US and China Trade Talks Impact Tech Ecosystem

Bloomberg Audio Studios, Podcasts, radio news. Bloomberg Tech is alive from coast to coast with Caroline Hyde in New York and ed La Loow in San Francisco.

This is Bloomberg Tech coming up. Apple closes a retail store in China for the first time ever. What this means for the iPhone maker's plan to revive sales, Plus US.

And Chinese officials continue talks to extend the tariff truth beyond mid August expiring with Tech Export Controls under the microscope, and.

We discuss SOFI second quarter earnings with the CEO, Anthony Nodo.

As the stock surges, Apple's.

Kind of softer down seven ten to one percent, a big points drag at the index level, closing a store in China which we can get to, and then headlines in the last hour from the Wall Street Journal that JP Morgan is now the front runner to take over that Apple credit card business.

There's a lot to discuss, there is, and there's a person to do it with. Bloomberg's Tom Giles joins us now and Tom just first of all, this signal that we're getting pulling back from one particular area bricks and water in China.

Is it a big deal for Apple?

China is a huge deal for Apple.

Let's put it in perspective this one particular store.

There's a question mark about this mall.

You've had other retailers US based retailers like Coach, Hugo Boss have gotten out of there. So I'm not sure how much to read into those one particular mall. But let's dial the lens back and talk about the big picture in China. China is a huge market for Apple, and they have seen sales declining there for a whole.

Host of reasons. Most recently.

You have to look at the domestic economy in China. There are deflationary pressures. There are questions about how much the tariffs are going to affect that economy. Remember, exports are a huge part of China's global economy, so demand there. How big is demand for products like Apple's iPhone. That's what Apple needs to take into consideration. We're going to be hearing from them in the next couple of days

That sets us up really well for earning.

So I think analyst consensus is that they will swing back to revenue growth on a year on year basis in Greater China. So we wait for that. The headline this morning is from the Wall Sweet Journal and that JP Morgan, in a pack of many, is now the front runner to take over the credit card business. Interesting in a sense that SERVICESVA is important.

But what do we need to know?

Well, remember that this is an important relationship for the banks. Goldman tried it with Apple, it fizzled. There are questions about Goldman's consumer strategy and whether that was the right mix for them. It's a big deal for JP Morgan. Gives them opportunity to push financial services products to a whole new legions of Apple customers.

Big deal for them.

Bloomberg's Senior executive edit for Tech, Tom Giles here in San Francisco. Thank you very much, let's stick with that China story. US and Chinese officials are in their second day of trade talks in Stockholm, this to extend their tariff truce beyond an initial ninety day period. Let's get over to Stockholm where Blueberg's Oliver Crook is standing by.

Oliver, what's the latest. Yeah, that's right.

We're just in the briefing room here where were expecting Treasury Secretary Scott Bessett at any moment now in the next couple of minutes, Jamison Greer, who have been locked in discussions with their Chinese counterparts for the last two days, with the Vice Premiere of China five hours yea yesterday, about six hours so far today.

In terms of the trade.

Negotiations and the ambition, as you say it is, to extend that trade truth that currently stands between the United States and China. Those teriffs from the US have dropped down to thirty percent, twenty percent of those are fentanyl related, ten percent of those sort of baseline tariffs, and that's down from the one hundred and twenty five percent level we reached at the sort of fever pitch of the

There certainly is Oliver just going back to our sweet spot of tech that has been a lot been made of rare earth metals, whether or not they've actually been able to get more swiftly from China into the United States, And of course there was that offering that olive branch of h twenties going back from Nvidia.

Yeah, that's right, and that's really kind of the only place you've seen a great deal of olive branches extended from the US and from China.

To one another.

And we should say these are not just sort of acts of goodwill. These are two sectors in which each side is dependent on the other. Whether it's the Chinese who have a stranglehold on those rare earth metals, on those magnets, whether it's the United States that has a stranglehold on those advanced AI chips. And they've made those concessions, but not necessarily out of the goodness of their heart.

I'm sure that will be one.

