Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive from coast to coast with Caroline Hide in New York and Eva Low in San Francisco.
This is Bloomberg Tech coming up.
Tech stocks rebound is investors see clarity around the war in Iran.
Five days into the conflict.
Plasanthropic is on track to generate annual revenue of almost twenty billion dollars, more than doubling in a few months. This admitted clash with the Pentagon over AI safeguards.
And Apple comes after the PC market and budget minded shoppers of its new MacBook Neo. We have the details. Interesting day to launch a product. There's volatility around the world when it comes to tech because we want some certainty around the war in Iran and Ceranti is.
Not what the market is getting at the moment.
And it's an extraordinary day once again when you think about also the economic data coming in strong for the services sector, inflational pressure actually dialing back. But now the market tries to understand where the tuck moves and a's that one hundred as you say, big tech in charge today we're up one and a half percent. Bitcoin also seeing a risk asset move into that.
We're up almost eight percent.
Seventy three thousand is where we trade crude down, and that's maybe alleviating some of the pressure on stocks.
We'll get that update from at least the Pentagon's perspective and the US perspective.
What's happening in Iran.
Overnight in Korea, the costs be the main benchmark index dropped twelve percent, the most on record.
There was a halt very early.
In the Korean session for volatility, and it was those two names that we talked about twenty four hours ago that provided about volatility, Samsung and sk Heinix. Part of this is what's happening with Iran. Part of it is that Korean inequities were massive outperformers. But it's just a moment in time. I'm looking backwards. But my goodness, that was a market check that maybe we didn't expect this morning.
And again it's based on leverage.
But let's talk about the leverage that US Event Secretary Pete Hegseth has at the moment, delivering a briefing this morning on the situation in the Middle East, saying military operations in Iran will accelerate.
This is not a mission accomplished situation. This is simply a reality check. The combination of US and Israeli intelligence and combat power will control Iran and will control it soon.
Blumergs Tyler Kendall is at the White House with the latest and he made reference to the Iraq War there by saying, this is not mission accomplished. But where are we in terms of the clash with Iran?
Hey, Caroline, Well, as you heard the Secretary Pete Hegseth there is reiterating that the US has no plans to let up its military campaign in Iran and maintained that the US has enough weapons stockpiles to keep this going until the country's full objectives are achieved. Secretary Heagseth did outline that the US and Israel now have what's being called uncontested control of Iran's airspace and that we should expect this mission to move into a second phase where
we will see more strikes deeper inside the country. We also heard from the Chair of the Joint Chiefs of Staff, Dan Kine, that said the US and Israel have hit over two thousand targets inside of Iran and confirmed that a US submarine sunk an Iranian naval vessel for the first time in international.
Waters since World War Two.
Now, there's a lot that we're paying attention to here, but it does not appear that diplomatic talks or a viable off ramp at the moment, even as The New York Times reported this morning that Iranian operatives reached out to the CIA through a third party country to talk about potential negotiations the day after the attack started. However, Ed and Caroline, we heard from President Trump just yesterday
saying that the time has passed for talks. As US officials make clear that they are accelerating, not decelerating, as this Defense secretary said earlier.
Today, lots of headlines on the Blouebg turn constantly about what's happening in Iran. Buried also in the news cycle is the latest on tariffs? What do we need to know?
Tyler Well And we.
Heard from the Treasury Secretary in an interview earlier today who said that we should expect the global baseline tariff, currently at ten percent, to go up to fifteen percent as soon as this week. We also heard from the European Union, according to people familiar with the matter, telling Bloomberg News that that trading partner does not expect their
rate to go up to fifteen percent. Now keep in mind President Trump put this new baseline tariff on the table after the Supreme Court struck down his tariffs imposed under IEPA, the International Emergency Economic Powers Act, and now he's using this different authority. But that will run out
after one hundred and fifty days without congressional approval. But I was in the Oval Office yesterday when the USTR Jamison Grier, announced that we should expect the administration to wrap up some of their other trade probs that would put tariffs in place in a more durable sense within the next five months. Section three h one investigations into alleged unfair trade practices.
We already have those.
Investigations ongoing against China and Brazil. But Ed and Carolina, a senior Administration official, tells me that we should expect more investigations to be announced in the weeks ahead.
Blimberg, Tightler, Kendall, thank you very much. Let's get latest on markets, technology, markets and sentiment with Todd Elstein, Panassa's investment CEO and portfolio manager. I'm just looking down on my Bloomberg. You know, the NAZA one hundred is now modestly higher on the week. Things change very quickly. How much of a shock, particularly to the technology sector and the view of the technology sector has the war in Iran bin?
