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This is Bloomberg Tech coming up.
Apple surprises with a strong outlook, demand roaring and signs its coping with a supply crunch.
The stock source back to life plus.
Roadblocks plunges as an aggressive push to enhance safety tempered daily user growth will discuss for the CEO and.
A Bloomberg interview with Open AI CFO Sarah Fryer, who pushes back on the AI leader missing its own target and bigs up its stretch goals.
Let's talk about goals. Let's talk about where the nast that one hundred is and the moment if you're doing at publicly traded companies. We're up nine ten percent on the Key Tech benchmark ed. We are at a record high, and in fact we've had five strength weeks of gains, the same as we're seeing on the SMP longest winning streak and weekly gains that's back in twenty twenty four. Even as we're still waiting with Beta Breast between some sort of deal between the US and Iran a longer
term piece. The market is hopeful for that, but really it's been tech driving it, and you've got the keystock.
Yeah, Apple is the big story, and this is a big move higher. We're off session highs, but we're looking at a three point five standard deviations move on track for the best day at one point in almost a year. This doesn't normally happen. The last time we got an immediate post earnings move like this from Apple was in May of twenty twenty four. The outlook for sales in the June quarter is growth of fourteen percent to seventeen percent, and Apple was super clear demand for their products is
outpacing their ability to supply. We'll get into the specifics and more on the consumer demand side of the Apple story with Julia Ask Julias Advisory, a tech futurists who studies consumer behavior and of course a long time follower of Apple and what's going on inside Apple. Let's be very focused on demand. Apple has a wealthy, high income customer base and all of the evidences they're very happy right now to buy iPhone, iPad and Mac.
Yes, give me more.
Yeah, So I think if you look at the US economy. You know, the economy grew by two percent gup, and the Ied States grew by two percent in the first quarter.
Folks have tax refunds in their pockets, and we all know that we're in a I guess we're going to call it a k or a view shaped economy here where the affluent, you know, the affluent folks the United States are still doing well and still spending a lot of money, and that outpaces some of the things on the other side, like low consumer sentiment, high energy prices, and you know, things dragging the economy in the other direction.
It's a formula, right, an equation demand versus supply. And you know what Tim Cook's talking about is principally chips being a supply constraint and mac is a focus that they can't get enough out there into the real world. What was your interpretation of the real story there, of what's really happening, of how Apple's managing in that environment.
Yeah, I think you know, Tim Cook is a genius when it comes to supply chain. He's also been very good at navigating the political environment, and you know, you could I don't think they've gotten lucky here. I think they've planned well. I think the second thing you know, you look at too, when we think about all of the AI and all of these use cases, it's driving to demand for more powerful machines and more memory, and that certainly fits into apple sweet spot.
I'm surprised, Julie that there isn't more handwringing about the forward guidance that these constraints and supply chain are going to remain, that this is going to affect gross margin in the second half of the year. When Tim Cook's handed over the reins. Why is there not more worry about that.
You know, I don't have a good thing. I don't have to be honest with you. I don't have insights into the supply chain. I mean, certainly, Apple is one of the most prominent brands in the world. They probably have more power in purchasing in the supply chain, and they've also done a lot of things over the past couple of years to diversify their supply so it's yeah, I wouldn't underestimate what they're doing.
What's interesting is they've diversified the supply chain out of China, but finally China is back ramping in terms of demand. What did you make of the stella gains that they're making.
That, Yeah, honestly, I was impressed.
It was.
You know, one of the things that suppressed me with others is that the iPhone sales grew by twenty percent, but they seem to have made gains in every market around the world, and they kept emphasizing it wasn't just the developed markets, but it was also the emerging market. So an impressive quarter for sure.
We wanted to learn a little bit more about Apple's future and the story of Apple's growth trajectory, and we got the smallest of glimmers when John Turners popped up on the earnings call and he said, there's a great product roadmap. I'm just not going to tell you anything about it, simple as that. Really, I mean, what is the expectation from experience industry analysts like you on how John Turnus would be any different on the product side to how Tim Cook has been.
Well, I think there's a few things I keep in mind. I think the first one is there's really no device like an IT device on the horizon that's going to replace the smartphone.