Of the questions to Treasury Secretary Scott Besson. So we will get a little bit more detail on that, Caroline in the next couple of minutes. So stay tuned and we'll hear from the Treasury Secretary quite soon.

We'll be coming back to you, Oliver Kruk, thank you from dot com. Let's get you bought a context now. Michelle Guide is with us. She is the CEO of

Most important outcome is going to be American security, prosperity, and leadership, and that's what all of these trade negotiations are about.

There are means to that end.

China has built a massive manufacturing economy, the United States has built a massive consumer economy.

So they make stuff and we consume it and we buy it.

And now, being a consumer at that scale is a big vulnerability when your largest supplier is an adversary, and we buy and consume three hundred billion dollars more stuff from China than they buy from US.

And that matters.

When it's not just toys at walm More, and it's not just home appliances.

We are consuming things independent on them for.

Things that are really important to our national security, as you had just mentioned rare earth magnets, it's batteries, it's pharmaceutical ingredients, it's the ability to make ships across the world that have a commercial and a defense implication. So rebalancing our trade relationship is key to making sure that we are reincentivizing our ability and making it more attractive to buy and to build these things at home than to rely on China to.

Do those things.

It's interesting we've of course had MPY Materials with an announcement that they as one of the only rare rev metal miners here in the United States, they're going to be supplying apple in some way. But are there enough incentives? Well, what is ultimately a very dirty process? Do we want to bring that home?

Michelle more portly, Well, China is either going to do it in a very dirty process, because we have seen that the Chinese Communist Party does not.

Have a lot of regard for the environment.

Or we can incentivize American companies to do it here in a much cleaner and more efficient and effective way.

And so I think have America lead in these things.

Rare earth processing and other critical minerals is going to be really important. We'll do it much cleaner, more effectively, safely, and trustworthy than the Chinese Communist Party.

Michelle, good morning, it's ed in San Francisco.

I don't want to go broad that meeting that's happening right now in Stockholm between Chinese trade officials and American trade officials. Who is currently on top in this negotiation.

Well, I think what we've seen is that everything is on the table, and the United States has a lot of leverage. As you said, you know, they want a lot of things from the United States, including our chips and including our consumer economy because they are largely export based, and.

So we matter to them as much as they matter to us.

And so I think everything's on the table, and ultimately here the goal is to walk out with a better deal for the United States, so we are more prosperous, more free, more secure, and we can incentivize building the sectors here that are going to be important to American leadership. The President last week just talked about our big AI Action plan and wanting to run on American tech, and so we need to incentivize the industries that are going to make that possible.

And one of the pillars of that plan is for America to export technology to the world. How important an export market is China for the American technology stack.

Well, the jury is still out on whether or not China is going to be an economy that wants the American technology stack. If you listen to what Hijin Ping has said, he wants an independent, controllable AI hardware and software foundational system.

That means a Chinese tech stack.

And so we'll see whether or not Chi Jianping and the Chinese economy wants American tech. It's all the more reason that deals with our allies like the EU that just happened, like Japan that just happened matter because if you look at the US and our top ten democratic allies the EU included, that's like sixty to seventy percent

Michelle, it's almost the one area of bipartisanship has been a hawkish nature towards China. But I think about a potential ban on TikTok.

Currently not happening.

When we think about a potential meeting between Trump and jijingping, some China Hawks, some of the most odd and in the current administration for frustrated that actually President Trump is giving way too much for a deal.

What do you make of it?

Well, I think the big picture is all of these things are chips in the bargaining tools. They're all on the table and up for negotiation, so we can ultimately get to a deal that does make us more secure and more prosperous. And so we've seen back and forth on TikTok. We know that the Age twenty chips from Nvidia were under export controls in April, and then in July there were assurances that those licenses would be granted to export them.

But all of these things are in flux.

And it's part of the high stakes negotiations that are taking place. Ultimately that we want to get to a place where we are incentivizing American leadership and security first.

And that takes regulation here at home as well. The AI Action Plan meant to foster growth, particularly when it comes to the underlying large language models and indeed the infrastructure. What's interesting is there is this game of cat and mouse and China yet more and more sophisticated models, open ones coming to the full. How do you measure how far China is in the generative AI race?

