SpaceX Kicks Off High-Grade Bond Sale

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SpaceX is selling investment grade bonds for the first time following its record breaking IPO.

We'll have the details.

Plus Micron strikes an AI infrastructure agreement with Anthropics to drive enterprise AI adoption and a lot more. And Chevron signs a twenty year deal with Microsoft to power a West Texas data center could be one of the biggest in US.

Good Morning, Monday.

June twenty second, twenty twenty six, SpaceX's inaugural bond sale. This is about repaying their existing debt funding corporate needs, and Bloomberg's reporting has been spot on. What we understand is that right now you have the same banks they've been working with on their existing financing going out, holding investor meetings, gauging appetite. But we believe that they'll look at maybe raising around twenty billion dollars through this mechanism.

There's only one man for the job.

Bloomberg Intelligence senior credit analyst, Robert Schiffman. That's the story, right, Why would a company that has one hundred billion dollars of cash on hand and do this?

Explain?

Well, I didn't think I could be more bullish, but every day I wake up and show up at Bloomberg, I'm more and more bullish on AI, and I think this deal is just going to support that. You know, why do they need to raise more money. It's because over the next handful of years they're probably going to spend a lot more than one hundred billion dollars. In fact, the free cash flow is probably going to be a lot more than one hundred billion dollars. On the negative side.

Let's go to the investor demand or appetite for this. We had reported even prior to the IPO that SpaceX had managed to get investment grade ratings from the three main agencies, and in your react you basically say, this is how we think they'll stack up relative to their hyperscale piers. You have a greater rating. Still, why does all of that matter?

Well, I think listen, nobody owns SpaceX right now from the bond side, so there's going to be enormous demand when you have an inaugural offering like this, it's going to be a feeding frenzy. And quite frankly, I think three quarters of the people that are going to buy the bonds aren't even going to know what this company does. It's going to be very much of a buy now, ask questions later. But what do they have supporting them?

You mean the demand, the one hundred billion dollars demand for twenty billion dollars of supply, just real quick like, trying to compare and contrast.

The equity story.

This stocks down nine percent one hundred and sixty seven dollars a share for the equity investor. They read the prospectives, they listen to Elon Musk, and everything that's being pitched is very far into the future, but is the kind of common denominator between the equity investors' approach and the credit investors approach to SpaceX. Trying to understand the path of CAPEX. Does it work the same way?

Listen? Equity and credit are different. Equity is based on hope and future cash flows. Credit generally is based upon present cash flows and what leverage looks like right now. I actually do think that those are going to somewhat come together over time. This company is committed to reasonably low leverage below three times. They're committing to having twenty five billion dollars of cash on the books for the foreseeable future, and there's a hope of just absolute tremendous growth.

Doing both.

Robert Schiffman, senior credit analysts of Bloomberg Intelligence, thank you very much. We talked a lot about SpaceX so far, this morning, But the bigger market story is this return of tech leadership. Right, chip stocks outperforming and leading again. Software continues to lag. There's a lot of focus on lower energy prices, what's happening in the golf, and that's supporting the growth trade.

Joining US senior.

Portfolio manager Tiffany Wade at Columbia Frednedle, there's a lot to kind of put together in this morning session. But again technology continues to be the story in this market.

Is that true for you?

Yes, that's absolutely true. We did see tech stocks take a bit of a breather, including semi stocks last week, but they're after the races again this week and that continuously the market higher.

Of course, for investors of all types, the outlook for monetary policy and rates is important. It was really interesting Noria Rabini on Bloomberg Television earlier basically saying, nah, it's still tech.

Just listen to this real quick. People obsessed with the FED. Whether there's fifty businesspose higher, where's al right? Now, what's the difference. The key story is tech boom and that's going to be the most important first order I feel anything else.

You know, Tiffany, I grew up in the Bloomberg Newsroom school of Well, you got to understand the rate environment because higher rates discount the present value of future cash flows, and future cash flows are one way that we measure the health and valuation of technology companies big and small.

