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This is Bloomberg Tech coming up.
Disney shares sinking after giving a tepid growth outlook that says the market of waits news on who will be it's new leader. Plus Oracle raising more debt as a software giant looks to raise forty five to fifty billion dollars in bonds, an equity for additional cloud in the structure capacity and sources, say Elon musk Is in advanced talks to combined SpaceX with XAI. Will have all the details,
but first we check in on these markets. Then in certain areas breathe some size of relief after selloff on the NASZAC on the s and P five hundred, we're actually seeing a bit more of the buying of the dip when it comes to stocks, not so much when you're looking at commodities rob percent when you're looking at the NASAK. Now Bitcoin bounces, but boy did it feel
the pain. Over the course of the weekend. We're only training at seventy eight thousand, so still the pressure on on so called digital gold as we actually see that continued strain on gold and silver that really catalyzed on Friday and the decision of who will be the next FED chair. Move on to the individual stocks in video is one of the biggest points drags to the downside to day off by one point four percent. We're going to dig into what really its relationship with Opening Eye
and how much it's committing to funding. It is going to look like we're looking at Oracle now up two percentage points. It's selling a whole wealth of debt and equity. But does this steady the nerves that it would in some way temp junk status on its debt. We're getting
into that a little bit later. Move on there, because then the here and now we're looking at earnings and it was tepid growth more broadly that we saw for Disney, and that particular seems to be being pointed forward to this fiscal quarter that we look at what is the worry about people not traveling towards many of the parks in the year to come. We're currently off by four percent to say, on the interry day basis, but interesting news over the course of a weekend as well. About management.
Felix Chillette joins us. Now, just going to the fundamentals of the business. The quarter they just reported was strong, particularly in streaming, but it seems to be where we're going in parks, which is a slight nervousness.
Yeah, I mean, they just reported record sales and parks for the previous quarter. They hit ten billion dollars of sales in the quarter for the first time. But they offer this outlook today that said, you know, in the current quarter, there are some concerns. There's all this you know, volatility in terms of the international market. Are they going to have as many international visitors to the parks. They're going to shift some of their marketing to try and
attract more domestic visitors to the domestic parks. There's also increased costs. They're launching a new cruise ship. They have a new Frozen exhibit opening in the parks in France. So yeah, the park's outlook for this quarter is not as good coming off a very strong quarter.
Interesting time for parks though, and it's leadership because we understand there's a key vote going on at the boarderlane this week.
Yeah, so the ward is meeting they're expected to vote on Bob Isereiger's successor. We've been watching this for three years now. They are leaning towards Josh Tomorrow, who's the head of Parks, and we're expecting to see that vote this week. Disney previously said they're going to announce a successor for Bob Biger sometime before the end of March. So things are moving forward and it makes sense that Josh Tomorrow would be in the lead at this point.
The Parks and Cruise division is providing the vast amounts of profit at this company, and it sort of reflects where things are at. The experience is really working well for consumers right now, and we've talked about the home entertainment is still somewhat tumultuous as we make this transition from cable to streaming.
Felix Junette with the best run up. We so appreciate it. Thank you. Meanwhile, Disney CEO Bob Byga.
Didn't talk about their IP, saying there's no rush to acquire any more of it.
Here he is in Today's Enny's Cool.
I think we have a great hand. I don't really feel that we have a need to buy more iping to continue to create our.
Own and we've got an unbelievable bedrock of stories already told to grow.
From sticking to Disney, streaming landscape and more with Daniel Payne his slate Stone Wealth CIO. Just for a moment, we're just talking about how important the parks are. But from the streaming side, it had a really good innings in terms of profitability. Finally, in terms of the previous court are just reported on that push us forward.
Yeah, really good from the entertainment standpoint, and that's where they see a lot of their operating leverage leverage.
In the company.
But we do believe moving forward there are a few catalysts out there on the experiences, which is their parks and cruises over the course of the year that really could be beneficial to shareholders.
You know.
The near term concerns which they mentioned for the first quarter because of international travel, you know, might be pressuring the stock today along with the management changing. So there's
a lot going there, you know, under the hood. But bottom line is we got massive stimulus and down to pipe in this country with the tax cuts, with the one big beautiful bill, We're going to have about one hundred and fifty billion dollars of tax refunds for consumers, and the US consumer they've proven over and over again that if they're halfway confident with their job and they have excess money in their pocket, they're going to spend it. So that could be a catalyst moving forward once we
get into summer. And another thing that nobody's really talking about is that this summer we have a few events that are kind of unique for this country. We have the World Cup here this summer, and we have the two hundred and fiftieth anniversary of our country, which.
