Bloomberg Audio Studios, podcasts, radio news. Bloomberg Tech is alive from coast to coast with Caroline Hide in New York and Eva Low in San Francisco.
This is Bloomberg Tech coming up. Musk's political aspirations in focus after the Tesla CEO says he's formed a new political party.
Plus more tariff warnings from President Trump. Today, as countries rush to negotiate trade deals, we bring the tech.
Angles and Cory've agrees to buy Core Scientific in a nine billion dollar all stock transaction. We'll discuss that and the rest of the tech m and a landscape.
But first we get to these markets that come off of record highs, anxiety building around the trade announcements, and indeed where the negotiations will go down to the wire come July ninth. I'm looking at the NaSTA one hundred of by three quarters of percent at the moment ed we're seeing stocks down, bonds down, dollar higher. But there is one key company that drags from a points perspective, and you've got it.
Yeah, that's our top story, and that is Tesla. The stock down more than seven percent in the session, now down more than twenty seven percent year to date, Musk says he's formed the America Party. The concern from the Cell side, in particular is that this is just more distraction that must won't be as focused on Tesla as
he pursues these political ambitions. There's also the factor weighing on the stock that is President Trump over the weekend, commenting on the news of Musk setting up his own political party.
It's always been a two party system, and I think starting a third party just hands to confusion. It really seems to have been developed for two parties. Third parties have never worked, so he can have fun with it.
But I think it's ridiculous.
Let's get it straight to Bluemeg's Max Chrafck and the President thinks it's ridiculous. Big investors, analyst notes out today, think it's really worrying.
Yeah, and you know President Trunk's Trump's political observation that you know, third party candidates have generally not done well. That is true historically, And of course there's there's also just the risk that you know, having a poor relationship with the you know, the president of the United States,
with the party that's in power. As Musk is trending towards is going to have negative consequences, not just for Tesla, which of course does have you know, areas of exposure, regulatory exposure as well as benefiting from these EV tax credits that are about to go away, but also for Musk's other companies, you know, SpaceX, massive government contractor some of these other companies also depend on sort of regulatory
you know, good relations with regulators. So so lots and lots of risk here for investors.
And I think that's what we're seeing in the stock We're showing some of Musk's posts on X over the weekend, as well as the president's response on True Social but the catalyst was the big beautiful bill Max. I think it'd be really helpful if you just exp lane this basically difference in fiscal policy opinion here between elam Mosque and the President of the United States.
Well, there's a question of fiscal policy opinion, whether or not you agree that these tax cuts should have been extended or I think from Musk's point of view, maybe there should be more cuts to pay for them. But then there's also the sort of vibes thing. You know, Musk spent a lot of time and and you know, hurt his popularity through doge you know, comes away cutting you know, a little less than two hundred billion dollars
maybe best case from the deficit. And now he's reading these headlines talking about trillions of dollars being added to the deficit, you know, over a decade. And so so I think I think there's a sort of personal affront. And I also think it's important we not missed the fact and Trump brought this up in his post that there are aspects of this tax bill that are going to affect the bottom line of Musk's companies. Now, it's possible that as Tesla you know, pivots to Robotaxi, these
hits won't matter as much. But we're talking about significant money, significant money that's going to make Tesla's cars more expensive for consumers, and that's going to cut into Tesla's margins, which we've already seen under pressure, you know, over the last few quarters.
And that's exactly why Annasov William Bair Blair actually downgraded the stock today. JP Morgan said about forty percent hit to profitability on the back of these regulatory changes. There is one note of optimism, though, coming from Ralliant Global advisors Jason Sue, who had said, look, this is kind of the only option left to Elo Musk actually is a savvy political move. What did you make of that nomax?
You know, I think there's always obviously always, you know, different interpretations and so on. You know what we saw from investors when Musk and Donald Trump had their sort of first blow up at the beginning of June, and then then they kind of like seem to be patching things up the stock started going better.
I don't really I think you really.