Does the FED really matter at all?

I think the FED still matters a lot, and it matters a lot for tech stocks as well. It matters a lot for high growth stocks. We did see a slightly more hawkish FED meeting last week, Kevin Worsh's first FED meeting. However, you know, quite a bit has changed since the data they were looking at last week, including the MoU between the US and Iran. So I think we might see, you know, potentially some different news coming out of the next FED meeting. Off oil prices continue to normalize, and.

In the background, of course, for the Bloomberg Tech audience, you know that there are headlines coming from the Vice President and his participation in the talks between the United States in Iran. We're very soon going to start talking about earnings again, and I just wondered Tipany from Columbia thread Neils perspective, how important earning's momentum is going to be for a market where technology continues to dominate.

We're going to get a first read on that from Micron this Wednesday. I think that's going to be very important to see if the momentum from these stocks can continue. We're going to want to see continued revenue upside from a lot of the semiconductor stocks, and we're also probably going to want to see continued CAEPEX positive capex comments from all of the hyperscalers. That will help keep the spending party going. For all of the ass cated infrastructure names related to AI build out.

It's really hard in aggregate to kind of say where's the beginning, middle, and end here? You know, I think you'd note right, tiffanyed it last week some of the chip stocks, the picks and shovels, took a bit of a breather, and off we are again today with the Philadelphia Semiconductor Index outperforming and engauge that's up ninety percent year to date.

How long can that carry on for?

I think we're going to see this continue for another couple of quarters. The outlook for these stocks related to AI infrastructure spending is tremendous, and the revenue and earning estimates continue to be revised higher, and I think as long as that continues, you'll continue to see these stocks working.

We started the program today talking about SpaceX's inaugural bond sale, but I just use that as a case study that with Capex, both in equity, the market's being flooded, right, Alphabet doing its offering, the use of corporate credit to fund what's going on. How closely are you tracking these companies going to market to get the capital.

They need to fund these big commitments.

We're certainly focused on the outcome of these bond sales because I think it's an indicator of the appetite for the market for the amount of Capex spending that the companies are doing.

It's also non.

Indicator of future capex expectations. So as those bond sales continue to increase in size, it can you know, it means that capex spending intentions continue to rise. So it's certainly something that we're watching to indicate the health of the capex spending cycle and also the intention of a lot of the large companies around additional spending for AI infrastructure.

Tiffany, real quick, what's the next thing you're watching for on your calendar?

I think it's probably earnings Micron this Wednesday is certainly a big one that we'll be keeping an eye out for.

And there's been some news this morning about Micron and a deal with Anthropic, which we'll get to you later in the program. Tiffany Wade of Columbia, Fred needle Back on.

Bloomberg Tech, thank you very much.

Now coming up, Meta invests nine hundred million dollars into an Indian fintech startup called Cred, with plans to appoint

That's according to some reports out there.

I think the company is also just put headlines out of its own. SpaceX can end the deal after three months, and Reflection is set to pay SpaceX one hundred and fifty million dollars per month for that compute as part of the deal. It didn't really do much to ease the pressure on the stock, which is again down for a third straight day, but still above its IPO price one hundred and thirty five dollars a share. Big Tech is turning to big oil to meet the electricity demand

What do we need to know about this?

And like the natural gas part of it, the Permian West Texas very interesting.

Yes, exactly. Well, that's the key part of this.

It's a huge power power plant to fund an enormous data center. But the really important part is it's right in the middle of the Permian Basin, which which many people know is the.

Biggest oil field here in the US.

But with all the oil that comes up, there's an enormous amount of natural gas that also comes and there's so much natural gas within the basin that it actually often overwhelms pipeline capacity and has to be either burned off or companies have to pay people to take it away.