Well, you know, it's a great question. Great to be here today, and I think when you think long term, when the S and P five hundred was down twenty four basis points coming into today, you're today. So I think this is really when you talk AI, this is a generational investment where the demand for compute as the
economy goes agentic. It's just a very durable growth that the war is clearly from a human standpoint, you know, we hope and pray for a de escalation, but I think the overarching investment wave is just going to be very large over the next several years, and that's going to be a durable trend to invest behind. Despite some of the headlines and supply shocks we're seeing.
Today, we saw equities and creer the costs b drop the most on record. As Caroline quite rarely points out, you know, that's an issue of leverage as much as anything else. What do you do in this situation? Where you have a war in the Middle East, in Iran, you have a fluids tariff policy, let's say, and again you know we are looking in particular at the energy sector in the context of Iran. What are you doing right now, Todd?
Well, so, thirty first year at Parnassas, twenty five years managing in the Parnassas core equity strategy. We haven't put in a trade since this conflict began. We're focused on great American companies, durable franchises, the AI investment wave and just quality companies, quality compounders. So for us, our clients really come to us during these times to invest in
durable businesses. So again the headlines can be emotionally jarring, but we're not here to predict the price oil for the next three weeks or some of the short term supply shocks. It's really invest in durable earnings. Tech regime changes, quality American companies, so it's the applied materials, the costcos, the master cards, the Microsoft's and keep it low turnover. And that's why our clients come to us during these times for that long term perspective.
Ton is the long term perspective still one where you build out an AI infrastructure or the winning trades of twenty four twenty five, the in video is still the way to go or is it shifting?
Well, I think there's a durable investment behind the infrastructure, So we like to look for the bottlenecks and AI and we think the compute demand is going to exceed supply for quite some time, so we're looking to invest in the building blocks of that AI infrastructure that are increasingly valuable. So think about applied materials building the equipment that builds the chips that are bending the laws of
physics and almost making impossible possible. Companies like Synopsis, which sells the software that designs the chips, just think about chips being thirty times more complex to design over the next five years, going from two hundred billion transistors to a trillion on a chip. More power, more performance, more workloads, more augentic. So we're looking at those areas of the AI value stream that are durable, again, designing the chips,
building the chips, and then that ecosystem. Clearly, companies like Amazon, Google, Microsoft have scale. Companies Broadcom and custom Silicon, we think they have a long run way of growth. So we're looking for those value streams that are going to help supply the compute needed for this economy long term, to go agentic, which is more inference, which is more adoption.
Going agentic that has upended some trades when it comes to software. I was lucky enough to speak with Paige Duty, CEO and chair Jennifer Tohada yesterday, and she was talking about how she sees the stickiness of certain software companies such as Hers.
Just take a listen to what she said, Todd.
Somebody once told me that software, enterprise software is a little bit like a tattoo. You can take it off, but it's really painful and it leaves a mark. I just think that our customers are going to make very intentional choices about where they're going to invest in using AI to build something themselves, and where they're going to trust an expert.
Page Duty is about digital resilience Todd. But her argument is that their moat is the infrastructure that they've spent a lot of money building out and the trust that they have with their customers. Where are you seeing opportunity in software? Where are you concerned about in software?
Well, where we have some concerns is we recently exited investments in service now and workday. Again good companies, just the forward range of outcomes got too wide for us, so we have backed away from those where we're invested in software. Clearly, a Microsoft, we think is a dining room table long term asset that they have in the
value chain. We also, again as we talked about a moment ago like company Synopsis embedded in AI chip design where we have silicon go into systems more complex transistors and then infrastructure AI and robotics, we think a company like Synopsis is embedded in workloads to unlock productivity of chip designers. And so those are the areas that we think are mody durable in workloads, and we think our long term investments to make where the range of outcomes
we think is skewed more positive. So again a Microsoft, a Synopsis a bit more concern around a workday and a service now, and we remain invested in SALESFA Worse, which we think is working hard to have an agentic platform, and the valuation of salesforces relatively compelling if you look at the forward embedded expectations.
Right now, certainly after a more than forty percent sell off that we've seen in the last twelve months.
Todd, It's always great to catch up with you.
Thank you for your time today, Todd Olsen of Finass Investments.
Now coming up, we speaking with the Tato Institute.
Jennifer huddleson about the implications of the feud between the Pentagon and Anthropic.
