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.
TSMC reports third quarter results, beating expectations and giving a positive outlook, buoyed by strong AI demand.
Glass's trade tensions re escalate between China and the US.
Good president. She's rare US hardbules, but a global pushback.
And yet another exec departure from Apple with its head of the chat GPT. Like AI search efforts going to Meta.
For first ed we dig into the market instead of shaking off that trade anxiety and refocusing on the AI trade.
Of course, you just just TSMC will dig into it.
NASA up three quarters percent with trading higher for two straight days. People focus on that and indeed potential talks between President Putin and indeed the United States President.
But what are we looking at underneath the hood?
Yeah, TSMC the world's biggest and most important contract manufacturer of semiconductors. The news is that it is hypedic sales growth outlook for twenty twenty five for the second time this year. Then we look at the shart we open up two percent. We've given off some of those gains if you read on the Bloomberg terminal or some of the market stories. The early part of the morning was TSMC driving US up positivity. But the trade story is overtaking a little bit AI demand intact character.
It is, let's just talk about that being an impact.
Bloomos Peter Elstrom, who needs that tech coverage from the US, Europe, in Asia, and Peter, look, TSMC did almost what ASML did.
They said, Look, AI, the.
Mega trends still there even if China pulls away in terms of demand.
Yeah, it's a little bit more than that.
CC way, the CEO had this conference call after the earnings results and as Ed was talking about, they hike their forecast for twenty twenty five for the second time. Just three months ago, they hike their forecast. And now what CC, what you're saying is that this AI mega trend is actually getting stronger. They of course are making the chips for Nvidia and for many others too, and what they're seeing is that the demand for those chips
is getting stronger. At this point, they're watching the capital spending from some of the big customers out there, including Open Ai. They realize that in Video is going to have to supply those customers, and the trends are going up from here. So we're starting to get a fuller
picture of what's going on in the chips business. We've got preliminary results from Samsung earlier this week, and we got ASML, the chip equipment maker after that, and now we have TSMC, the biggest contract chip manufacturer, which is giving us a very strong forecast too.
That's kind of the demand side, right, Peter. But on the supply side, there was lots of interesting information. The two headlines that jump out at me are there massively supply constrained. Capacity is tight, but they're moving really quick to expand manufacturing capacity here in the United States.
That's right.
Yeah, Well, it takes a while to build these chip plants. They've begun construction in the US a few years ago, and they've now said that they want to build on top of that. They want to expand even more than they.
Have in the past.
But they're trying to add capacity in the US while they also build up their capacity in Taiwan right now. So it's taken a while for them to bring those fabs online and then meet this very strong demand that they're getting from customers like Nvidia, also from Apple, they're supplying a number. They also make the chips for AMD too, as AMD tries to compete with Nvidia, so they're really the big beneficiary. They're kind of the picks and shovels that are helping with this AI boom.
Look, we are looking at the ADRs a little lower, Peter. They're at a record high in trading over in Asia.
Is perhaps just a lot already priced in?
Yeah, maybe, as Ed was talking about, there are a lot of factors going on in the market right now. The primary trading forum for TEA SMC shares is in Taiwan, so we'll see how they do tomorrow as they open up there. But the ADRs are getting buffeted a bit. Probably there are some high expectations going into this. I think investors did anticipate that there was going to be some pretty strong numbers from TSMC, But on top of that, there are a lot of trade factors that are playing
into this. The US China tension certainly kind of overlay a lot of what we are seeing in the market right now.
The index Peter Alstrom, Thank you very much. Our next story is trade tensions between China and the US. This is what Treasury Secretary Scott Besson had to say about how negotiations are going, and in particular about one top Chinese trade official.
We've had four rounds of talks Geneva, London, Stockholm, and Madrid, and both sides approached them with great respect, and this individual did not. He showed up uninvited and said, quote, China will cause global chaos if if the poor shipping fees go through. So I don't believe that China wants to be an agent of chaos. And maybe maybe they used to have the wolf warrior diplomats, so maybe he thinks he's a wolf warrior.
We don't know.
This is happening.
