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To welcome everybody on Bloomberg Radio, Bloomberg TV across Bloomberg platforms. Yes, indeed, Carol Masser, Joe Matthew here at the Milk and Institute Global Conference. We have a special guest. And I feel like reading in this morning the headlines were made.
It's like they knew Kathy was going to join us.
Kathy would CEO CIO and of course the founder of ARC invest It's so nice to talk with you again.
Thanks, delighted to be here.
You gave me my big break in twenty fifteen.
I'll never forget that.
Well, it's so funny because I want to talk to you on because you kind of put him for me on the radar, and I just feel like it was a time when so many people questioned what he was up to. Now everybody is so excited about the SpaceX ipo. We see increasingly how he's kind of melding his universe together.
Tell us about kind of that bet, and even today we have that he's building a chip factory at least fifty five billion in investment, maybe as much as almost one hundred and twenty and he's doing this chip factory.
SpaceX with Tesla. How are you looking at Elon right now? What his next era is?
So this is why I founded ARC invest.
We knew that the seeds that were planted in the twenty years that ended in the bubble, they've been germinating for twenty twenty five years and now they're flourishing. And what we're seeing is fifteen different technologies evolving and they're all converging. And Elon about six months ago, and we've been using the word convergence for a long time, he said, you know what, I think my companies are converging more
than even I understood. And so we're seeing of course SpaceX XAI, rumors about Tesla, and really he believes that in the new world, or to create the new world, a company has to be vertically integrated. And so that's what's happening here. He is moving into incredible vertical integration as he moves data centers into space.
Is it all about our Bloomberg intelligence?
George Ferguson cover Space covers defense, but he said, it's all about Elon controlling the supply chain. Kathy, But I do feel like globally, we're seeing countries companies really thinking about.
Their supply chain. Is that part of his strategy?
Absolutely?
Absolutely, And also when a company is breaking new ground literally in this case, and really inventing something, the supply chain doesn't exist very often or not all parts of it exist. And I think also as he's discussing where he's going and how he's going to do it, he is.
Getting the supply chain ready.
You know, he always sets the time frame, you know, much sooner than most.
People would expect.
But it's to get his employees and the supply chain focused, because when he moves, he moves fast.
You've really helped to define people's perception of Elon Musk and the company Tesla largely as one that is not about making cars, but one that's about autonomy and robotics. When you walk out the Hilton here different than where I live in Washington, DC, driverless weymos are picking people up and driving away with them all day long. The
mainstreaming of autonomous vehicles is just about here. I'd like to know if you see that actually fulfilling itself in the next year, and if this is a zero sum game or you're going to have Uber, Weimo, Tesla all.
Involved Okay, this is where vertical integration comes back into the conversation. In the robotaxi world. Tesla's vertically integrated and has created the platform upon which others will build their companies. So I credit our team, So Tasha, Daniel Brettwinton have been focused on this from day one twenty fourteen when I founded ARC and yes, slowly, slowly than all at once. So vertical integration for Tesla means it will have the
lowest cost structure by far. Now it's going to use Uber's umbrella here three dollars plus per mile, but if our analysis is correct, those costs as robotaxis scale are going to drop to twenty five cents per mile.
Think about it.
The cost of transportation is going to collapse here and no one Waimo's cost structure, according to our estimates in twenty thirty, will be fifty percent higher than Tesla's because they're dependent on other auto manufacturers and others in the supply chain that Tesla is not.
How are you thinking about the SpaceX ipokathy, do you anticipate there's so much enthusiasm going into it, massive side, massive interest, But do you think there'll be a drop off initially after you know, once it makes its public debut, and then ultimately kind of play out like Tesla did that eventually it goes up again, like how do you see the trajectory?
Right?
So this is only at least what we know so far, seventy five billion dollars.
There is so much demand out there.
We have in our venture fund, so ARKVX SpaceX is the largest position. And because we're direct to consumer when it comes to venture although the fund has scaled north of eight hundred and fifty million, investors had to look for us and how did they find us? They were looking for SpaceX. So the demand is voracious out there. Only seventy five billion. Yes, it's a big IPO, but just think about how SpaceX has reawakened the dream of spacexlation.
This has captured the imagination not just of investors but really everyone.
So does that mean you don't think it'll fly? You think the anim will continue? Do you think there will be some settling ing, there'll be.
Supply demand imbalance in the beginning, you'll see that pop. It will be volatile, I would imagine, But we hope to serve in terms of providing our research We've already got a SpaceX model out there on our site arc
dash invest dot com. We have not added data centers orbital data centers in However, our preliminary work suggests that that part of the business could take relative to our existing model, could take Tesla from a revenue generation point of view, orders of magnitude higher, ten twenty times higher.