Have to squint to see how you starting some kind of quicksotic third party is kind of a brilliant political move. I think you know the consensus, you talk to Wall Street investors, you talk to balls and bears. This is not going to help the company. This is a drag on the company. You know, no matter what your point
of view. Obviously there are some exceptions, and you know, who knows that Elon Musk has has pulled stranger things off before, So maybe this will turn out to be some kind of brilliant political gambit.
Bloomberg's Max Chafkin, thank you very much. Let's continue the conversation. James fishback from Azoria partners. He is a former advisor to the Department of Government Efficiency or DOGE, and he's written an open letter to Tesla's board of directors calling on them to meet with Elon Musk and seek clarity over his political ambitions. Azoria is also postponing the listing of its Azoria Tesla Convexity ETF. After Musk said he
was forming a new political party. James Fishback joins us, Now, I think we just start with the basics, James, if we can, Why did you write open letter to Tesla's board and why do you think they need to understand the formation of the America Party in the context of whether or not is a net benefit to the company and Tesla's future goals.
Well, good morning, Ed.
The truth is that when you have a full time CEO and Elon Musk, who has been an extraordinary CEO, his time and energy needs to go to Tesla and synergistic companies like Xai or SpaceX.
A political party.
Regardless of how I might feel or the President might feel about how ridiculous this stunt is, it does not help Tesla in any way, shape or form. I wrote the Tesla board this weekend asking for one thing clarity. Sit down with Elon Musk this week and clarify what his full time obligation to Tesla will be in light of this new political party. If he cannot, If he cannot be Tesla's full time CEO, the boord what it needs to take into that into account and needs to hold him accountable.
Has Tesla's Bullard responded to Aleta James.
I have not heard back from Tesla's board yet. I'm confident that this week they are going to have this conversation with mister Musk. Let's just remind everyone listening. Elon Musk is free to burn his own money in a political party. He is not free to bring shareholders like us along with him. He does not own Tesla.
We do.
And if Elon Musk does not want.
To be the full time CEO of Tesla, he should tell us now, because starting a new political party, with the travel, the candidate recruitment, the training and the organizing that comes with that is not a wise use of his time.
Ed.
He has been an extraordinary engineer and visionary leader for Tesla and for SpaceX. I have FSD in my car. I know you do as well. It is a magical technology. Robotaxi is brilliant. It's rolling out right now in Austin. That's what his time and energy should be focused on, not trying to sabotage the President of the United States, James.
Can you remind our audience your exact exposure to Tesla, how much you own? How that is the scale within assets under management of Azoria.
Yeah, absolutely so. This Tesla Convexity ETF very simply was designed to combine the power of owning an asymmetric stock like Tesla with asymmetric call options on an asymmetric stock like Tesla.
And so this was.
Upwards of a billion dollar investment we were going to make on behalf of retail and institutional investors over the next few months in Tesla. We can't do that in good faith right now because you have a CEO who is putting personal political ambitions ahead of his obligations and medicaid, the detriment of shareholders and Caroline, there's a much bigger
story at play here in America. We have seen CEOs who have pursued and imposed a political agenda at the moral and financial detriment to their companies, which is why tomorrow we are still publicly listing or Azoria five hundred Meritocracy ETF, which invests in the top five hundred companies in America and excludes any company with a political DEI hiring target. Those are moral failures and their financial ones as well.
Will that exclude Tesla? And what of the ETF future plans If you don't hear back from the board.
Well, look, we have to hear what the board is going to say.
First.
My biggest concern now is that mister Musk, who have a lot of respect for that, he is going to use his position at Tesla and resources and time and energy that could be better spent on optimist robots, on robotaxi, on the new model. Why rollout that he's going to use that time and energy on this new political party.
Whether you agree with it or not, the truth is the CEO of a company has a full time obligation to that company's employees and shareholders, and so we need to see clarity if we are going to revive the Asoria Tesla Convexity ETF. I hope we get that clarity care line, because Tesla is the best AI investment that investors can and make right now. Between the energy business,
Humanoid robot's full self driving and robotaxi. This is a compelling stock to invest in, but we can't do that right now when his political ambitions or front center.