Well, I think it's how many countries and partners across the world are adopting Chinese tech versus American tech. And our goal is to have more countries and more companies adopting American tech and in some cases Allied tech if we're not the category leader, so that the tech stack across the world is trusted. And so having a scorecard where we track how many companies and countries are adopting US and Allied technology versus Chinese technology is really important.

Michelle Geider of the CROC Institute of Tech Diplomacy at Purdue, thank you very much. Now, coming up, Spotify shares drop as the music streaming company disappoints investors with a surprise second quarter loss.

We'll have the details next. This is Bloomberg Tech.

Spotify shares having their worst day in two years, as the company reported a loss in the second quarter. Let's get more of Spotify's earnings or Bloomberg's Ashley Carmen, the scene seems to be about employee pay in some ways and taxes upon that.

Yeah, in some ways, Spotify is a victim of its own success. They've basically said that because they've been doing so well on the stock market, they've had to pay out a.

Lot more than they anticipated.

To employees for payroll, taxes and whatnot, and so that ended up in a loss in earnings per share.

There's a lot of like earnings mechanics and financial wizardry around this kind of stuff. Is there a kind of core Spotify story actually of how streaming audio is going for them, and maybe a little bit about their video strategy as well.

Yeah, So Spotify keeps adding subscribers users like they keep.

Growing every single quarter. It's pretty remarkable.

But what's sort of been a challenge for them is figuring out what their next verticals are.

And seeing that through successfully.

So they've really made a push for advertising that hasn't really panned out. They said now they are going to be kind of rethinking.

That approach with advertising.

Their head of advertising actually stepped down yesterday. He's taking a job at DoorDash, So they sort of suggested that this is going to be a direction that they're going to change course. And then they're making a very concentrated push into video, and on today's earnings call, they said one of their co praresidents said that.

This is a very exciting opportunity, but it's not a necessary opportunity.

So I think they're still kind of figuring out where they want to move next.

It's interesting that the week dollar, of course, plays into all of this, and the third quarter to forecasts not looking that pretty either. Ultimately, they are building more and more users. As they say, it's sort of growing like a weed, so that's going to be a positive momentum story for many longer term.

Yeah, I think that that's how they're trying to position this is that in the long term they seem very bullish, they're excited, they feel like they've had a really great product.

It's just these.

Short term issues that they're kind of dealing with, and investors, we'll see how they're feeling about it.

The stock's down almost eleven percent, which introday is the biggest drop since early April, but if it closed, there be the biggest drop since June of twenty twenty three, So it's.

A strong reaction.

I'm not asking you something to ask you every single quarter because this is how I listen to podcasts. How is Spotify doing in podcasts?

They've really pivoted into video podcasts and they've been trying to recruit more video creators to the platform, so they really have not focused on these audio podcasts anymore. I've reported quite a bit on how this initiative is going for them. They're still missing quite a few of the largest podcasters on that service.

For video, but they're still pushing and they're still trying.

Where is the audience for them? Always the growth story at least it seems like.

It's developing markets, Yeah, but then also just trying to get people to spend more time on the platform watch these video which they compensate based.

That consumption rather than adds.

They're really trying to appeal spend more time through audiobooks and maybe up level them to different tiers of subscriptions. So I think that's where they're eyeing some possible growth.

Bluemogs actually Carmen on the streaming and Spotify beat. Thank you very much. We have another earning story in PayPal. Look at shares of the company down significantly, on track for their biggest drop in almost six months. In part, it's just the basics that they're seeing slow in growth and payment volumes. But what happened in the morning session was that the CEO on the call was talking about US retail spending and sort of softening economic consumer data.

That kind thing.

But he was basically saying that they see a slight acceleration and that's kind of worried people a little bit. It's going to be interesting later in the hour Carrier when we have Sofi, because it's somewhat analogous, right that we might get a similar or maybe different read on the strength of the consumer through the fintech lens.