Is going to be a lot of steamless in and of itself.
I've seen some projections that the World Cup is going to generate about six point five people coming for the event, it's going to generate roughly seventeen billion in GDP for
this country. And you know, with those kind of visitors, who's not to say they might stay a little bit longer and bolt on a trip to one of the Disney parks moving forward, So I think longer term, there could be some catalyst to get this stock out of the fund that has been in over the past four years under the current management.
We'll talk about management and current management, how do you feel about maybe the person who's helped drive the park's business becoming the CEO of the whole business again.
Well, that could be the reason why we've seen some weakness today because it could be like, you know, here we go again, because if you remember back in twenty twenty, we had the same thing happen when I Eiger, you know, placed his hand picked successor, Bob Chappick, in control, and you know, unfortunately for Chapick, he was put in control of the entire operations in February of twenty twenty, so we know exactly what happened a month or two later.
It's kind of hard to run a company when the whole economy shuts down and discretionary spending comes to a halt. So you know, that might be kind of unfair to judge Chappick on that, but there could be some nervousness with investors by doing the same thing once again, putting the head of the experiences, which again is parts and cruise line and gaming ahead at the charge of the company.
So there might be some hesitancy there.
But I will say Disney over the past four years has nearly doubled their EPs, but yet the stock has been essentially flats. We've had massive valuation contraction. And if they get the right person in charge that can pull the various levers of this company, you know, we can have a premium brand once again trading at a premium valuation. So right now the stock trades at roughly seventeen times
to twenty twenty six earn exestimus about six sixty. You know, if a market multiple is placed upon this premium brand, you know the stock could get into the mid one fifties with pretty much ease.
And so that is significant.
Upside potential if the right person can make the right decisions moving forward.
If we hear it's Josh, and we know the board is voting this week and then they've promised us that we would hear by the end of March. If that's the case, then where do you think they can drive the realization that their IP is worth so much more that the spending isn't having to just go up into the right when they're trying to market the latest Avatar movie, or when they're having to really pay top dollar for
sporting events. I mean, you just went at length and what the soccer means for the US more broadly, but when you're trying to stream it or show it, it gets very expensive.
And that's the problem with that side of the business.
There's significant operating leverage with the variable cost and you know, you spend all that variable cost money up front and it's almost.
Like you build it and you hope they show up.
And so you know, if you get the formula right, you spend the money on the content and it's success, then that significant leverage for the earnings growth of the company. And that's kind of the factor that investors are weighing right now with especially with this change in leadership. Could it just adds uncertainty to the stock but you know, once again, you know, and uncertainty lead to opportunity, and their opportunities how you make money in the stock over market cycle.
Daniel Payne a Slate Stone Wealth.
I appreciate it coming on today and coming up the US.
It aims to slash.
Its reliance on Chinese rare earths and other metals. We'll tell you all about the plans for the first of its kind stockpile for the US private sector.
That's next as a blomleg tech.
President Trump, Well, it's set to launch a twelve billion dollar stockpile of strategic critical minerals. The move set to count US lance on Chinese rare earth but send prices for related companies higher. But it's all according to sources thus far. Let's bring in Bloomberg's tech editor in DC, Mike Shephard, tell us about this first of its kind store for US private sector. What do we know is set to potentially be announced here, Mike.
Well, what we're looking for is the US Export Import Bank to take a vote later today on approving this package. The private sector will kick in about one point six to seven billion dollars as part of this seed money, and the US Export Import Bank will kick in another ten billion dollars, and this would be the biggest such
deal in the Bank's history by far. And it really is a sign of just how much the administration is pushing in this area of rare roots and critical minerals and trying to wean the US from its dependence on
China as a key source for these inputs. They're so essential to the private sector, to autos, to iPhones, to gas turbines even and without access to them, we risk seeing a manufacturing supply chain disruption akin to what we risk experiencing earlier last year when the Chinese government started to impose some of those export controls on rare earth. So the US is trying to diversify around it and ensure both pricing stability and supply stability.
Here.
Caro administration officials have been detailing what could be announced. But what's interesting, Mike is through which countries are we going to be sourcing from and what sort of backstops do these The export import back need to know that they can sell this on correctly and not be landed with an awful lot of minerals.
Well, the idea is to ensure that US manufacturers have this access, and it would create this stockpile akin to the Strategic Petroleum Reserve here that manufacturers here in the US could access is needed, they would have to pay into it to be able to eventually make purchases and then promise to replenish it down the road. But this is just one of several steps in the area of rare earth that the US government is taking right now.