James Tesla is the only publicly traded name in Elon Inc. Across many companies, but he is also CEO of SpaceX and of Xai and has leadership role at Neuralink. And what I hear all the time from investors in XAI is actually they feel that's his primary focus. XAI in the run up to the November election, Musk was the biggest donor. What he wants to do with the America Party is back candidates for House and Senate seats. So how does that work. He's already stretched across multiple companies.
What difference does it make if he's putting his own wealth towards a political endeavor. He's basically continuing with something he's been doing eight or nine months anyway.
Yeah, that's a great point. So his work at XAI or SpaceX directly complements his work at Tesla. So when you talk about the technologies, the GPUs, the dojo models it's being used at Tesla, those are also carrying over to XAI. The synergies, the physical materials, the engineering breakthroughs at SpaceX have carried over into the cyber truck, for example. So there's obvious synergies between his work at Tesla and at SpaceX and at XAI. No synergies exist between Tesla
and its AI efforts. And starting a political party that seeks to sabotage the President of the United States who just delivered one point two trillion dollars in spending cuts over the next ten years.
I don't get Elon.
With all due respect to Elon, he promised a trillion dollars in spending cuts over the last six months, didn't come anywhere close to delivering that, and now he wants to start a political party. Meanwhile, President Trump just signed in the big beautiful bill this past weekend that actually delivered not just one trillion dollars in spending cuts, but a record investment in our border security. Companies like Matroid benefiting from that deploying AI vision technology at the border
to stop human trafficking and drug smugglers. And then second, record tax relief for working families who for under the Biden Harris administration, we're getting the very short end of the day.
Bringing it back to the Tesla perspective here, though in particular rather than political one. What about Musk's own pay package? What about potentially thinking of succession planning here? How is the board likely to respond to that? How are your retail investors that you've been building an ETF for going to respond to that? To think, that's a great question.
Elon deserves to get paid for the extraordinary work he has done at Tesla. What that judge in Delaware did is nothing short of political lawfare, and Tesla shareholders, including Azoria, want him to be paid and paid hugely for the contributions he's made and the wealth that he's generated.
For all of us.
So that is a separate issue. Of course, anytime you have a CEO as big and as bold and as visionary as Elon, you have to think about succession plans. I trust Robin, I trust the board to have this conversation with Elon this week to clarify his new America Party, not on the merits of what the party stands for, but what it means for his full time obligations to's Tesla as.
CEO Zoria, CEO James fishback. Thanks for joining us today. Appreciate it. President Trump is said to announce more trade deals and deliver tariff warnings today. It's ahead of the Wednesday deadline. This comes as US officials actually signal that trading partners will have potentially until August first before tarif's actually kick in. For more Bluebergs, Tyler Kendall is joining us now. So the clock is ticking less than an hour. What do we expect to hear?
Yeah, hey, Caroline, as you said, we're almost two twelve pm Eastern, which is when President Trump said that we could expect the first round of his tariff letters to be sent down. He said to expect twelve to fifteen countries to receive them, but at the moment, it really is unclear which ones are going to and how they're out ultimately going to respond.
Now, our understanding is.
The letters are going to be out in the next coming days, but really the tariffs aren't going to be enacted for about three weeks time August first, which would suggest that the administration is open to negotiating further here despite the July ninth deadline coming up on Wednesday, and we heard the Treasury Secretary Scott Vessont basically say as much in an interview over the weekend, saying that the playbook from the administration is what they would like to
call maximum pressure. They're going to send out these letters in a bid to get our trading partners to put their best offer on the table. Now, I'll quickly point out one development that we've been tracking, which is really sort of a reversal in which countries seem to be
getting priority here when it comes to talks. The administration has expressed frustration when it comes to Japan, for example, And you had President Trump this morning threatening an additional ten percent tariff on any country that aligns with the bricks after those that group of nations held the summit over the weekend, which could spell trouble for India, of course.
But Caroline and Ed pair that with the confirmation this morning that the European Union's arsenal On Vonderlin had a phone call with President Trump just yesterday, and what really does feel like a reversal of favor for the trading block, which we had been, our understanding had been was really at the end of the negotiating line.
Boo Books.