From a share performance is a very different story for so Far, which is up a whopping thirteen percent right now. That interview to come at right here, right now. Coming up, we've got open Ai back startup Ambient's healthcare. It was reaching a one billion dollars valuation. We speak the co founder Nik Kilberduma.

That's an expertive roombed tech.

Open AI back startup Ambience Healthcare has announced it's raised two hundred and forty three million dollars in a new funding round, valuing the administrative AI company at more than one billion dollars.

For more.

Nik Kilberduma, Ambience Healthcare co founder and chief scientists, joins us it's really interesting, you know, I actually go back to maybe even three years, and this is where a lot of people said the promise in the near term was AI and healthcare, you know, the administrative task.

But the round is big.

I mean, what do you need two hundred and forty three million dollars to do?

Yeah.

I think this round two hundred forty three million dollars values as the company at one point twenty five billion dollars. Now that round is led by oak HCFT and recent Horoitz and with participation from open AI. I think it's a testament to this platform that we've built for health systems, which liberates clinicians from the administrative burden and enables them

I think this surround is a testament to that way.

What's the company's core competence? You know, I understand the platform, but what is it that you're good at that's allowed you to build the platform.

I think a big part of it is we've built an incredibly deep working relationship with open AI and other foundation model makers to build the most capable foundation models for healthcare and medicine, and then we've taken that and packaged that into a series of workflows to help clinicians. So I'll give you one example. We work with Cleveland Clinic, one of the most sub specialized academic institutions in the country.

Nikill go to that relationship, that working relationship that you want to invest in further with open AI. What makes your business defensible versus open AI just sort of building it themselves.

I think a big part of it is as you think about sort of the gap between general purpose reasoning models and models that are actually a clinical grade and compliance grade. There's a massive gap between models that truly understand the medicine that's happening in every single visit.

We talked about Cleveland Clinic.

And other academic medical centers. Just the level of depth and clinical reasoning that's happening across one hundred plus different specialties, and how that's different from primary care to if you have to go see an oncologist to even an oncological subspecialist who might specialize in a particular type of cancer.

We are currently as we speak, just also seeing live pictures of President Trump, who is currently in Scotland. He's opened, of course, a new golf course, but he's also been negotiating with EU, continues to be discussing relationships with the UK going forward. We're going to be diving into that as and where necessary for you. But let's just return to you, Nikhil, as we hear, of course what President

I'm sure it's a great question.

I think the idea of how do we build AI that's safe, how do we do it responsibly, how do we roll it out in a way that's effective. We're lucky to work with some of the premier academic institutions in the country, and that's allowed us to build infrastructure not only to create and train AI in a safe and private way, but also the governance processes to roll it out responsibly. But I think the opportunity getting this

Nikail Baduma of Ambience Healthcare.

Let's just shift gears into.

The other of AI and the relationship between Microsoft and open Ai, because apparently when they're in advanced negotiations that could change that relationship and actually help inaugurate the AI age. The ongoing talks would give Microsoft access to open AI's tech even after the chatchipte maker has reached its goal of building artificial general intelligence. For more on what is going on spring Bloomberg's Map Day. Now, this is an

How is this going to change? Map?

That's right.

So Microsoft, as a condition of all the investment they poured into open ai, they have access to their technology.

They can make it into their product.

They're worried for some time about a potential cliff, you know, should open Ai say hey, we've you know, built an artificially general intelligence system, Microsoft.

Would lose access to the tech.

So what we're hearing recently is that Microsoft is getting more comfortable at the terms they're talking about now, I mean that cliff might not occur, there might be a way that they can continue to have access to some of open AI's technology, you know, should they hit that milestone.

Matt, We've heard that talks of progressing, that they're positive that they're still ongoing. We heard from sources that in some valley, Sam Altman actually met with Sati Nadella to talk about the issue. The part of it that is on the open Ai side of this is that they want to change that corporate structure. What do we know about how these negotiations are moving toward that.