You don't think the foldable phone is an IT device?
Okay, So maybe, but fundamentally we are glued to screens. We like cameras, we like social media, we like YouTube, we like watching sports. To a screen is important. I don't believe the next device, so to speak, is going to be an aipin that's listening to us and generating context for a number of reasons, like the use cases, the privacy and so forth. So I think that's a piece of it, and I think the other side of
it is too. Certainly, you know, we talk about AI will increase demand for more powerful devices with more memory and more speed.
Judiosk from Judiosk Advisory, it's great to have you back on the network. Thank you very much for joining us. Now look for that AI deployment you need on the hyperscalers to spend, and boy are they on track to spend at the moment over seven hundred billion dollars on AI infrastructure. A new macro analysis, though, suggests there's limited evidence that the payoff thus far justifies the extreme cost. Tatiana Daria Daria is here with us from New York
to break it all down. Tatiana, your piece actually caught my attention because I thought it was positive about the fact that people are using AI, deploying AI in their businesses, and actually the labor markets and climbing at the same time. So maybe we releave some angst about labor and AI, but the angst about paying for infrastructure and AI. What was the data that showed you that we're only not saying a payoff these hyper scalers yet.
Yeah, exactly so the macro anks. Perhaps this does not justify that because the workforce is growing, at least for the fourteen large corporations that I looked at, which arguably have the largest budgets to deploy AI. But it is the cost of those who are enabling this technologist worth it. And if you look at a cross measures, I mean, everyone has their favorite CFA metric, right, I'm not saying these are the only ones. But I'm a macroturist, so I look from a bird's eye view, and I looked
at things like sales to grow sassets. I look at things like return on investment investment capital. This is a key one because it has turned the corner lower in recent quarter so and it's a new development. It has been going up since ever since the launch of chat Gipt, and it's turning lower now. And that explains why investors are getting very gitterally here, because yes, it will take time for these investments to pay off, but how much time?
That is the key question.
Tadiyanna, I'm going to help the Bloomberg tech audience out a bit. The reason we're talking about this now is on Wednesday night, four of the biggest tech companies in the world told us this year they're going to spend a lot of money on the infrastructure that powers AI, and everyone wanted to know, well, what's the result of that,
what comes out the other side? And so in your analysis, the dynamic is that AI is improving efficiencies, it's not displacing jobs, and it's undermining the cost cutting case the technology. Tease that out a bit and also explain like why did you dive into this data set?
Yeah, well, the key question is, well, it's really AI revolutionary for companies yet, and it shows that it's boosting productivity but it's not displacing labor seta means the benefits are real, but perhaps modest and not as revolutionary as some altman is selling you and telling you that AI
will displace all humans. And then that has to shadow and how much demand will these companies ultimately get down the line right If a CEO decides, well, it's great, but perhaps not worth all of this investment because it's only helping me four percent, then perhaps they will slow down the spending, will slow down the demand. But the
big tech hyperscalers, they're investing ahead of the demand. And this is something obviously we've seen back in the dot com when the internet infrastructure is the same key risk. What they have going for now, the hyperscalers have going for them now is the strength of their balance sheets and their profits. That is earning them little bit of the benefit of the doubt. But some of this metrics
are already mixed. If you look at return on assets, it has been falling for Meta and Microsoft, but searching for Amazon and Alphabet. So only companies who are really delivering very solid results, like Alphabet it was just an outstanding report. Those will earn the benefit of the doubt more than the others because the evidence is really mixed across the companies.
Bloombergs Tatiana Derrie with the macro view and the data analysis and what's really happening in tech, Thank you very much. Now coming up Open AI CFO Sarah Fryer tells Bloomberg the company sees a quote vertical wall of demand for its products.
We have more from that conversation next Carot.
We've got some key CEO conversations to come up, and we've had some big volatility in the stocks that they represent. Roadblocks off by fifteen percent. This as they move aggressively. They say to adopt safety precautions. It's all about age verification, but it's that's putting some friction into new users. With down fifty percent, Twilio ramping up seventeen percent, the age of AI is an inflection point. We have both of the CEOs on later in the show. Stick around for that. Ed what else?
