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Microsoft accuses Chinese hackers of exploiting vulnerabilities in its SharePoint software that have led to breaches worldwide.
Plus Open Ai and Oracle deepen their Stargate Data Center partnership to power AI work lanes, but no sign of soft Bank to help finance the US infrastructure, and.
NXP gives a not so bullish third quarter forecast, suggesting the chip makers still contending with a turbulent industry in the face of tariffs. Microsoft our top story in a blog post, saying that state sponsored Chinese hackers are behind what's happening, and in particular the stock reacting level to the early in the session car a normalizing a little bit, but we've got to get into it.
We do. Let's stick with that Microsoft story.
But in Magistrate dreiberg joins us for the latest and these are known state actors, two of them and then one Chinese based actor.
It would seem.
Yes, that's exactly right.
Microsoft said this morning that two groups backed by the Chinese government, silk Linen Typhoon and another group have been responsible for some of the exploitation of this vulnerability in its SharePoint software. We've also heard from other cybersecurity firms that they're seeing multiple different organizations sort of hack into businesses and governments based on this vulnerability.
Jake, the top priority right now seems to be identifying the victims. Do we know what the kind of net result of this this hacking activity is? Who's been impacted?
We know that the impacted organizations are ones that hosted SharePoint on their own servers. Seems to be a real smattering of different groups, government, agencies, businesses, other organizations all over the globe. We know that governments have been hit in the Middle East and in Europe and here in the United States. We also know of businesses and state level agencies that have also been hacked into.
Microsoft for its part, say investigations into other actors are also ongoing. When it comes to the exploits, we could currently see what they've put out in a blog post, but more broadly, they acted swiftly to try and patch the issue for once in a server.
That is the key concern exactly.
We've seen warnings from cybersecurity companies that you don't just need to patch, you need to sort of hunt for whether your systems were penetrated and what they might have been taken. And a source told Bloomberg yesterday that the hackers, once getting in in some instances, are stealing log in credentials, user names, passwords, tokens, and that suggests that they may be trying to exploit that information to watch other attacks.
Bloomboags Jake Bleiberg out of New York City, thank you very much. Meanwhile, shares an NXP semiconductor or trading lower today, the company posting third quarter forecasts that were less bullish than invested in anticipated. Then they went on to talk about the state of play in the automotive industry, which is fifty percent or more of their revenue. Bloombozy and King, who leads our chip coverages here, that'tually a pretty simple story right away from all the AI stuff, there's been
a glut in inventory on automotive chips. NXP saying, look, it takes time to work through them, but for that industry and that key customer, the world's a bit uncertain as well.
It absolutely is, and we'll hear from Texas Instruments in a similar vein later today. The cross currents are everything's supposed to be getting better. This kind of glow that we've had over the last couple of years is supposed to be going away. So we want you know, if you're an investor, you want them to be more bullish, you want them to be a bit more reassuring. That's not what happened for man XP. They said things are still had hanging around.
And ian almost bullish is the wrong word for it.
When revenue is down six percent for n XP and actually revenues have been down quarter after quarter.
Right, Yeah, I mean what we'll have to look at. And this is why I think it's going to be useful to have Texas Instruments reporting today sort of back to back. Is this a customer related thing? Is NXP basically supplying automotive companies that are struggling more than others.
Texas Instruments is a much broader supplier, has a bigger customer list and a bigger set of products, So that will give us a sense of whether this is a general automotive malaise, whether this is China related, whether this is Europe related, and we'll have a much clearer picture later today.
I am going to dig into this a bit later in the program, but the Philadelphia Semiconductor Industry Index, sorry, is underperforming generally in NVIDEO and am D A big drags on that. The read through between NXP and those two is difficult for me to see. But generally speaking, away from those kind of ultra specialized and even analog chips, things are quite robust still.
Yeah, I mean we've seen I mean you talk about the index, the index has done pretty well this year. There's a lot of money has been put to work. Everything we've heard so far and we'll hear more on on that vein as the inning season unfolds, is there's a lot of spending still going on on these large AI infrastructure systems, and we've heard nothing that's telling us that that's not going to continue. And that's really what's going to be the most important thing, and that's what's
driven the socks so far. Analog has been a slightly different story, but again analog benefits from the server build out as well. You need these power related chips, you need these micro controllers as well.
