From Marhard. We're Innovation, Money and Power Collie in Silicon Valley, NBN. This is Bloomberg Technology with Caroline Hyde and Ed loved Love.
I'm Caroline Heide of Bloomberg's Weld headquarters in New York and Omed Lovelow in San Francisco.
This is Bloomberg Technology coming up.
Chip makers.
They worn on the impact of the US curbs on China and the stocks they drop.
Will break down everything you need to know.
Past we push ahead to earnings. Is Netflix and Tesla prepared to report results after the bell and.
We returned to our New York Tech Week conversations.
We're going to be discussing the state of fintech and search for talent here.
I think China is the key story, particularly in the context of US technology export curbs to China.
I want to first go to Europe ASML company.
A maker of chip making equipment, and basically short story, they had earnings not good, but the proportion of what the orders they're getting is increasingly from China. Ironically, so they've had to come out and address the latest expansion of curbs. In twenty twenty three, around ten to fifteen percent of their shipments are going to be impacted by these new restrictions. We're going to talk to our analysts about what is going on here in just a moment's time.
The more direct impact as well is on video dropping for a second straight day on a two day basis. We're heading for our biggest two day drop since December twenty twenty two. And they issued an EIGHTK after market. They reiterated what they told us on Bloomberg Technology Caroline, which is, Yeah, no near term impact of financials, but basically this is going to impact our ability to service our existing customers and develop new products. That is a concern, particularly.
For in video.
Let's get more detail and analysis on this and bring in at man deep scene of Bloomberg intelligen and so, Mandy, what we're talking about here is specifically a eight hundred and h eight hundred China specific chips being caught by increased curves. How do you analyze that sort of tangible impact on the industry in twenty twenty three.
Yeah, Look, I mean we know China revenue is about twenty percent of in videos overall revenue, and there is likely some pull forward of that revenue. Given this wasn't a complete surprise, you know, we're talking about these curves, and then I definitely think there was a pull forward element, which is why the company is probably saying there won't be any near term impact. But down the line, you have to ask yourself. You know about the customer base
of n VIDEOS chips, and it's mostly the hyperscalers. Hyperscalers are about fifty percent of all the buyers of these GPUs right now, and there are two or three big hyperscalers in China. So if they're not able to get their chips for AI training, which is the primary use case here, I think that will have an impact, but near term impact probably is muted because of that pull forward aspect.
Interesting muted.
We're down by some ten percent over the last thirty days, and indeed, more broadly, we saw more than seventy billion dollars shed from the overall well chip stocks. When you're looking at the semiconductor indices, how are you anticipating China US two tug back or some of the valuation run up that we've had because it's such a mixed picture for chip makers out there. More broadly, we're just talking about a SML and woful numbers coming from them.
Yeah.
I mean in the case of Nvidia, you had a streak of upward revisions and to the extent, the bogie for twenty twenty five is eighty billion in data center revenue. Now when you look at, you know, the incremental data center spend right now, every dollar is going towards AI chips and networking, and clearly that will lot change. So some of that, you know, chips that in Vidia can't sell to China will be taken by somebody else.
And I've no.
Doubt that the company's undershipping demand right now.
But that eight billion number.
It's a very high bogie because the overall data spend center spend right now is close to fifty to sixty billion dollars when you add all the capex amounts. So clearly for in Video to reach that target in twenty twenty five, they need demand from everywhere, including China, and I think that's what is at stake here in terms of what kind of impact it will have two years down the line.
Mandy, this is a story if there is one. ASML is the company which makes the machines that make the chips, and its bookings plunged forty two percent in the courter gone because there isn't demand broadly out there, but demand from China doubled. In other words, proportion of orders for chip making equipment from China doubled. And yet in that same twenty four hour period this company learned about expanded export curbs on chip making equipment. How complexes that explain it to us?
I mean, look at the supply chains right now, So the fabs are all based in Taiwan. The assembly is being done in China, So clearly, you know, it's not a surprise that your latest end equipment is being needed in China because they want to, you know, keep doubling down on their ability to assemble and manufacture a lot
of these chips. But at the same time, I feel the big driver for a company like a SML, or for that matter, the semicap equipment complex is the diversification aspect geographically, and every government right now is trying to make sure that they have local semi fab manufacturing and they want to get those equipments in the region where
they these companies are operating. So long term, I do think the drivers are there for equipment companies, especially eue s. In the case of ASML, but near term dynamics, obviously you can't take China out of the equation given all the manufacturing is being done over there.