Is China's decision to unveil export controls and the rare earth supply chain is now sparking a global pushback. Bloomberg Senior Tech editor Mike Shepherd joins us to break it all down. Based on what the Treasury Secretary was talking about and recent reporting, China sees its hand with rare earths as being leverage in a negotiation. There are two sides and question Mike is whether China is or is not overplaying that hand.
Well, that is a big question right now in the market, and certainly here in Washington where we're seeing the IMF and World Bank meetings being held, in so many global officials in town to watch these trade negotiations unfold on in real time between the US and China with so much at stake, and the question is how much of an impact there will be on other economies in the US is banking on other nations, other trading partners and other allies also feeling that pain and joining the US
and trying to counter whatever China may try to do in restricting the shipment and export of rare earth materials from China to buyers outside China, and that is something that will affect the European Union and other nations and Japan. We have seen a push led by the US to try to get the Group of Seven to somehow counter and respond to China's intention here and look what we're seeing is even as China is trying to exert some leverage, the US is also expressing a little bit of skepticism
about whether this will actually go through. Jamison Greer, the US Trade representatives said yesterday he doesn't think China will actually take this step, owing to the geopolitical implications and the fallout it would have on the global economy. And we can see a sign of that step the sism in the counteroffer that the US made at the US is really only stepping forward with a longer pause and tariffs, and that's not nearly enough for what Beijing had been
hoping for. They have been really angling to get a relaxation of years of export controls as a result of that leverage.
That did seem to be real anger coming from Treasury, Sectary Scott VESNT.
Their MinC.
And I'm interested as to reminding us how important the hand is that China has when it comes to technology.
The fact that they.
Mine an awful lot of the rare earth, but the main point is they also produce and refine most of the rare earths.
Well they do, they own, They really hold more than half of the world's reserves, and they dominate the refining and production of these elements are critical across the economy and consumer electronics and automobiles, and in military equipment. Think
of night vision goggles. You can't run those without some rare earths, and so the importance of this is something that hits a nerve with trade officials around the world, but especially with the US, because American officials had thought the rare earth's issue have been settled during the last round of trade talks, and here China goes, in their view, reopening it and trying to use it as a last minute bit of leverage heading into this all important meeting
between President Donald Trump and his counterpart Hijiping at the end of the month, And rather than seeing a narrowing list of trade issues to be resolved heading into that meeting, we're actually seeing a growing list. And you heard the
Treasury Secretary talk about the sensitivity around shipping. And there is also the question, Carol, of the US move to expand coverage of sanctioned firms to include subsidiaries, and that's something that hits some of the Chinese champions like Huawei and SMIC, and that is something that Beijing also has
objected to. And we've seen this all play out just in the last few weeks, and it raises questions, Carow, about whether the two leaders can actually sort all of this at the end of the month, if and when they sit down.
If is a big if right now, Mike Shephard, thank you very much. Indeed, from DC, look amid this geopolitical tension, you are still seeing the markets relatively calm. I'm looking at the tech markets up sevent ten percent on the nastat one hundred. We've been whipped a little bit about the concerns on resurgence, trade frictions more broadly, but the AI real feel factor is still there. Angeloukakafas is with us seeing global investment strutres to Edward Jones.
Today is AI winning out.
It is a good tech for a good day for technology. That the SMC results and guidance provide some confidence in the durability of the AI theme. There's no AI related slow down, at least not yet, and AI is going to remain a kid driver for markets and Joe.
One of the most read stories today on the Bloomberg terminal and on the website is Ken Griffin, the founder of hedge fund in Citadel saying that jen AI is not helping hedge funds beat them market with astonishing returns.
We're going to pull up what it is that he said.
But as somebody that is in the markets as a strategist, your reaction to that news story and also what Jeni better than you in strategy.
I don't think we're quite there yet. We are still in our view in the early stages of adoption. Of course, there's a lot of spending going in now to make this technology and incorporated. But thinking about major technology firms and really many different businesses, including in finance, they are all requiring their operating system to incorporate AI. So it will take a little bit while to see productivity gains, but we do think that these gains are on the way.