Okay, let's get to Shares of Spirit Airlines down severely, sharply about sixty percent after a report from the Wall Street Journals saying the company is preparing to cease operation operations after bailout talks with the US government have failed. That is from a Wall Street Journal report where they
cite sources. Remember last week, over the course of many trading sessions, we saw one hundred and fifty percent gains to the upside, bigger gains to the upside because there was an idea the US government would bail out Spirit.
Looks like it's not happening. We'll be right back. This is Spoomberg Tech.
Open AI CFO Sarah Fryar tells Bloomberg the company is meeting objectives and sees strong demand for its products. Pushed back on a Wall Street Journal report earlier this week that the company missed internal goals for revenue and user growth. Let's get the details from Bloombergshery and Gafari, who conducted that interview. I want to start with the pushback right that the metric that was out there from the journal is that they are not hitting a billion active weekly
active users on chat GPT. And in the course of the conversation you had with Sarah Fryer, she's talking about them hitting the highest levels that they have and stretch goals.
What did you learn from that?
Yeah, I think she was talking in the perspective of the internal revenue targets, which there were also you know in that report that Opening I did not hit some internal revenue monthly goals earlier this year and some other revenue targets. And what she said was that, you know, at the highest level. We feel like we're beating our plan, but how we often get there moves around from period to period because it's still a young business that's not
perfectly for pastable across every metric. So how I interpreted that and how she explained the stretch goals was an acknowledgment that internally they may have not met certain goals, but that overall, she you know, assured confidence in them meeting their revenue targets at a higher level.
Is sort of the.
Direction of how I interpreted her comments and swing that confidence with that quote saying we've got a vertical war of demand.
So it's still the argument that actually it's compute that limits the ability for the company to grow at perhaps and pace it even could.
Yeah, that's right.
So she talked about the fact that she feels there's still very compute constrained meeting. They want more compute, they're scouring for more compute. Now we've seen the Stargate plan shift as we reported a pullback and some sites in
Norway and UK. I asked her about that, and you know, the response again was that while the details may change and the types of compute deals they do, they do that overall, they want to be able to serve products like Codex or their new image generation model more broadly, and the compute is still a limitary there to getting more revenue.
Essentially, it is such a great story, basically the most read on the terminal throughout the morning screen and all about how they've got a genuine friendship, Sir Friar and Sam Altman. We appreciate the reporting. Thank you. Now. Elon Musk told a jury that there was no contract dictating the terms of his early donation to open Ai. Now the trial of the AI company's nonprofit status, Musk said he was reassured by his fellow founders that open ai would continue to operate as a charity.
Now.
During his three days of testimony that Tesla boss stressed his concerns about AI safety, Open ai co founders Sam Altman Greg Rockman, Well, they're set to take the stand later in the trial.
Ed Elon Musk's annual compensation from Tesla was one hundred and fifty eight billion dollars last year. That information revealed in a regulatory filing from the company late last night, about six months after investors signed off on a one trillion dollar stock award for the Billionaire and compensation plan. The finally also offered new insight into the overlap between his companies, showing that Tesla made more than half a billion dollars in revenue last year from selling products to
other Musk run companies, in particular XAI. Another top story, The Pentagon has struck agreements with Nvidia, Microsoft, Reflection AI, and AWS for use of advanced AI tools on classified military networks, according to a Defense department's statement and two defense officials. This adds on to other tech companies that have agreed to similar deals like SpaceX, Open AI, and Google. Bloomberg Senior Tech editor Mike Sheppard joins us from Washington, DC.
I just want to go to basics with this, what the deals are for, what the underlying technology we're talking about is.
Well, this takes these companies which already have been providing some AI tools to the Pentagon them into the classified space along with SpaceX, Open AI, and of course the company that didn't get mentioned by the Pentagon, and that is Anthropic. Anthropic was really the first to break in and until recently they were the only AI provider that was allowed and cleared to work in the classified space.
So this gives the Defense Department a wider range of vendors to choose from if in the end they really do part ways as they have threatened with Anthropic in this dispute. Over terms, the ideas that you would see these companies use their products were in both intelligence platforms and in combat operations platforms like the Maven system that has been used in operations against Iran.