I'm so glad you went there data centers in space.
And I mentioned before we got going it came up on a real estate panel where so many of the real estate investors, even related companies, has switched their focus to data centers. But we brought up data centers in space. What does that mean though? Then for all of the data center build out and money that is happening here on Earth, does that mean.
A lot of that goes away? There's a little bit of a bubble, like how do we reconcile that we think?
And this is the important judgment call.
Is this hype? Is this nineteen ninety nine? I can tell you unequivocally it is not. As I mentioned, the seeds were planted. Then now we're ready and we think this technology revolution is going to dwarf the industrial revolution.
By far so.
I think that we'll need the orbital data centers. And of course Elon is informed by his experience in Memphis, Tennessee and now Mississippi.
Memphis became not in my.
Backyard, you're increasing my electricity prices and you're ruining our land. So he's basically saying, I'm not going to have to worry about not in my backyard in space.
But does it make a bubble of the stuff on that.
I don't think so. I don't think so. We think we're going we need all of this.
Yep.
Sorry, I know I'm dominating.
I mean you guys should walk away with this, go to ask you about something that took place today. You woke up and saw your third largest holding just go through the roof in AMD another blow the doors off quarter. And it's really creating this question now about whether we should be paying a lot more attention the market is to CPUs after GPUs went crazy. We're looking at people take money out of Nvidia now and chase stocks like AMD. Do we need both or is that where you're looking?
We think we need both.
I do think there is more competition. We want it, we need it. But it was interesting Sarah Fryar at Open AI.
I'm going to give her a shout out because I heard her.
Speak and she was saying, you know, people are chasing GPUs. They're they're going to be really shocked at how agentic AI activates CPUs and infernt generally activate CPUs. Yesterday, Lisa Sue provided a stat we had.
Never heard before. Right now, for.
Every for every CPU, there are four to five GPUs when it comes to enabling AI. Lisa thinks it's going to go one to one in the future. I think that has been the sleeper and you see Intel has taken off.
In fact, we're seeing a lot of stocks that were you.
Know, they were very big in the bubble. And I just said to our team today, I said, what's going on. We're going back to the future. You know, Intel resurrecting, Yes, and Flextronics is now called flex Boom.
So I think we need it all.
Not to mention data storage, which has been one of the most remarkable exam of a shortage creating a monster rally. So you need these old fashioned chips, yes, to get to this new fashion AI.
All hands on deck.
We want to ask you about a story that came out Google, Microsoft to give US agency early access to AI models. So basically the White House vetting AI models those good are bad and.
Knowing this administration and David sachs our ais are, I don't think we're talking about heavy regulation here. We might be talking more about national security. National security. We heard this with Metho's you know software that you know has not has been a place for sixty years and never been penetrated. AI can find these vulnerabilities, So they're probably trying to tighten up a lot of what we do out there and make sure that our industries are safe.
Doesn't that bring a political implication though, to what may or may not be available to people if the White House is choosing which platform we auto use.
No, you know what's interesting, and this is taking a leaf from open ai in its early days GPT. You are saying, we don't think we can release this. This is too powerful is great marketing. It's true that it's very powerful, but it's also great marketing. A lot of the people at Anthropic came from open AI. So while they're blazing trails, no question about it, and they're leapfrogging one another, which is great. Competition is great for US here,
including competition from China. I think that you know, we're on our way.
I want to ask you about stable coins tether and their potential. Do you think it has a chance to become big in the US under the Genius Act?
And you've also invested in Circle?
Are you looking at other stable coin related players.
Beyond that crypto Bild? Tell me there's a lot going on right now.
It is a lot going on.
There's a big meeting at Morlago, Like I know, a lot of crypto folks like.
Tell us well.
And you know, in the last election, I do think the crypto community was very was part of the swing factor because they knew deregulation would take place under this administration. That's absolutely true. So yes, we're seeing the deregulation. You know, this is creating a new financial world order. Many people think the dollars should be going down because of our deficit and debt and all of that, and what we're seeing here in the United States is deregulation, tax cuts,
and a very business friendly, very business friendly administration. We think the return on invested capital is going to go up in the US generally, and we think that the crypto revolution we were at risk of losing it. Yeah, and yes we do think USAT has a shot.
You do, yes, all right, I'm not going to have like a million more who's doing?
Kathy, thank you so much.
Really appreciate it, Thank you real, thank you so much.
Really appreciate it.
Kathy would of course, she's the CEO, CIO and of course founder of arc in vas someone like I said, it was ten years ago, yes, that we first started talking, yes about Elon Musk, so really tremendous to catch up with her again and