Of course, from an investment standpoint, we need to be ware of complacency or euphoria. At some point that's going to be increased competitions and overbuilding over capacity. We are not quite there yet, but something to what's out for and I think the reaction in the c SMC results in the stock today, the meat reaction reflects the high expectations.
So it's the two very distinct story, right, how market participants use AI and then the impact of the ALI story on markets. But you went there with TSMC, So what did that sort of outlook from them tell you about the staying power of this cycle?
Yeah, I do think it provides confidence that this will continue, especially thinking about the next six to twelve months only the direction of travel force spending is higher, and there's a lot of push for many different businesses and industries to incorporate AI. So I think that the mega trend of adoption remains alive and well. And yes, we can debate all day about valuations, but the results speak for themselves, especially as we enter a key earning season.
We don't have all day, but let's debate where would you go? Evaluations are high for some of the big names.
So we favor a Barbel approach.
So having continue to participate in this AI long term secular theme as I would call it, but at the same time, for especially new capital, start to complement portfolios with areas of the market that have been left behind, and that could include value style investments, small cap stocks that may benefit from the Federal Reserve rebooting its rate cutting cycle. So having this balanced approach and again avoid chasing some of the unprofitable, more speculative parts of the market.
What is the catalyst for those speculative parts of the market to actually be popped? Do you think that we can remain irrational for a little bit longer if you see it that way, you know.
As they say, you can only tell a bubble kind of with the benefit of hindsight. But at the same time, there's some key differences between now and the late nineties. A lot of these companies that are doing all these heavy spending, they are financing that from their own cast from operations, so not that finance. They are very mature, profitable businesses, and they have a diversified stream of revenue.
So we're not quite there yet. Valuations are not at extremes, But at the same time, markets are going to be sensitive to any news about return on investment from all this spending that is taking place, and also paying attention to science of euphoria, which we do not see yet.
In this environment anger. I think we should continue to talk about tariffs. The idea when the President took office in January was that consumers would take on the burden of tariffs, right because companies would raise prices across all sorts of domains. That hasn't really materialized. What has been impact impacted is the labor market in different ways. Are the people of cutting back, how are you reading that play out right now?
Yeh, couple of things here about prices. As we navigated the very period of high uncertainty, especially in April and May, companies really try to absorb a lot of that and not pass these increased costs to the consumer. Now that we have a little more clarity, we may see a little more even distribution of these increase in costs. We have seen goods prices increase, but at the same time they increase. The apptic in inflation remains manageable now as it relates to the labor market. We remain in a
low hiring and low firing mode. The labor market remains balanced. Corporate Corporate profits remain at record highs, even as we've seen a significant slowdown in hiring, which to me applies productivity gains, so we do not expect a major uptick in unemployment. Companies have been very profitable, so they have really no pressure to continue to cut costs to protect
margins because margins again aurt all time highs. But something to monto, there's going to be some disruption from AI, But so far it seems like only a small part of that slowdown in the laboral market is because of AI, or you know, Tarish for.
That matter, and I take you, I ask you, that takes us nicely into earning season that's about to hit us hard next week. Angelocal cofas of Edward Jones, thank you very very much. Indeed, Okay, coming up, Salesforce looks to reinsure investors worried the company could lose out in the AI boom. We have more on Salesforce next. This is Bloomberg Tech.
Salesforce shares.
As you can see, they spite this morning after chief financial and operating officer Robin Washington has said the company expects to return to double digit revenue growth in the coming years.
More in the company's outlook.
Let's bring in Bloomberg's Brodie Ford, who covers enterprise software companies. It's still down a quarter so far this year in terms of its market cap, but some reassuring points that to reacceleration of growth exactly.
I mean, this is a stock that was beat up thirty percent year to date yesterday, and so it's up seven today and that's pretty cool, but it's still investors are a little anxious whether these kind of traditional application leaders like Salesforce are going to be the ones to successfully sell ai products. We got a decent outlook from Salesforce yesterday, but you know, it's not a resounding celebration. At this point.
You've been reporting on the close relationship between open ai and Oracle and how maybe the publicly traded and at this stage slightly bigger of the two is helping that company navigate chip export controls.
What do we need to know? It's interesting.