In king always with all the context, so appreciate it. Thank you. Let's dive deeper into the tech earnings, the vibe in the market right now, Anna Rathens with us founder and CEO of Grenna Dilla Advisory. Anna, your take here is that, yes, we're perhaps pulling back on the day somewhat nxp not resounding vealing of optimism, but we're still near all time highs and we've still got a four trillion dollar in video in our hands.
Yeah, good morning.
Markets are definitely the valuations are high. There's no slicing that in a different way. But I guess you know, you have to look at tech differently than we used to. So a lot of allocators and wealth advisors out there, we've been taught to look at tech as a growth sector. Perhaps it's more than that. So the AI component is definitely tech, but maybe there's also a quality factor there as well. Got healthy balance sheets, great cash flow, especially
those mega companies, megacap companies. It's also got a defensive sector of characteristic as well. We learned that we cannot operate this economy and our society without tech infrastructure as well as software. So I think that when we're looking at tech, we have to look at it from multiple angles in order to perhaps try to explain some of this valuation. It's not just about AI froup. It's much more than that.
But what's been interesting is the AI winners have powered forward on the twenty twenty five, and those winners have been deemed well the metas of this, Wells in videos of this, Wells Apple left for dust. In some ways, Alphabet has been a lagged too. How do we set up into Wednesday when we start to get a couple of those MACS seven names.
Yeah, I think there's definitely a vifurcation in those MAC seven names. And right now it looks like the people who have really invested and gone forward with AIS are definitely winning. Now Alphabet, for example, will have different challenges, right Not only do they have some legal challenges, but you know, I don't know about you, but when I talk to my friends, they stopped using Google as a
search engine. They're using chat, GPT. And I know that's just a few people around me and perhaps you, but those things can actually catch up. And I know Chetman and I is improving, but I think that's a real competitor there, and so AI is going to be more important going for work for some of these Max seven names, and I wouldn't expect disappointing report from them, but certainly I think investors can read between the lines.
And I what's curious about this week is that on Wednesday, Alphabet and Tesla posts their earnings results right somewhat analogous companies, some differences, and on the same day we'll hear from the President about his vision for AI and American AI. It's going to be a wild ride for investors this week, isn't it.
Well. You know, anytime anyone from the government talks about technology and AI and even bitcoin or blockchain, I get a little nervous because I think we have to tread very carefully here. We don't want to get in the way of innovation, and yet we want to protect consumers, right, So it's going to be a very It's going to be a balancing act for anybody who from the government, from the White House talking about AI and how America is going to be involved in the development of AI.
I would go in with a little bit of a cautious view, and frankly, I'm expecting a lot of lofty statements, but the question always is how does this actually translate down to the day to day and actual software and make difference in our productivity.
Let's bring it back to today's news.
What did you learn about the near term and quantifileble impact of tariffs? You names like General Motors and NXP show us that actually something's happening here.
Yeah, I mean something is happening there. We're talking about actual money, right. I mean, so for last week, if you think about the CPI and consumer sentiment, you didn't really see it, right, but you are seeing it in earnings. This is actual cash flow impacts. So I think this is going to trickle in as the quarter goes and give us a better view of exactly what areas of
the economy are being impacted by tariffs. Who is is actually assuming some of those costs because GM actually came out and said we don't want to pass down all the costs to the consumers. So it'll be interesting to see how those things get I guess diversified into the supply chain and how GM and other companies actually manage those challenges.
And going back to taras tarvis is all about the geopolitics that is currently involved in technology investing. I think of the geopolitics between US and China. I think of the latest news out of Microsoft blaming China for a hack. How much do you factor that into your current investment thesis? How much can you price that sort of geopolitics in?
Yeah, I mean I never thought that this trade talk with China is going to be simple or smooth, right, and this is yet another twist in the plot. I would hold that August first deadline date really loosely in your hands, because you know, it was April first, and then or July ninth, and then now it's August first. I think that the Trump administration as well as China, I mean, they have a lot at stake here, so
I don't think the deadline really matters. I think we're going to be negotiating until we actually get to a good place for both countries, and August first might coming.