So we know that first of all, Microsoft is is the biggest holdout to that re negotiation of open ai structure. We know that open ai wants to alter it's it's corporate charter. They want more flexibility, they want the ability to raise a whole lot more money. And that's really what's kind of ticking the clock here, particularly a bunch of cash from SoftBank, the big investor, has the authority to dial down some of that investment if opening Ey doesn't.

Complete the restructure before at the end of the year.

So it's just created this little bit of ticking clock in the background, putting pressure on both sides to come.

Up with a deal and also revenue share. Right, Matt, it feels as though open ai is realizing, well, how much value they're adding and what's a little bit more of it?

That's right.

I mean, if you want back the clock to twenty nineteen when Microsoft first put cash in the open AI, Microsoft got a really good deal on kind of a flyer at this AI lab was going to be a big deal. Roll the clock forward. Turns out there an enormous deal and opening iye wants a bit more of that pie for sure.

Bloomberg's Matt Day reporting with the rest of the AI and infrastructure team really appreciate it, Thank you very much. Just stick with Microsoft, which reports earnings tomorrow. Cashranging Global Investment Research Managing Director the Goldman Sachs joins us. He covers the software sector has a buy rating and a five hundred and fifty dollars price target for Microsoft TV

What did you hear then and what do you make of it?

Yeah?

So, first of all, congratulations on breaking that news story. So that's incremental development. And we actually publish our note later yesterday and we didn't cover the detailed reporting that you guys did, so that certainly is a wrinkle, but it does not change the overall thesis. Our view has been that the partnership has more legs to it than commonly believed in the media and in the Wall Street community.

And run on work cus infrastructure.

So I think if this word of progress to its ultimate fruition that of the deal word we signed, it would take away a at least an investor's perspective as to what is the time duration that you can bank and your model and what is the longevity of this partnership. Because the AI revenues have come out of nowhere seemingly, and I've scaled and helped Microsoft's Azzure business propel itself to a not to thirty percent growth through which we

Let me ask it this way, what has the biggest net benefit to Microsoft been from the relationship with open Ai.

Yeah, many things. First of all, that they are tech forward, and you could argue that in the cloud competing cycle that they were not exactly the first ones out of the gate, but in this AI cycle they are the first ones out of the gate. And there's so much of a cachet and boasting right that you have, especially with Ceosatin Adela, who is a ranking cider of the company, has been there for a long time. Being able to pivot the company at the right time. That of enormous

So that's all to myself's benefit.

The eighty billion run rate for Azure comes in tandem cash with a more than eighty billion dollar need to spend on capital expenditure. Is that currently totally vindicated in your mind? Zyme when we see it increase.

It's a dollar for dollar right of capis gives you a dollar of AS revenues roughly give or take, and there's within that there is a slightly more inefficient conversion of the dollar of capis into AI revenue and slightly more efficient conversion. So we think that it is the right trade off at this point in time. And the good news of your Microsoft is that you're running a very diversified business that all the capex is not extremely

That's a very important consideration.

Long as the returns keep coming and you're able to generate a dollar of revenue for every dollar of capiss, as long as that algorithm, broadly speaking, holes, I think it's the right trade off for the company.

There have been concerns though, surrounding Microsoft, whether or not it's just how great the product is to use when you're sat within its ecosystem, but also the cyber issues that we've seen running front and center this month cash how much do you expect Satia to really talk.

To those issues.

I believe that there is a bit of a lag between the actual chat GPT technology that is open a I brought, broadly speaking technology and how much of that gets incorporated in the Microsoft Office Copilot, and I believe that that lag is likely to reduce over a period of time. And we're also implementing consumer grade technology in the enterprise. I mean, that is a completely different piece. So I'm not surprised to hear what you've heard with

Way in the future.

That version of co pilot that we used today is going to go through significant enhancements liberally to customize it tailor at your workflows. Oh, that's going to get significantly better. So the buzz is going to get better.

One thing I've always wanted to ask you cash is present day, middle of twenty twenty five, Microsoft is the world's second most valuable company. Right, And if I think back to when I arrived in Silicon Valley in twenty eighteen, but even two years ago, did you see that coming where Microsoft would vie with Nvidia to be the most valuable company in the world based on the direction it was headed pre open AI and all of that.