Later this week there will be meetings with dozens of foreign ministers here in Washington to agree on trying to find some way to create a mechanism to stabilize prices and supply around the world, not just here in the US, but with allies, so that collectively they can reduce some of their dependence on China and increase extraction, mining and refining in a number of other countries. While we call
them rare earths, they are actually fairly common. It is just that they are not extracted or exploited in as many places as they are, and to the extent that China has come to dominate the market and cara. The clock is ticking. Remember that the trade truths that the President signed with Shijinping late last year, it's only good for one year, so they have to start making these moves to ensure that supply won't be as disrupted as a risk being facing earlier last year before the trade agreement.
I'll see how project vaulted it is known continues being by to Smack Shepherd. Thanks for detailing all of this. Let's get the broader economic picture now to well what's moving tech stocks in particular Natal Gallagher's with US principal economists and director at Board.
Just going back to that rarer suggestion, is.
That positive do we need is supply chain, real headache for the this is out there right now.
Yeah.
Absolutely, you know what we're seeing as a fundamental shift in how the US has really been addressing supply chain resilience over the past few years and absolutely top of mind following the export control measures by China back in
twenty twenty five. You know what, in essence we're doing is we're creating a strategic preserve of rare earth menerals for the digital economy, which means that we're less at the behest of foreign entities as we try to continue to move forward right in AI innovation and all the potential for the economy that that really houses.
A lot of the focus has been not so much on supply chain of rare US as well as that, but also really just the bottlenecks that we see in delivering the AI hope and euphoria that is built into the market, whether that's power, that's energy, whether it's land. Natalie, where do you stand in terms of the reality of AI and what has been thus far driving a lot a lot of stock share and shares high this year?
Yeah?
Absolutely, I mean twenty twenty five we saw a really intense increase in valuations there's a lot of hope in what AI can deliver. We heard that at the DeVos Economic Forum, also allowed and clear by many key tech and political leaders as well. Now, in order for these valuations to hold in twenty twenty six, and what we're really going to have to see and it's going to sort of earmark the year, is a close right in the gap between how much is being spent on AI
and the ROI that we're actually going to achieve. If we get those productivity gains, then this is absolutely a great story of foresight. If we don't see those productivity gains, then we're going to have a conversation much more housed around capital misallocation.
But now, Sie, how's that going to show up? As an economist? You looking at job's data? I mean, because at the moment, all we're seeing is jobs cuts upon jobs cut, which in some way seems to be going back to AI.
Yeah, I mean, it's fascinating right what we're seeing in the overall jobs data. I'll first sort of approach that and then tell you as an economist what I'm looking at. We look at the jobs data, there's not a whole lot of evidence that the jobs that are currently being cut is.
Due to AI.
Right, we know that that's what companies are saying. At the same time, it's not really showing up in a clear way in the data.
On the other hand, what.
We do really need to see is almost a discontinuous jump in the productivity data. Right, So if we're sort of on this level increase, what we really want to see with AI is we're jumping up and then we're on a totally new level playing field when we see that, and there should be early adopters in some key industries. I'm thinking, you know, healthcare, consulting, finance, we should see those early signals and they should be showing up in the.
Data as soon as twenty twenty six. You think.
That, I firmly believe that's going to need to happen in twenty twenty six in order for these valuations to be deemed worthwhile.
We're going to be getting into these big stories that are in the market today of how.
At the moment we continue to fuel.
The ever needing expansion of AI infrastructure, whether it's oracles selling debt and equity, whether it's well whether or not in video is going to be giving up to one hundred billion dollars or not to open AI. How are you seeing that narrative continue in twenty twenty six, and we're going to have to see a pullback in the amount that the companies are committing.
You know, I think it's more so we're really going to have to see the ROI in a meaningful way that we can go back to. And again that gets back to productivity, and the risk really is as we sort of pull all of these levers and they get more and more complex, it becomes a much more opaic environment, right for investors to really operate in, and so the risk of those valuations maybe being artificially bolstered goes up.
Just from your perspective, the narrative of circular deals is that actually, in many ways we often put it in a negative context, but that's exactly what in VIDEOS should be doing, investing in its own clients to be able to foster the potential ROI that we might see in this locks that jump.
Yeah, I mean absolutely right.
So if we see this truly meaningful transformation in the economy that's sort of promised with AI, then.
We're in a great spot, right.
These circular investing schemes that is excellent foresight by these companies. If we don't see that, right, that's the real risk of pretty significant market correction, right because that investing scheme, it is bolstering the overall revenue numbers that we're seeing.
What therefore are some more of the headwinds.