Tyler Kendall from Washington, DC. Thank you very much. Let's get more on global tariffs in their impact join us now. Is Liza Tobeing Ghano, Global managing director, your trade lies there is advising on geopolitical risk. You heard Tyler's reporting there. How much is this about managing expectations versus getting something definitive from this administration today on what has been agreed and what will be agreed in the weeks to come.
Right, Good morning, ed in Caroline, It's nice to be on with you.
Yeah.
Secretary Scott Bessett has messaged this as a maximum pressure can so they're trying to ratchet up the pressure and get more concessions from US trading partners. It does seem that by kicking the deadline back to August first, they are needing more political wins. They need more deals in order to make this look like more of a success.
But what I think markets may be missing at the moment is that there is another big chapter in President Trump's trade agenda looming in the background, and that's the sectoral terriffs. So of course what we're all obsessing about right now is the reciprocal tariffs, and there's a lot of uncertainty the uncertainty keeps extending, and the US courts are raising more questions about the legality of these reciprocal tariffs. But by contrast, the Department of Commerce meanwhile is undertaking
these investigations to lay the groundwork for sectoral tariffs. These are the Section two thirty two investigations into things like semiconductors and pharma and various medals and a whole host of other key things. And if you'll recall this investigation, Commerce has this authority in terms of looking at the
national security vulnerability. So that's still looming. It's been delayed by these trade negotiations, but it's still coming, and it's arguably a lot more consequential than za we'recal tariffs.
A lot of that directly relates to China, right, And the latest headline is the President warning an additional ten percent tariff in response to anti American policies, as he calls them from bricks nations. But if you consider the bricks nations and where this administration is focused, all of these different negotiations happen in parallel. Do you think China gets more time and is more of a priority than anyone else.
Yeah, there's a few trade partners that are sort of on a separate track and they're not really part of these ongoing reciprocal tariff negotiations. China, Canada, and Mexico. You know Canada and Mexico of course, because they're USMCA trade partners, and they're on a separate track. But China, because the President has been saying that he has a deal already with China, this is coming out of the London trade talks.
What you really have there is more of just a fragile truce that centered around rare earths and export controls, and so it's very fragile. I think the administration would like to keep the door open to further trade talks and maybe some kind of a phase two with China.
They would like to see China open up more, but of course it takes two to tango, and China has consistently disappointed US trade negotiators, and what Washington may try to offer towards Beijing as concessions or conciliatory diplomatic moves will be read in Beijing as softness and weakness, and they will push harder for more concessions. So I think there's a lot of fragility here, and either side could tip over this Apple car in terms of this kind of fragile US China truth, Oh.
Apple cart takes me exactly where I want to go because for us in the world of technology, Apple has been the front line of fire when it comes to tariff exposure. We also think of the chip the semiconductor names, and you mentioned section two thirty two. All of this give us the advice you're giving leadership at Corporate America
right now. Do you navigate tariff's like this or do you ultimately take the takeaway is build more in America and signal more rather than see the realities of where tariffs go in the next month or week.
I think with China, you have to have a China strategy, and that has to take the medium and long term into account. It has to take into account China's track record and the track record over decades really of US China trade negotiations eventually disappointing and breaking down.
So I think you kind of have to bake that in.
What remains to be seen is how seriously the administration will back up President Trump's desire to reindustrialize here in the United States. There's some areas where this sort of conflict among goals is quite striking. For one thing, the US needs a strategy on rare earth. I think the US dependency on China for rare earth and permanent magnets has become really a hot topic that everyone's tracking now, but we still don't have the US still doesn't have
a strategy to deal with the lack of demand. Really, and what you saw in the big beautiful Bill over the weekend was there had been some measures in place on the green energy side to put more funding towards solar and wind power that would have created more sustainable demand for the off take of these nascent rare earth projects.
That was stripped out of the bill unfortunately. So I think you need to see more, you know, an array of support beyond terrors to strategies to reindustrializing in the United States.