So when I launched coverage at Goldman in twenty twenty one, we had a big price target on Microsoft, and the pushback that we got was, you're implying that the market cap can grow by another half a trillion. Two it's already a multi trillion dollar market or what was And I think it was a couple of tillion. Yeah, And I think what it comes down to is, if you unlock a big tech cycle, the dollars at stake and every tech cycle are larger and larger.

And if you are.

Leading this cycle as opposed to being a fast.

Follower, who is to say what the new market?

Nobody envisioned this kind of playing out the way it did so, and we're still early in AI. So if you listen to the economist, they're talking about how the labor market could be incorporated by way of AI. If that were to happen, you got a lot more value creation along the way. So I'm not I'm pleasantly surprised about how quickly it has happened, but I was just remarking earlier that Microsoft stock has actually performed in line with the nastac finally, since the launch of Chat GPT.

It doesn't make any sense right now.

Finally we're just about even, Sophie vindication.

Yashraan and Managing Director of Global Investment Research at Goldman's has great to have you here on Bloomberg Tech.

Thank you very much. Carry some news.

Yeah, it's time to talking tech now and first up, door Dash spotifflies Global of Advertising Lee Brown will join the food delivery company as chief revenue Officer starting in late August.

Now.

Brown previously led Spotify's two billion dollar ad business across ninety international markets and is set to oversee door Dash's revenue in the US, Canada, Australia and New Zealand.

Whilst Weimo is set to.

Launch its robo taxi service in Dallas next year in a partnership with rental cil company Avis. Now Weiver says Avis will serve as a pleat fleet partner providing infrastructure, maintenance, car management operations.

The Dallas Deel.

Marks a multi year partnership that Waimo and Avis plan to expand into more cities over time and venture debt firm to Cora, Hare's raised six hundred eighty five million dollars with the backings from the likes of Peter Teel and Marc Andreesen. Now, according to CEO Kerry Finley, the money will be used to make loans to about twenty to thirty million dollars to startups. Now, the latest investment brings the firm's assets and management to about one point four billion dollar zed.

Okay, coming up.

So FI CEO Anthony Noto joins us to discuss the company's.

Second quarter result.

An upbeat forecast and my goodness to shares already taking off this Tuesday.

Stay with us.

This is Bloomberg Tech shares are so far climbing off.

The company reported second quarter revenue seventy two percent EU of year jump in fee based revenues. Let's discuss with the man in charge, SOFI CEO Anthony Noto. You know the SOFI story, Anthony, has become kind of simple. You've kind of invested in fee based business lines, many of them they've been consistent. But now what the market seems to be seeing is that flowing through to the bottom line as well. Would you just explain how that went in the quarter.

Sure, we've made the conscious effort of diverse fire or business into these capital light, less credit risk a few revenue streams, one of which is our long platform business where people pay us to use our originations platform, which includes our underwriting capability, our marketing capabilities, and our servicing capabilities to produce loans for them.

For a fee that they pay us.

We also generate fees in our SOFI money account business through interchange, as well as our brokerage business, and then of course our credit card businesses. And so as we've diversified the products that we offer, the revenue streams have also diversified. We're about forty four percent of our revenue outcomes from these fees that are generated without use of capital and without credit risk, and so.

That deversks the balance sheet quite a bit.

So our ability to grow their overall business forty four percent with a twenty nine percent operating margin is reflective of that diversification and less risky revenue that's more visible as well.

Anthony, you just talked about de risking. Elsewhere in the earnings domain, PayPal was asked about the strength of the US consumer and comments from that company with somewhat negative that they see some sort of cracks in the strength of the consumer from those that use your platfor your various financial offerings.

What are you seeing present day?

Yeah, they have a very different strategy and business than us, and a very different target audience. We're appealing to the overachievers in the United States that are looking for ways to be able to save, to achieve, and invest to achieve their long term ambitions, whatever their American dream may be. So we're helping them spend less than they make and invest the rest, and we're seeing really strong trends for them.