Other than waiting for ROAI, we're also still tackling tariffs, We're still worried about South Korea's relationship with the United States, for example in the here and now, let alone China. What could be the headwind that you're looking out for?
You know, one head wind I'm particularly interested in tracking is actually jobs. Right, So we're in a labor market overall. When we talk about the macroeconomy that's quite soft. But when we speak specifically to AI, machine learning, sort of these high powered tech jobs, we have a little bit
of a bottleneck there. And so something really interesting that came out of the US Taiwan trade deal just a few weeks ago was this goal, right of onshoring significant supply chain efforts from Taiwan to the US.
In order to do that, we're also.
Going to need significant changes in our workforce development. And there's a risk there, right, because We've had meaningful policy changes over the last year alone.
Fascinating Take Massady Gaga come back soon, we hope. Principal economist over at Board coming up, elamsk will is in advanced talks to combine SpaceX with Xai. Will have all the details. Next, this is Broombed Tech checking on on Tesla shares well. We're seeing the impact of European sluggishness again. You saw it throughout twenty twenty five, but down two.
And a half percent.
As we understand, European car sales of Tesla's in particular slumped into twenty twenty six, in particular absolutely plummeting French shells down forty two percent. They only sold six hundred and sixty one cars. Norway registrations plunging eighty eight percent.
But that says we.
Hear specific changes in policy over in Noise in particular, but look generally Evy registrations going higher in Europe, but just not the Tesla, whether it's a political read across or whether indeed it continues to be something around the brand and a slower adoption of older models versus the
Chinese one. But let's move on to other areas of Elon Musk's empire right now, because we understand that he is in advanced talks to combine SpaceX with Xai, according to sources, a deal that would combine, of course, two of the largest closely held companies in the world. I
just think XAAA is valued two hundred billion dollars. SpaceX is currently worth eight hundred billion dollars at the last Camp and their Deals Team Managing editor Ianna Baker joins us some more, there's been a lot of conversation about somehow his empire combining forces, whether it's Tesla and SpaceX or Xai and SpaceX. It looks like the latter is the more likely at the moment.
That's the idea that's gained traction in you know, late last week and over the weekend, that it looks like these two private companies SpaceX and Xai, which also on X, would come together. It's possible, and the future Tesla could be involved. There's a lot of theories that one day there's just going to be one huge Elon must conglomerate. But for now, at least it looks like this is the plan and that SpaceX would still go public later this year.
I can see that.
The benefit for xais that it needs a ton of money. What is in theory the benefit to investors of both these companies buy culbination.
A lot of this is futuristic. If investors in SpaceX want to see these data centers in space one day, which there's been some filings that could indicate maybe that's something they're working on. This is a way to bring that together. But definitely, you know, is it a bailout of XAI, you know, compared to SpaceX hard to say.
We don't know any details on what is the structure right now, what shares will be transferred or exchange or swaps for each other, so those details still need to come out to see, you know, how shareholders make out.
And what sort of approvals do they need because we understand a lot of this has got investors support, but do they need to Can it just be done because it must thinks it's the right thing to do.
It's hard to say, but last year when x and Xai merge, it kind of just happened in an ex post and that's fat A lot of this, especially when there's private companies, the M and A is very much behind the scenes. Maybe an investment bank gets brought on for a fairness opinion, or there's certainly law firms, but it's hard to say. It's not like a public shareholder deal or you know, there might be committees, but a lot.
Of it's done behind the scenes.
And if Tesla had been part of this merger, then you might see more public information or independent board shareholder votes and whatnot. But this is all going to be happening kind of under the radar.
Briefly, who would run it?
That's a great question.
You know, Xai has brought on Anthony Armstrong, a former investment banker and who worked in the government. You know, SpaceX has leadership, and our reporting you know, doesn't have the answers. But there's certainly a few people in Elon Musk's sphere that could you know, potentially run this. Apparently all his executives do everything at all the company, so maybe it's just everyone.
Certainly there's cross pollination already. Leanna Baker is a great scoop that came out earlier today. We so appreciate it. Meanwhile, coming up Oracle, it's raising to build out to day our infrastructure, with plans to raise up to fifty billion dollars on that.
Next, this is blue Beg Tech. Welcome back to Blue Beg Tech. We check in on these market.
It's a bit of a reprieve if you're in stocks and the dollar today, not so much if you're in gold and silver or up nineteen percent on the Nasdaq one hundred is we get a bit of a bounce back after a couple of days selling on big tech stocks. We're looking at Bitcoin, It's seventy nine thousand. Look it's up on the day, but boy was it sold off hard throughout the weekend. Once again, we're questioning people's desire full risk assets. More broadly, at these sorts of valuations.