That anthropic context is important because many are feeling the perhaps they're just broadening the circle of AI expertise they can lean on in video for example, talk to us about how this new agreement expands the use cases for the Pentagon.
Well, in a way, the Pentagon is also thinking about some edge deployment of AI, and what that would mean is that if they wanted to move a data center to a remote location somewhat closer to the battlefield, well, that would mean that they are not connected to a cloud per se and running a very small data center.
And I'm speaking of this in more hypothetical terms, but if you wanted to bring some of Nvidia's processors remotely in a way from a cloud and away from the safety of say a large data center in northern Virginia or at a large military base in the Middle East or elsewhere. This would be a way to do it.
And of course that the Pentagon wants to expand the data centers it runs and provides on its own property, and we have reporting on that from earlier in this earlier in the year that they intend to do sort of facility in Georgia. This would give them more leeway to do so on a classified basis as well. So for Nvidia, this is an expansion of their interest in at work. We saw it at the GtC here, Edwin,
you were here in October. There was a lot of talk about what more n Vidia could do for the government, and certainly the Pentagon has been one of the biggest buyers of tech services and really a driver historically of advances in technology over the years.
Bluembags Mike Shephard fascinating as always, Thanks for bringing us from Washington. Now coming up, Twilio absolutely saws after reporting strong first quarter results. CEO Cozy Maship Chandler is going to be here with us next. This is bloom Beg Tech.
Twilio shares taking off after strong first quarter results. The company reported its fastest revenue growth in over three years, fueled by a massive surge in AI driven demand, joining us to discuss what he describes as quote a milestone quarter, Twilio CEO Cozmoship Chandler the stocks on track for its best day right now since the end October, point since May of twenty twenty.
This doesn't happen every day.
So in that milestone quarter, what were the milestones that you think your company's hit that's got the market thinking like.
This, Yeah, thanks for having me on. I'd point to a handful of things. First off, I would say this was one of the best quarters in the company's history. And you know, we've been in the process of a turnaround for a handful of years, and I think this marks a really important inflection point in terms of, you know, the history that's unfolded over those couple of years. I think, in particular in the quarter, something that was really exciting for us was that our voice channel grew up to
twenty percent. That's the sixth consecutive quarter of accelerated growth in a row for us in that channel, and you can see a lot of that sort of been catalyzed by voice AI workloads that you see from so many different kinds of startups, and I think what's exciting about that is is that these conversations are being enriched by data, which also speakst our strengths, and in particular, these conversations are moving from things that used to be human to human,
and increasingly human to acient to human.
For lots of people.
The kind of base level story is messaging demand right, going back to Twilio's roots, The more exciting story is that Twilio's on this journey where it goes from being that messaging and communications offering to being much more of an infrastructure layer. You know, you hold yourself to really high standards. I know that we've discussed that, But where do you think you are on the journey towards that kind of much more encompassing platform that you wanted Twilio to be.
Yeah, I mean I would say that we're executing well on it. We've got our big customer conference signal next week, so I don't want to get too.
Far ahead of that and front run it.
But the way that I would characterize it is very
similar to the way that you described it. Like these things tend to start in a channel life messaging like voice, our ambition is that many more of these translate into cross channel communications, in which there's this channel orchestration layer, which means basically that however a customer wants to be reached, whenever they want to be reached, whatever the kind of context with which they want to be reached, they are and that allows for a highly enriched, deeply personalized interaction,
whether again that's human to human or agent to human. And I think at a time when the lms are unleashing so much power, being able to add context to those conversations is crucial, and that's something that Twilio is really able to do.
Cos MAYA so B to B, but how much she's starting to see or B two ce like the whole world of vibe coding. I'm having to set up twilios to be able to connect my WhatsApps with what I'm writing, to be able to basically see the way in which I use AI personally. Is everyone suddenly using Twilio in a more consumer focused way?
I think predominantly we're like ninety nine percent B to B. To be honest, I mean, I think for the lay developer, maybe that's kind of the angle of your question. I think it's never been easier to use our console than it is today. We've actually done a ton of behind the scenes work to make that console experience super simple. So we've always been a very very attractive brand for developers.