Go Anna Rathban, founder and CEO of Grenadilla Advisory, thank you very much for coming up. Oracle and open Ai is set to expand their partnership, opening up more data centers to satiate AI demand.
We had the details next. This is Bloomberg Tech.
Oracle along with open Ai have announced that they're set to develop four and a half gigawatts of additional US data center capacity. Let's bringing Bloomberg's Brodie Ford now on how the evolution of stargate is going.
And who's involved and who isn't, because we'll get.
To sort of bank in a moment the fact they don't seem to be on the page, but this is this component to what have ten giga?
What's by four years time?
They really seem to be building it out now, right, and.
We can for get a giggle lot.
I mean we're throwing these numbers around now, but you know, a couple of years ago you would never hear about a giggle wat data center, and now we're talking about four and a half. I mean each one of those about equivalent to a nuclear reactor. And so a four and a half gigawatt data center deal that's across the country. This is an unprecedented cloud deal. I mean, this is
likely the largest single cloud deal ever signed. And so right, if your oracle, if you've been trying to tell people for many years, you're going to be a real cloud infrastructure player.
This is a pretty.
Resounding sign of confidence from the most important AI company at the moment, Berdie.
The way we look at this is it it's confirmation of our prior reporting on the projects. But also, as Cara alluded to, some clarity on the bits that SoftBank is and is not financing absolutely.
So it's very interesting because in January we saw you know, Larry Ellison, Sam Altman, and soft Bank sitting at the White House. Today, SoftBank doesn't appear to be too involved. They're not saying we're out for good. But this four and a half gigle walks, which likely gets those to around thirty billion a year, soft Bank is not involved in financing. Where does the rest of that money come from?
That's going to be a big question in the following months, right because open Ai makes a lot of money, they're not making that much money to be able to just spend all this themselves.
We're going to dig into more news miracle in a minute, but I just want to understand where we think these data centers are going to be. Do we have much detail on the timescale here as well?
Every time I ask a source where the next data center is going to be, they tell me a different state. They're evaluating a lot of different states, a lot of different sites. If you've read an article that says, hey, they want to develop a multi giggle data center here, odds are that starting. It has evaluated this site, so I'm keeping my eyes out.
Slightly smaller scale, but Oracle's also in talks around one hundred million dollar a year paramoun Skydanceteel, What do we need to know about that one?
What you need to know is if your dad is Larry Ellis said, and he helps you buy something, you're going to have to kind of help buy some stuff from him as well, right, I mean Larry Ellison's son, David Ellison has been in the works to buy Paramount for a while and they're already having negotiations that assuming that deal goes through, Paramount will be a major OCI customer.
They're going to put all of their CBS, NTV, it's a lot of assets, a lot of gigabytes, and they're going to be on Oracle servers doing best.
Brady Ford, thank you really on top of this story. Thank you very much. Okay, we have another story. Some updates in the four billion dollar fraud case against the estate of deceased Autonomy founder Mike Lynch. A London judge ruled that HPE lost close to one billion dollars after buying Autonomy. Lynch's estate will face a claim for much of that sum after he lost a London fraud case
along with the former CFO of Autonomy. The ruling suggests HPE will likely recain just a fraction of its total claim. The ruling comes less than a year after Lynch drowned when his yacht sank in a storm off the coast of Sicily. Poseidon has announced its raised fifteen million dollars in a seed round led by a sixteen Z crypto, as the company looks to tackle bottlenecks in AI training data, including IP safe resources. This particularly aimed at training data
for robotics, multimodal models, and physical AI. Here with more is s y Le Poseidon President and CEO story The incubator behind Poseidon state of players really clear, right. AI models have become commoditized, compute costs have come down. But the bottleneck, as you see it and many others see it, is the data.
You have a solution, yes, as you just wanted to put that into context again because now you know the previous generation of models. We're scraping the internets data, which is you know, you know you can scrape it all. But now AI is going to the physical world. It's the multimodel models, right, it's a robotics model, it's a video model, audio model, and this really real bottleleg is the data, as you said, because you know, you can't ask rate it illegally on the Internet, and a lot
of times this data is very private. You know, there's a lot of IP safety concerns. And in that world, how do you coordinate the collection, labeling, curating of the data. And we're using actually crypto incentives to actually coordinate that massively label coordinator.