I mean, Oracle is kind of a famous lobbyist, right they know Washington, They're pretty tight with the Trump admin right now. And yesterday open ai said when we're having trouble getting chips into UAE or Argentina, we call up Oracle and they are the ones that have kind of been able to help us get our chips around the world. And we found that pretty interesting because our arcle is playing an increasingly large role in open Aiyes in for a bill.
Out Bloomberg's Brady Ford across a lot of stories, thank you very much. Another top top story, Apple can't catch an AI break. The executive who is in charge of developing a chat GPT like search feature within Apple is stepping down and heading to Meta. That's according to sources. For more, bloombergs Mark gunman who brokes that story joins us. Now, who is this executive and how significant is it Mark that he's jumping to Meta.
Yeah, this is keying.
And to give you an idea of how significant this is, we've talked about maybe a dozen Apple AI departures over the last few months. This is probably the most significant or second most significant of that group. This person was a direct purport to John g and Andrea, the senior VP who runs all of AI at Apple. This person was actually put into their role only a few weeks
ago when his predecessor, Robbie Walker left Apple. Walker had been in charge of Siri, but he was removed from being in charge of Siri in March after the major delays and the blowback against Apple Intelligence.
And then he.
Started a new team called AKI Answers Knowledge and Information, and that team is focused on AI powered web search tools, so basically adding chat, GPT, perplexity, Gemini like functionality to Siri and other parts of the Apple operating system. And Yang he became in charge of that program just a few weeks ago. Before that, he was running the search
related functionality, then he was running the whole thing. And so now Apple's AI team is going through another major reorganization in light of that significant departure.
And a key line in your story is several of the Apple team members think that this is going to continue to happen, more departures to come.
This is going to keep happening.
I mean the core team developing the models underlying Apple Intelligence. It's a team called AFM or Apple Foundation Models. They've been breeding bleeding talent since July. The creator of that team and the person who ran that team, Roman Paying. He left for a two hundred and fifty million dollar multi year pay package and is now a senior AI executive at Meta. Since his departure, they've lost about a dozen people. I'm told there's several other people on that
team continuing to interview. Other people are going to met Us still. Other people are going to start ups Open AI and Google. We've been reporting this out as these departures have been happening, and these new companies have been hiring these folks, and this is going to continue, given the pay packages that these competitors are offering, and given the embarrassments that Apple's AI AI efforts have become for some of these people actually working on them.
Mark you've come on Bloomberg Tech and you've broken all these stories about people to Apple. A reasonable question and we just have sixty seconds, is is there actually anyone left at Apple of notes working on AI.
Oh.
Apple has tons of folks. They're working on acquisitions to try to refuel the ranks there. John g and Andrea, despite their being rumors and discussions about him stepping down, are being pushed out of the company for several months now, he remains in charge.
He may not be.
There for long, as I'm told that Apple has been looking for outside replacements for him, but for now he's there. Creig Federighi, who runs all software engineering, has now taken an ownership role over all the AI.
Strategy at Apple.
Mike Rockwell, who created the Vision pro he's heavily involved in the AI strategy there now too. So yeah, they have definitely had folks, but it's just about refueling the ranks and putting the right people in place. But certainly this is another considerable setback to Meta's game potentially.
As always, we thank you so much for joining us.
Meanwhile, coming up potentially catastrophic breach of a US based cybersecurity firm it's being blamed on Chinese state backed hackers.
That detail and the fallout.
Next, this is Bloomberg, Bloomberg Tech, and it's time now for talking tech and first up. US cybersecurity provider F five disclosed that Nation state hackers from.
China breached its networks and gained.
Long term, persistent access to certain systems, including source code now.
The breach prompted warnings from the.
US and UK authorities, describing the attack as a significant cyber threat that could be used.
To exploit vulnerabilities.
Plus, Uber is giving some drivers in the US the option to earn money by completing tasks related to the companies new data labeling business. This is an area where the rideshare giant sees an opportunity to shine in the AI boom. And Microsoft is pushing Windows users to talk to their computers. But the company is rolling out a
new AI voice feature activated by saying hey, Copilot. It's part of a broader effort to rebuild Windows around AI, including expanding use of tool including copalant Vision, which lets software see what's on a user's screen.
