alex Steele. We moved next to the telecommunications space. Both AT and T and Verizon both reported third quarter earnings this week.
AT and T said it gained more mobile subscribers and analysts expected well steady focus on its fiber optic network and fixed wireless service.
But Verizon reported quarterly revenue that missed analyst expectations. The company said it was weighed down by lackluster sales of hardware such as mobile phones.
For more, guest host Emily Grafeo and I were joined by John Butler, Bloomberg Intelligence senior telecom analyst. We first asked John for his take on what he saw from AT and T this quarter.
Mob Bell delivered It is what I would say. They actually had a very steady quarter. The one thing I've always liked about AT and T is they are the steady hand in the telecom space, unlike technology. For example, in telecom, I always say a millimeter is a mile. You know, if they edged out expectations on key metrics particularly and wireless and so, you know, steady as she goes really a good story. And it continues to be based on what I saw this quarter.
So they gain more mobile subscribers in the third quarter than analysts expected. Where is that coming from? Is that people switching from a competitor to AT and T?
Yeah, Emily, So what we're seeing in telecom is the market is largely saturated, So when you see gains at AT and T, it's typically coming from other carriers. We're also seeing a big migration coming out of the prepaid business as carriers like AT and T take their best credits out of that category and sort of elevate them
into the low end of the post paid space. The other thing we're seeing our second line, So a lot of people are actually getting second cell phones or adding an additional line to their phone, and so we're getting what I termed second line growth as well. So it's really a combination of those factors that's at work there.
So John kind of zoom out a little bit. Look at the wireless space in general. We've got you know, Verizon, AT and T, T Mobile. I mean, it's got three big, big players, and the pie is not growing a whole lot, I don't think. So how do investors think about where to lay their wireless that's here between those three names, So.
Let me take it from the top. T Mobile continues to be the growth name in the space. They have I think, the strongest brand they've been out there with a consumer friendly brand. It's very splashy, it resonates well with the young people. When you look at those net news subscribers coming in every quarter. Team mobile just continues to be quartered and quarter out. As I said a moment Ago, AT and T is this steady hand. They're growing steadily, they're executing very well. And then at the
low end of that spectrum is Verizon. They've had some trouble, they've been losing share in recent quarters. They're starting to make the turn. So it's going to be interesting to see the industry dynamics here as Verizon on the margin gets better I think in coming quarters. So we're watching that. But in terms of how the stack lays out, now, that's that's where it is.
How are you thinking about AT and T and these other wireless providers versus the traditional telecom companies because we've learned in at least the AT and T earnings reports they're trying to get more into that traditional telecom business laying out broadband fiber. Is it working.
Yeah, So if you look at the history of telecom, AT and T and for Verizon are the old regional bell operating companies. There are a number of them put together, actually, and so they both still have a wireline business, a fixed line network that they're using now to deliver and really grow in the broadband space, and that is causing
convergence with the cable industry. Right the cable operators are now getting into wireless, and telcos are all leaning into broadband and having very good success building share and taking share from the cable guys. So that's going to continue to play out in coming quarters. And I think the competitive edge that the telcos have is a lot of their networks are built on fiber, and so fiber is
the best long term solution for broadband. It's the highest capacity and it stands up very well to environmental pressures.
How did the cable companies, then, John, compete? What's their competitive I guess strengths versus AT and T and Verizon.
I think so great question, Paul. You know, on the broadband front, they're trying to upgrade their networks to what's called doss for it's going to give them the ability to offer the same upload and download speeds, which they can't do now. The download speeds are very fast, but the upload speeds are rather slow, so you don't get that the metrical service, but hopefully coming soon. And I think on the wireless side, they're capturing a lot of
share at the low end of the market. They're coming in with some very compelling offers and it's working and they're taking share from the telecoms.
And wireless to John Butler, Bloomberg Intelligence senior telecom analysts.
Each week we look at research from Bloomberg and EF previously known as New Energy Finance.
They're the team at Bloomberg that tracks and analyzes the energy transition from commodities to power, transport, industries, buildings, and agriculture sectors.
This week we.
Took a look at nuclear power and for the first time in seventeen years, there are no nuclear reactors under construction in the US.