And what are you watching.
Yeah, some headlines just across the Bloomberg terminal and it relates to Roadblocks. Nebraska's attorney general has filed a lawsuit against Roadblocks, alleging that they have conducted deceptive safety practices, including allegedly enabling child exploitation. That the stock still higher five percentage point, it did sort of take a leg lower in those headlines. Here will continue to track that we have been tracking Roadblocks and other platforms when it comes to safety.
This is Bloomberg Tech. A surprise move.
The architect of Ali Baba's main Ai platform, Quen, has left the company. Jiang Lin was one of the most influential figures behind Ali Baba's transition to AI. Linn did not give a reason for his departure, which has raised questions about the Chinese tech giants' future plans and the country's ability to catch up to US competitors Linn and Ali Baba representatives did not respond to messages seeking comment.
Currently, let's stick with AI ED because Anthropic is on track to generate annual revenue of almost twenty billion dollars based on current performance. Now that would actually nearly double its run rate from late last year. As the AI
company's few though with the Pentagon continues. Let's get the details of Bluemegg's editor across all Things AI, Seth Fiegerman, is notable the scale at which Anthrobert continues to grow, even though it might well be pushed out of government work if the threats hold true.
Yeah, as you said, you know, it's more than double a matter of months, which reflects the coverage that we've had, you know, in the league up to the Pentagon showdown, as we've seen more mainstream awareness of Anthropics, AI agents and AI coding tools in particular. On the one handed, shows that it has been like a position of strength in the lead up to the standoff, you know, getting significant traction in the enterprise market, but it also shows
what's at stake here. We're still waiting to see what happens if the Pentagon moves forward with the threat as leveled by Hagsavan Friday, and I think there's just generally a lot of uncertainty about how broad the impact will be on his business relationships.
As Anthropic was labeled a supply chain risk by the US government. At the end of lost three week open Ai did its own deal with the Pentagon right, and Sam Altman, the CEO of open a I, came out publicly and talked about how that was rushed and handled in his sloppy fashion. Our latest reporting is a base one. All hands within open ai yesday afternoon. What was said? What do we need to know?
Yeah, I mean peated some of that same rhetoric to employees during his real first chance to address their concerns, and reiterated the concerns that they might have been too hasty and announcing this deal on fraggy, which might have
made them seem more opportunistic. He stressed that open ai and the employees there are very much empowered to kind of share their expertise about how to best use their AI models, what their limitations and opportunities are, but he also stressed that it is not Opening Eye's place to basically weigh in on operational decisions from the Pentagon, by which he meant maybe employees might disagree with what's happening in Iran or with the rage in Venezuela, or they
might agree with one and not the other. It is not their place to tell the Pentagon how to behave on that matter.
Bloomberg Seth Figgman, Thank you very much. Let's discuss the possible ramifications of a fallout between Anthropic and the pents. Gott On Jennifer Huddleston as a senior fellow in Technology Policy at the Cato Institute, and you wrote at length about this a moment ago said that Anthropic had been labeled a supply chain risk by the US government. You go a little bit of a step further and say that they've been blacklisted essentially, and that there will be
ramifications to that. Please take it from that.
So I think that there are two things to think about. There's what does this mean for Anthropics specifically, and what does this mean for the broader conversation around AI innovation and the innovators in the American AI sector. For Anthropics specifically, this could certainly have consequences, not only when it comes to their contract with the Department of War. But we saw President Trump post on True Social calling for all
agencies to stop using this product. And what signal does this send to other whether it's contractors or other companies that are using Anthropic, both here in the US as well as around the world. More generally, for the AI community, there's also likely to be concerned about what does this mean that the government's willing to do in terms of stepping in if they don't like the decisions of a
particular product. What does this also mean for America's AI leaders when other countries around the world want them to make changes for the government to use their products for things that go beyond what they deem ethical.
In your paper, you cite the great Albus Dumbledore, and you say, as he did at the end of.
The Philosopher's Stone or Sorcerer's Stone, if you're in.
America, it takes a great deal of bravery to stand up to our enemies, but just as much to stand up to our friends. Why did you invoke Albus Dumbledore? And what are you trying to say that?
