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AI enthusiasm is back as AMD rallies on a blockbuster Forcus and nvidiaoting's a deal with fiber maker Corning. Plus, Disney posts stronger results than expected thanks to improve profitability and its streaming business, and we speak with Uber's CFO as the right hailing platform posts a second quarter outlook that also beat expectations.
First, we return to these markets that are risk on look.
A lot of that has to do with geopolitics. There is hope of a de escalation between Iran and the United States. Could it's a deal be getting closer. The market trades on that. Stocks rise higher, and indeed bon yields pull back. We see a move in the dollar two Oil on the down side means we're at one point four percent on.
The nasat one hundred.
But there's a whole host of other news as to why technology stocks are on top, and.
It comes from earnings and AI ambitions.
We've got AMD pumping up fifteen percent once again taking the breath away from investors that not only are we seeing GPU traction, but CPU is seemingly on fire, despite of course also concerns about memory. We're still seeing growth in that trajectory. And in Nvidia up four percent, managing to play a bit of catch up after it's sold off for the last few days.
But that's as they could do with Corning.
They could be buying up to five hundred million dollars worth of shares and it's all about optical fibers. That's all about the AI data center too. So as TALKI infrastructure with a man who's been doing it for years in Kings with us in first AMD Lisa Sou managing to show that the total addressable from a market for CPU in particular really on fire as well as GPUs.
Yeah, now you're exactly right.
They put out earnings that were sort of pretty good, not as maybe exciting as some had hoped and learn. On the conference call, she gave a very bullish projection for the CPU, which is one of their core parts, part that's kind of been neglected in this AI race, and said, look, things are really strong there and guess what in this current quarter things are going to be up seventy percent for that particular business, and that was affirmation of what a lot of other companies have said.
Wow, I mean, how is she navigating some of the issues that we've seen from a supply chain perspective, some of the memory issue that of course hits the PC side of the business.
Yeah, I mean she got a lot of questions on the conference call exactly on that point, as you would imagine, and her answer was like, look, we've seen this coming, We've been working really hard. Guess what if you're a memberships player, you want to be selling this extremely expensive memory to me and to data center. So don't worry, we can meet our forecast, was what she was essentially assuring people.
Now, AMD managed to pay off and we are seeing them ramp up sales. But when you compare like an eleven billion dollar guidance for the Core to coming compared to well seventy billion dollars we expect from the like sort of an Nvidia, it's still a second versus the giant, and the giant making news to day in what did you think about the deal with coreing Corning And once again is this cirt killar financing in some way or just making sure that AI infrastructure can get built.
I think Jensen would explain it as you did at the Milk and conference this week, is like, look, we are going to go out. We're going to use our money to remove or to do our best to remove any possible bottle neck that's out there. And fiber is a big potential bottle neck going forward. Speed of light is as fast as you can transmit information. Traditional copper
is reaching its limits. Guess what we need to make sure we have a lot of fiber optic connections out there for our forthcoming chips to keep this whole thing going. So he's obviously been putting his money to work in that kind of company as.
Well, company based right here in New York State and King We so appreciate you out on the West coast for us.
Thank you. Let's speak about more of all of this streny perjury is.
With US Semiconductor and Semi's equipment and this obviously capital your latest note, can you highlight how am d strong CPU growth doubling of projections is that achievable?
What could Chow call that?
Well?
Right now? The demand is very strong, you know, Agent Ki is the primary reason. But overall, AI capex has been going up as well. And on top of that, we're seeing strong demand on the enterprise you know, server side as well. So I think in a part of it is AI, part of it is in a traditional server demand. Overall demand is very strong, and in addition to that, you know, supply has been tight. Uh you know, Intel talked about you know, not not having you know,
enough supply to you know, address the current demand. As a result, you know, the visibility is extending, the backlog is extending through the year, even into into next year. But I think I think there's also the structural you know, uh tailwind from you know, you know what we call the CPU to GPU ratio. If you look at the systems today in AI, typically it's one to four is
what we see. In some cases one too, but the view is that that's going to go to one to one, even you know, more than one to one.
So you know, that will be interesting to see.
Tiny for our audience talk through that step function. It's all about agent KI, It's all about the need for inference, right.
Yeah. I mean, look in training workloads. You know, historically we have seen you know, a CPU to GPU ratio of you know, one to four, even in some cases one to eight. And as we move to influencing, that is changing, primarily because of agentic AI. And of course you need to run the models still on you know, powerful GPUs, but to manage you know, because users are creating so many agents, to manage these agents, and to make sure that agents are you know, getting the appropriate
data and they're talking to you know, other APIs. You know, CPUs you know, play a critical role. So we are seeing again it's early days. It's it's difficult to draw you know, too many conclusions, but the trend is moving in the direction of you know, that ratio improving in favor of cp you. So you know, our view is that at least you know, we have visibility based on you know, some of the architectures that we have seen from Nvidia and AMD and Google, et cetera. Into twenty
twenty seven. You know, it's moving in the in the direction we think it's going to get to like, you know, one to two by end of next year. But whether it gets to one to one or even higher than one to one, that remains to be seen.
Can I talk you about talk to you about valuations, because when you look at AMD on a one year hr, it's extraordinary.
We're at a new record high.
We're up three hundred percent over that one year basis, we're up sixty more than sixty percent on the year, and a new record high of look at six hundred billion dollars market cap, that's nothing compared to the four trillion of Nvidia. But when you start to get a little bit anxious about where the stock trades, well.
You know, the valuation is rich, right, you know, and videos, you know, trading in high teens. When you look at calendar twenty seven members and AMD is probably trading close to twice the multiple. It is at a premium. But as you said, it's a smaller market cap name. You could argue maybe it's growing faster because it's smaller in size.
But you know, for US, I think CPU certainly helps the short term, but longer term, if you look at the GPU opportunity that's much bigger, I would say GPUs probably we're talking including the custom chips, you know, a trillion dollar type SAM and the CPU. As Lisa said, it's about one hundred and twenty billion. It used to be sixty, not too long ago. So I think it's
essential that AMD make progress on the GPU front. And they've announced you know, new customers, you know, Open Ai and Meta, and those customers are expected to ramp later this year and into next year. So you know, that's why we're we're actually sitting on the sidelines right now, even though the demand is very strong because of valuation. We want to see some evidence that you know, AM they can actually gain and compete against Nvidia and gain some incremental share as we go into next year.
So it's about execution for Lisa, Sue talk to us a little bit about what we seeing in optical fiber exuberance today as well. Corning up fourteen percent in video saying look, I want I want to in on your shares up to five hundred million dollars worth and the right start purchase them. What can Corning bring to AI data centers?
Well, at a high level, you know, AI demand is putting pressure on connectivity. You know, you know it's one thing to process the data, but you also need to move the data at the super fast speeds, and the demand has been so strong that you know, all those connectivity you know, bottlenecks are emerging and optical plays a key role in moving the data not only between you know,
the servers, but also between data centers. So you know, we're seeing, you know, the supply constraints emerge across the board, and I think in videos, what EN Video is trying to do is make sure that you know, those supply constraints are not going to limit their growth and they're using their balance sheet strength. And that's one of the reasons you know, we like n Video because you know, they not only have the best products in the industry,
but also have the balance sheet strength. I think that is a structural like vantage in an environment like this where everything is so tight.
I'll bec analyst Streni perjury. It's really great to have your analysis on the show today.
Thank you very much. Indeed.
Meanwhile, sticking with all things chips, Germany's Infinian also reporting earnings forecasting revenue of around four point eight billion dollars for its fiscal third quarter that did beat expectations.
The company is saying it's benefiting from spending moon on.
AI infrastructure, where it's power supply solutions for data centers and very high demand. But as you see, the stock has been under pressure in European trading like twenty twenty six, they say on track to grow about ten percent coming up. Disney gets a profit boost from some successful sequels, improved streaming results, and guests spending at their parks will dig in.
This has been by tech.
Check in on shares of Disney having their best day in a year, currently up seven percent, the company posting stronger than expected results thanks to improve profitability from its streaming business and guests they're spending more at the parks. Here discuss is Helen and Wang, which is Philip Securities research analyst. You were impressed by the numbers and all being given by the new CEO.
Yes, I think it's a pretty solid number of the m ros first earnings both revenue and EPs pis estimate and they've guided for twelve percent EPs girls for twenty twenty six, so that's for the acceleration. So I will say it's pretty good start for the new CEO.
Good start when actually we thought maybe things didn't look so pretty when he first took up the reins. There was Sora unraveling the deal with open Ai. There was concerns with what's happening with Epic Games and their partnership. But more broadly, how do you think the consumer is feeling right now getting into the park, because we've got a lot of micro headwinds.
Yes, looking at their experience division, they are seeing a slight decrease in their US parkeet so that is probably something paired from the wall. So fewer for as far as are traveling to the US, but we are seeing guests spending more at the US parks. So per person spending group five percent you're on year, So that means people are spending more on the tickets, on the food, on the merchandises. They're seeing very strong booking in their
Disney World. Another factor that's coming is they're seeing the cruise ship having higher volume, probably because of the new introduction of their Disney Destiny and Disney Adventure that was introduced in March twenty twenty six, so that kind of gives them a forty percent increase in cruise booking capacity.
I love how in your notes you really think about the flywheel effect, the IP flywheel effect.
This is how this business makes sense.
The fact that they've got new frozen experiences coming online. They're investing in the IP and the entertainment but also in the experience space, are you willing to take down more of that investment at the moment because they have spent a lot on cruises, they are updating the way in which they're serving people at the parks.
Yes, they're definitely investing very aggressively right now, but I see it comes from a point of confidence because they're doing so well in their current business, so they're trying to expand more in order to lay out more on the lanesom Girls Wrongway. So they're coming up with a lot of major part expansion globally. They're coming up with another new cruise ship in Japan, and they're also coming up with a new scene part resulting Abu Dhabi. So I guess the war impact is very minimum for them.
I guess it's a good thing because their unique value is rooted in the strong brand, reputation and the flightway effect.
I think that's a really good point that even though we've got conflict geopolitical anxiety in the Middle East, they're still going ahead with what's happening in Abadabi. Just one area of concern is just the cost of doing business when it comes to sports as well.
Right, ESPN did show that weakness.
There is that something that you also have to take down in terms of investment.
They need the content, they need to win the rights.
Yes, ESPN actually the increasing revenue because of the higher subscription and affiliate fee due to their NFL transaction, But it's definitely they're showing a decreasing operating income because of
the highest flora and production costs. But I guess everybody in the streaming industry right now is trying to increase their life sport because it's a large market, it has a very loyal fan base that will always be there, and everybody wanted the piece of that juicy pie and sport where are so expensive right now, especially if you want it as skill and Disney they already have the skill, so I think even though the cost is a little bit high for them, but they do have the advantage in that sector.
Helena, it's great catching up with you.
Thanks for joining again, Helena Wang of Philip Securities. There are all things Disney Now, it's time for talking tech.
First up, White House economic advice that Kevin.
Has It says a potential executive order is in the works to provide a quote clear roadmap for AI safety.
Now the directive is taking shape.
Weeks off, Terranthropic revealed its mythos model that could pose a global cybersecurity risk. Plus, Morgan Stanley is rolling out cryptocurrency trading on his e trade platform, charging clients at just fifty basis points, half the cost of some major rivals like Robin Hood. So latest move in a massive Wall Street pivot. The biggest banks are no longer just
watching the crypto space, looking to own it. And Samsung has officially entered the trillion dollar club, making the firm only the second Asian firm after TSMC, to hit that one trillion dollar milestone.
Now.
The company's gain also pushed the Cosby Index past seven thousand for the first time in history. Coming up, we're going to be speaking with the Uber cfo Alargi, Christian Murphy as as the Right Haling Platform posts a second quarter outlook the beat expectations. We're talking all things AI as well as delivery the Supremo Tech.
Checking in on shares of Uber company.
Reporting second quarter bookings outlooks the beat expector that we're out eight point four percent as break down striving bookings growth in particular, you' a CFOs with us Alergi Krishna Murphy, ALERGI, talk to me about why we're amid the macro concerns, amid maybe a slightly worrying environment with oil prices, for example, You're still managing to push forward on bookings on demand.
Thanks Caroline.
So I think you know, if you think about our quarter, the first thing I'd say is we're incredibly proud of the pace with which our teams have been introducing new products, and you would have seen just recently we at our annual go Get event, we introduced a number of new products and features that meet our customers where they want to go, whether they're developed internally at uber or through our partners like Expedia, we're bringing them best of breed solutions.
So that's setting us up for incredibly strong top line momentum, and we delivered twenty one percent growth in the quarter. This is the third successive quarter where we've done that kind of a mark for the company, and we are also in addition to those product innovations organically in our core, we also reported that we were able to scale our nascent autonomous vehicles business ten x here on year, which is again a really good starting possession for us to be at.
Now.
We're doing all of this in a very choppy macro environment, as you rightly pointed out. I'm happy to talk about some of the detracting items there, but what we have been doing as we get this growth, we've been focused on extremely disciplined operations from a cost management standpoint, and we're embracing AI increasingly to drive more efficiency for the company.
So that's allowing us to report EPs growth of forty four percent here on you as well on top of that twenty one percent and top line growth, and it's setting us up really well for the rest of the year. And you see that in our outlook, which I think met and exceeded expectations on both top and bottom line.
Let's take into that Uber Expedia partnership.
It's only about a week old or so, and I can understand that it's sort about adding hotel bookings, Like, is this some sort of real uptick to subscriptions? Do you think in the longer term, how does it help just bring more and more people back to the app time and again?
Yeah, yeah, So I think the important thing to know there is we think consumers who engage with our products across our portfolio are incredibly valuable to us, and today only about twenty percent of our monthly active consumers engage across the platform on both mobility and delivery services, but when they do, they drive significantly higher growth, bookings profits
for the company. And underpinning all of that activity for US is our Uber one program, right, and we talked about getting to about fifty million members as of this quarter.
We added about twenty million.
Members the last year alone, and now these members drive fifty percent of our gross bookings for the company. When you think about a partnership like Experia, what we are trying to do is to expand the surface area of what we consider cross platform and today's mobility and delivery
in the core. But hotels are a very adjacent opportunity for US, where fifteen percent of our mobility gross bookings comes from airport trips, forty percent of our US riders take trips outside of their home cities, and then last year we did one point five billion trips globally that
happened in outside users' home cities. So when you bring in a program like this, it allows us to bring the best prices to our consumers on hotel bookings from experience platform, and in addition, we're giving them ten percent cash back which is quite incredibly valuable, which they come back and spend.
On our plot.
Can I talk about the B to B business?
You want it to become a ten million dollar plus business briefly?
Like?
What are the growth markets for that?
Yeah?
So very exciting trajectory there for us as well. We noted that we're at now five billion in gross bookings on that business and it's growing forty five percent relative to that twenty one percent total that we talked about. When you think about our B to B business, it's effectively bringing ubers services across both mobility and delivery to enterprise grade sort of modality to customers across the enterprise stack.
When we where we are today, we are at about three hundred thousand organizations globally that are using our services through this offering, and we do think that over time we can service as many as a million organizations globally and that would allow us to get to five get from five to ten billion dollars there.
It was CFO Alergy.
Christian Murphy, thank you very much indeed for joining us today on all things earnings. Let's turn our attention to energy now, because Microsoft is considering delaying or abandoning is ambitious clean energy targets. According to sources, the reason AI race and most body four joins us for more on this. Just spell out what the targets were for Microsoft, why they were so perhaps over and above others in the space.
Yeah, you remember, there was a point in time where we heard big companies talk a whole lot more about the climate than they do now.
Right.
Microsoft was one of these large tech companies. I was quite vocal, and they said that we're going to match one hundred percent of the energy we use in our offices and data centers by putting clean energy back onto the grid. That might be solar, battery, wind, stuff of
that nature. But of course these targets were set before the AI boom, and now they're racing to get as much power as they can and starting up gas power plants, and so our understanding is that inside the company, there's a growing sense that we're going to have to revise and take back some of these ambitious climate targets that were so important at least to our marketing.
You say, talks inside Microsoft are ongoing there's no final decision. In fact, you spoke to a spokesperson for the story and talking about how they're continuing to look for opportunities to maintain that annual matching goal. But look, they're not commenting on the much tougher hourly commitment.
Was that a tell?
Yeah, it's one of these things that's quite wonky. I mean, I certainly had to learn a lot of these differences, but matching on the annual level is not quite as difficult because essentially, during the daytime there's a ton of clean energy, largely due to solar. Matching your energy use in the nighttime is the big challenge, especially because data centers run twenty four to seven, and so you could maintain your annual matching and it still sounds pretty good.
But what this is, and it's important to recognize, is it's a step back on climate goals. Assuming they go through with this decision, I think.
Makes Brady ford the impact of AI, we appreciate it.
Thank you.
With AI costs, open ai expects to spend fifty billion dollars on computing power in just this year.
That's according to the company's.