Digital gold has not been particularly loved. Meanwhile, gold got absolutely hammered on Friday and continuing into Monday. But let's look at some of the other areas of focus when it comes to individual stocks. The mood because underneath the hood and Video has been one of the ways down in terms of points. We're going to dig into why in Video is perhaps reassessing how much is going to be committing to Open AI's infrastructure build out, how it
commits to that as well. So we also see how Oracle is up to and a half percent, having brought a little bit more transparency as to what they need to raise for its own AI infrastructure, largely to open AI bonds stock. The sales are upon us already. Bloomberg's Brodie Ford joins us, who was working hard all weekend because it was on a Sunday that we learn that here's a company that's looking to raise what up to fifty billion and a make sure of equity and.
Debt Sunday night, it's time to raise more money. Yeah, it was kind of a unique situation to have this kind of large announcement from a company as mature as Oracle on a Sunday. But what that really underscores is how Oracle has become this poster child of all the AI financing fears. It's expected to be negative free cash flow for the next couple of years as it builds massive data centers, and the big question has been and how much money will they have to borrow to do that?
Will they be able to maintain their investment grade? And they essentially were trying to respond to these concerns and say that no, we have a solid plan.
And it's interesting maybe they've been learned from past haste with a previous bond sell at the end of last year where Bonholder was an own suing because.
They felt that they didn't get enough.
Well clear transparency that this was a company that will be tapping the debt market a lot.
When we're looking at what they're getting.
Today, though there's three year floating rate notes, there's three a fixed, five year fixed, seven year fixed, what's a long seventy.
Ar, ten year, thirty or forty year.
How much they're having to pay for the debt side of the equation, which they actually say is the only time they're going to be tapping the bond markets.
This year, Well they're gonna be. They're expected to get a ton of free cash flow once you look a couple of years out, once those OAI contracts and others start flowing. And what's particularly interesting today is to see them issue equity and often when that happens, investors don't like dilution and the stock goes down. So it's funny to see the stock go up on an equity insurance. And what that means is that the company is willing
to do what it takes to keep investment grade. It does not want to get saddled with some incredible interest rates. We've heard a lot of concerns on these loans, and so they're trying to show that they're going to do what it takes to maintain a good rating.
And actually that was really what we heard from the analyst space coming out here, saying this should be positive sign that they are really committed to avoiding junk.
Absolutely, and I think what it is too is just clarity. I mean, there's been so much uncertainty about Hey, is Oracle going to be able to get all of the loans it needs? Is it going to be able to complete this build out seamlessly? Is Open AI going to pay its bills? That's a lot of the questions that have been weighing on the stock and so kind of any new information that shows a specific plan, almost whatever that plan is, as long as it seems reasonable, is going to be read as good news.
We'll see how the up to twenty five billion dollars on sale goes today and and need some of those convertible notes as well. Broddie Ford all over the Oracle story, and let's stay with the AI related debt story now, because the cost of data center build out, it is expected to.
Top three trillion dollars.
An Oracle isn't the only tech company borrowing to finance their plans, but he works senior private credit reporter policylks.
And joins us.
Now, who you've been looking across the board at the panacee all ways in which companies are trying to finance an extraordinary amount of build out right now? How much are they leaning on public bond markets or indeed the rest of the debt system.
So the best way to think about this is they are tapping all debt markets. So we have obviously the typical unbalanced sheet corporate borrowing, which you see like with the Oracle deal today. That can be an investment grade bond, a hiled bond, or a leverage loan, or even a private credit direct loan. But there's a lot of off
balance sheet borrowing happening as well. I know that sounds a little bit scary when you first hear the words off balance sheet, but what it simply means is that instead of an investor lending to the company, they're lending to the actual data center project itself. So they create a special purpose vehicle that is the actual building, or an owner and borrower to create the data center. When you tap that, that opens up a whole other realm
of markets. So, for example, the bank project finance construction loan market has been heavily involved in this space. You're seeing private placements, which are typically insurance companies. You're seeing structured finance investors in the form of commercial mortgage.
Backed securities and asset backed securities.
You're seeing private credit, You're seeing GPU finance for the chips.
It is touching all parts of the debt markets, and.
We think about cole Weaves very much thinking about financing of the chips to begin with, we saw that deal between blue Out a meta is a real pin up.
And the private slubpot of the business. What are they having to pay for all of this?
It really depends, and it can range from just a little bit over investment grade all the way to double digit teams mid teens yields.
It just kind of depends on the structure.
There's also a big difference between something that is a hyperscaler borrowing or ultimately backed by a hyperscaler versus some of the more risky things where maybe it's a small early stage company that needs to borrow money.