I think increasingly, whether you're a Vibe code or whether you're just experimenting, whether frankly you're launching an agent for the first time and asking your agent to do the work on your behalf. Are consoles ready for that. We're seeing pretty limited volume, I would say so far, but we definitely think that that's going to take off, and we're super excited about it.
This is clearly a very positive story for the stock. We're up four billion in terms of market cap today alone. What does it mean for people at the moment? Cosmo? Are you hiring in this moment?
Yeah, I would say were you're doing like some modest hiring. Like by and large, over the last couple of years, our workforce has been relatively flat. I think, like a lot of companies, we're seeing tremendous productivity gains as a result of AI. I'll speak for myself, but I think this is true of our workforce. I'm ten to fifteen percent more productive today than I was two years ago as a result of using different kinds of AI tools. We deploy a variety of them with very very strict
security guardrails to our workforce. But I think everybody is seeing a real improvement. Rather than turn that into a layoff or something of that nature, instead we're turning it back to how can we accelerate innovation evelocity twenty.
I see you Kaizimoship Chandler on the back of big moves on a big earning support. We appreciate it now coming up roeblocks, aggressive push for safety features. It's costing then nearly a billion dollars. We're going to discuss that and the outlet with the CEO of David Zuki. This is BlueBag Tech. Welcome back to Blue Beg Tech. And let's get back to Apple's earnings and break down one of the highlights. Today's big number twenty and a half
billion dollars. That's how much Apple made in the China market, where look, Apple has struggled in recent years, beating Wall Street projections this time and then some they thought it was just going to be eighteen point nine billion dollars, and we are seeing a significant move in the stock, at one point hitting a new record high. We're up four point six percent, and this really is just showing
that Apple is back to firing on all cylinders. What was amazing though, was they were really clear about the supply chain headaches, about the cost pressures, but for now investors not worrying about the margin hits.
Let's talk about the change topping Apple investors' minds. What to expect from incoming CEO John Turners, who as Mark German, joins us for more and Mark led our coverage of the earnings print last night, and in the end right it becomes a pretty simple story where they give an outlook for the June quarterer, and we know that there
is a supply constraint, particularly on Mac. But the moment that John Turners popped up on the call, could I just ask you, Mark, now that you've had a night to sleep on it, what the takeaway from that was of what mister Turners had to say.
Well, he certainly didn't keep me up all night thinking about it. He didn't really say much. He praised the guy who hand picked him at his successor. He said the right thing for the audience on the call, which was we're going to continue with the financial discipline that we've had the last two decades under Tim Cook. But the real comments related to Turnis actually didn't come from
Turnis himself. They came at the very end of the prepared remarks from CFO Kevin Breck, where he said, we're having a CEO transition and we're reevaluating what we do with our cash. And this practice we've had about share buybacks giving money back to the shareholders. We've given back over a trillion dollars. Well, we're going to continue that. We're doing another one hundred billion dollar buyback that we're announcing today. But the fact that we're talking about it
means something is going to change. And what they're doing is they're giving themselves more flexible ability now to give less money back to shareholders and hold on to the cash for things like deals or investments for infrastructure for R and D. And that is a really big deal. And this puts John Turnis in terms of what they're going to be doing with their cash somewhere in the
middle between Steve Jobs and Tim Cook. Tim Cook was all the way on one side, giving as much back as possible, right trying to get to net cash neutral. Steve Jobs was on the other end of the spectrum where he didn't want to get anything back to the shareholders because he wanted to hold onto as much as possible for investment, and by the way he lived through the early years of the company and Apple nearly going into bankruptcy. The turnus is somewhere in the middle, whereas
they're not going to keep it all to themselves. They're still going to give money back, but they want to be more judicious with that money as needed.
Some analysts have perhaps read into holding onto cash not promising as many big buybacks, perhaps or hinting at that under the new leadership as being also, we've got some price pain to swallow. We're going to have to take a hit to gross margins if we are going to see the pricing pressure from Memory, for example, Mark, is there that anxiety? Should there be that anxiety?
That might be a small component of it, But I would be surprised if Apple's response to pricing changes related to Memory ends up being taking money out of their own bank account and eating those margins. I think they're going to offset some of that by raising prices. Typically in these types of scenarios. Apple likes to a split, right, They like to eat some of it and like to give some of it to the consumer.