We see them moving their money into SOFI money. We give three point.

Eight percent interest on our savings account in SOFI money with it if you're a direct deposit customer or a SOFI plus customer, we offer them investment opportunities that are really attractive. We offer stocks without commissions, fractional shares, we have sofi ets that are award winning as well as

Avan.

It's interesting that that flywheel comes at the same time as basically the market's got a flywheel of its own and seeing froth in certain sectors, Retail investors really wanted to get in on the latest meme stock as well as ipo. How are you thinking about general to AI, like helping with the education side of things. I know you're targeting over achievers, but are they diversified enough in their own investments?

Sure?

And let me take your question and talk about what I think are two technology supercycles that are unprecedented. We're driving the growth that we are over the last eight years without the benefit of crypto.

Or blockchain or AI, but I think the combination.

Of blockchain and crypto as well as AI are two super cycles that will put a tail wind behind our company and really help us really revolutionize the financial services industry in ways that continue to give people faster ways to send money at lower costs and to do it safer.

In addition to.

Being able to invest in this asset class, which does help as it relates to the areas outside of the country that may not have exposure to the US dollar and its stability. In addition to be able to invest in that asset, will allow people to borrow against that asset, which will lower their cost of funding and in addition to that will allow them to be able to pay across borders more easily and quicker. Artificial intelligence is helping

From Anthony Nodo, CEO of sci Fi A Sofi, thank you very much joining us. We actually has some breaking news crossing the Bloomberg terminal and it comes from China's trade envoy Lee Chengyang. He's talking about the progress of talks in Stockholm. He says that the US and China have agreed to extend the trade truce. They have exchanged views on various macro economic issues, They agree on the importance of safeguarding soald trade, and that the talks have

Meta set to report earnings after the closing bell on Wednesday. I believe it is with investors closely watching its AI investments for more Blue megs, Kurt Wagner joins us, Look, we've got some big ends to think about more broadly, Kurt, and I'm interested as to where we go in terms of the spending that everyone's looking at is about talent, it's about capex.

Will it be raised?

I think that's the speculation, is that, especially once you saw what Google did last week raising their capital expenditure target for the year, I think there's some assumption that Meta might do the same, given the scale a ideal and all this very expensive hiring they're doing on the AI front.

Now, remember they already raised.

The range for their capex last quarter as well, So there was a different number in January, a different number in April, and now we'll be watching tomorrow to see if there's another new number. But given the spending AI, I would not be surprised if they go that route.

And yet we're always reminded every quarter that Meta makes all its money from advertising, and so there's AI story where adds a better price more powerfully, and then there's like, is all this investment going to pay off?

What is the street expecting?

Well?

I think the good news for them now is that the AI story they're telling today feels more urgent and more timely, I think than the one they've been telling for the last year or two, which was related to like the metaverse, and so here now they're talking about chatbots, they're talking about LMS, data centers, like things that people I think have a better understanding of what the potential outcome is.

The metaverse was always ed.

You will remember that the main thing that they were sinking all of this money into, and there was no real, you.

Know, end insight to that.

Now I don't think there's an end insight to AI either, but at least I think they're doing something that a bunch of other companies are doing.

It's a little easier perhaps to wrap your head around.

Blue Vers Kurt Wagner looking forward to meta after the bell tomorrow. Thank you very much, Caro. That does it for this additional Bloomberg Tech. But we had some big breaking news in the last few moments.

We did, and it's so important to the tech eCos and more broadly the world economy. We're looking at China saying it does indeed agree with the United States to extend that tariff truce. Remember it was likely to expire in mid August as to where currently tariff's had been set at about the thirty percent level.

We are going to read the language very carefully. All those experts on wording China and US talks with candid says Lee chain Gang candid good thing or bad thing?

The markets will tell us in due course caract.

And what does it mean for semiconductors? What does it mean for the flow of rare earth metals? Do not forget to check out our podcast. You can find it on the Terminal soll As, online on Apple, Spotify, and iHeart from New York from San Francisco.

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