Discuss in your report the bigger picture of what Microsoft's trying to do right. Microsoft has said it wants to double data center capacity of its own over the next two years, and in aggregate, that's the direction that the United States is going in over the next decade. But they'd also had these like prior commitments to match the sourcing of their power in terms of their commitments from renewable sources, this is natural gas. So how are they managing all of that?

Microsoft have said that they're they're pursuing kind of a diversification strategy, So they want they want diversification both in terms of geography but also in terms of fuel sources to renewables and natural gas. And I think they're pursuing nuclear as well. I mean, obviously the natural gas as is on is on the fossil fuel side, so it does does create a lot more a lot more emissions.

There is in this project.

There are there are guardrails to mitigate the emissions, and they do have plans to to maybe build in some build in some solar, maybe some batteries at some point in the in the future. But but the end of the day, it's an enormous natural gas plants, so the emissions are going to are going to be sizable associated with that.

Chevron's shares modestly higher. Microsoft shares modestly lower after still was announced. Bloombers Kevin Crowley in Houston, thank you well.

Modestly so.

Misoft down two percent, turning out to news in big tech, Meta is shaking up the executive suite at WhatsApp and is in part a massive nine hundred million dollar investment into an Indian fintech startup, Cred. So Meta is tapping Cred's founder Canal Shah to step in is the new global chief of WhatsApp to build out new revenue streams for the mesaging platform. Ms Kat Wagner joins us with the story, it's not straightforward, this okay, so basically the

It is and you're right, there's two parts of this, the investment part in credit. There's the new executive for WhatsApp in Kunal Shah. And this is a strategy that you may be somewhat familiar with from Meta. With this sort of like invest in recruit at the same time. This is how they got Alexander Wang from Scaleai.

Last summer.

They invested heavily in Scale and recruited alex Wang at the same time. This is a very similar approach smaller scale. This is a smaller investment than last summers, but this is sort of their way of bringing entrepreneurs who have their own businesses, who have you know, a financial stake in a startup and enticing them to come work at a more established company like Meta.

How's Meta sort of explaining this.

You know, we put a lot of emphasis on the idea that WhatsApp can monetize in different ways future revenue streams.

Is there any kind of hint of what that looks like.

Well, they're doing a handful of things right now, including ads, subscriptions, and business messaging. Those are sort of the three things that are going for revenue. What I think is important here is that Khunaalshab being from India and having an Indian startup is not a coincidence.

WhatsApp is huge in India.

They see a ton of potential there from a business standpoint, and I think they thought that it was important to, you know, have someone very familiar with market and very familiar with how WhatsApp is used in that region coming in and taking over. And so the hope is certainly that he can take those revenue streams that are sort of already in place but grow them considerably in India, but also in other markets outside of North America.

Bloomberg text cut Wagner with the meadow WhatsApp story, thank you very much. I want to go to China's battery metals market. Chinese lithium futures have plunged nearly nine percent over the last two days over speculation that caatl could soon restart, one of the world's largest lithium mines. A preliminary provincial land notice has some investors' bedding that the site may reopen in the second half of twenty twenty six.

Now that supply.

Volatility comes as Beijing tries to sharpen its geopolitical leverage over other critical minerals integral to making everything from iPhones to missiles. China has imposed new export controls on major US rare earth producers, MPEd Materials and USA rare Earth. The retaliatory move comes off to the Pentagon blacklisted some

That's sex, this is Bloomberg tech.

I mean hara anod, and it's time now for talking tech. First up, ten Cents is giving we Chat an AI upgrade. The company is testing a new assistant called Shaowei with a small group of users, allowing them to complete tasks through text or voice. The move could bring AI to weed Chat more than one billion users and help ten cents compete with rivals like Ali Baba and byte Edance in China's AI race.

Plus.

Robinhood is looking to raise two billion dollars through a convertible bond off, tapping into a booming market for corporate fundraising. The company says about three hundred million dollars of the proceeds will go towards share buybacks, with additional funds earmarks for hedging transactions tied to the deal end. Climb is

Thank you very much, you hire right now.