President, Greg Brockman, testifying in open AI's courtroom battle against Elon Musk. Brockman also said he and other co founders were concerned that Musk lacked the patients and AI understanding to run the chat chypt maker. The trial continues today. Coming up Disney's bottom line. While it gets a boost from some hit sequels, it got some what.
To come as well.
We're also talking about the streaming turnaround, resilient spending in the parks.
There's a new CEO and it was pretty good news to him.
As the stock reacts up to seven percent, the best day for Disney in a year at least. Let's talk about NASA one hundred one and a half percent the socks again.
Chip stocks are on fire.
We see Nvidio inking deals of corning to ensure that there's AI infrastructure supply, and AMD really impresses on its earnings.
This is brumbo tech.
Welcome back to bloommeg tech. We have got techtogs in demand. There's geopolitics at play. There's hope that there is some de escalation between US and Iran and that plays into the markets. But so two to earnings and I'm looking at the nastag up one.
Point six percent.
We're a record high again for the tech heavy benchmark, and we think about what's leaving the pack in terms of points. There's a lot to do with earnings. I dig into one of them. Disney currently having its best day in a year, new CEO Josh Damara, able to deliver strong results in particular. Look, we're up six percent on the name. We're just rolling over from our previous peak. But this is all about a company that's getting more optimization,
more monetization from streaming in particular. And look, Bloomberg Intelligence is pointing to the strengthening growth outlook and more consistent earnings trajectory. More broadly, as a company brushes off part concerns with higher and exbra share guidance too. Keith Raganavin from Bloemegg Intelligence joins us now and look, can you talk about perhaps the anxiety going into this about the consumer and they show resilience.
Is it the box office? Is it the was working?
Everything seems to be working right now, Caroline. And of course, coming into this quarter, there was a lot of concerns about whether Disney would in fact lower their guidance for the full year, and they did exactly the opposite, which is why we're kind of seeing the shares really react with so much more confidence today. So, you know, on the theme parks, which is sixty percent of total company profit, we were expecting, you know, very very modest profit increase
for the fiscal second quarter. They actually outperformed with five percent increase in profit, and you know, they attribute that to pretty strong per capita spending, even though visitation was a little challenged, so international visitation to their domestic parks has been heard by you know, a stronger dollar and some of the geopolitical tensions. But despite that, they kind
of delivered. And really, I think the upbeat commentary for the fiscal third quarter where they talked about, you know, a pickup in demand and some of those attendance headwinds kind of fading away, really lends credence to their very optimistic outlook for fiscal twenty twenty six and even fiscal twenty twenty seven.
It's all about what we're discussing at the top of the show, the flywheel effect of the IP and how attractive it is that plays into the streaming into the content. Just to listen to Josh Tomorrow on the call yesterday, what he had to say.
We centralized television programming within Disney Entertainment DTC. So we're programming for Disney Plus and Hulu while being smart about window and content to linear so that we can expand reach.
And maximize monetization.
And we also integrated our games business into Disney Entertainment and this creates new opportunities to cross promote franchises and use games to extend storytelling and ultimately develop new ip.
And of course was this morning not last night? My days are a loss eitho when we're in earnings, I'm interested as to what Josh did to convince about perhaps his big epic games bet, the Fortnite bet that people have been worried about to start of his reign.
Yeah, so it's really, you know, as part of that
whole content strategy. Yes, you're right to point out video games, and they're basically trying to create, you know, this one stop shop really using Disney Plus as kind of the hub for so many more products because you know, at the end of the day, at Disney has such a fantastic product portfolio with of course streaming, but then you have movies, and you have theme parks, and you have merchandise, and you have video games, and it's really, you know,
Josh Tomorrow kind of setting the stage for achieving that whole next phase of growth by leaning more heavily into that Disney Plus experience. Right with video games, you have access to a whole new audience, a much younger audience, you know, whom you can sell into. And that's exactly what he's planning to do. But it's really about reintegrating
the content engine as a whole. And I think he did a pretty good job of convincing investors that he knows exactly what he's doing and he has a plan in place.
Now we're all excited for Devils product.
Too, if you haven't already seen it, but took us to another place where content is coming. Warner Brothers Discovery got their earnings after the Bell.