Ed Okay, coming out, We've got a riddle for you. How do stocks get weaker? And more valuable. More on how the AI boom is impacting equity dilution next, Also quick look at markets right.
The story has been.
Split between the early part of the day where TSMC's outlook was really boosting US, but TSMC US listed shares at least have fallen away. The market is modestly higher. There was some sort of nervousness and now calm about what is happening in trade talks between US and China. Will continue to track those stories throughout the range of the show.
This has been big Tech. Welcome back to bloombog Tech.
Our top story is TSMC, the world's biggest, most important contract manufacturer of semiconductors. It's US listed shares are now down a percent. They had opened up two percent and quickly fell away.
The story is.
That they have for the second time this year, hiked their sales growth outlook to the mid thirty percent range for twenty twenty five, and the writing on the Bloomberg terminal is really clear. That's given the market at large a lot of optimism about the outlook for AI and demand. Remember, TSMC is the contract manufacturer of Nvidia chips as an example, not doing much for their own US listed shares, though it's an important one that will stick with.
Caraen we will.
Let's just turn our attention back to that riddle that you left us with, ed because unusually, well usually we see a company's equity gets diluted. We tend to see investor Sara on the stock. But the AI boom has turned that on its head. Take a look at Intel shares. August is when the chip maker began selling newc to the US government from SoftBank and Nvidia wanted to Bloomberg calculations. That waters down the stake of existing investors by around fourteen percent.
So why are shares up so much?
Markets reporter common Rhyinicky has been answering the red ule and it's just all about the AI boom.
Yeah, it really is. So it basically boils down to, you know, Intel was really not doing very well. It stocked, was very beaten down. There was a lot of worries about how the company was going to turn itself around. And this new influx, this new cash on the balance sheet is really positive and investors are saying, basically, we'd rather own eighty five percent of something than you know,
zero percent or one hundred percent of nothing. Right, So it's basically this idea that this is going to help the company grow more, that it's going to do better in the future, and so taking a little bit of dilution on the profits is okay for now.
Commen.
This is about hype and the golden tickets of AI.
Right.
You write in your story about AMD gets its partnership with open AI, Intel gets its partnership and investment from Nvidia.
The stock story is history from that point.
Yeah, it's so true. And AMD shares are up, you know, just as much forty three percent, you know, since that deal was announced, and you know, Intel's been up ninety percent just since the end of August. So we're seeing so much enthusiasm about AI and all of these deals, even though they're in such rapid succession, have been really beneficial. Investors are excited about it. They want to be buying into these shares, and they want to see the growth going forward.
Bloem moost Calm, and Ryan Key, thank you very much. Meta has announced plans to build a new gigawatts scale data center in Texas, committing more than one point five billion dollars to the project. The investment marks the social media giants twenty ninth data center and underscores it's pushed
to keep pace in the rapidly evolving AI race. The news comes mid a wave of major data center announcements yesterday, including a Microsoft ndscale partnership, a new collaboration between Coreweave and Paul Side, and a forty billion dollar consortium acquisition of a ligned data centers. Here to discuss their identity center further, Nancy Tegler Laffer Tengler Investment CEO, who says, quote, it's about the power stupid Okay, hit me with that thesis.
Oh and do you always find the right nugget to pull out?
Yeah, Well, I mean, look, there's expected to be I mean Open AI has said they need twenty gigawatts of power. At sixteen billion per two gigawatts, that's a fair amount of change. And then you have all of these just using Texas as an example, you have all of these companies opening data centers in Texas.
It's kind of the perfect place.
Horizon is the only one that comes with its own power source, which is natural gas on the Mitchell family Longfellow ranch. And so that's great news, but powers a lot of power is going to be needed for the rest and Texas already has a grid problem.
So we are looking at Laffer Tangler, at names.
To names that can that can solve some of the data center problems and some of the grid problems that are coming with this major buildout.
And photonics is a hope. It's not yet.
We're not yet there in reducing power consumption, and buildouts are are critical. What we heard from Oracle recently, from the co CEOs was that you know, it's not about demand demand, it's about supply.