Apple built its reputation on iconic product design, but the influence of the team behind the iPhone and iPad has faded over the past decade. Bloombo's Mark German writes in this week's power On newsletter that the incoming CEO knows a major design shakeup is needed and is getting ready to put his firm imprint on the tea. Mark joins us, now, and this is about the industrial design studio that in the era of first Steve Jobs and then Johnny Ive for a very long time held a lot of power

Yeah.

Over the past decade or so, you've seen the industrial design studio go from where exactly the future products are is dreamed up, where the whole company would come in to rally around the next big thing, leading to products like the iPhone, the iPad, the iMac, the iPod, the Apple Watch, you name it. And it's now more of a service organization where different teams, operations, engineering, they come in,

Mark you've detailed recently the kind of roadmap on the hardware side for not just the rest of this year, but beyond that. Is there a case study of where this kind of return to design focus plays out.

We just have about thirty seconds.

Yeah, I mean we would like to see bigger design changes, right for the first time in twenty years. You're going to have a meaningful shakeup to the iPhone over the next few months with the fold wall phone, which I'm calling the iPhone Ultra. But there's a lot more to be done. There's more product categories. Major changes are necessary to freshen up the AirPods and the album watch. Those are categories that have essentially looked the same since twenty sixteen.

Right, Blue Moos Mark German who puts power on out on Sunday mornings and then comes on Bloomberg Tech Monday to go through it.

Thank you so much.

Now, coming up, Micron lands a key deal with anthropic as AI demand keeps surging. It's so interesting to see Micron and Memory name go direct to a frontier lab.

We're going to go through that. This is what your markets look like.

Kind of muted, but outperformance in chips, which has been the story of the year.

Welcome back to Bloomberg Tech.

Our top stories today, SpaceX's bond sale and Micron striking a partnership with Anthropic. Bloomberg executive reporter Kim Ragki here with details.

On both coming.

Yeah, thanks, Ed. So we're seeing a lot of red on the screen today here with SpaceX share the are down about eight percent off the lows of the day. But if this continues, this will notch a third straight day of selling and the name after its record breaking IPO. So what we're seeing here this morning is that investors

Clothes the most common rhinicky, Thank you very much, Let's stay with Micron. Jake Silverman of Bloomberg Intelligence says Micron's new supply deal with Anthropic highlights just how tight memory chip capacity has become. He says major AI data center customers are increasingly locking in long term agreements to secure that supply, and Jake joins us, now, this is the thing, though, it's a deal between Micron and a frontier lab direct right,

It's definitely not typical for memory makers themselves to sign these kind of deals, but it's not necessarily uncommon for big customers to look for supply assurances. Hyperscalers themselves have often done this in terms of how you think about wayfer allocation from someone like TSMC, for.

Example, in your react, you're talking about it being reflective of the situation, the state of play, and how tight supply is. But this is good news for Micron, right if you just go on the sheer reaction alone.

Yeah, this is good for Micron in the sense that it gives them a little bit more visibility into the actual downstream demand, at least theoretically based on what we're seeing from the agreement that they actually put out in

You write in the react note that this sets them up well for the next down cycle situation. You know, historically memory markets have been cyclical, right, boom and bust. We talk about that a lot on the show, But there are loads of people that don't think there'll be a downcycle, you know, in the traditional sense, because of the trajectory of data center building an investment. Just explain your point of view on that.

Yeah, I think just if you look at historical trends, Having covered memory for a while, we've always seen up cycles and down cycles, and I don't think that just because we're seeing very robust demand right now, it doesn't mean that we won't see price declines on say a sequential or you're over your basis in the future. What these agreements might do, though, on the other hand, is

Jacob, As you know, Micro reports fiscal third quarter earnings after market closed Wednesday.

What are your expectations got.

Yeah, yeah, yeah, we think they're definitely going to offer guidance results that are above consensus right now.

We do think that.