Lasotomin, I'm Gano Global. Great to catch up with you. Thank you now coming up TikTok maybe building a brand new app for US users. That story is next in talking tech. This is in berg tech. It's time now for talking tech. And first up, Huawei's Ai Research Lab is pushing back on allegations and relied on rival models to develop its own platform now. The accusations come after the company published a source code for its PANDU pro e models. That was last week, where users on GitHub
debated its origins. While we're responding stating the use of open source code is common practice and they strictly adhere to licenses. Plus, China hits back at EU restrictions on their medical device makers, announcing reciprocal curves. Beijing says it will exclude EU based companies from Chinese government procurement on certain medical devices. The move comes ahead of high stakes and meetings between the EU and Chinese leaders. And TikTok maybe building a new version of its.
App for US users.
It's according to reports, and the company is planning to launch the new app on September the fifth. TikTok users would have to download the new app and migrate in order to continue using the social media platform and the existing app, but it's said to work only until March of next year.
Ed Okay, Coming up, Core, We've agrees to buy Core Scientific in a nine billion dollar also transactions, got the details of some Monday m and a coming up next. This is Bloomberg Tech. Welcome back to Bloomberg Tech. I'm looking at a couple of big tech names moving to the downside. And what's interesting about Apple and Alphabet both
lower this Monday is news out of the EU. So starting with Apple, Apple is a pee that five hundred million euro fine that was relating to the app store saying that the requirements that you has for appstore changes are unlawful. Maybe some pressure there. Similarly, Alphabet or Google is saying that it's going to list the search results of competitors right at the top of the page in order to conform the Digital Markets Act. Again, a stock that's down one percent. That news came out on July
fourth holiday here in America. Maybe it's having an impact. Then there's the big one, Tesla, the biggest mover to the downside in terms of the points drag on those major industries. Elon Musk has founded the America Party. The cell side are worried that it's going to be a distraction away from Tesla his core obligation. And there's the impact of the President of the United States commenting on that. Later in the program, we're going to go out to Crag Trudell. It's going to give us a lot more
of the market reaction in this story. Correct.
Yeah. Amid all of that, though, we've got some m and A news ed and that's a cap Gemini in France races to build Boulder AI offerings with the Transalactic deal. And here in the US, Core Weave has agreed to buy Course Scientific to expand its data center capacity. Again it's capitalizing on AI demand. Leanna Baker's here with us. Who leads the deal team? Leanna, Let's go to Core We've and Core Scientific first, because this is all about
the need for compute. They actually eyed the asset about a year ago from a much less price point.
And since then Core Scientific shares have gone up a lot, so I think patience has paid off for them. Although you might see that shares are down today. That's something we're following closely because you don't often see that in M and A But because it's an all stock deal and Core Weave is a pretty volatile stock that could be weighing on shares.
Of course Scientific.
There's also this kind of broader m Anda Monday vibe. Cap Gemini is doing something in the market to get itself up to speed on AI. What do we know about the backstory here. I've been reading reports about this piece of M and A for some time.
Thanks Ed, We've been all over this story. So cap Gemini first started talks with this company a couple months ago. They were in advanced negotiations and then we had dislocation and market. You might remember all that tariff drama, so talks sort of stalled there, but then it came back. We've been hearing a few weeks ago that things were happening. We were trying to get that final price. We didn't
get there, unfortunately, but you saw it announced today. Since then, since talks broke off, you know, the euro has strengthened a bit. Maybe that came into play, but definitely there's going to be consolidation among companies that consult other companies. These B to B companies are being affected by AI and that's going to be a trend that we're seeing. So i'd say WS is looking to get stronger here by getting with a bigger rival Bloomberg.
Leanna Baker, who leads our deals team, thank you very much. Let's get back to today's big story, Tesla. After CEO Elon Musk announce the formation of a new political party, how do investors feel about it. Let's bringing Michael Green, portfolio manager and chrief strategists at Simplify Asset Management. I was on the Bloomberg on the HDS function. I think you have a very small holding in Tesla, maybe thirteen
thousand shares or so to clarify that for us. But your reaction is somebody that has exposed that name and Elon Musk forming a political party.
How do you react, well, very quickly.