They can't get these data centers built fast enough.
Let's go to the promise of photonics, because you're already looking at a particular company cohere. Remind us of what the thesis is there, Nancy, and how quickly you think it can become a reality.
Yeah, so that's the question, Caroline, I mean, Coherent is you know, really focused on building photonics around the quantum computing needs, which is just going to add another layer
onto this whole power question. And so what we've done we've launched a new strategy called Macrocycle Opportunities and we have four themes space, robotics, quantum and nuclear and in that we are trying to identify the companies that are going to drive the next wave of transformation overlaid with AI because it's essential to many of those themes, or most of those themes.
So coherence. One.
One of the other names that is important to us is not a photonics name, but is quantum services. We own that in our twelfth best we own it in macrocycle, and we own it in our growth portfolio. They've got a thirty six billion dollar backlog in modernizing existing grids or power providers.
Nazi, You're doing what so much of the market is having to do right now, which is have a lot of hope baked into these forward looking not only promises of the actual returns on investment in AI, but promise of photonics, promise of quantum. What is the fundamental research you bring to bear to be like? These are good bets.
Well, so what we've done. And I didn't answer your question on timing, I don't know, Caroline. I mean it could be. The expectation is it could be a decade.
But we've seen things accelerate so quickly, and the excellent CEO at AI World yesterday said we're going to see more transformation in the next ten years in the last one hundred. But what we've done in constructing the portfolio is we've established leaders and they are about forty to
fifty percent of the portfolio. So thinking quantum IBM, which is a pretty low risk business model, and then the enablers, which is a coherent and then the speculative names and that would be Ion, q Righetti, all of those names. So the objective is and that's ten to fifteen to twenty percent, and then enablers are twenty to twenty five.
So we're trying to mitigate risk by existing build positions in existing technologies that are already reproducing earnings and then couple that with names that are speculative.
Nan we started this conversation about the news of Meta's latest or twenty ninth data center a gig or what in Texas. You have the small if my Bloomberg terminal data is correct position in Meta, but they are not a hyperscaler, right, so how do you view that build out that they're doing and the attractiveness in the broader thesis you've just outlined to us.
Well, so we do own a very small bit ed but if you recall we've talked about this in the past where we sold the majority of our holdings because we felt like the business model and we were wrong by the way. We felt like the business model of advertising was not where we wanted to be, and then they pivoted to AI and I think.
That's what's driving these investments.
And they've been pretty successful at attracting a number of high leveled executives from many companies, but in particular Apple. So I think that for us is you know, we pivoted to Spotify. I think we actually did better with Spotify, But the point is that we've we missed the meta run and I think the question now is can they convert it to revenues And I.
Think that's going to be the challenge.
However, Mark Mahaney just published a piece that shows EBIT per employee in revenue per employee at Meta, Amazon, Microsoft, and Google is up massively and that goes to the bottom line. So I think the jury is still out on how they're going to monetize all of this, but we'll see. I mean, they're making the investments in people and in capex.
Nancy just very very quick is Elon's pay pack is going to get voted through.
I think so, I hope so. I like to be aligned with the CEO as a shareholder.
Nancy Tegler, we appreciate it so much. Lafa Tengra investments great time on the show Coming up, the CEO of Startup Upgrade joins us to discuss the company's leasest running ground and what changed in the fintech market since his day's running Lending Club isys.
Bluembg tech.
Fintech Startup Upgrade has just closed a one hundred and sixty five million dollar Series G funding round that gives the company a seven point three billion dollar pre money valuation. Upgrade, which offers mobile banking, credit card and other financial services, was founded by former Lending Club CEO and co founder Reno Laplanche.
He joins us now in San Francisco.
Over the last couple of years, actually, Caroline and I've tracked very closely the valuation of private I wouldn't even say just fintech, you know, it's more specific modern banking services, multi platform offering. But just to start, why raise that money, what do you need it for?
How does it help out with growth?
Now? So we're in the fortunate situation of being cash flow positive, so we didn't need might say that. Yes, but as we think about the evolution of the company, we're sort of getting closer to taking the company public. This is probably our last sort of pre IPO raise, so it's a good opportunity to sort of check on where we stood in terms of building up Shaoulder value and also create an opportunity for liquidity for existing employees prior to an IPO.