Fascinating to SMLC actually said our Chinese customers say, we are happy to take the machines that others don't want at the moment. It's just questions how long they can actually be shipping them there, manly saying always great to have them on of course from Bloomberg Intelligence and look, this picture is a difficult one we have from the CFO of ASML really talking about a very dynamic macro
picture coming from China. So let's get into that picture a little bit more with Amy Selco, a partner at all bright Stonebridge Group, which is a part of Denton's Global Advisors. And your expertise is needed here because there are so many clouds, whether it be due political making, whether it's a US pushing against shipments to China, and then there's of course the Chinese economy, which can't really
get a clear read on. Start with the economy, how much do you think demand is there for technology from international imports right now?
Oh, demand is huge because that international technology is so important for China to continue to push its economic recovery. Good news coming out from China, as you saw with the Q three three numbers beating expectations four point nine percent growth in Q three, but it is a slowing economy and the recovery is far from certain if China
doesn't have access to that technology. Clearly investment is going to continue to be in technology to try to have indigenous technologies replace this uncertainty around access to global technology. But in the very short term, of course, Chinese demand is going to continue to be significant for these technology imports.
Amy, let's head over to China.
The Belton Road Forum of President G kind of made this thinly veiled comment directed at the US. I'm sure that downplaying basically how much emphasis you should look at the progress and development of others and the risk of economic interdependence. I'm assuming that President G was talking in the context of technology and technology exports. Are you worried about about the sort of posturing on both sides here?
Well, certainly, absolutely, for all the clients that we serve, it is a significant worry about where are those geopolitical risks going In the wake, of course of what's happening in Gaza, right now, the fact that Russia and China, China's leaders are together in Beijing right now, as the President of course is in Israel, and then we'll come back to the United States to welcome the leadership of
the European Union here. And so there are these discussions about how geopolitics are impacting interdependence, and I think that is what President She was getting at in that reference. He of course is celebrating a ten year anniversary of the Belton Road Initiative, welcoming foreign leaders from a number of countries, representatives from more than one hundred and thirty countries, and so trying to tout the relevance of China on the geopolitical stage. At the same time that obviously the
US and China disagree on some fundamental issues. And while communicating again and that's a very positive thing, we're all waiting to see what that communication does. Will it stabilize the relationship or is it only a temporary law as the relationship continues to get more challenging because of these export controls, because of the US and China disagreeing on issues around Ukraine, around the war that Israel is waging against Hamas right now, and other issues around economic interdependence,
something that she Jinping is worried about too. But again in the short term, he needs that technology input from American companies and others into China.
I don't think geopolitical risks could be more complex, Amy, and you've put that very clearly to us. In that global picture right now, talk to us about the clients and companies that I just think of m CEO, for example,
a company recently listed here in the United States. It's UK based, it's international in terms of its focus, and the CEO reading has was at a conference yesterday just saying, look, this is so difficult to be able to just cut off the technology from flowing into the China, and it says it's a very hard problem to solve just coming up with a list of components that are deemed critical and applying some sort of kind of guidance against it.
How difficult is it for your clients to navigate this right now?
It is harder than ever, that's right, Caroline, because companies are trying to gauge where are there truly national security based restrictions that are impacting them because of policies engaging as well as policies here in Washington, DC, and they have to navigate both of those issues you're talking about ASML video other companies that are worried about policy developments that are going to in some ways constrain and otherwise open up different opportunities for them to continue to grow.
And so in Beijing, the policy restrictions are are we just in the short term able to continue to sell our products until China indigenously innovates its own competition to our products, and so you can't have confidence in the long term outlook for continued growth in the China market. And then of course in Washington, the impact of yesterday's announcements, how will that impact these companies' abilities to continue to gain global profits that they put into global innovation that
are derived out of the China market. And so, yes, companies are trying to balance these issues of significant national security concerns that are coming not just out of one country, out of multiple capitals. I'm mentioning Beijing and of course Washington, but we're hearing these same concerns coming out.
Of Brussels, Tokyo, elsewhere.
And so companies just have to balance these issues and try to advocate for the need to continue to promote sales that aren't impacting national security in global markets so that they continue to innovate and remain global leaders like Nvidia, ASML others really are.
Amy.
Let's end on the data.
You know, it's a critical consumer electronics market.
There are hyperscalers there.
GDP came in four point nine percent, just below Beijing's five percent target. Give us your Chinese economy scorecard based on that data.