So my next question was why is Andreson's crypto team backing you and not an AI specialist.
Partner or a different firm.
First of all, micro founder is a you know, robotics at UT Austin, and he's he's a big AI specialist who's been kind of working on this data licensing and data collection for the last ten years and even he thought about how do how do you incentivize data collection with data dividends? So you know, he he he's an
AI expert in in this in this problem. But the reason why we are kind of they we think this is so so timely, is you know forty days ago actually meta semi a quiet actually as as you know, uh, scaling on as a data left a very huge vacuum in the space to actually for competitors and new players
to come in. And if you look at scaleing on D I mean, I'm not trying to criticize, but they have to you know, make a lot of shell companies, work with shell companies and developing countries to actually coordinate this kind of digital sweatshop to make that happen. But the beauty of crypto is that it's still really good at coordinating incentives in a at a global scale and pay them instantaneously with stable coins or.
Other type of cryptotokens.
Right, And that is a very very huge advantage number one, right, And number two, not only that, what crypto and blockchain does is it is good at you know, putting this data and IP on an immedable ledger and track and attribute it and license it with small contracts. And that's those two are very very important advantage of crypto. Even where my co founder, Ai Specialist wants to actually use thistagnomogy.
S ry, let's just go to the basics of the data that is needed. Here, I can see the crypto read across. I think of Vaccineinfinity, the game that when bananas in the Philippines years ago, how people wanted to play because they earned money in tokens via playing this crypto native game. You're going to use people, incentivize people to sort of video themselves in the real world, then ultimately helps Tesla build optimists in the real world.
Yes, actually you hit on the right comparable. Ex Infinity was an example of coordinating this massive number of people in the Philippines and other types of developing country, other other developing countries to actually play games to ourn' tokens right in.
The same way.
Now, you know, when Tessa wants to train as human aid robot, they you know, even if you script the entire Internet's data, you can't actually have a testa robot holding a coffee cup, right because you know, you need a million angles of data to ecocentric video footage and a million different types of settings and that kind of data. Instead of actually hiring a shell company and they're having their share company hired, you know, tens of thousands of people.
You can coordinate this at a mass skill and an instantaneously with a with crypto incentive. That's what we're doing.
And let's talk about the end demand here. How many companies? Who is your ultimate provider? How do you then sell this aip this ip safe AI training data.
Yeah, the reason why it's IP safe is that everyone who are actually contributing data, anyone can contribute this data anywhere around the world, right, and then actually set their licensing usage terms on the blockchain. And we are at the moment we're not completely centralized, and we are now going to launch a decentralize a deep in app in the center physical infrastructure app and fall that actually collects data, you know, puts this on the blockchain with the licensing
terms in place. But at the moment, we're now actually acting as an agent to actually secure these contracts, and we already have a you know, we've already signed a contract and we cannot discuss.
It at the moment, right, you know.
And then I mean in the robotics relevant.
Well, quickly, if scale AI, the scenario left a vacuum and you look to occupy that vacuum, how many phone calls have you had from the other frontier model makers that you could fit into their organization in the same way just thirty seconds.
You know, actually many many organizations, And I was really surprised as C Stage company, they were willing to work with us because a lot of them were telling us that they were dropping contracts from SCALEI.
But I meant in terms of you being acquired or you joining a bigger group.
We don't have any plan.
We don't have any plan. And we think the advantage of this open system is that we can work with any AI.
Farmers, s y Lee, a Poseidon and Story. Great to have you on today.
Now, let's just turn back a minute for what's going viral because Tesma's futuristic diner in la is complete with a drive in charging experience. Now, the sleek retro Vibe diner is also replete with two sixty six foot megascreens and a rooftop skypad and a prototype of Optimist.
The robot is serving popcorn.
Apparently that was at the pre launch event for the Hollywood venue. Tesa claims it's the largest urban supercharger in the world.
Let's just talk.
About another key player that's got earnings later this week. Alphabet, Well, Google, we understand is seeking to recruit news organizations for a new licensing project related to AI.