That's all in on AI.
We've had a lot of new neo clouds.
It ca'll hang out you for example, just tell us about the need for transparency. Though, what so interesting is the equity markets response to Oracle today? It's just few you're telling us a little bit more. When we have so much private credit getting involved, do investors feel they have enough information about just how broadly the borrowing is going from certain issues?
I think it depends on the issuer.
So Oracle, for example, well, it is doing this off balance sheet borrowing, it is still tied to those data centers through lease commitments, and that does show up publicly in their financial statements.
But I think for a lot.
Of these deals it's actually pretty much all private. It's also a lot of times private company is doing it, so then the investor base is just a very different investor base. And I hope we're getting disclosures, but it's unclear.
And I think what makes it nerve wracking for the markets is even if those private company investors are learning about it, maybe the rest of the market doesn't know, and that can just cause unease and uncertainty around the absolute scale of the debt being borrowed right now.
Well, said Bloommegg's polastics and got to go and read her offers throughout all about the debt markets. Really interesting stuff. Meanwhile, let's go to other Ai build out. In video, CEO Jensen Huang says the company has proposed one hundred billion dollar investment in open Ai was quote never a commitment. Speaking to reporters in time, Hay over the weekend reiterated his support for the chat chip tea maker, but did not disclose the total investment.
Just to listen, Sam is closing the realm, and we will absolutely be.
Interupted in their home mode, their home mode.
We will invest a great deal of money, probably the largest investment we've ever made a.
Large So is that going to be your overall one hundred peal?
No, no, no, no, no, no, nothing like that.
Fair Figeman joins us now for what was a busy weekend, as always from mister Huango for in Taipei. Look are we meant to be surprised that when you've inked some sort of deal and said look we're good for up to one hundred billion dollars that actually that hasn't been fully ironed out and agreed and it's up to sch Mega walk coming online a little bit.
I mean, I think it's important to step back. I remember when this deal was announced in a few months back. It was a monumental moment for both companies. One that attested to the scope of the buildout that opening I had in mind and Nvidia's role in that, and also a lot of the circular deals concerns. To your point,
there are a lot of daylight there. They've ever set a firm timetable or a fixed amount, and so there was room to imagine and maybe it wouldn't be one hundred billion dollars, But now I think it's a question of just how far away is it from that, and again over what timetable.
Some of the reporting from other networks and outlets has been that actually in video is getting uncomfortable with a competitive landscape, uncomfortable with a so called discipline of open AI. Is that something that we're hearing in our reporting or is this more this is a company that's maybe he is aware of the criticism around circular financing and it's just been questioning a little bit more.
Yeah, I mean, it's unclear, and it's a delicate balance here between these two companies. Even if Nvidia is maybe having those concerns that you lay out, Opening Eye is still very central both to a larger landscape and to Nvidia's own deployment of chips. It's clear that the relationship between these two firms has not broken down. As Jensen said, we'll probably be the largest investment they've ever made, and will probably be the largest funding round we've ever seen.
But it's possible there is some daylight there.
Let's just go to that funding round because that's what's currently under negotiation. We know that Middle Eastern investors has been eyed up, we know the Amazon's interested in the round. So what sort of scale are we talking and how will it be related to using certain companies equipment or giga what's coming online?
Yeah, so, I mean we've reported that up to one hundred billion dollars in this funding round, which again would be the largest that we've ever seen, trumping Opening Eyes prior forty billion dollar funding rounds. We've seen that Amazon, SoftBank and Vidia each willing to potentially commit billions or tens of billions of dollars to this round. Does not currently feel like Opening Eye is hurting for money in
that one respect remains to be seen. And then to your question, not just in Vidia, but certainly Amazon, Microsoft, like these are all, if not circular relationships. Then continued examples of the companies using the suppliers to fund their ambitions.
Well, we'll keep a track of it, figure and breaking it all down on that relationship between the video and open Ai. Meanwhile, coming up, let's talk about crypto exchanges.
They're under pressure.
Plunging trading volumes is really the issue. At the moment, we're off by just a couple of percent. We've cooped some of our losses on the day, but we'll dig into it next.
This has been their tech bearish sentiment in crypto.
It is weighing on the exchanges as investors pull back on trading platforms like coinbase and Gemini, Well, they're seeing stock prices and training volumes drop more on the entire ecosystem. Let's bring in Boombog cross asset reporter Isabel Lee and no Wonder. Companies exposed to trading and volume are going to be feeling the pain when everyone probably takes.
A bit of a step back at this moment, definitely a step back.