I think when we think about American companies typically standing up to pressure from governments, we're thinking about will American companies hold true to American values when they're faced with pressure from foreign adversaries, when the Chinese or the Russian government asks them to cross right lines that violate American values,
violate the ideas of civil rights or civil liberties. When Anthropic was faced with some pressure from the US government asking it to violate its ethics to make sure to remove what it felt were necessary ethical safeguards to prevent mass surveillance or the use of its AI and autonomous weapons, it also said no. And that's something that shows a great deal of courage, whether it's standing up to a foreign adversary and understanding the business laws there, but particularly
when it's standing up to your own government knowing that there could, in this case be very real consequences in the market.
Jennifer, what caught my eye was saying, this is a kin. This behavior is a kin to something we'd expect from the Chinese government.
Now, where should the agreements or not go in the future. You at the Cato Institute are all about limited government, but at this moment there are deep ethical questions about the future of generative AI and its implications for the use in the military and written large for.
The labor market. How does this get decided.
Should it be a Congress decision, should it be just a case by case decision.
One of the things that makes the situation unique is this goes beyond just a mere dispute over a procurement contract because of those additional threats, the threats to either the Defense Production Act or to label the company a supply chain risk. But I think it does highlight some of the underlying concerns or debates over how should we think about protecting civil liberties and civil rights when it
comes to AI use by the government. AI can be used for wonderfully productive ways in the government, just as it can in the private sector to help constituents find the services they need, but there are also real and legitimate concerns about the way it could be abused. Again in this particular dispute too, the issues where mass surveillance
and autonomous weapons. One of the places that we need clarity when it comes from policy makers is around what the government's going to do to restrain itself in its use of AI. This will help both citizens and innovators feel more comfortable with the technology, both in the government context and beyond.
Jennifer Hudelson is a fascinating blog. People should go read it. Senior fellow and the Technology policy at the Cato Institute, thanks so much for joining us today checking in on shares of Apple that are trying to hold on to gains today as they unveil yet more new products, and this week they've announced plenty, but today it's the turn of the MacBook Neo, with a starting price of just five hundred ninety nine dollars.
Maybebug's Dana Wolman joins us for the details.
This is about four hundred bucks cheaper than the usual price point for Apple.
Who are they going against here?
So this is really truly the first low end and I hesitate to call it low end, but the first low price laptop that Apple has put out, and this puts it in direct competition with all sorts of Windows PC makers that offer have long offered budget laptops, not to mention Chromebooks, machines that are sold not just to individuals who are on a budget, but also institutions like schools that are buying in bulk.
The question is, well, how did they do it?
And one of the ways they did it was to use the processor that has its ties to the iPhone, not the M five chip.
Just explain what's going inside.
Yes, absolutely so, in terms of just the internals inside, this puts the MacBook Neo about on part with an iPhone sixteen Pro released in twenty twenty four. And I think that the release of this machine really is a testament to how far mobile silicon has gone. As I said, companies have been offering lightweight, really cheap laptops for a long time now, but just because they have been available, that doesn't mean that we necessarily would have recommended them.
To most people. And that is because the processors available the.
Time for years were pretty low powered, and you really could feel that in the form of slow, pokey performance. And I think it is a testament to the quality of the silicon and the technical advance the technological advancements that Apple was willing to put out a machine at this price point run the mobile processor inside.
Yeah.
I mean John turnis in a statement he's the hardware engineering chief, talking about how from the ground up they've.
Built this piece of tech to be more affordable. But this comes at a time.
Where personal electronics is getting more expensive all because of memory.
Yes, absolutely, it really is striking that Apple was able to announce today a machine that's about six hundred dollars at a time when we've been warned that the prices of things like laptops smartphones are about to go up
precisely because of this memory crunch crisis. And I think that the price point combined with the moment where everyone is nervous about prices, about the prices of consumer electronics specifically, and also just the fact that this is a fresh new design with things like new colors, things that are things that do frankly matter to consumers who've been possibly holding off on a new purchase for a while. If I had to guess, I think this is going to be a popular seller over the coming month.
Right, And those macas and Mac pros, they had the entry level lowest storage spec removed, which basically carry an effective price hike. If you read the riding from the Bloomberg News team, bloombergs day in a woman, thank you very much, Welcome back to Bloomberg Tech. The war in Iran entering its fifth day, The story inequity markets at least is technology rebounding. The Naze one hundred is off session highs, but at one point four percent now positive
on the week. Things have changed very quickly. We still see movement in bonds. Looking at the US tenure yield four point zero six percent, it had at one point in the last thirty six forty eight hours gone above four point one percent. We're just kind of waiting to see the next step politically speaking, but we are tracking both public and a little bit later in the show private markets too.