So Simplify has a two x levered variant of the Tesla fund that provides access to that. It is a very small fund. As an investor in Tesla, however, I would would argue that this is not so much a choice that he has, but almost an inevitability. At this point he is man. Tesla is very closely as his SpaceX and related businesses from Elon Musk. They're very heavily tied into the political allocation machine, whether that is the Department of Defense and NASA through SpaceX, whether that is
through the environmental credits associated with Tesla and Solar. You know, this is a business that is deeply tied into the political framework, and at the end of the day, unfortunately Elon Musk has now managed to basically alienate both Democrats and Republicans. Democrats by aligning with Trump initially in the anti woke movement, and now of course Republicans by breaking with Donald Trump and launching the American Party. I've drawn the analogy that this is much more like William Randolph
Hurst than any form of traditional technologist. He's largely known at this point for his political and communications empire in the.
Form of Twitter.
Is a town square that really seems to be setting the tone here, whether he is established.
As opposed to as opposed to being the key inventor or the technical brain himself.
Right.
Like, the thing that we always go back to is that in many annual regulatory filings in the boiler plate, they will put Elon Musk is essential to this company and if anything were to happen to him, that would be to Tesla's detriment. But as I know, I've reported a lot on it, right, there are many talented and influential, impactful people at that company. Even so, there is an element of key man risk from Tesla's own perspective. It's in the filings.
Yeah, at the end of the day, the Tesla buyer is suffering from their car being keyed in a parking lot, not because of the technologists, but because of the chief executive officer and a leader of the company. That is clearly a risk, both from a management standpoint and a talent acquisition standpoint. He is a transformative figure to many in the technology space who dared to actually build stuff in a technology world that was largely focused around consumer apps.
You but he is not the inventor, He is not the key technologist. What he is is the key spokesperson, and so the underlying behavior that is occurring here, it's not entirely clear that he has a choice to back away from the political sphere given the exposure that his businesses have. Whether this is reckless or not is ultimately
going to be determined by the history books. We can't really know the influence, but with a deeply divided electorate, the threat of a third party does have the potential to disrupt elections, primarily purting republics, much more than it would likely hurt democrats.
This is a global company as well, and Michael, we've seen the impact in Europe that Musk's political affiliations have had. You then think about China, where real growth engine for them. But maybe China starts to look at the lessening in political weight that Elon has had with the administration backs away there, and then you've got competition. Do you remain as exposed to this name as little as it is?
Well, ultimately, we have a fund that is dedicated to Tesla, so we will buy that just based on whether shareholders want exposure to that name or not through that fund. But at the end of the day, this is a business that, for the very first time in history, is actually looking at the potential for a sales decline. It has had extraordinary success in a few models. The model Y was obviously a huge runaway success, but it has
an aging product mix. It has a significant new competition, particularly from Chinese companies coming in, and this is of course creating conditions under which the business itself is very
much under threat. It has always been a bit of a mystery from a valuation standpoint, and so it's very hard to create a compelling argument for why you should be aggressively buying Tesla and now, other than the desire to gain exposure to a very high volatility, high beta name, which has been one of the key characteristics that have attracted people to it over time.
Yet, Michael, give us the signal that you're getting from those that have wanted to get into your fund, that have wanted the exposure, to the volatility or to the mystery around you know, Musk in and of itself, is that waned in any way in the current political environment.
We haven't really seen it, weanhe in any meaningful way. But the reality is is that most of these levered ETFs are simply offering investors a tool to access lower cost leverage than they could obtain through a margin account. You can get a two x levered exposure at a fraction of the cost once you factor in management fees and the costs of the leverage that can be obtained in the institutional space. It's much less expensive than in
trying to obtain that through margin or through options. And so the argument is very compelling if you want that levered exposure. The question is ultimately, do you want LeVert exposure to a business that really has gone somewhat ex growth and is now looking at the situation in which those political liabilities both in China where it's perceived as an American company at a time period where that's probably
not particularly attractive. Europe similar phenomenon, and as I mentioned, you know, growing competition in the United States as well as the political headwinds make this a very challenging environment for Elon Musk.
Fascinating conversation, Michael Green, simplify asset management. Appreciate your time today.