They'll talk a little bit about some of their contracts. But I think one of the reasons that they make this announcement today with Anthropic is it's something that they can highlight to investors to give everyone idea of what types of customers that they're signing to these agreements. But we don't necessarily think that they're going to give a lot of details in terms of you know, we don't think they're going to give anything in terms of pricing.

And to recap micro on not four percent on this supply agreement with Anthropic, but up more than three hundred percent. Here today Jake Silverman of Bloomberg Intelligence, with the analysis now coming up. The CEO of Base ten and one of its lead investors, is coming on the show to talk about the inference startup's latest one point five billion

Really really looking forward to this one. It's next. Swim Bog Tech.

In Video is developing chips and software that will make humanoid robots safer around people. Humanoid robotics are expected to generate two hundred billion dollars in revenues by twenty thirty five, according to Barkley's estimates, but current safety systems can make the machines less productive. In Vidia's Halo software will give robots a much better sense of their surroundings so they can interact and even make contact with people.

We're going to talk with a little bit more about that later in the week.

Aim ferance startup Base ten has raised one point five billion dollars across two tranchers, one an eleven billion dollar valuation, the other at thirteen billion dollars. Base ten specializes in delivering software and computing capacity to companies tapping open source,

Yeah, absolutely, Look we're with inference right now. What we are seeing is there's a lot of demand for inserting intelligence everywhere we possibly can, because open source models are getting very good, right and post training techniques to specialize those models for specific tasks are getting very good. And as the app player comes online, you know, there's an

Just real quick, what's that like trying to acquire that the compute? Like, do you have any leverage in that market? If everyone is supply constrained? How is the experience of being a company of base tends, age and size going to in video as an example, saying we kind of need this.

Yeah, Look, we have a very strong relationship with the Video and you know, they've been very supportive of us over the years. Look, we one thing that we realize is that you cannot be reliant on one compute lost. You have to, you know, work to diversify, not necessarily from a chip perspective, from a cloud perspective. So you know,

I posted on x that you're both coming on the show and poor I kind of put this quession out there that if you could only invest in one part of the five layer cake, as Jensen calls it, what would it be? But Altimus has been so busy, you know, with the frontier labs at one end and other parts of the five layer cake at the other end. What was the thesis around base ten and why you wanted to get in here to co lead the.

Round ed It's good to be here.

Some troops cannot be said enough times, and one of those is that Inference is going to be one of the largest, if not the largest markets not an AI in the world. And why is that the case? You know, the early innings of AI were Q and A tell me about my trip. We've come a long way since then. You know, it's multi agent they've gotten longer context. You go retrieve, analyze, synthesize, verifying, then you go again, and each request is kicking off hundreds, if not thousands of

So that's that part's so fascinating, right, if we could just go to open source. When this story started for us, let's say twenty two, but for you guys probably before that, it was this idea that it was only the model, the largest models with the hundreds of billions of parameters that mattered, and in the world of open source that the issue was that that just didn't work. People couldn't make any real use of them. I go back to

Is that fair? Yes?

Look, I think if you look at you know, when you think about open source has kind of gone through a bit of a journey. You know, there's LAMA three, maybe two two and a half years ago, and then there was a bit of a winter, and then I think the deep Seek moment last year really put it back on the map, and there was definitely the capability

Doing it for them.

So let's go back to what we were talking about cost, but also giveability and capability. You know, the other case study in this open source debate was Meta kind of changing its narrative saying, well, actually, we are committed to open source, but we you know, at some point we need to be realistic about about the benefit of closed models.

Sure, look at yesterday it was Deepseek, today it's GLM.

It'll be something tomorrow.

And as I said, it's seasonal, and that battle at the model here is not we're nowhere near the endgame. What base tend does is it helps customers like cursor, like a bridge, like open evidence, harness the power of the model underneath, combine that with your unique advantage as an enterprise, your workflow, and deliver something that is best for that specific workflow.

Now it's not just one model.