We certainly are, and look, big tech is leading the charge in terms of stocks. Big tech is also heading to Washington executives from Amazon, from Google, from open.
Ai, and others. That's that to me.
The President Trump today to formalize a pledge to protect consumers from rising energy costs, so an event that Presidents actually alluded to during his Stage of the Union address.
Remember, we're telling the major tech companies that they have the obligation to provide for their own power needs.
They can build their own power.
Plants as part of their factory so that no one's prices will go up, and in many cases, prices of electricity will go down for the community.
As kt w Berg Senior editor Mike Shepard and for many we already heard Microsoft lead the charge, but then Amazon others talk about commitments they've already made.
Well, that's right, and.
They're all going to step in with this pledge, the so called ratepayer pledge. Later today during an event at the White House with the President, it's set the start at three pm and they are all going to assign this agreement. It's non binding, but they will promise to try to bear some of the additional costs that their new data center build out for artificial intelligence projects and infrastructure will bring in terms of a rising electric city prices.
They want to make sure that as those data centers are built, all those projects are carried out, that consumers are not forced to bear the burden of that. And now in this CARO, they will be agreeing to work with state governments and utilities on rate structures that will try to protect consumers. But that is further down the road, and all this, it's important to note, is non binding, so there's no guarantee that.
All of this will be carried out.
We are already seeing some states carrow take steps on their own to try to shield consumers. In New Jersey, for instance, the new governor, Democrat Mikey Cheryl, has frozen utility rate hikes in keeping in mind the vulnerability that consumers are increasingly feeling from rising electricity prices. The last Consumer Price Index report that we saw showed that energy prices are up six point three percent inutility bills, and that compares to two point four percent in year over
year in overall inflation. So this is a leading indicator in terms of what the president is worried about when it comes to the affordability question, which looms large in the midterm elections. But it also looms large for these big tech companies which are worried about some of the backlash and blowback from all those investments in artificial intelligent artificial intelligence on which they have stake not only so much money, but really their entror businesses.
Bloombergs Mike Shepard, thank you very much. Let's stay with data centers. We talk a lot about advanced hardware on this program for AI training and inference, but AI is also creating demand for storage hard disk drives to store the massive data sets AI generates. That's led to soaring valuations like wd's formerly Western Digital. This is a stock that has surged in the last year, up six percent or so so far. In twenty twenty six is up
eight percent in the session alone. WDCO I mean ten is with us and welcome to the program.
Thank you for having me.
You know, I think there are loads of people that are going to watch this program and be like, I've got a WD hard disk drive HDD somewhere.
In my home. I understand you have one and I have one.
Right, and it protects some of my most valuable memories in terms of photos and videos. But the story is data center, and probably it's underappreciated to start with that, where HDD fits in the data center story, and then use that to contextualize what is crazy demand right now?
Sure, I mean, if you look at the AI value chain, a lot of focus has been around the computer resources.
Right.
GPU's memory, that's a source of compute, that's generating data. But ultimately data needs to get stored. That data that's generated, that needs to be stored, right, and that's where hard drives really come to the fork. Eighty percent of data that is stored in the cloud is still on hard drives. And if if you look at where things are going with AI, what is happening is actually there's a structural
change in how hyperscalers. The market really looks at the value of AI and as a result of that, as a value of data increases by association, storage increases as well because you need to stare more and more of that data. And a simple analogy to use is power generation.
Right.
If you think of GPUs and memory as the power generators, data is actually the fuel that powers right those power plans, right, and so really that is fundamental to enable EI going forward. So in short, if you don't have HUDs to be able to stall that data to generate that's been created, can.
We can we extrapolate on that analogy a little bit. So when we think about a data center, we think of it in terms of gigawats. A giga what equates to hundreds of thousands of GPUs depending on the on the stack. Is there an equivalent that our audience can understand when it comes to storage, So you know, alike for like that that you can chew on, maybe it's impeted bites something like that.
At that scale, there isn't really a rule of tumb that you could use, say, if you have a gigle out of compute, how much does that translate into storage? Because in a way, there's a bifurcation of compute from storage. If you think about AI. Every time you run an AI workload, whether it's training, it's inference, those compute resources can be recycled every time you run a training model,
development or an inference worldload. But the data that's getting generated and as a result that gets stored, it doesn't get deleted.
Right.
So storage is actually growing because of the value of data increasing over time, and how.
Much is your supply growing? How much can you ramp up to meet the first demand.