Now coming up more.
Crackdown on jips as the US where we're looking at the White House saying to prepare more chip cubs in an effort to combat smuggling into China. More on that next, This is Bloomberg Tech.
The White House is set to restrict shipments of AI chips to Malaysia and Thailand and an efforts cracked down on suspected chips smuggling into China. That's according to sources. For more, let's got out to bloombergs Mike Sheppard in Washington, DC. It's a very clear story, right that the restriction is to prevent the flow of advanced semiconductors through a backdoor third party into China.
What do we know, Well, what we're hearing from the Commerce Department is that we may be seeing a move soon to try to limit sales. It will require companies based in Malaysia or Thailand to obtain licenses to buy these advanced AI chips. Pretty much, when you think about it, it is Nvidia and also AMD that makes the most advanced out there used for artificial intelligence purposes, and the idea is to prevent those buyers in Malaysia and Thailand
from averting chips possibly to Thailand and to China. And the concern that the US has articulated over and over again, and it's not just the current administration, but the prior administration too, was that other countries could be through their prior relationships with China, a source of chips that China right now is prohibited from buying. The US is imposed restriction after restrictions since the early part of the twenty twenties aimed at keeping these advanced chips from China to
slow its position in the race to dominate artificial intelligence. Now, what is unclear is where this rule is. It's still in the draft stages. Things could still change, and it's important to note that Secretary of State Marco Rubio is heading to the region. He'll be in Kuala Lumpur later this week for a regional meeting of Foreign policy chiefs
from various countries in the area. They obviously have a lot at stake when it comes to the arrows that the Trump administration is preparing to unleash on so many of those countries, not just Malaysia and Thailand, but so many others in the region. But they're also going to
be concerned as well about export controls. This step is also considered another glimpse of what would replace what the Biden administration had unveiled in its final days before leaving office, the so called AI Diffusion Rule that restricted countries' access on a three tiered basis. But it was an approach that many in the industry and many allies around the world had viewed as cumbersome and perhaps unfair to them.
Well, said mag Shepphin appreciate the update. Look, let's get an investor perspective on those potential chip curbs, and more broadly, Beth kinniggers with us IO finally technology analysts. So, despite all of this and the clear narrative the US wants to restrict access to technology to China, we still have Jensan Wong actually wanting to sell into China. More long term, Beth is that a fool stream.
Yeah.
I think there are two sides to this. From in video's perspective, they don't.
Want to lose that revenue. This is a massive country.
But what the United States government is really communicating is that the technology has too far reaching implications for this to really be about the next consumer app, the next enterprise app.
This is really a matter of national security.
From an investors standpoint, I love that demand signal. I love the signal that the United States government is doing everything they can to control this technology.
I don't have demand concerns.
I think this is bullish, regardless of if in video sales into China or not.
What about supply concerns therefore, and whether or not we're able to bring the manufacturing and the expertise into the United States so that we're not so dependent to be able to make that sophisticated technology abroad.
I think a lot of this is hitting the news buyers now and has been let's just say, the last six months. But the United States has been preparing for this for years. We know that because Taiwan Semiconductor has built this sab in Arizona. This is not an overnight project. It's been going on for years. As someone who's tracked AI for many, many years. Therefore, I think we are more prepared than what might be assumed right now to onshore and to keep those supply chains fairly domestic.
But if we saw shares in Malaysia and Thailand drop overnight in those respective fields data center chips. But many of the cell side notes point out that actually those most exposed to this potential initiative are American companies. Which American companies do you worry about?
I will be quite bold and tell you I'm not too worried about this. I think if there was ever a technology that has this outsized demand, and it goes back to is it.
Going to be five hundred billion?
Is it going to be seven hundred billion in AI chip sales by the time we end.
This decade, maybe even higher?
And I have very little concern over what a China impact would be specifically on this technology.
It is not a consumer technology.
Consumer technologies your Tesla, your Apple, they badly need China's population.
This is not a consumer technology. It's primarily enterprise.
And then of course you have sovereign AI at the government level.
We really do not.
Need China the way we did on the consumer side with those other technologies.
Beth.