I was sitting in my SOFA nicely over the weekend, and then bitcoin fell. It fell to as slower since April, the tarify of in volatility. So it's made a lot of investors panic. Granted, thin liquidity over the weekend and fewer traders, fewer online, and we know they've been Bitcoin falls. It triggers a wave of liquidations. We saw billions and
billions of long and short positions liquidated. But still investors have been increasingly becoming a little unhappy with bitcoin because macro factors that used to help it before haven't been really helping. Like a weeker dollar that's supposed to be good for bitcoin, but it's not really helping right now. So now we're seeing January decline and it's really one of the longest streaks. I think it's a fourth straight monthly decline, the longest streak since twenty eighteen.
I mean, bitcoin shed nearly eleven percent in January. At one point it was trading the lowest since President Trump's returned to the White House. Much had been hoped for regulatory changes, in particular what white get through Congress that seems to be put on ice.
Is that also an issue? Definitely, it's put on.
Ice because if this president, which is supposed to be the most crypto friendly president, can't help it, what can And you also see it and flows flows are drying up. I mean, sure it's just a bucket and this we still have more than a billion dollars in assets, but you see flows drying up. I think investors have been spoiled because it used to be always green on disc
green inflos after inflows. When bitcoin ETF's launch in twenty twenty four, which is crazy, two years ago, it made records after records, and now I mean some would say it's consolidation. Some would say, oh great, now I can buy it's an attractive entry point because for a while Bitcoin has been too high, and if it's too high, I mean, how will that be an attractive entry point. So it's a mixed sentiment out there, but for now, you can't deny that there's some gloom in crypto.
World, some blue for Michael Sailor in particular. I mean, just talk to us about these digital asset treasury companies and how much this pain must be hurting.
Them, just like bitcoin.
I think digital asset treasuries are whether you love them or you hate them. But today headlines are making for Michael Sailor because for the first time, the plunge token's price fell below the purchase cost of Michael Sailor's leverage bitcoin proxy and strategy. So that's really something. There are no margin calls yet. I want to make sure there's no immediate financial stress, no expectation to sell bitcoin. But it's just something worth noting. Could this be the beginning
of something? Maybe, but maybe it's also just like a bad day, a bad week, a bad month. But it's definitely worth noting because he is the biggest, biggest bull of bigcoin and lots Street.
Yeah, the company's cost basis is about seventy six thousand, and we went below that for a moment. I mean, we see the shot stock price just get off of its lows, but still under pressure. Once again, isabell lee across the sasset class for us, we appreciate it. Now coming up Palenteer earnings, they come up after the bell. We're going to discuss what to expect. That's in Bloomberg Tech.
Earning.
Still coming all lies on pal Andeer reporting after the closing bell today and actually, for the first time in two years, Palentiner's shares are not rallying into a.
Quarterly earnings report.
Let's break it all down Bloomberg's Tech Equity Reporter com and rhaning key on the day, they're up just a little bit, but yet to date it's been brutal.
Right, it has.
And if you look even further back to November when they hit the record high ahead of their last earnings report, the drawdown is about twenty five percent, which is pretty significant for Palenti, for any stock, and a very different setup that we've seen going into our earnings from previous reports. So it's definitely looking like, you know, the stock could get a little bit of help. Its valuation is still very high, even though it's come in a little bit.
With this, you know, the stocks decline, so investors are looking for some very key things. I mean, pounds expected to put up another great quarter. The guidance will really be paramount, and there's a lot of volatility in this name, so we could really see big swings in either direction.
I mean, revenue is still meant to be sixty one percent growth fifty more than fifty percent for the fiscal full year. But doctor CoP's got to be aware of how many ways has deemed a bit of a mean stock, and as we've just been discussing with crypto and bitcoin, we've seen a lot of changes where people have been wanting to allocate.
Is that anything to do.
With it, It's more about just a terrible time for software in general.
I think it's a little bit more tied to the software you know sell off. We've seen a couple analysts commenting on that it's just gotten weighed down with the rest of the sector. I think there also could be you know, there's been some of a rotation away from you know, the most expensive tech names. This definitely is in that camp. And you know, a source said to me, if you're looking to rotate in something's over one hundred times you know forward earnings, that's not really maybe the
place that you're going to be looking to buy. So yeah, we'll just really see I think doctor Karp as well, you know, he's such a passionate CEO. People will definitely be listening for his comments on the call, and that could, you know, really go either way as well.
We always get some pretty choice words from doctor Carp, pretty most common Rhyanikey, great to have you on today. Thank you, Look Palente isn't the only big tech name reporting earningxist week. Look how many we've got coming and please to say Fiona Sincotter's senior analysta City Index Financial can.