So we've projected that exerby growth, which is the amount of storage just needed, is going to go at twenty five percent CAGO over the next five years. We feel very confident that with the technology enhancements they are bringing to be able to deliver higher capacity drives to the market, we're able to meet that demand going forward.
What's interesting is it's yourself and Seagate. Many would sort of see as yeah, the place that people come to.
How are you ensuring with this first demand and perhaps anxiety coming from cloud providers and they're like that they're not double ordering, that they're not ordering from you. At the same time as Seagate make sure that they get the fastest of the speedies.
Yeah, that's something we pay very close attention to, looking at the inventory levels that our customers have, working very closely with them to reassure them that we have a technology room net that's going to be able to meet their needs. And I think what they also appreciated. Storage has become a critical piece of the AIDETA center infrastructure stack and as a result, we've really shifted the partnership
model with our customers. They're giving us really good insight into the applications and workloads they're bringing to market over the next few years. A lot of it's going to be multi model in nature, and what I mean by lots of it's going to be a video based because video is going to be a big driver of storage, and that's giving us a lot more confidence in terms of the demand that they're signaling to us and also ensuring that they're not creating an oversupplying the market.
I mean, you talked about your innovation roadmap. Can we talk a minute about hated assisted magnetic recording For those who aren't in the lingo, but basically this is something that Seget's been pushing forward on and you too, have been bringing that sort of innovation.
Where are you in.
Terms of neck and neck and you're already bringing this to customers.
How is it testing out?
What is it?
So we're already qualifying here this is a magnetic recording or HAMMER affectionately as we call it, with two customers. But we've taken a slightly different approach from our peer where we feel a dual track process. Right. We definitely are committed to HAMMER and that's required to get us
to one hundred terwer bytes per drive and beyond. But in the interim, we feel that with our current EPMR technology for the next three years, we can actually get up to sixty terabytes and deliver it with more reliability, more quality, and more scalability to our customers and a hard transition to HAMMER.
So I've got to go back to something earlier. Why don't you just increase capacity.
We don't need to increase unit capacity. What we're actually doing is to use technology to increase the capacity per drive. So today we're shipping at the top end of our products a thirty two terrabyte hard drive. In the second half of this year will be shifting shipping a forty terrabyte drive right between now and twenty twenty six will be shipping close to a sixty tia Hart Drive. So just imagine that the capacity for drive is doubling in the next two years, so we don't actually have to
increase the number of units we're producing. That's great for our customers because it means better to all the cost of ownership thru higher recdentity lower power consumption. That's something that also it is the lower power demands of the listeners.
We are going to have to compress this.
But WD separated sand disc right nand Flash. That has been an interesting financial transaction and hopefully we can get to it of time. But the basic conviction is that HDD is the way to go focus. But you know, the Flash guys would argue in the context of the data center in the cloud that SSD is going to have a role. What is your latest thinking on how that went and the project long term?
So I think that the spin has been a very successful one. If you look at how both companies have performed since the spin, close to.
A yeog astonishingly, but both have done really well.
I think what has given both companies is singular focus on their specific technology road maps, specific segments of the market that they play in as well, and specifically your point. We are symbiotic, right. I mentioned eighty percent of data that gets stored in the cloud on heart drives. SSDs represent the next fifteen to twenty percent of it as well, so it's a symbiotic relationship. There are some workloads that require lower latency that are very much designed for SSDs.
When it comes to long term storage, the vast majority of metadata to support training and AI inference going forward, that's going to be leveraging hahds because of the superior economics that we deliver. We've also launched a month ago at our Innovation Day some new innovations coming out over the next twelve to twenty four months that's going to improve the data throughput and performance of hard drives. There will also be able to support the needs of AI workloads coming down the pode as well.
Your global company, we have a pretty global issue on a hands at the moment, how are you thinking about your supply chain? Carry thinking about ensuring that your customers get what they need and when they want. When you have manufacturing as far flung as Thailand as China.
Here in the United States, as well.
Yeah, we have a very global supply chain and quite a diversified one as well, and we constantly model rist scenarios like the conflict they're unfortunately seeing in the Middle East right now. From our current perspective, we're keeping a very close watch on it. I'm pleased to see us of now, none of our employees in that region are impacted and there's no material impact to our business as well.
We appreciate being so candid and talking us through what is a fascinating part of the business. WD CEO there, Irving Twang, Thank you. Let's return to the conflict in the Middle East, where one of the major concerns has been cyber strike, though so far no major attacks have
been reported. Let's speak with Sanaz Yahah, co founder and CEO of cybersecurity start up Zafran and a former member of the Israeli Unit eight two hundred, the country's military spy units, as has anything been occurring and it's just been protected thus far.