So it may be some of that, but we'll see.
I don't think that's going to be entirely clear until the tail end of the year or early next year.
Mark Gman all over the Apple News. Thank you very much. Indeed, now on another earnings front, Roadblocks is paying a price for children's safety. The stock pumpted after the company cudits full. Your book is forecast making clear though that that new age verification and child safety features that they've embedded, they're creating some friction for user growth.
See you.
David Zuki joins us now, and you made really bold statements in the investor letter saying this is worth it. This is worth it long term because it's building a safer global standard of safety. Talk us through when you will see actually that friction die down.
Hey, great to be here at highlighting, coming off a great quarter, forty three percent year on your bookings growth bookings of one point seven billion dollars more than twice. What we've shared with investors is our long term growth trajectory. And yes we've highlighted our commitment to setting the global standard for healthy, safe, age appropriate digital engagement. We have rolled out age check all around the world this quarter.
We now have over sixty five percent of US users who we have age checked.
But we did.
Highlight in our earnings call there is some short term friction from communication and other factors. We believe though this is worth it. We are well on our path to ten percent or more of the global gaming market and more of that of US, and we want to bring along all of our under sixteen users as well as the over sixteen who are growing very rapidly.
How about bringing along the industry, Dave, Because you're a first adoptor here of this technology that can help age verify. Do you think others in gaming will have to do this? Do you think others will experience such friction as you come out of it.
I want to highlight if you go to our corporate site and read our values, one is take the long view and the others respect the community. We've continuously innovated on safety since we started in the company, and as the technology got good enough to age check, we've leaned into it. This is an addition, of course, to our industry leading text filtering. The fact that we don't allow image sharing on the platform allowed us to do several things.
In addition to age checking, we're going to be introducing kids accounts and select accounts. We're able to do this within our same app because we are age checking. Also, because we're age checking, we can now identify the eighteen and up players on our platform and we've introduced some interesting economics for them. So we do think we're setting the industry's standard and we have this commitment to what we call the global standard.
Dave, good Morning.
You came on the program three weeks ago and I asked you if you would kindly model for us at that moment when you were announcing the new policy and new platform changes with safety in mind, how that would impact user behavior. And that's kind of played out in the earnings print right, Just explain that the interaction between the policy that you put in place and why it would impact user metric and behaviors platform.
Well, I want to highlight we're using age checked and we're asking our users to age check if they want to use the communication functionality on roadblocks. So in Australia we're over seventy percent age checked in the US over sixty five percent, but that does highlight there could be roughly thirty five percent of our users in the US who currently are not communicating on our platform. We believe
that can contribute to some short term friction. In addition, as we go along on our eighteen and over segment, we've shared that more and more we're using our recommendation algorithms to support long term retention on the platform more than shorter term monetization. These both have contributed to short term friction.
Dave, let's talk about Roadblocks this future and Roadblocks reality. This seems like a big play, a big upgrade from Roebox Studio.
We talk all the time to Unity.
I am very into unreal engine right and how that impacts my experience in the games that I play. This presents an opportunity for you to do work with some of the big budget developers. Could you just explain the pathway to that.
I want to highlight two separate levels of this. We have continued to release over the last quarter and will continue functionality that is very unique to Roadblocks. Roadblocks is a game engine, a client, a cloud, and together we're committed to publishing once and having whatever you publish work both super high quality on a gaming PC but also perform very well on a two gigabyte Android phone. Those
are very different configurations. We want to support both with the same build as well as when our creators build on Roadblocks they go around the world. The future for us is a hybrid architecture, and what we want to do is make it easy for creators to create experiences that are ultimately multiplayer and photorealistic and do it very
easily by powering it with AI. So we have combined really a hybrid architecture we're starting to show it off that combines our multiplayer synchronization with cutting edge real time video world models. We believe this is the ultimate hybrid architecture to democratize photorealistic multiplayer.
I like that about the democratization and making the building of games open to many. How do you think about the pricing structure?