It's quite a definitive statement our last pre IPO raise. So you have a plan in place in a roadmap to do that.
Yeah, I mean no certainty obviously, it always depends on the market and on our own sort of growth in the next twelve to eighty a month. But we're yeah, we're feeling good about the direction a go, Nald.
What's so interesting is the way in which Upgrade gets new customers. In many ways, you're casually positive because in many ways looking for that profitability metric because you don't have to spend loads of marketing because you partner with big businesses. Just tell us about how the business model has help to weather what has been a real downturn for other neobanks during the twenty twenty one earlier era as well.
That's right, Caroline. That's really what makes a great unique is our mutile product, multi channel strategy. So we're fortunate to have six different products, mobile banking, credit cards, personal loans, and then sort of indirect products like BNPL, home improvement financing and auto loans where we work with partners to
deliver financing at the point of seal. And increasingly these sort of indirect products already of turning into good source of customer acquisitions where we can acquire a customer for a not a loan at a local dealer, of home improvement financing, at a local roofer person who installed new windows, and don't become upgreade customers, and we can self intern sort of benefit from all of great products, including credit cards,
including mobile banking. So we really created that sort of ecosystem that benefits from multiple products.
And many know you from Lending Club. Was it those relationships that helped you on the other side? Could you repackage these loans, perhaps sell them in bulk to well a community bank if it's relatively risk free, or onto a private equity house if it's relatively risky, And I think auto loans come to mind when we're thinking about risk.
At this moment.
That's right, right. So we've i think helped sort of provide forty five billion in nouns since we started. It's
not all on our balance sheet. So we are certainly sort of setting loans to loan buyers, and that include a very broad range of buyers from small banks and community banks and credit unions that are going to focus on the sort of safest loans to sort of private credit funds, securitization structures where you can allocate the risks differently and where of investors might might be willing to chase a higher yield.
Reno jurisdictionally, would you just reflect on on the experience of leading this company in this startup, What is it like being a neo bank under the Trump administration?
For example?
Are they friendly and cooperative in the things that you want to do versus their governance of traditional banks?
Right?
So, yeah, it's certainly a very business friendly environment right now. But some of that translates into media a little bit less stringent of regulations at the federal level, but lending is also regulated at the state level, and I think whatever relax relax standards where we're getting on the federal h stage, where where we're not getting at a state level. So so state regulators I think fielled that vacuum left
by federal regulators to to to a certain point. So I don't think there's a sort of meaningful change in how sort died the regulatory environment is.
No memories are short, but I just want you to reflect from an on lending club and what you learn that briefly, because there were issues then.
You did have to step down. I'm interested is to what you've learned from it.
Oh yeah, so much. Yeah, So I think the lending club was really the first sort phase of fintech, right, it was really sort of building up an entirely new industry.
We've so very uncertain. Regulatory and compliance framework upgrade ten years later has really been part of that sort of second phase of the industry, whereas more efforts of established framework, established rules of the game, and I think we've we've all been benefiting from from that, and the fintech industry has been able to grow and and not really be a sort of strong challenger.
Truly.
Some more traditional banking industry.
Appreciate the answer, and O Laplanche come back, CEO of Upgrade, We thank you now.
Coming up.
Anthropic reportedly looks to raise even more money, particularly from the Middle East.
We're on that next. As a Bloomberg Tech.
Anthropic is reportedly in talks about a Debbi based investment firm MGX to raise additional capital, just weeks after completing a funding round that valued the AI startup at one hundred and eighty three billion dollars all. According to sources, CEO Dario m Oday met with MGF executives during a recent tour of the Middle East, joining us as Bloomberg Shering Gafari. This is something you and I have been
reporting out together. The way i'd summarize it, you give us the details is need money, need compute, make some friends across the Middle East.
That's right.
It's never too early, I think for these AI companies to start thinking about the next funding round, even if they're weeks before they've closed the last one, and you know, we're talking about you know, the billions at this point. Anthropics last round they raised thirteen billion at one hundred and eighty three billion valuation. If you're thinking about what kinds of pools of capital are out there at that scale.