For more, Paul and I were joined by Chris Gadomski, be an EF lead nuclear analyst. We first asked Chris where we stand with nuclear reactor technology.
Think about a football team or a basketball team and you're sitting your best player on the bench, and there's a lot of issues with regards to nuclear energy, but it is a very, very robust technology that can provide the twenty four to seven type of baseload power that
many customers are looking for and interested in having. We are are for the first time since two thousand and seven without a reactor under construction, which is very, very discouraging, especially in the context of the fact that China has got something like twenty seven to twenty eight reactors under construction, and Russia is building twenty two or twenty three reactors around the world in six different countries. So what has happened to the US nuclear industry. We've kind of dropped
the ball on large reactor construction. And there's a lot of hope and a lot of cheerleading that some of these advanced reactors are being developed by a whole slew of companies will carry the day and provide an alternative nuclear solution.
Talk us through just how long it takes to license and build a lot of these larger reactors.
So though the AP one thousand that was built in Vogel at a budget a cost of thirty four billion dollars, it took about fifteen years to license and build. And
that's quite a long period of time. What utility executive is going to look around and say, listen, let me grab another one of these and spend that type of cash and wait that long, Especially since the new technologies intermittent renewables are coming on and they provide an alternatives, and there's a lot of change in the utility industry and the electric power industry, and hence it becomes a pretty risky proposition to place a bet billions of dollars
for a technology that's not going to come and return an investment for several different years. And there's several examples not only in the US, but also in Europe where this is going on.
Some of these smaller modular reactors that we hear about that kind of seems like a reasonable solution to me. I don't have to build this monster generator. I do something smaller for maybe lower cost, presumably cheaper all the kind of stuff.
Well, the question is is that we anticipate that those reactors may be more expensive on a per kill a wide basis, but the risk that they present to a utility executive signing to invest this technology is less. You can build them sequentially so that you get a cash flow after the first one is up and running and now you're building the second one, as opposed to waiting
the many years to get that. We anticipate that licensing and building an SMR and will take about five to six years, two years in the licensing process and three or four years optimistically for construction. We don't anticipate any of these advanced reactors coming online in North America until twenty thirty.
How does this compare internationally.
Well, the US is a leader in the development of advanced reactors and SMRs. There's only two SMRs that operate around the world, one in China, one in Russia, and only two under construction, one in China and one allegedly in Russia. They're supposed to break around soon. We have a very interesting development in Wyoming with terror Power developing or replacing a coal plant with an advanced reactor, which
is very, very exciting. But they have not received a construction permit for that reactor yet and they're still doing preliminary work, and we anticipate that coming online around the twenty thirties.
What's the feeling within the halls of Congress about this power source? Is there any support for nuclear power or is ideologically divided or where are we on this?
It's certainly changing from being very very questioning and very very nervous about it to be more accepting of the technology because they realize the certain advantages of nuclear power. I live in a solar powered house in California. I get all of my electricity from solar energy. But when you think about powering a large city or so, you need something more than just intermittent renewables. Renewables are very good solution for part of the problem, but they're not
a solution for the entire problem. So to displace some of the fossil fuel that we see being used now, we need to have a clean, carbon free source of nuclear power. SMRs have greater flexibility, easier to bring online, and hopefully they'll have a role to play in the future.
Well, let's talk about AI.
We think about data centers and the demand there, and when we think about nuclear supplying these data centers. I know you mentioned that this should be a pretty much a post twenty thirty phenomenon, apart from the revival of Three Mile Island by twenty twenty eight. Can you talk a bit more about that.
Yes, several studies that suggest that there's a tremendous demand growth for nuclear power between now and twenty thirty. There are some questions will that growth continue after twenty thirty
or will plateau for a while. I wish I could say that there'll be a solution from the advanced nuclear community before twenty thirty, but if it is, it's just going to be first of a kind one or two WHO reactors, and the challenge is developing a supply chain that can deliver a fleet of these advanced reactors to really respond to the growing demand for electricity from the data centers.
Our thanks to Chris Kadomski, be any app lead Nuclear Analysts.
This is the Bloomberg Intelligence Podcast, available on Apples, Spotify, and anywhere else you'll get your podcasts. Listen live each weekday ten am to noon Eastern on Bloomberg dot com, the iHeartRadio app tune In, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal