From the heart of where innovation, money and power collide in Silicon Valley and beyond. This is Bloomberg Technology with Caroline Hyde and Ed Lovelow.
Live from New York.
This is Bloomberg Technology coming up. Microsoft surges on the back of strong quarterly sales and profit growth despite economic uncertainty.
Glass Meta also jumping on the company's ad sales laying investor fears about the impact.
Of tariffs, and Apple takes an epic flow from a federal judge on its app store sales commissions as the tech giant gives up.
For its own earnings later today.
But first we check in on these markets which are in risk on mode.
We're up more than two percent.
On the nasat one hundred, best day in all of a week at the moment. As we see those earnings news flow into the sentiment, we're seeing Bitcoin also up to two point four percent. Interesting news that Morgan Stanley's e Trade might be offering bitcoin more broadly crypto to its retail investor base.
That's a big one.
But then dive underneath the hood, what's going on in the microha.
Yeah, big technology earnings performance and metters the place to start right This is a big gain and the story really simple. Outlook of the core business for the current period, strong raising the guidance for the range and capital expenditures, commitment to advanced compute access across the company. But there is a nuance there that also the higher cost of doing business because of tariffs is having an impact. Great discussion ahead and then Microsoft waf look at the gain
thirty three percent top line growth on Azure Cloud. Also discussion about the commitment to spend on data center, but there is some evidence that all of the prior investment is now materializing in the spend on their cloud business.
Let's get some more Microsoft's results.
Ted Mortenson, managing director at Baird thirty three percent top line Azure growth is four percent beyond what the street said. But within that there's a sixteen percent content ttribution from AI. Those too many are just numbers, but they do seem to be evidence that the investment to date is now start as translate to top line game.
You nailed and thanks for having me. The bottom line of if you look at that, that's actually thirty five percent in constant currency, and what Amy Hood alluded to is most of that upside is just the Global two thousand migrating to cloud, and right now on Azora they can't even keep up with demand. On Jenni, that guide of thirty four to thirty five percent was way above the street.
Let's talk about unable to satisfy current demand. There's an interesting is it caution coming from Microsoft that, look, they're willing to be underserving in terms of supply because they are starting to normalize their spend in terms of capital expenditure.
I think they're trying their best to provision a lot of this next generation equipment, specifically Navidio GPUs. There is just so much much demand. If you even look at some of the metrics that open ai put out last week of having a run rate of one hundred and seventy four billion in revenues, the demand is just outstripping demand. Supply, plane and simple, and their provision of new data centers with this next generation GENAI stack infrastructure is just agents
can't keep up with demand. And that's a very good problem to have.
Yeah, so can we strip away that noise?
We had note after note, analysis after analysis that in some way Microsoft was curtailing data centers, whether it be through leases or renegotiation, is that happening or is this the ebb and flow of doing business TEED.
I think on the call they tried to get to the root cause of this misinformation. I think you got a lot from the Cell side that fiscal twenty six capex will moderate, it can't go at the same level at twenty four to twenty five when they were building long term assets, and they define long term assets as data with the shelf life of about fifteen years. Those are shells and the other shells that they're building, you know,
they have to be hooked up to utilities. And I think the big thing that the Street was kind of missing is time to power. They are somewhat restricted on these next generation data centers just getting the power capacity needed to fuel the GENAI loads. So fiscal twenty six will moderate, it's normal. It can't grow at fifty percent
plus forever. And I think where the Street maybe got it wrong with some of the analysts on the ED side, that we're picking up some weakness and you know, quite frankly, that's a good data check, but probably not put in the right context if you understand core technology and what's happening in a gentaki.
Ted my relationship with Microsoft is I grew up learning how to use computer on their operating system and more recently I'm a gay. Two pieces of news out today. One Xbox price is going up because not just on the hardware, by the way.
On the titles themselves, because of tariffs.
But I always go to the Bloomberg terminal look at the split of cloud and just like software revenues, they're still quite good at selling software that you can otherwise get for free somewhere else.
Is that fair?
That's fair? And I think you know you look at you look at Microsoft, and they have a huge advantage as well as Oracle in relationship to the other cloud titans, whether it be a Meta, Google or Amazon. They already have the enterprise customer. So when you control the enterprise customer to begin with from previous revisions of whether it
be you know, Excel, Word Outlook. And now you know you have a CEO Sat Nadela, which is a visionary in tech that should be at the top of the list of CEOs that actually get the migration to jenn Ai.
Now you can leve entire base through Jeni. And what's different on Microsoft that I think they brought this up on previous calls is Microsoft has a Jeni steck that they've created over the last of multiple years that's extremely it's written once, it's unbelievably scalable, and when you leverage apps on top of that, you've got a model that if you can.
Touch okay, you let me jump in real quick.
While this is all happening, Microsoft are being contributor. The nastack's now pushing to two percent s and P five hundreds pushing higher. A big part of that, I know Microsoft's not sort of where it was at the open, but it was on track for its biggest gain since twenty twenty. And I think that for all the sort of negative sentiment around the world about cloud computing and tariffs, it's pretty astonishing moment in time in the earnings context.
Isn't it. Yeah?
And I think therein lies what's phenomenal about this guidance tad is the fact that we got it and what is it that we're starting to see. Is it that come despite macroeconomic headwinds. Just see the shift, whether it be to on prem to the cloud, whether it's movement from non GENI to Jeni, is just so mission critical that they have to stick with Microsoft right.
Now, that's the right question.
I mean there's two aspects. All those Global two thousand has to migrate to cloud to lower cost, and that's that's what you do in a recessionary or a decreased growth environment. More importantly, what Microsoft said on their call last night was a little bit eye opening on the guide of Azora being up thirty four to thirty four, thirty four to thirty five percent next quarter. Yeah, christ and you're bringing the cost down on these models two X and their tokens, the Geni agent tokens are off
almost fifty percent. So the street had this huge debate on ROIC return on invested capital. Well, Microsoft's reducing costs of Jeni for broad adoption. And if you're sure, if you're in the s and P five hundred, if you're not migrating to Jenny I, you put your whole model at risk from operating margin perspective.
Ted Mortenson, bed Managing Director, fantastic to have your voice today, Thank you. Let's just shift to meta now because shares are also jumping following really resilient ad sales in the face of Taris sick.
Listen, we've had a strong start to the year. Our community keeps growing, with more than three point four billion people now using at least one of our apps each day. Our business is also performing very well, and I think we're well positioned.
To navigate the macroeconomic uncertainty.
Mark Zuckerberg talking about the ability to navigate. Let's get up to Evercore. I I scene managing director Mark Mahaney now and I pick up where.
Ted left us.
The return on investing capital is this bearing dividends? Is the integration of generative AI throughout the ad offering vindicating that spending that actually they are for this year because of tower of costs.
Well, Carolina give you a couple of points on this, you know one, I think a meta is proving to show that at the app layer, the application layer, that you can get a good ROAI return on you know, AI spend. I thought the way Zuckerbird laid out their earnings call last night, the five areas of focus for AI for the company, and then the returns they're getting kind of within each areas of those focus and one of the they're used the applying AI.
To improve their ads platform.
Well, the application of AIS allowed conversion rates to rise about five percent, which is a big number for an ad platform.
That's that huge.
On the user side, they're trying to improve engagement, They're trying to make the content more personalized, more relevant. Well, they were able to show that the application of AIS led to a seven percent six percent increase in time spent on both Instagram and on on Facebook. So yeah, I think they're proving that they can use AI to improve the service and actually anetize it like you can
get a return on other AI spent. I want to be careful though, I think extrapolating from Meta to other companies it's a tricky thing to do.
One very few companies have spent as.
Much money and as effectively as Meta has, and then Meta's advertising platforms just more resilient. I'm not at all sure that these companies are out of the weeds, are out of the danger right on when it comes to the impact of tariffs.
So their argument, right is that the time spent metrics or evidence of the resiliency and like tough economic environment. I felt like this story evolved over the course of this statement, hitting to the end of the call, and this is the quote from Susan Leon. Why so the Capex range gets raised, and we're all thinking commitment to AI, even though they said it goes to the cause of business. Then Susan gets asked about tariffs and this is the answer.
The higher cost we expect to incur for infrastructure hardware this year really comes from suppliers who source from countries around the world. Goes on to explain uncertainty relating to trade negotiations. We're working on mitigations. The Capex range got raise because it's more expensive for them to build the data centers.
Mark ed you just you nailed it. I think that's absolutely true.
I mean today, keep going, mom, thank you.
I think there are two reasons.
One is that I think they are getting more aggressive offensive. They've seen the return that they're getting on their aisvan and they're leaning into it more. The second reason, however, is that costs a rising. And I don't know if you noticed this, d but she was very careful never to use the.
T word I eat tariffs.
I didn't use it's a political Yeah, it's a political statement these days, and nobody wants to get involved in politics, so so she was very careful about how.
She answered that. But yes, the costs of tariffs.
Are attacks their inflationary, and if you're buying a lot of infrastructure hardware like Meta clearly is and some of the other hyperscalers, by the way, your costs are going up. So my guess is that Amazon may have to raise its CAPEX, and Google's going to come back to us and having to raise its capex, and Microsoft next year will probably have to raise its CAPEX numbers because the infrastructure costs a rising.
Look, Susan Lee was employee number forty at Meta. She's a CFO, but she gets the business, and what she was explaining was that the compute needs are across the business. In other words, we're not just doing this for the training of a frontier model. They've got people in marketing, they've got people in the ad development business that are demanding.
For access to the computes.
Do you have conviction that Susan Lee is getting that right in the numbers that she gave you last night.
Yeah, I think so.
Look, we've had three years now of the of really aggressive deployment of AI too to boost the ads business, to boost to boost the platform for advertisers and for users, but also to roll out some new things like Meta AI and then meta AI devices maybe ray band, meta ray bans maybe, and also to boost the WhatsApp business. And so I think they've shown that they can get a good return on this. I mean they're good cutthroad capitalists like a couple of these other companies, and I
think they're making rational business decisions. They're probably leaning a little bit more heavily than other companies, but it's paying off for them. I think you'll see other companies look at what Meta has done, and I think they're going to.
Lean into AI as well.
I know we kind of drifted away from the AI revolution earlier this year. I think we're going to come back to it. I think Meta's going to give us good reasons to do that.
Yeah, they're bringing out Meta AI app as a standalone. We've seen also the levers being pulled in terms of
advertising when it comes to threads. How does that filter into WhatsApp and other offerings more broadly marked But you said you can't read across from Meta into perhaps other social media companies like Snap because Meta ends up being like the port of safety in that respect, But read across to Amazon in terms of cloud, and indeed you say that Amazon might have to raise their spending on infrastructure spending in that respect, But where else does AWS takers in terms of growth?
Well, I just think if it's if it's if the infrastructure hardware is more expensive for Meta, it's more expensive for everybody, And so that's going to be the case with Amazon too. I think they're going to they may well have. I mean, I think the direction of AWS capex.
Is going to go up in unless you know, but things could.
Change quickly in this tariff environment, folks. For now, those hardware costs are going higher, and so that's going to probably be reflected in rising capex spending. And then just a point on Meta, I think their model is more resilient. Also, we haven't really seen the dramatic economic dislocation. Our checks start indicated that you started to see some adverticals really softened in the month of April. We still have the whole year ahead of us. So I'm you know, I
don't think. I don't think metas out of the woods. My only point is that relative to almost every other AD platform, they're more insulated, they're more resilient than anybody else. But you know, even if there's a sharp economic downturn, They're not going to be immune to it.
And market's the Chinese retailers that pull back an ad spending. What about Amazon's e commerce business, I.
Think that's going to be tbd. I think the March quarter is going to be fine.
Google gave us a fine March quarter, Metais did, and I think Amazon will too. We haven't seen any sharp fall off yet in consumer spend, but prices are rising. They're going to be rising materially. Those dolls are going to be more expensive on Amazon, and and so exactly how Amazon handles that, whether they're going to eat margins or defend market share. And my guess is that knowing Amazon, they're going to defend their market share, so they're gonna they're gonna be willing to uh to take a hit
hit to margins. So that could be a downside to the stock. So it depends prices arising on Amazon. That's not a good thing for the Amazon ecosystem.
Mark Behiney, ever, COSI senior managing director, could have you back on the show, Thank.
You very much.
Now coming up, Qualcomm becomes the latest chip maker to offer a cautious sales outlook in the face of trade uncertainty. We'll have more in the company's earnings next. This is Bloomberg Technology breaking news that's moving markets. Bloomberg reporting the US is weighing a potential easing of restriction on Nvidia sales to the United HOURRA memorates. That's according to sources, who say President Trump could announce the start of work on a bilateral chip deal during his upcoming trip to
the Gulf. Nothing has been decided officially, according to our sources. They emphasize that the debate over chip trade rules for the UAE and other countries remains ongoing in Washington, but the stock spiking on that report to a session high of five percent. Competition for Nvidia closes a home. Investors are going to be playing close attention to Amazon's AI business when the company releases its earnings later today. A key part of its AI growth strategy is Trainium, the
company's custom design chip. I've got a tour of the AWS facility where they're made and designed. Have a look at this. This is aws Anda Perna Labs in Austin, Texas. Amazon does all of its custom AI chip design in the US. Most of it happens here. Amazon bought and a Perna ten years ago. Today, the team designs and tests custom hardware and software that power AWS data centers worldwide.
We looked at Trainium, Amazon's AI chip for training and inference and a Perna doesn't just design the chip, They oversee computer electric called mechanical, thermal, and software engineering for the entire server. AWS sales reps focus a lot on price for performance to win business for the chip. So today Trainium two delivers up to four x the performance of Gen one that required reducing component count, improving power,
calling and networking across the server. In Austin, there's a quiet lab for chip validation testing from the wafer level to boards.
Then there's the noisy.
Room where full servers are stress tested. Trainium still in its infancy, but it helps reduce Amazon's reliance on AI chip leader Nvidia. It could also give AWS more control of its own destiny in the market that Nvidia dominates. Next up is Trainium two at scale. Project Rainier, built with Anthropic will run hundreds of thousands of these chips, and that project goes live this year.
Let's deal with chips and in fact the work perform on the nast that one hundred is qual Con this after the biggest maker of chips for smartphones gave a soft revenue prediction for the current quarter. A mid concerns that, look, taras could hurt demand for more. Let's bring in Bloem megs Ian King. I feel for Cristiano and Qualcom because they've beat on the previous quarter.
But it really is that sort of middling guide.
Yeah, I know, you're absolutely right. The guide at the top end wasn't bad, right, I mean, it's really all they've done is say what everybody else said, which is, hey, we had a really good quarter. Things are going okay for us. Look but we were doing better than even what we said. Well, you know, maybe we're not so sure about what's going forward and these things are beyond our control. Everybody else said the same thing, but they're getting beaten up a lot harder.
Ian very quickly Qualcomm Android in China, what was the story?
Yeah, I mean this is really important. This is a massive market for them, so in a way they're a test case. Like more than forty percent of their business comes from China. They said it went well.
Well, we keep an eye on China and the business they're Blouem magazine can keeping it short for us as well.
We love it.
Meanwhile, Roadblocks reporting earnings before the bell, and a large of them expect to jump in active users for the first quarter, fitting from efforts maybe to attract new players and keep as they grow older and using the service longer. So as you see up four percent intelligence, Senior analyst Manly singers, hey with us, and this is a company that is managing to steer us for growth again in spite of macro uncertainty.
They've got the users there.
Yeah, I mean, I think Roadblocks is a defensive name, like a Netflix is where people still need entertainment, and you know, in this case they cater to the younger demographic, the thirteen year olds and look now older older as well, and they have that native content. So when you think about you know why TikTok did so well because they
had the creators. Gaming creators are on Roadblocks. This is the platform where they create the content and in this case, they have a very successful model in terms of payouts that they give to those creators. So it's all user generated content. They don't have to spend a lot in terms of getting branded content and you know, paying content costs, and look, it's a very small company when it comes to the hours spent on the platforms eighty billion plus
hours annually. Compare that to Netflix one hundred billion around, and they monetize very less compared to all the other platforms that are out there. So from that perspective, I would say there is so much room to monetize that hours spent on roadblocks. I mean, there's still a five billion dollar revenue run rate company at the end.
Of the day through advertising and licensing. Blueberg Intelligence Senior and Lissman Deep saying thank you very much.
Let's check in on the shares of Tesla because with a chair, Robin Dunham has been denying reports from the Wall Street Journal that allege the company was looking to replace Elon Musk as its CEO.
We're currently at one point seven percent. A strong denial. Is that smoke without father away.
Yeah, that is the critical question. All you need to do is go to Tesla's regulatory filings form ten K and they spell it out very clearly, this idea about key man risk. Every single regulatory filing has that Elon Musk. They are highly dependent on his services. They acknowledge that he spends time at all these other companies. I know that succession planning is always in the background of the Tesla board.
That's the role of corporate governance exactly.
I think what's interesting is I continue to hear that Elon Musk also plans to spend a lot more time on XAI.
Right, that's a.
Really big project for him, a priority because he wants it to be competitive against open Ai for obvious historical reasons and anthropic But this is a clear denial by Tesla posted on x to the official Tesla account, citing the chair of the report that the board was looking to find a replacement, not clear of succession or a reaction to the state of this year.
I mean, don't you think it'd be a failure of corporate governance if at some point they weren't thinking who on earth could if forced to lead a business such as test.
What people forget is that beyond Elon must there are many other generals of the company running the place data and the company is still the leader in many of the fields it's in.
He's a good delegator, right, Welcome back to Blue Meg Technology.
I'm karent hid an Eli.
I'm Med Lovelow right next to you.
Let's talk about some of the biggest movers in markets, and it continues to be Microsoft.
Actually from a sort of points.
Perspective and percentage perspective, the story is simple top line growth on its cloud unit of thirty three percent beyond what the streets saw, the evidence that all that spending on AI development is translating into sales, and that is a pretty clear image on your screen. Away from kind of the earnings context, there is also litigation and antitrust consideration into other names. Right we are, of course talking about Alphabet, the parent of Google and Apple. We're going
to get into detO on those stories. But I think interesting that Apple basically flat.
We acknowledge that.
It's treading water, probably ahead of earnings after the bell carrier Alphabet.
I don't know, I don't draw a cause or link.
There's see that and see maybe it's the meta numbers and what that feeds into advertising resiliency. But we also, of course got a very strong pushback from Peachi, of course, the leader of Alphabet and Google, against any sort of de facto breakup of the company. As we consider remedies toward is deemed a monopoly place within search. Leon Niyhlan's
here to break it all down in court. Finally, Snapitchai getting up there and saying, look, any of these remedies, whether it's sharing our data or that it's actually spinning off Chrome, you're breaking us apart and it's too much.
Yes, So he took this doan yesterday in the Justice Department's trial. This is the three week trial that's supposed to determine what the remedy is for Google's illegal online monopoly in search. The Justice Department has proposed, as you mentioned, that Google be required to spin off the Chrome browser, and also that it be required to share a lot of the data that it collects about users and the web with rivals. And Sandar Pashai pushed back on that
remedy in particular pretty hard. He said, you know that while not an actual breakup, would be the facto breakup of the company, because it would allow all of their rivals to effectively reverse engineer their technology and use all of the sort of things that Google has built up over the past several years to gain its sort of share in in search.
Lee I said that Apple stock was flat because it's treading water ahead of the market closed when it does earnings, maybe there's downward.
Pressure from a critical court decision.
A federal judge ruled the Apple violated court orders by not opening up the app store to third parties. You've been tracking that story as well. What are the need to know details about it?
Yeah, so this.
Goes back to the long running litigation between Apple and Epic Games, maker of Fortnite, which sued the company back in twenty twenty over its app store, and even though it lost most of the counts in that case, the judge did find that Apple's app store a violated California state law against over antitrust and ordered Apple to make some changes to its app store policies, in particular allowing developers to link out, i e. Make it easier for users to buy digital goods and services on their own
websites as opposed to within Apple's ecosystem. Apple didn't really love this, introduced some new policies in January of last year that it was still going to charge a twenty seven percent commission on things that people purchased outside of the app Store if they took advantage of these links well, Epic complained. The judge held a series of hearings both last year and this year and found that the changes
that Apple made were deliberately anti competitive. She said in a very blistering opinion that was released late last evening. She said, you know, every single time Apple had a choice, it chose the most anti competitive option. And on top of that, she found that some of the executives who testified at the hearing lied on the stand, and she recommended that the federal government open a investigation into whether they should be held liable for criminal contempt.
Right, I mean on fire was Gonzales Rogers saying that if they thought that this court would tolerate such insubordination, it was a gross miscalculation. Apple comes back earlier and says, we strongly disagree with this decision and we're going to appeal it.
So what next?
Yes, so Apple is going to appeal. She said in her decision that Apple needed to make immediate changes. They are likely going to try and appeal that to the Ninth Circuit to put that on hold at least through the appeals.
In this we'll see if the Ninth.
Circuit agrees, because they have already reviewed this case one time and found earlier that her decision, you know, was solid, so they could put this on hold while Apple appeals. If they do, you know, it's going to go through the appeal process and we will not probably have a decision until sometime mid to early next year. Or they could say, you know, this should have gone into effect last year and so so they could let it go into a factor while Apple appeals.
Bloomberth Leon Eilan out of DC, Thank you very much.
Let's get more on Apple, but specifically what investors expect from its earnings report later today.
That's bringing Carolyn A. Milanates.
She's the president and principal analyst of creative Strategies. Bloomberg's Mark German, who let's just be honest, is that is probably the leading correspondent and journalists covering Apple in the world, says, don't look back at.
The quarter gone or the numbers.
It's really about the long term and what Apple communicates on how it adjust supply chains in the face of trade policy presently, what is your thesis on that.
I agree with Mark, It's really about what Apple is able to do from a manufacturing perspective, supply chain perspective to make sure that they are not subjected to whatever
the administration decides to do. On the tarist side, we know that they are planning to shift their production to India as far as iPhones that are coming to the US, but that doesn't happen overnight, So anything that they're able to disclose, and obviously Apple always keeps their car very close to their chests and things like this, but the street needs reassurance that they have a plan and it's the same Fai.
Actually, Apple is historically the master of the bottom line, right, profit and margins, irrespective of what's happening around the world. But it's likely I think you and I discussed this the last time you're on the show. India long term flying handsets out of that nation into the United States. It all costs money moving something from place A to place B.
How do you see them explaining.
Their ability to protect themselves from those costs.
There's a couple of things. One is that this is team's cook, bread and butter. He is an operational guy. He has been entrench in supply chain organization for a very long time.
Is also a very good diplomat.
So I think that while moving supply chain and production to India is one of the core things that they can do. Is also very good at dealing with politics, whether it is at home or in China. So I think these are the other thing that we'll see happening.
But we also have to remember that Apple is becoming more dependent on revenue coming from services, and so we might see some give from a price perspective on the actual phones and other devices, thinking that they can recoup some of that from the services side.
Now it might be a good diplomat, but many might feel that potentially they have dropped the ball from.
An AI perspective.
Carolina, and I've got one note land in my inbox coming up from Linked Secuities.
I think that Apple is struggling to stay relevant. Is that to much of.
An assumption to be making right now? Because of Syrian and the lackluster rollout of Jenny.
I look at the end of.
The day, I think that what people are picking up is the fact that Apple made promises from an AI perspective and they're not delivering quite yet. That's a reality.
What is a reality as well, is.
That consumers are still not going into a store asking for something that is AI driven, and they're still very much focused on hardware when they're looking specifically as smartphones. So there is some grace when it comes to the opportunity that Apple has. But it is interesting to see the exignment around the statement the pitch I made yesterday of the day before, around Jemy and I get into Apple before the end of the year.
Yes, so that cross pollination. Look, maybe that's AI winning out for Apple longer term. They don't always do it first, but my goodness, they are not doing it best in the longer term, Karentina, Do people have the bandwidth to hold on to that view?
I think so.
I think that there's going to be two realities. One is the Apple and sire and what Apple Intelligence itself is going to deliver it to consumer is much more personal.
But what people are.
Really excited about now is the more general AI and that's where Jemmy and I, CHAGBT and the other providers come in. And to your point, Apple does usually come in later in the market with a solution that then pleases consumers because of the way that they package it together.
You're both making historic references to BlackBerry and the smartphone market. I think what's the one area where Apple is is indisputably King.
Oh, I think it's simplicity.
To be honest with you, is the fact that at the end of the day, when talking about packaging things together, that when they deliver it to consumer, the you know, the simplicity they used to deliver that solution is what is an I've seen consumers to stay wherever they are. And the other one is obviously marketing.
They're good at that. We have to see how much they can dial.
Up that services side of the equation throughout Carolina Milanaisy. So it's great to have your president and principal analyst at creative Strategies coming up. Uncourt Capital it raises three hundred million dollars if it searches for the next big AI startup. When you speaking with a managing partner, Andy McLoughlin, that's next, there is a Bloomberg technology.
Uncourt Capital has just raised three hundred million dollars that will be spread across two funds. The early stage investment firm who made a name backing the likes of Poshmark, Postmates, event Bright, and Fitbit, are looking for its next big startup, focusing on AI for more. Andy McLaughlin, Uncourt Capital managing partner joins us. Now, Caroline and I have noticed something.
Let's start here.
Every day, literally the daily cadence, we are delivering news about a new fund that's closed. What is the big picture macro driver of that activity, Andy, and in your case, specific to you.
That's a great question, know, and I think it really comes down to LPs so investors in funds looking for ways to deploy capital into managers who have a knack and a history and a track record of having found kind of breakout companies before they were obvious. And I think as seed investors, that's what we have to be well class at. We have to be able to see around the corner and see the things that most other people can't see.
Is Andy, almost the seed and the very early stage, the harbor and the storm at the moment, is that where you're getting the interest from LPs.
I think that's right.
I mean, when you invest as earlier as we do, and this is often inception stage or very short afterwards, you are insulated from the global macro a little bit. And of course there are going to be knock on effects from the tariffs that will affect maybe some of our later stage portfolio companies who are thinking about maybe going out for an IPO in the next year or so.
But I think for the very very early stage, I mean, it's just given people the steely determination to put their heads down and to just build.
I think more broadly, we're thinking about, therefore, where it is impacting your later stage investments, the follow one investment that you've given and goodness, I mean, you've been found in two thousand and four as a VC company, so you've got long term bits mets coming to fruition. What are you thinking about the exit market right now? Because Annie, I'm correct me if I'm wrong here, but a lot of the exits you've had at Uncork have kind.
Of been M and A. You haven't had that many Landmark IPOs.
Yeah, I mean the IPOs that we talk about.
Obviously, Fitbit was the first send Grid Poshmark Postmates had filed for IPO before they were taken out. And I think, you know, there's been lots of talk in the industry over the last even like two weeks around you know, if IPO is on't happening, and if M and A is still slower, that we're beginning to see kind of
the dripp grip of deals happening again. Actually, a lot of liquid is probably going to come from the secondary markets, and I think as early stage investors we have to be thinking always about how we can begin to realize liquidity for our investors, because honestly, if we don't give them capital back, they won't give us more in the future.
Okay, so let's show the portfolio names you highlighted again. What do they have in common? When you think about okay, you want to look at the next great startup at the early stage.
But as I read out at the beginning in AI, yeah.
I mean I think firstly on AI, you know, AI is pervasive today and it will only become more pervasive. I think, you know, people are still talking about AI native startups. I think you wind the clock forward not very long, and all of a sudden, you know, talking about AI is going to be talking about cloud where
it's just assumed that you're building using AI. And in terms of the companies that you highlighted, I think that really the two things are that you know, these were early bets on founders that had a particular point of view on how things should be done. And secondly, they were opening new markets. I mean people Obviously now think about Uber Eats and they think about door dash, but Postmates was the very first on demand food delivery app in North America.
That was the first.
Consumer grade wearable that could track steps and fitness. So, although you know, these are different types of businesses, different business models, that kind of one thing kind of runs through all of them.
And there's some data that's been doing the rounds on X and it's about early stage investing and how the pool is dominated by few players and rec and Sequoia Vinoden over at Costler. What's that like for you in that environment where there's a high concentration of activity from just say half a dozen to a dozen slightly larger firms.
Yeah, I mean we typically see those as the firms that will follow on from us. I mean, yes, they all have seed programs, Yes they're all doing seed investing, but you know, when you're trying to deploy a multi billion dollar fund, you can't be slinging two, three, four million dollar checks all day long.
So you know, we see them as partners.
And I think one of the things that we love about seed investing is that we have our place in the ecosystem. We can be very collaborative with our co investors at our stage and then work with the names that you've mentioned later.
And I think as I as I.
Talked before about our challenging opportunity is we have to be able to pick things before they're obvious.
As soon as they're obvious.
A Koestler or an Andresen or a Sequoya will sweep in and pay big money for it. So for us, it's all about spotting the things that aren't right aren't there yet.
Andy, it's been great speaking with you.
Thanks Anamclaughlin, Thank you veryone called Capital great to have you. Meanwhile, let's you stick in the world of VC. Because Washington actually hosted business leaders and vcs and lawmakers for the Hill and Valley Forum, the focus on tech and national security numbers. Amri Horden spoke with Lux Capital managing partner Josh Wolfe why the rest of the world should not rely on Chinese AI models.
The first thing starts with the chips, so we said, okay, we have to restrict chips unto China. And unfortunately, one of the great lessons of innovation is that necessity is the mother of invention.
So we restrict them.
They're still going to find ways to route around. Now, whether deepseek was trained through in a technical tre earn these diffusion models where they sort of copied some of the other foundation models and built on them, doesn't matter. What matters is really efficiently unpresumably less GPUs, meaning they don't need as many chips. They were able to do things that some of our best models couldn't do, and so that was a wake up call to say, is
the future of AI going to be smaller models? Is the future of AI going to be different chip architecture and.
How are we going to compete on that?
Now?
My own personal view is that open source is going to be closed source. That these large companies open AI Andthropic and others that have raised tens of billions of dollars, most of which have a crue to Jensen and Nvidia to s he sells the chips that in the future, what's going to happen is the companies that have the longitudinal silos of data, meaning people that have a lot
of big data. Big data which everybody was talking about ten years ago didn't materialize to a lot, are the ones that we'll be able to use free, open source models on their proprietary data. So that might be Farmer companies with their clinical trial data. It might be Bloomberg with their repository financial information. It might be Meta with their WhatsApp chat's and Instagram and Facebook posts.
It might be Elon and Tesla and.
X with all the Twitter posts.
So those are the people that I think are going to be advantaged, and that's what we should be focusing on. How do we compete with China, not on the chip side, not on the model side, but on the applications and the use of the data to actually do stuff.
On the chip side.
Though, Jensen wang I caught up in them very quickly when he was coming into the conference and I asked him about how far behind is China? And he said, is China behind? He thinks they're very very close. So how do we make sure that they don't surpass America?
Well, I think it's going to be about the use cases. So number one, we don't want the rest of the world using Chinese models, because Chinese models will approach an assymp tote of truth but not truth. There will be no search about Tenement Square and Hinjang and the Wigers and these kinds of things and So we want the world using open models that are made by companies like ours, like hugging Face, that are the open source repository for all the best AI models. That to me is something
that trends closer to truth. And those are the kinds of systems that you want people using AI for. They're going to come up with their own ship systems. They're going to come up with less good but much more number numerous of them, and they're going to find ways to beat us in that domain. They're going to come up with their own models again to their own policy prescriptions and what Chi Jinping wants. The key is how
do we get our kids using it early? How do we become advantaged as individual humans using AI to be more productive?
That was Josh Wolf, managing partner of Lux Capital, speaking with Amrie Horden.
Time Now for Talking Tech and First Up.
Robin Hood saw retail investors that flocked to the financial service platform as for.
President Trump's tarifs.
Really world market companies saw net revenue jump fifty percent from a year earlier to nine hundred and twenty seven million, but crypto revenue fell behind, maybe reflected in the stock move. CEO of lad TENEV spoke with Bloomberg earlier about their strength in April.
April's continued to be incredibly strong across the board. I talked about futures already, but you know, equities and options are adder near multi year highs and net deposits has continued to be remarkably strong.
Plus, Instacart has acquired US grocery e commerce platform win Shop, the latest acquisition as to the delivery companies growing numbers of software businesses, which now powers over six hundred brand sites.
Turns. The size of the deal were not disclosed.
And Visa says it's enabling AI agents that will help browse products and make purchases for consumers, cutting the time and energy customers spend on shopping. We spoke with Visa CEO Ryan Mcinernie exclusively, who have this to say about the program.
What we've announced is a set of tools that give agents the capabilities to go make payments on your behalf. Think of that as AI enabled Visa credentials, and also the rules and the capabilities that will provide trust, trust that consumers will have in their agents, trust that merchants are going to have that they're going to get paid and trust that financial institutions will have that you've actually empowered your agent to make those purchases on your behalf.
And you can watch more of that conversation with the Visa CEO online at Bloomberg dot com.
Ed that does it for this edition of Bloomberg Technology. But let's recap the kind of biggest stories in markets. Microsoft and Meta resilience and strength and growth of their core businesses while.
Committing to spend on AI.
In Vidia now pairing some of its gains after a Bloomberg exclusive that the US is weighing easing chip export cubs for Nvidia to the United Arab Emirates. Will continue to track that story carry throughout the day.
But we've got so many more earnings to come after the bell. The all important Apple down three ten percent. We get that epic loss when it comes to that fight in the courts regarding the app store, But what will they say in terms of pull forward from consumers? Amazon up too and a half percent? Will they deliver eight percent growth and revenue? And Reddit at more than
four percent? Maybe a read across from Meta there. Do not forget to check out our podcasts, though you can find on on the terminal, as well as online on Apple, Spotify, and iHeart Broombag technology.
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