Talk us to.
We've got a MD on Tuesday, Qualcom, Alphabet Wednesday, Thursday got the big one that is an Amazon far out. How do you embrace for some of these numbers, because look, Microsoft last week wasn't a bad set of numbers, absolutely beaten up when people were worried about the capital expenditure.
Yeah, that's right.
I mean, we're definitely seeing this sort of division between those techs that are in favor and those that are not. And I think that's going to be even more under the microscope as these earnings come through, the market is very much more selective about where they're looking to direct capital. You know, before, as we said, it was just very much more jump on that tech trade and ride it higher. There really wasn't too much in it. But that's just
not the case anymore. And we're seeing, you know, even numbers that come out relatively good, like we said with Microsoft, end up with you know, a ten percent drop in the stock. And at the same time we saw Meta
driving ten percent higher. So it does feel a little bit more unpredictable in that respect, and it also means that the bar I would say is even higher on these companies to impress than it has been before, even though valuations in some cases have come down a bit given that sort of setout of tech that we had seen since the November highs.
So let's just start with Palenteer for example, what would a software company that is going to deliver more than sixty percent earnings for share growth more than sixty percent revenue growth have to articulate, you think to change the sentiment on the name.
I mean, I think Ford Guidance is going to be absolutely key, and I feel that's where sort of, you know, Microsoft might have just sort of let the side down a little bit compared to Matter for example. So I think for Guidance is going to be massively impressive in order to support this valuation. I mean, as we spoke about, you know, the evaluation here is what one hundred and forty times expected earnings.
So you know, it really has a lot to live up to. And given that we've.
Seen all these questions about the AI spend capital expenditure, what's the monetization. This does mean that investors do actually want to see that something's coming through now, And for that reason, I think Ford guidance is going to be key here.
Yeah, if anyone can show productivity and articulate what AI is doing, palentteer like you do that. Meanwhile, Alphabet's that one stop shop, vertically integrated, showing what it can do with its own chips, doing what it can do with its own tech and hardware and the whole shebang. What do you anticipate? Alphabet has had a lot of mood music to the positive of late. Will that hold?
Yeah?
So, I mean I think this is definitely one of the stocks that seems to be in the favored few. I mean, if we look at up eight percent across January, which is you know, pretty good returns for a tex stook in January sixty eight percent year on year. But I think, you know, Amazon and again with sorry Alphabet, again with Amazon, are going to be very much a litmus test as far as that whole sort of you
know AI theme is concerned. Obviously, with Alphabet, you're looking at a four trillion dollar valuation, so you know, investors are really going to want to see whether there's momentum in that Google Cloud and advertising to support that valuation. So you know, focus, as I said, will be on that cloud, growth, will be on AI initiatives, monetization of that, and also spending. I mean, this is what you know the market has been getting very nervous about.
Is you know, what is that AI spending? What are we looking at? How much is it expected to go up? And what are the returns on the back of that.
What's interesting is both Alphabet and Amazon will be a bit of a tell fro an in video maybe AMD as well, which is coming out beforehand, of how well are they producing their own chips? How much does that matter to InVideo in the future. I mean, we don't get their earnings until later in February is always fearing. But do you think semiconductor concerns should be start to build in in terms of companies being able to build their own and just turning to a broad com for example.
Yeah, I mean it's definitely a question that's on the table and a focus that will be there. And I mean if we do see that happening, then obviously that will move attention away from Nvidia and that sort of you know first to market momentum that that stock had. I don't think we're necessarily there yet, but I think it is right to expect that to slowly start creeping in.
So attention will be on that as well, as you said, you know, and video not for a little while yet, but it's always a massive focus as we get past these earnings this week.
How many calls are you taking also about the private side, the question marks around Opening Eyes fundraising and what that really means the rest of the ecosystem to your public investors.
For a moment, it's definitely a question, and it's that question that we had, and it was very much a concern I think, you know, around October November time, where there seemed to be a lot of deals going on and there was that sense of all that question is this sort of an ecosystem that's growing or is it just circular investment?
And I don't think that was ever really resolved.
The market does seem to be a little bit calmer about those questions for the time being, but I wonder if we as we move towards and videos, whether those questions will start to appear again, and especially after we've had the earnings this.
Week Piana Sincotter bracing us for a big week at City Index Financial Markets. Thanks so much for your time as always. Meanwhile, that does it for this edition in Bloomberg Tech. Do not forget to check out our podcast if I'd on the terminal, as well as online on Apple, Spotify, and iHeart.
From New York. This is Bloomberg Tech.