Briefly, Dave, we've said initially roadblocks reality will not be free. I mean real time video AI modeling in the cloud is expensive, but just like with the rest of the AI world, these prices are going to come down and down. I want to highlight this is complemented really with our vision for creation, and if we look at what's happening in the coding space over the last six months, more and more software engineers are literally having AI run overnight
doing multiple literations to help build software. Gaming is much more complex. It involves software, three D assets, NPCs, real time operations, terrain geometry. We're really pursuing that same vision that agentic multiple itteration AI work. With Roadblock Studio, we started introducing things as innovative as using NPCs to help test software, and we believe we're uniquely poised to help creators build more quickly, higher quality, and more diverse experiences.
David Zuki, CEO of Roadblocks, thank you very much.
Now coming up on the program, sources tell Bloomberg Peter Teals founder's fun has raised six billion dollars to back later stage companies less than a year after its last growth stage hall. We'll have the details next. This is Bloomberg Tech. These the Teals found his fund has raised six billion dollars of fresh capital to back growth stage startups. That's according to sources. The new fund comes less than
a year after it closed. It's lost late stage vehicle Bloomberg'sventure Report, and Attash Mascarinus broke the story and it is with us. I think this has found his fund biggest ever hall So it's not just that it came in quick succession from the last fund being done. They're going big and so's everyone else.
At the moment, totally.
I mean, I'm made a joke on X earlier this year that firms we're going to have to raise new funds just because of how much they're putting into Open AI and Anthropic, And now we're seeing exactly that. I mean, their last growth fund they closed last year around four point six billion, invested that in less than a year, and now they're back in the market. The last growthum
was only invested in seven companies. We saw its first ever investment in Anthropic, a one point twenty five billion dollar check, big investment in Opening Eye as well, and then across there are other late stage investments like Cognition and Stripe.
Natasha who's wanting to recommit hit is it LP's and new money's coming in to founders fund? Yeah?
No, I mean it's it's four point five billion from their institutional LPs. So we're talking sovereign wealth funds from across the world institutions, and then one point five billion from Founder's Fund employees as well, including Peter Tiel. And this is something that people really do focus on because it is unique to Founder's Fund. A lot of times when venture capitalists raise fund, you might see just the general partners, the tops in your management put in some capital.
But this is the largest amount that actually the employees the Founder's Fund have put in to the fund itself.
To putting the money where the math is putting by Natasha and Mescarin, we thank you so much, just all of these keys when it comes VC. Now, let's talk more about general to AI right now, because it's turned coding from a specialized skill into something anyone can do the simple prompt. But as AI writes more code, its impact is being felt on hiring for junior software engineers. Just take a list.
I actually tried a whole bunch of tools in the beginning, and this was about a year ago, which I think is like feels kind of like the stone ages of vibe coding. I was able to make the foundations of the app in maybe a month, and as like a totally non technical person, I was actually able to build a full stack app, so there's like front end and back end capabilities, and I was able to get it out on the app Store just entirely myself.
And whilst that's opened up new possibilities, there is a downside. Since twenty twenty two, employment for software engineers right out of college has fallen by nearly twenty percent. Nagel thinks companies are making a big mistake.
Think that one of the biggest risks of the whole thing is that people are going to get too focused on the short term and not think about the long term enough.
First of all, if you don't hire.
Any new people, who's going to run the company in ten to fifteen years. But second of all, our research and others has shown that these junior people are actually the ones who are able to change their job and get the most out of using these tools.
Chen agrees, I feel very strongly that this is like not replacing engineers. I think the more you use AI to build, the more you understand the space and kind of even know what you can and can't do. It's like, technically I can make it, but an engineer probably could have made this in a much shorter timeline. And probably with like much more robust code.
Watch the full Wall Street Week episode later today six pm easton three pm Pacific time. Okay, coming up, we're going to get back to Apple and the week that was in tech earnings.
What a week it was.
Apple back up towards session highs, up five percent.
This has been big tech.
NASA administrator Jaredizigman says a future space economy cannot be completely taxpayer driven and cannot be forced into existence, but NASA can.
Work to set off the spark.
He laid out his vision on Blueberg Surveillance this morning.
A space economy sure would be great, because I don't think we're going to have that sci fi future we imagine with lots of space stations in orbital outposts and a Mars space if it's entirely paid for by the taxpayers. So I want data centers in space to work. Why not take advantage of a giant fusion reactor that's already out there. I want you, I want us three D printing organs. I want us making cancer curing drugs in microgravity.