Hello, good morning. Yes, we are seeing increased activity in scanning what we call reconnaissance in cyber of different cyber actors and cyber groups. Some of them are activists just want to make noise or denial of service.
But we're still seen seeing.
Like one of some of those apts trying to get access.
Mainly to critically infrastructure.
Thus far not to any end, but soon as what are the tactics, what deployment, what sophistication do you tend to see from Iran?
It's a good question. Look, actually they are very under pressure. Look, this is the first time Iran ever launched a missile on a European country like Cyprus, so they are all out, They are using all their existing arsenals, They are using a lot of a to enable the value.
But I don't see any more.
Sophistication that we have seen before, just big, big volume, like they are all in all apps, and I do believe that this time also since even the cyber groups in Iran are kind of under pressure, there are being attacks on those.
Places as well.
So I do think we should be more proactive, not reactive, and make sure at least we have protection in place against the non tools and techniques that they're using during the last two.
Years sana as.
Yesterday, the Homeland Security basically briefed the Senate on the heightened domestic risk here in the United States in the context of some form of response from Iran. With that in mind, could you just help us understand Iran's cyber competence, how much of a threat nation to nation they would pose if cyber would be one of the tools or things that they pursue in response to what is happening.
Yeah, for sure, cyber is a part of Iranian regimes doctrine for defense and offense, and there are at least three different entities in Iran.
That are actively.
Claiming and engaged with cyber offensive activities. One of them is Ministry of Defense, the other one is Ministry of Intelligence, and the last one is IRGC, which is like the revolutionary regards. Each of them has tools and techniques and
a lot of people. And also there is some cyber partnership between the nation states and a cyber crime So I believe that these people are going to be still active and trying to deploy, for example, ransomware in many critical infrastructure, financial, healthcare.
And at the.
Same time also there is some partnership between Iran and other countries as well.
Are we talking in terms of risk it being US institutions that would be on paper at risk from such an attack or is it sort of at the company in corporate level where America is most on the defense.
The company and corporate ve like for the hackers, they are now looking for low hanging fruits. Look, there is something to understand about Iran. Iran main goal is to
keep the government stable. There is nothing they want to achieve more than just being governing Iran, and for that they have to show impact that they are strong, right, So more of the impacts is just to show that they can impact and damage Western companies corporate level and in order to gain back like that prestige they have inside Iran.
So there is no safe zone.
And I think actually those that they don't have cyber practice and cyber resilience in place, they are those that they will be the first victims.
Of this run.
So as of course, many would say that in this era of general to AI, well, the threat level just spiked to the right in many areas of cyber You are an AI native Threat Exposure Management company. So how is AI being deployed by Iran if at all?
At this moment, Iranian are using some.
Public AI modules in order to scale their weapons and the way you do a cyber activity, you need to get access first, and then you need to propagate that access to get your mission. They are using it in order to get access much more like that. Scanning is being done a lot by AI. They even built new weapons by AI at the same time. Since and we know about at least some of the groups doing their own agents in.
AI as well.
At the same time, it looks like they are at the beginning somehow in the journey and we find some bogs, if I'm saying their tools. Last summer they tried to hack some water system in New York and they had enough books I.
Created malwers that they didn't run fully.
But what is important, I think for your audience there is that the I is an also great impact for protection. Like before this you had to go and learn and understand like forty different groups and watch tools they have. Now those agents can also help the enterprise level and help the market to be reducing that exposure to the risk in a very autonomous Slippon.
Sanas Yesha, CEO of Zephyran, it's great to have you on the program.
Thank you very much.
As story we broke yesterday, Josh Chusten's five Capital and Indries and Horowitz are Co leading a fundraising round for Anderil. They can nearly double the defense deck startups valuation. That's according to sources who say they're seeing to raise four billion dollars at about sixty billion post money valuation. Carry interesting timing given what's happening in the defense sector in Iran. Interesting these two big venture firms leading this late stage.
Round and again another company that remains private for as long as possible. But what's notable is we're at this moment where we're questioning autonomous great weaponry.
We're at this moment of.
Ethical questioning, and we wonder how much that's something that's been debated in an investment.
There's no confirmation that any aerial tech has been used in Iran and no evidence or reports, but they do have deployment anti drone deployments in the Middle East with so common on US military basis. But they want to evolutionized the entire military tech stack.