Yeah, So for Warner Brothers, it's just such a completely different story. I mean, I think, you know, fundamentals their earnings. That's a little bit of a sideshow here. It's all about M and A. We do know that one of the numbers that we're going to be looking for as the street will be is at TV advertising revenue and
advertising revenue in general. We do expect a pretty dismal quarter if you would you if you can call it that for TV advertising, just because Warner Brothers Discovery lost its rights to the NBA, and so that is definitely going to have a huge impact. But other than that, any color that you know they can offer, just generally from an M and A perspective, although I doubt they will do that.
It's a busy timmy if you too, Thrang and app and we so appreciate you of Bloomberg Intelligence.
Let's stick with those earnings.
We're getting back to MD why because it's the biggest points contributor on the nasat one hundred, that a record high.
It shares a record high. We're up seventeen percent.
Bluebag's Round for Stelca has been writing about well, some.
Of the competitive threats that are coming in video's way.
Let's go in on AMD because this isn't actually just a GPU story, this is CPU story. This is about a total addressable market that doubles.
Yeah, good morning, thanks for having me.
So what I would start with is that AMD coming into this report was coming off its biggest one month gain since the dot com era, so expectations were really elevated for this report. And even with that, it really just blew everyone away. Very strong results, very strong forecast. At least a couple of upgrades I saw, including from
Goldman this morning. People were very impressed by their ability to draw like really impressive growth and really sort of establish themselves as a major player within AI.
Some of the price target changes were actually I watering.
I think some of them.
First Team were doubling their price target on AMD, so big moves. Ryan, what about in video playing a bit of a catch up today, because you've been writing a lot about how maybe it's been beaten up when the rest of the market, in the socks at least, have gone up into the we've been worrying about competition.
Yeah, truly interesting is if you look at the socks, it's up I think about sixty percent since late March. However, in Vidia, the biggest company really in the world, certainly the biggest semiconductor company, really hasn't been participating in that rally to the same degree. And it does seem like there is a growing appreciation that a couple of years ago it basically had a monopoly on AI chips. Now we are seeing more and more people come into this market,
including some of Nvidia's biggest customers. So Alphabet last week talked about how it's going to start selling its TPU chips to other clouds. Those are specifically designed for AI applications, so there is a lot of demand for them. People even view them as superior to in Nvidia products in certain use cases. Amazon has its own chip, Meta is developing its own chip. Microsoft is These are all of
Nvidia's biggest customers. So while it is dealing with competition from the likes of AMD, Intel, Qualcom, all these sort of traditional chip makers, it is also seeing more aggressive moves into the space from its biggest customers. Like I said,
Alphabet probably being the most notable one. Certainly people are starting to wonder what does this mean for Nvidia's growth, margins, pricing, power, market share, all of that if we start to see some of its biggest customers looking to reduce their reliance on Nvidia.
Most ran Laselca.
We thank you very much for the round up on chips and let's stick with chips. The semiconductor market is on track to hit one trillion dollars, but global tensions rising demand of forcing the chip supply chain to adapt. That's the focus of this week's episode of Bloomberg Primer, Take a look.
AI is booming.
AI chips accounted for more than one quarter of all chips sold in twenty twenty five. That figure is expected to reach more than half by twenty twenty nine. Chip demand is no longer dictated by which new iPhone or PC will have customers lining up.
What has changed over the years in the semiconductor industry is since we're seeing such a surge in the need to build data centers for AI deployment and applications, we're seeing a more sustained growth period in semiconductors as opposed to the old fashioned sickle call when we used to have Intel come out with chips that everybody had to upgrade their computer for.
Spending on AI infrastructure like data centers is projected to soon cross the one trillion dollar mark.
So the demand for these chips is there.
There's just one maybe not so nanoscopic problem. How concentrated is too concentrated for this supply chain. Here more from the team at Bloomberg Originals on today's episode of Primer. That's Tonight Bloomberg six pm ET or on Bloomberg Originals at eight pm New York time. Now, sticking with chips, let's take a look at today's big number, fifty five
billion dollars. That is how much SpaceX is estimating elomusks Terrafab chip factory will cost to build along with Tesla's according to a public notice which shows the estimated total capital investment could actually write to one hundred and nineteen billion and the additional phases of the project are completed. Coming up, Apple going to let users choose their own
AI models across iOS twenty seven. More on that next, As Broomberg tech cool and I was trying to turn its devices into a comprehensive AI platform with the iOS twenty seven, this full users will be able to choose from multiple outside AI models like Google's Gemini or own products. Claude Bloomberg, Mark German is here with us, and Mark is it trying to be agnostic here in some way?