You mentioned one demand signal. I follow you on social which are the hard and soft data sets? Are you tracking right now to give you your demand signals that inform your thesis.
What we probably track most closely is really those generation of GPUs that product roadmap by Nvidia, and then of course within that supply chain there are many partners that will give you early signals. What I'm hearing and what I'm seeing is we will close this.
Year with Nvidia on top again.
Zero demand issues again twenty twenty three and twenty twenty four combined is what we have for H two of twenty twenty five.
That is a very big statement and it's so far, so good. Green Light, green Light and video.
Stay with it, Beth. It's interesting that maybe we think about an Oracle and its exposure to trying to build out it's cloud offering over in Malaysia, for example, and maybe that has to be thought through a little bit more and politically negotiated if there are limitations to access to the GPUs that it needs over there. Who are the other names that you do like that you is it all just about in videos? A no one stop shop or can you broaden it out.
I'm still loving hardware quite a bit. When we look at Nvidia, there are company sandwich between that custom silicon which is going to see a resurgence off inference, and one stock that's in between Nvidia and something like Amazon's Tremium is a stere Labs.
Beeth Kendick, Biofund. Great to have you back on Bloomberg Tech. Thank you very much.
I believe you've.
Now hit a point. I think the board's gonna have to get involved because this is now over. I think there's a line in the sand that he's now starting across, and that's a frustration. There's someone's a huge supporter of Tesla Autonomous, the Golden Age head. You cannot kind of go down this path.
That was Wedbush analyst Dana Ives there earlier today weighing in on Musk's pelistical aspirations, and here's what Jed Dolsheimer from William Blair had to say as well.
With Elon, it's a little bit of a double ed sword where you know, I would argue what people are paying for is his ability to innovate. Elon Musk is one of the great innovators of our modern day. So taking him out, does the board really would they would they really want that? And I think, you know, when you kind of asked that difficult question, I just don't see them stepping in at this stage.
Bloombek's crazed ol has he had to unpack the impact of the news on Tesla shares. We got the cell side reaction in those sound bites, that investor sentiment mirrors that as well.
Yeah, I think that's right. You know, I think Musk may have had a point when he told us back in May that you know, for every person on the political left that he was turning off with his actions in Washington, he was, you know, perhaps opening some doors for Tesla on the political right. Now he's potentially getting himself on the wrong side of the GOP and on
the wrong side of President Trump. And you know, I think there's probably a fair number of consumers too who would just say, altogether, you know, I'd rather not have my car sort of be wrapped up in the politics of the world's rich person and you know, have what I drive sort of send some political signal altogether that that's not you know, a reason necessarily for people to go out and buy your car.
And they haven't been. We saw the sales down thirteen percent in the previous quarter. Craig, We're also seeing the impact on the stock. We're down another seventy one billion dollars in terms of market cap today. We're not actually at the depths that we saw in the previous feud at the beginning of June. What does that tell us?
Yeah, I mean I think this is still a stock that is pretty richly valued and maybe has some value you know, ascribed to it left over from you know, even if we think back to just where the shares were trading before Trump won the election, right, the stock is still up from from those levels, and so, you know, are are we going to see investors continue to rethink and sort of reevaluate whether this you know, company has a better shot with an Elon Musk who has gone
from you know, maybe being well positioned with the White House to now not being well positioned at all and perhaps even becoming something of a foe for for President Trump.
Craig, I wrote to Tesla's board this morning. Through the avenues they're available to me, I wrote to Elon, As you know, I regularly ask him to come on the program. Do we have any sense of like the test of response at all? And if the answer is no, I think that's okay because it's pretty standard.
Yeah.
I mean, I think this is a board that has been pretty you know, mums the word over the years and really has only piped up in very you know, rare circumstances. I think, you know, it's it's going to be interesting in the months to come. You know what exactly this board has planned for a compensation package for Musk. We know that Tesla disclosed earlier this year that it had set up a special committee for compensation related matters.
And you know, so not only is there this question of you know, just how much the board wants him around, but also how are they going to keep him around?
Crad Dow, We appreciate it from London.
Now.
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