Essentially, they certainly do, and we keep a close eye on the activity of both thriving A sixteen Z and how it continues to foster some of these enormously valued companies here.
In the US.
Meanwhile, coming up, all eyes are on broad Coom, a publicly US trade in company.
That has results after the bell, we'll discuss that. Next it's a BLUEBG Tech.
We're still keeping an eye on tech earnings and next start being Broadcom. After the closing bell, Wall Street expecting the chip maker to report strong results, but based on recent trading patterns, that likely won't be enough to reverse the stocks months long. Slum Let's get out to Bluebow
Tech Equities, reported Carmen rhyani Key. The expectation is they'll tell us more AI chip revenues from a six, but it will weigh on margins right because of the mix and it being lower margin against their software businesses.
What are we going to wait for? What are we going to watch for?
Yeah, I mean those numbers are going to be really important. I think something that investors are specifically focused on is this sev seventy three billion dollar backlog that the company talked about in its latest quarterly earnings release. So in that December release, CEO howk Tan tried to make it clear that that was a minimum that they were expecting in revenue over the coming few quarters for AI, but investors thought that that fell a little bit shorred what
they were wanted. That sent shares down after that report, and they've really struggled to recover ground ever since. So that's something that's going to be really important. The other thing that I'm going to be watching is how the company talks about its software unit and the questions that
analysts ask around that. So that used to sort of be a benefit, it would offset the cyclical nature of a semiconductor portion, but now it's looking like a little bit more of an anchor and is also probably something that's weighed on shares in the last few months.
Yeah, SOFA has been beaten up as notable is Broadcom shares of down significantly, but they're still quite expensive in comparison to well historical numbers.
Yeah, so we've seen the valuation come in a little bit, you know, in this broader slump, but they still trade at seventy twenty seven excuse me times forward earnings, and this is a premium to both the S and P and in video, and so investors are maybe looking at that and saying, you know, maybe this is too expensive.
It should come down a little bit more. It's above the five year average four stocks, So definitely something that people will be watching, especially after in Vidia's earnings last week. We're so good and then the investor reaction was so muted.
It's kind of funny timing in the earning cycle. We're either kind of late depending on how you look at it.
And this is their fiscal first quarter.
I think they have like a seventy three billion dollar backlog for the A six part or AI Chip's part. Do we look at Broadcom as like a learning for what's happening in aggregate in AI, data center demand and so on.
Yeah, I think that it definitely has a little bit of that feel in the market. It you know, it also has these partnerships with Google's TPUs. That's something that investors will be looking for. They want to know that that business is sustainable going forward, especially given large orders from Inthropic and I think open Ai as well. Those orders expected to sort of ramp into twenty twenty seven.
And as I sort of said before, there's also this big software part of the business, which is mostly from their acquisition of VMware. So there's a lot of places in this company that you could look for some sort of insight into how, you know, AI is going, how this trend is progressing.
How have people seen it as a key competitor to in video going forward? How much No matter how many of these companies say they're developing their own I six, open AI has, Meta has in many we still just can't get away from what feels like the dominance of in video and.
GPU out and OWCPU.
You're totally right, and Broadcom is really I think made a name for itself. It's been able to capture some of that market share with these different kind of chips, but in Vidia is still the king maker there. It's the leader in the market, and it's expected to be able to have sort of the biggest part of the market share going forward. So most analystic investors seem to think that that pie is still big enough to mean that there's revenue to be had for a lot of
different companies. But program certainly has I think a little bit more maybe to prove on those sort of specific things when they're competing with something as large as in Vidia.
On any given day, calmen, you're usually responsible or partly responsible for some of the most red stuff on the terminal. And you've got a piece about chart watches, the risk of the s and P five hundred correction and what's happening in Iran. Summarize that and the data that you're seeing as best you can.
Yeah, So, something that was really interesting yesterday, sort of the intra day lows in the market. It looked like the S and P was breaking out of this very narrow range that we've seen over the last few months and especially during the start of this year. It didn't quite close there, but chart watchers are definitely interested in this sixty eight hundred level and breaking to the downside as it looked like might happen yesterday, would potentially portend,
you know, the future decline. So the next level people are watching would be you know, sixty seven hundred, sixty six hundred and then even going down maybe to the two hundred daily moving average. Now on the flip side, if we could break back over that seven thousand range, it could portend you know, further upside for the S and P. So we're watching that all very closely.
Common Ranicky across the markets. We so appreciate it. Thank you,