Well, China is, I think, in some ways relieved that they're seeing consumption resuming on the ground in China. Now this is short term and nobody is finished being worried, least of all Chinese policy makers who are going to continue with stimulus in order to get this economy restart again meet this around five growth target for this year, looking at next year being even more challenging. But maybe we're looking at December ed for what the Chinese government
says about continued stimulus in twenty twenty four. But just a reminder, putting more investment into the economy just adds that adds to that debt to GDP ratio, and so it is not a long term solution. Chinese economists are saying that so are international economists that China really needs to empower its consumers to continue to spend by investing in programs that will help consumers be less worried about
that outlook for the Chinese economy. That's going to be a difficult equation for China to manage.
Amy Seliko Principleward Dentin's Global Advisors, thank you, of course. Denton's an Albright Stonebridge Group property, thank you very much. Coming up, we're going to have the latest now on the Israel hamass war and the deadly blast of a hospital in Gaza City last night.
Karen, such complexity, such concerns, and meanwhile, here in the United States there is a second vote upon us for Republican Jim Jordan, who is looking to be the next speaker. Will keep you up to date with how that second vote doesn't EGO, it's underway.
This is Blombo technology.
I was deeply said in an outraged by the explosion at the hospital in Gaza yesterday, and based on what I've seen in appears as though it was done by the other team, not you. But there's a lot of people out there not sure. So we've got a lot of We're going to overcome a lot of things.
US President Joe Biden there expressing his outrage at the explosion of a Gaza city hospital and Tuesday.
Night they killed hundreds.
Now, he was speaking during a bilateral meeting with Israedi Prime Minister Benjamin Natanyahu in Tel Aviv. We want to bring in now, Joe Matthew, of just how difficult diplomacy always is, and it's just got an.
Awful lot tougher.
Can you just bring us up to speed with where we are with his trip at the moment to the Middle East.
Well, you just framed it perfectly.
This is an incredible test for President Biden. It just got a lot harder in the last twenty four hours the news of this blast. He's really taking a decided posture on this to say that data from the US Defense Department shows that this in fact was not the responsibility of Israel, but was a missile sent from a terror group in Gaza. He said that in a couple of different occasions today. But let's remind ourselves this was supposed to be a multi day trip throughout the region.
And following that blast at the hospital, a summit of Arab leaders was canceled in Jordan. The President's going to be heading back to Washington tonight, So the stakes here are very high for Joe Biden.
The stakes are It was also announced one hundred million dollars in aid to both Gaza and.
The West Bank.
Just tell us how ultimately we're able to see aid flow. At the moment, when we're looking at a house that's going through a second vote, try and find a speaker.
Well, it can't, is the fact, and that's why there's a great sense of urgency behind this vote.
It just started a short time ago.
Jim Jordan again is up for a second round and is not expected to win this round, and there are questions about what happens after that. The White House is putting together a massive supplemental budget request one hundred billion dollars for not only Israel, but also Ukraine, Taiwan, and border security to try to give lawmakers no opportunity to vote no, because one of these things will be, of course, if not more of them, an important element to any Democrat or Republican.
But there's got to be a speaker.
And at this point right now, it's unclear who will hold the gavel and when.
And I'll remind you.
One month from today is when the government is set to shut down. That also can not be managed unless this speaker fight is resolved.
Joe Matthew, we thank you so much of Bloomberg time now for work shifting Look. It's where we take a look at the changing landscape of the labor market amid advancers and technology first up. Regulators in the European Union are moling over stricter rules to monitor generator of AI. It's a proposal seen by Bloomberg outlined a three tiered approach classifying AI models and systems and the rules that would apply Now, the EU is poised to become the
first Western government to place mandatory rules on artificial intelligence. Meanwhile, AI startup Inflection AI wants to limit the role of chatbots in voting in elections. PI to the company's chatpot won't be allowed to advocate for any political candidate. The company is hoping other firms will make their chatbots to
the same. Plus this, a whopping seventeen point nine billion dollars has been poured into AI startups so far this year, and according to Pitchbook data half A Bloomberg, the value of funding for AI companies clim twenty seven percent globally compared to thirty one percent dip in overall deals for startups.
Set all right, this is a newsletter that the world pays attention to, celebrity bench, capitalist mark and Dreesen is issuing a new manifesto to highlight how technology can advance humanities, achievements and flaws. In a blog post that you published earlier this week, and Dreesen says, quote, the only perpetual source of growth is technology. Give us a real world problem and we can in technology that will solve it. Let's go deep on this and bring in Bloomberg News
VC reporter Katie Ruth. What I just said. It's just true when in Dreason puts out one of these blog posts, it shared endlessly on social media platforms and debated. Just outline and Dresen's argument in this latest academic exercise.
Sure, yeah, you're right.