The Middle East is increasingly sort of one of the only remaining pools that's going to make those kinds of investments at that level in the still unprofitable, still somewhat used, risky, right AI companies Suan.
What's interesting, and as you and Ed make clear in the story is Katsa had been a pool of capital for them previously, but they had to make amends for previous choice words when it came to other Middle East pools of capital.
That's right.
Zoanthropics CEO Dario Amedi has you know, in the past made comments There is a memo to his own staff saying that acknowledging that sort of fundraising in or that they would be taking money in the Middle East and there are trade offs there and that the company would sort of have to come to terms with the fact that not everything that they do will always be helping democracies, that it may help dictators, and so of course with the Middle East, you know, having a different sort of.
Set of governments, that is a new reality.
I think for these CEOs of AI companies that they may be making deals with countries that have different and maybe more undemocratic systems, right than here in the US.
And they shrink fari. We thank you very much.
And let's just say with Anthropic, because the AI startup founded by former Open AI executives.
Of course we just mentioned.
Daria, there's also Daniella Ramade and a handful of others is under a new scrutiny from the White House as it doubles down on its mission of building safe, steerable AI. White House ais are that David Sachs took to ex acusing Anthropic of running a sophisticated regulatory capture strategy based on fear mungery and blaming the company for a few a state regulatory frenzy that's hurting startups topic of Dave Lee's leader's Bloomberg opinion article and he joins US now.
And David sax was responding to a recent essay written by another co founder of Anthropic could come from Open AI, and let's just talk about what Jack had been posted.
Yes, this is Jack Clark, one of the co founders, their current head of policy as well.
And in this essay, you.
Know, he goes over some of his fears about AI and he may sort of metaphors around sort of being scared of the of the Dark essentially as a kid and sort of comparing the future of AI in some ways to the dark and not quite knowing you know, what shape it's going to take, what the risks are.
And it seems, you know, this is this isn't the first time David Sachs has kind of spoken badly off anthropic and what it's doing is scratching this itch to David sax And it seems the White House has the anthropic is it's kind of separate from the tech world in a lot of this, you know, we're not seeing anthropic leadership at many of these White House events. They're not going to you know, the been released with Trump
in the same that as Jensen Huang has. They're certainly not handing him a small trophy like Tim Cook did in the Over Office recently, and that now has kind of put a bit of a target on their back. I think is this sort of standalone AI company that likes to think it has perhaps stronger principles on safety than Open Ai and so many others.
Dave, this is a story that's in the zeitgeist. To borrow Tom keenism. It's playing out on social media. There are other people beyond David Sachs weighing in on it again, it's a little bit repetitive, but just explain the grievance the issue here that these kind of tech figures have with Jack and his essay and an Anthropic.
Well, look, there was for the longest time these sort of two camps in AI that one would say, you know, slow this down, let's do this deliberately, do bit safely. The others say, no, let's be accelerationist. Let's just innovate as quickly as we can and treat the problems as they come and solve some of so many problems with AI. And the way that's going to manifested in a more practical sense is that you have states like California that have recently made into law several bills related to AI.
One in particular was Senate Bill fifty three, which is about transparency, is about protecting whistleblowers. Anthropic stood alone in endorsing that bill. Open a Eye sort of begrudgingly said they could live with it after the fact, but Anthropic was the only company to say, yes, we think this is a good idea. Now, their preference would be for a federal law that would stop there being individual laws in different states around the country, and that's obviously what
David sax wants as well. But Anthropic are saying, look, if you want to do a federal law, let's see it, let's have it in Congress, let's see what that is. Until then, we're happy to back what little legislation is happening in California, even if that means it might make things more complicated for the AI companies.
Bloomberg Opinion columnist Davely with the latest Thank you very much. That does it for this edition of Bloomberg Tech. Carra what an addition it was.
It was, and yet more focus on data centers and indeed growth of AI.
Do not forget to check out our podcast.
Find it on the terminal as well as online on Apple, Spotify, and iHeart from New York.
For San Francisco. This is Bluemberg Tech