In some way it's trying to be agnostic.
But what it's really trying to do is understand where it's at in artificial intelligence. And if you look at Siri, you look at the Apple intelligence capabilities, there are nowhere up to par what you're seeing on Android. What you're seeing from competing devices, what you're seeing from CHADGBT, Claude, you name it, so they recognize that. So the name of the game is making the default offerings, right, Siri,
Apple Intelligence competent and good enough. Right in the same way that the built in apps on an iPhone are competent and good enough. But then you have an app store where you can outfit your iPhone with a bunch
of apps that many people consider superior. But you're still using an iPhone, and you're still driving services revenue to Apple, and obviously the harder revenue because they're buying you're buying their products, and so in the same way, they want to make the AI stuff good enough, but also offer customers the ability to put their own choice of AI models on top of features or to power certain features.
So you're still using an iPhone, and maybe you're even making them more money by subscribing to different AI services like chat GPT or Geminii their platform, which they'll get a cut of through the app store.
So at the moment mark you can interact with chat GPT.
That sort of got the first in with Apple across some of its functionality, but when it comes to sery. We understand that it's alphabets technology that they're sort of turning towards.
Where are we going to see and feel it differently?
So there's a couple of things going on here, right.
So Apple Intelligence when it first launched in twenty twenty four, Siri, that was based on Apple models, but there was what's called an extension to be able to tap into chat GPT. Now Apple's rebuilding Siri, so it's in house Siri using Google Gemini models, but that doesn't have Google Gemini functionality. It's basically like they hired the engineers from Google to fix Siri because you know, obviously they're doing a better
job building their models. But now in addition to chad GPT, you'll be able to tap into outside AI sovices, Gemini being one, Claude being another. And we'll see if they end up allowing meta Alexa.
And you name it.
In terms of when this is all coming, So they'll introduce these new features as well as the Revampseiri in June on the eighth at WWBC, and they'll roll it out in September, and I think if it rolls out any later than that, another disaster on their hands.
But I think this is going to happen this time.
Is this going to be enough?
Is this Apple being In the longer term, I'm making the decision that they are just going to outsource this.
Well, let's start with the short term.
In the short term, if you're a customer, if you really can't ask for more.
Other than to have access and have optionality to have anything.
Right.
As Gemini improves, as Cloud improves, chat youpt improves, you're going to get the best stuff on an iPhone. So from a customer standpoint, that's great. From a long term standpoint, I still think that Apple needs to get improved models.
They need to be on the frontier of things when it comes to AI, because they have all sorts of hardware plans in the future, and if you're a hardware company like Apple, you don't want to be reliant on third parties to power the underlying AI powering those products. So in the short term they're going to be great. In the long term, they need to get things moving in a far better, more competitive direction.
And we're likely therefore to see more of these announcements coming. And you as always set us up for what to anticipate with Apple Rumg's Mark gum and in some Frantsisco on all things Appleine and integration of AI.
I'm but used to say. Now though, we can get back out to.
The Milkene conference in California where Bloomberg's Joe Matthew and Krol Masser are sitting down with Kathy would have ARC.
Let's listen in.
All right, Paul and Scarlet, thank you so much. We 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 Elon 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 and 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 weaymos 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. We 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 IPO, Kathy? Do you anticipate there's so much enthusiasm going into it, massive size, 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 space exploration. 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 animal will continue? Do you think there will be some settling it.
I think 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 art 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 and 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 like 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 orbit bild 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 tricity 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?
We don't think so. I don't think so. We think we're going we need all of it.
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 A M D. 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 A. I'm going to give her a shout out because I heard her speak and she she was saying, you know, people are chasing GPUs. They're they're going to be really shocked at how Agent k 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 examples 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 this 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 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.
Bring a political implication though, to what may or may not be available to people if the White House is choosing which platform we ought to use.
Now 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.
It's a big meeting at mor Lago. Like I know a lot of crypto folks.
They 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, is 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 gonna have like IM just a million more questions. Who's doing Kathy, thank you so much, really.
Appreciate it, and thank you really so much.
Really appreciate it. Kathy would of course, she's the CEO, CIO and of course founder of arc in Vest. Someone like I said, it was ten years ago, yes, that we first started talking, yes about Elon Musk's so really tremendous to catch up with her again. And I feel like we we didn't even talk about alphabet, which I know was a great call for you before earning.
Before earning.
Yeah, believable