It's all, according to sources, which could be a big win for the struggling media companies.
Bloomberg's Hannah Miller joins us, now, is this some sort of Google capitulation here, because we've seen some deals done by other AI players, but Google's always set on the side.
I think Google is playing catch up here. You know, we've seen big companies like open ai and Microsoft strike these massive licensing deals with news organizations, and Google, yeah, they've been sitting on the sidelines.
They haven't been doing that as much.
So this could be them, you know, testing the waters, you know, trying to build better relationships with media companies as the AI race heats up.
Kind of.
One of our sources said that in one case, Google launched this kind of pilot with twenty different news orgs. You cover TMT right from the news perspective, So it's like a cash cow, a great gold mine just to sell data and bring in some money through a new mechanism.
A lot of people in.
The industry are saying this is a temporary band aid, you know, yes, we can get some money from these big companies at the start, but looking long term, of many journalists feel like AI is a threat to their business. You have people in the arts, you have people at major media companies concerned about the effect AI will have on their jobs.
Bloombog's Hannah Miller out in New York, thank you very much. Now, Netflix and Disney are both taking steps into the somewhat controversial world of AI video creation with software from Runway AI Blueboks. Rachel Mets brings us the story. Interesting one about this is that in the earnings context, this has already come up, particularly for Netflix right in recent weeks. But what's the controversy and what is the actual tool here? Like, what is it that a Netflix would need AI to do?
So as you as you mentioned, Netflix said on their earnings call just last week that they're using AI, and they also mentioned a production that they'd used it in. So companies like Netflix, what they could do with this software in theory is they could maybe lower some of the costs for special effects, so they'd use a model like Runway. Runways top line model is JEN four. They also have some models that aim to reproduce motion capture software and without using all the fancy and clunky hardware
that comes with it. So the idea would be to save costs here and to do some shots that perhaps it would have been impossible previously without using AI software.
I think we learned from Ted surroundos over Netflix that it was previously using to sort of simulate a building collapse, and I think it was an Argentinian particular visual effects company, but it wasn't Runway usually we understand according to people familiar who are Runway, have they worked with and what have they been able to produce thus far? Because they're actually out competing Hollywood or West Coast based visual effects companies.
Yeah, so Runway works with a number of different companies. We also know that Disney has been testing out those software. They also Runway has a deal with Lionsgate. They're working in a field that's increasingly crowded and there are so much larger players. Open Ai has its own video software. Google does as well, And what I would expect to
see is companies like Netflix. Probably they said they did not create that scene with Runway, Well that implies there's at least one other company that they're working with the software from, right, so I would expect to see that actually As these companies dip their toes into the water of AI video software more and more, you'll probably see them try out a bunch of different ones, and maybe they will end up using a bunch of different tools
for different things. I think it really just depends on what they find most useful and what their production teams do. Is it live action, is an animation, and what tools work the best for those sorts of things.
Let's try and get the big picture vision.
This is what Ted Sarandos actually said on Netflix's earning score.
We remain convinced that AI represents an incredible opportunity to help creators make films and series better, not just cheaper. There are AI powered creator tools, so this is real people doing real work with better tools. Our creators are already seeing the benefits and production through pre visualization and shot planning work and certainly visual effects.
So Rachel, that's how Netflix sees it.
If you are a Runway or another AI company that's working on text to video tools, right is the movie industry or television. What they're working toward is that who they want to serve.
Absolutely, I mean they want to work with professionals who are working in these fields, and they want to work with the studios. I think what's also important to keep in mind is this technology is really controversial because there are a lot of people people that perhaps would or would not be wanting to use this software, that are concerned that this is going to cut into their livelihos,
and I think that's a really real concern. So that's part of why the studios are being I think they're a little bit hesitant to be public right now about how and if they're using this software because the stakes are really high.
Bloomberg's Rachel Metz, thank you very much, Cara, what you.
Got as time now for Talking Tech and first stop ed in video. The chip challenger Furiosa AI has finalized a deal with LGAI Research. Now the South Korean chip designer one final approval for its AI chip Renegade after seven months of evaluations. Now in March, remember, the company rejected an eight hundred million dollar takeover from Meta, choosing instead to grow the business as.
An independent company.
Plast black Rock has told staff not to bring company devices to China, including iPhones and iPads. That's all according to a memo seen by bluembg News, and then move underscools, growing concern among some global firms about employees working there and data security and glade Brook Capital Partners has raised five hundred and fifty million dollars for investors for its
full fund. The firm has Stakes and SpaceX Perplexity Stripe, among other startups, and it prows to continue backing fintech, AI, E commerce, space and defense companies.
Ed okay, coming up, tech and energy leaders head to Washington to discuss how the US can win in the AI race. Or take a look at where global AI competition stands now, Caroline, you pointed this one out earlier today.
It's a name what I've not looked at in a while. Open Door.
Okay, the stock's down one point six percent in the hearing now, but look at some of the swings in the session. Bloomberg writing about some of the activity, some of the halts. Open Door is the latest memes stock. This says it on the Bloomberg terminal. No, seriously, go check it out.
We'll be right back. This is Bloomberg Tech.
President Trump in a bilateral meeting with President of the Republic of the Philippines. I want to go straight out to Mike Shepard there was a lot discussed there DOJ investigations being queried, and some referring to potential as Trump continues to see it of an election rigging, as he said, but we've also had so much more when it comes to the trade, when we think about China, when we think about magnets, as it says, flowing out succinctly from
the country. Can you just wrap up what we were hearing from there?
Well, First, the very first question the President took, of course, was on the FED, something very close interest to our audience, and the President stopped short of calling for Jerome Powell to resign as FED chair. He did keep up his criticism of Powell's handling of interest rate policy, saying that he's been too late and too slow to lower interest rates. And this is a theme he has returned to again and again in these moments when visiting foreign leaders join
him in the Oval Office. Just last week we saw him hit these notes with the visiting Crown Prince at Bahrain. We heard it again today with the President of the Philippines, Ferdinand Marcos. We also heard the President talk about China, which of course is a crucial topic between the US
and the Philippines. China's one of China's closest neighbors. The Philippines has to balance this relatelationship, and we heard Marcos and Trump both talk about this, and Trump also indicated he had accepted taken an invitation from President's Shushin Ping of China and was looking at possibly accepting it and would make a decision on that in the near future.
Carol Okay, Bloombergs, Mike Shephard, thank you very much. We also expect to hear from the President later this week in a speech on AI. Let's get from DC to the global perspective of how the AI race is unfolding. Nicolaus Lang is with us for that, managing director, senior partner Boston Consulting Group and the global leader of BCG's think tank, the BCG Henderson Institute. We've covered a lot in this program, how codified Europe's framework is around AI.
We're waiting on America to follow suit in many respects. The President will outline a vision on Wednesday. How would you summarize the differences of approach between those two jurisdictions.
Yeah, well, thank you for having me, and I think when we look at the global geopolitic SOFII. What we have seen here in our research is that we see two superpowers, Yeah, on one side, the US. On the other side, China, I think, leading in talent, compute, power, foundation models. And then you have Europe and the Middle East, which are these middle powers challenging the superpowers. And I think that's where we will see the dynamic unfold in
the years to come. You just mentioned the approach to regulation. I think this is different. I think in the US, it's different in Europe, it's different in China. And the realities that we need to adapt to these three constituencies and these three approaches to regulation.
Very briefly, Niklaus, the companies you advise, where are they trying to navigate? They're looking at expanding data centers within the Middle East, within the US. Where are people tending to default right now for their expertise?
Yeah, Well, I think what we see in AI is a fragmented world as we see it also in other parts of geopolitics, and I think companies realize that they need to be present in the different regions, both with data centers, with AI talent, and also with capital and investment. And I think that what makes this jubiled pigs of AI space so interesting because I think we have a huge dynamic, a regional dynamic which is very different from what we see in other areas.
We're going to be hearing much more about that regional dynamic and an event later this week, of course, over in DC Nicolaus Lang fascinating from the Boston Consulting Group. We wish we had had more time. Meanwhile, though, that does it for this edition of Bloomberg Tech Ed.
Yeah, don't forget check out the podcast where we can retap all of today's Bloomberg stories and a lot more that was going on.
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