I want all that to come to fruition. We can't force it into existence and now so, but we can do all we can to ignite it.
Not to discuss, but let's get back to our main story of the day. It's Apple shares, as you can see, at five percent, basically at a record high. Gene Monster, managing partner at deep Water Asset Management, joins us in Gene Before this you weren't but perhaps stop's not getting enough credit? Are we getting enough credit?
Yet we're engine there five I would have guess based on these results, you'd probably be up closer to ten percent. And Callen, I think what's at the core of this is a concern that we're kind of at the peak here, that this is the supercycle over the past three quarters. Just to put this in a perspective about this disconnect which I believe between what's going on in Apple, what the stock is doing, versus the fundamentals, I think there's this piece and important piece around the concern that we
are at the peak. As I mentioned, over the past three quarters, iPhone's grown at twenty percent. The previous three years to that it was up one and a half percent, so you see that supercycle. Of course, investors are always looking forward for next year. The iPhone growth is now expected to be six percent, So you see that big
drop down, and that's what investors are wrestling with. If they truly believed what we saw in the March quarter, in the June guidance that there was any form of sustainability to that the stock would be up more than ten percent. So I think this idea of understanding what's beyond the supercycle is at the substance of understanding what's in front of the stock?
What about beyond the June quarter? And Tim Cook, who's hanging over the reins after the June quarter saying, look, we believe memory costs will drive an increasing impact on our business. Is that also what's holding about the stock?
Well, I think you know, the memory piece is showing that they're doing an incredible job of navigating that. So the guidance that they gave did anticipate some depression in margins very small amount, thirty basis points. Effectively, the street had been expecting about one hundred and twenty basis points compression because of these component environments. So yes, they are seeing in effect, and that could be part of kind
of what's going on here. But I think an aggregate investors are probably feeling better today about how they're managing this environment than they did a couple of days ago, and so there's also this dynamic, kind of a unique dynamic. Again, I think this is about understanding growth for next year. But in fairness to the conversation today, there's a dynamic around capital ALEC returning capital to investors, and they added
some new language about putting the business priorities first. Now they of course always do that, but the fact that they had added that language to their conversation about capital return really sparked some questions on the call, like are they thinking about doing some sort of upsize in terms of their investment pace, which is very much behind, of course, not just on the cap X but on everyday R and D compared to the other tech companies. And so
that was another small dynamic. But again I think this comes back to a very basic question is what's the true growth rate of Apple?
Gina.
I love following you on the socials because in real time you're just giving your honest thought. I think you're in the camp of people that made a big deal of John Turners being on the call, and though he didn't say much, you got some vision out of it, right, You see the direction of travel for Apple under turnus.
Yeah, you can. I think, like you said, you didn't say a ton and you have to put everything that they say in the context of what they've always said in the past and kind of decode it. In the case of what Turner said, he did lead with talking about them having financial discipline continuing that, which basically means that they're not going to go and start to spend a ton of money unexpectedly. So I think this idea that they're going to join some sort of hyperscaler capex races,
that's just simply off the table. The other PIEC jokingly said, I'm not going to talk about new products, but if we think about what we're doing, this is the most excited I've been because of what is going on at this time now the most exciting that I've ever been.
They say that that standard op breading language, but at this time this time is referencing, of course, the AI chapter, and I think that you know, he knows what's at steak here, and they've got a lot to do to change investors and consumers alike in terms of their competent.
Classic Apple maximalist language. Gen Munster, managing partner at Dewad Asset Management. Thank you very much. Breaking news on the Bloomberg terminal. President Trump says he will increase tariffs on EU autos to twenty five percent. See shares of Stilantis dropping pretty quickly. This isn't a true social post where he says it is understood that if those companies were to build cars in the United States, there would be
no tariffs. So of course this is impacting cars built in the EU shipped into the United States.
It's a developing story.
Character it is, and just think how well many of the analysts say Apple has navigated such tarists. For example, we tied up a story on Apple on so much more does it for this edition a Blomberg Tech.
Check out the pod. It's worth it. It will give you everything you need to know. This is Blomberg Tech.