It's typically a collection of portfolio of models that are fine tuned to deliver that and that compounds over time, and so based in is successful. As these models get better, it benefits us and ultimately in the service of the app layer, which is you know, the customers that we discussed, who are delivering AI to the customer.

Jensen's been repeating a lot recently, just among the CEO of Nvidia. Sometimes you have to remind the audience testing case. You know, he wants to see his teams burning tokens. How does that apply to your custom is right? So pouls just explain really clearly the value that you're adding. But the economics are really really important to some of these companies.

Yeah, Look, I think.

Using tokens is obviously just what's synonymous with, Hey, I want us to be using AI everywhere.

It's in their interest for that to be the story right now.

And I think for us, you know, what we see is that customers kind of go through the same curve over and over again. Is that, you know, they go very aggressively, they start using AI everywhere, they start to see gains, but they don't necessarily do it profitably, and then they need to figure out how to do it profitably, and that's when they come to open source models. That's when they come to Base ten. That's when they come to you know, post train models on Base ten to

What I've been trying to reconcile is.

Ultimita is invested in in the big frontier labs as well, and those big frontier labs plus S FACEX, depending on how you define what they are.

Would also say that they have a role to play in that market.

Where are we in this cycle of where they're just in the NBA, very big players.

Where does Space ten fit in that? Look?

A lot of ink has been spilled on this debate of open versus closed.

Let me just take that head on.

The closed models of Frontier models are very very good, and they're very good for the use case that require highest intelligenced, highest reasoning, new use case discovery. If you didn't want to think about just one model as a service, they're very good and they will always be very good.

For that for a class of customers. That's not a long list.

You know, as Jonathan Ross said, there's about thirty five companies that drive ninety nine percent of all inference. The top five are the labs that you just listed, top four, top.

Five, the next thirty.

You know, that's people like Cursor, like open Evidence, like a bridge, like Harvey, and for them, if you if you're not playing the game of the Emperors and you're you know, you're thinking about how do I deliver something that is not rented from somebody else but mine that I can compound with. That's where that's where post trained,

About two hinges for Vestava back on Bloomberg Tech, found a CEO based ten and Paul Varruaal of Ultimata. Back again on Bloomberg Tech. It's really great to have you here in person. Thank you very much. Indeed, coming up on the show, Amazon is pairing Prime Day with pizza delivery. We're going to talk about what's behind the e commerce giants, fast food pivot.

Next, this is Bloomberg Tech.

Today's big number, twenty six point three billion dollars. That's how much US consumers are expected to spend on Amazon and other retailers during the four day sale that we all know as Prime Day. That figure comes from Adobe. Amazon's facing headwinds though consumer confidence to competition for the e commence giant has a few tricks up its sleeve to encourage shoppers to spend, including pizza delivery, Bluebog'spenser Sofa here with the latest. Okay, we're getting ready for Prime Day.

It's big.

I mean Adobe's predicting nine percent growth from the four day Prime Day period last year, which was July. You know, it's always tricky to compare Prime Day to the year earlier because the date moves around, and this is going to be the second year that they do a four day sale. But Adobe is predicting a nine percent lift, which is pretty size bull and a lot of that

And Walmart and.

Target both have overlapping sales, so there's going to be just a lot of a lot of deals going on those four days.

Okay, the latest tech in depth, Amazon offers.

Pizza in Prime Day experiment. Explain So this is the first year I've seen this.

The Amazon's offering five dollars pizza from Little Caesars. So basically, if you go to the site, you'll see this pretty prominently a Little Caesar's emblem on the site. You can click over there to get to redeem a five five dollars pizza. And they're running that every day of Prime Day, even a couple of days before it, and it seems to be something to you know, get people to come to the site, you know, just another another sweetener to get people that come to the site and check out

Bloomberg'spenser Sopa with a look ahead to Prime Day. But go and read the Tech in depth that went out this morning as well, Thank you very much, before you go. Disney's Toy Story five has gone to infinity and beyond.