He's definitely good at getting attention. And he's done this several times over the years. He's done one that was called software is eating the World, he did one it's called It's time to Build, and now he's done this one. And you know, it's always a super bullish case for technology, which makes sense. He is a technology investor in it is his job to see the future and make these bets.
He always includes zingers and some very controversial statements in there, which I think, of course help it get more attention. I think at the end of the day, what you should look at this is marketing. He's trying to get attention for his firm and dres and Horowitz, and you get an edge on some of these startup deals that he's trying to get access to.
It's also the pushback against regulation, right, he's trying to speak to policymakers with fifty two hundred words where he says a deceleration in AI will cost lives. Do you think it will in any way stoke policymakers to pull back on the regulatory endeavors.
Well, he's certainly a leading voice in the venture capital industry, and so if they're interested in hearing from the industry, he's probably one of.
The people talk to.
But I'm sure they would talk to an array of perspectives. I mean, he's always taken a more libertarian point of view. Not everyone in the tech industry has the same political philosophies as he does, but he's you know, he's on the board of Facebook. He's always been kind of vocal about being anti regulation, anti anyone interfering with anything that the technologist want to do. Yeah, exactly, and so you know, this is just.
Part of the course from Mark and drecent Okatie.
We've great to have such VC expertise in the house today we thank him.
Welcome back to BlueBag Technology.
I'm Caroline had in New York and right here in the Big Apple Well, all week long we're covering the technology industry because it's Tech Week. Upon us, I'm pleased to say we're now joined by one of the key founders in the area who chooses to live and operate have fintech business here in the city. Joining us is Stephanie Kirkpatrick or I'm CEO, which is all about making payments that much with the faster.
It's basically building upon fed.
Now, before we get into what you're building, why build it here in New York? It feels like fintech is an obvious choice when you think about the financial institutions here.
I mean, I had a huge opportunity to pick up and move to New York a number of years ago to Chase my passion about the intersection of financial services in tech, and here we are as I set out to found ORM. There's no better place in the world to recruit diverse talent and to live in an ecosystem where there's grit and tenacity and frankly opportunity in particular in fintech with what we're building, and I admit every time I see that New York skyline, I think, Wow.
Okay, so you talked about the opportunity in terms of who wants your products and what sort of products they want to be, because you've been at plenty of other startups. I mean I think of Lenvest, that was a great exit sold to another financial institution.
What did you see that needed to be fixed and why was New York.
The place to do it?
Well, there's a really unique insight.
So let me tell you what ORM does, and then let me tell you about the problem. We are this simplest API for fast, reliable payments and now instant bank account faircification, which we actually just launched right before Tech Week, so it's exciting times. And when I was inside of big financial services, I saw this huge problem, which is
time to money. More than half of Americans don't have enough money in the case of emergency, and if they do and it's a high yealed savings account or it's a brokerage account on a Saturday when they have the emergency, they can't get access to it.
I feel that's what Krypto was full.
Well, it turns out.
The most recent innovation is actually the ATM, which isn't good enough. So with the advent of instant payments, we think that it's important to rebuild the infrastructure, but all of our financial services and banking products sit on top.
Of and so now you've got this new rail which has been put forward by the Federal Reserve.
How does this compare How.
Does a financial technological ecosystem here in the US compared to a broad at the moment.
Well, you know, we are behind, let's say, relative to Europe and other areas where instant payments has been sort of a normal or has recently been introduced, But we're catching up.
What I love about what.
The FED has done is FED now and the instant payments product, and what we've had now for a couple of years with OURTP real time payments is the beginnings of an opportunity for consumers and businesses alike to see the advantages of something happening instantly. Right in our everyday lives, most things are faster and instant. In our financial lives. Everything is slow five days a week. Maybe if it comes in before the cutoff on Friday, the transaction can happen.
That's just no longer possible to sustain. And so now with FED, now you not only get the large top two three four hundred banks through the fed's new instant Payments product, you also get all of the coverage for smaller, critically important, systemically important banks as well as community focus banks.
So now we're getting distribution of instant payments, and the dynamic has changed around what you can do for the American wallet when an insurance claim wages, any sort of financial transaction can happen twenty four to seven, three sixty five nights, holidays, weekends, as opposed to nine to five banking hours.
And I just think about that crux point that we saw back March thirteenth when we were concerned about the Silicon Valley Bank and the rush to try and get payments through then and there to that point, I mean, what tumultuous twenty twenty three actually has been. I mean, I can't believe it's only about six months since that debarcle in the banking area for you, because you're launching these new products, because you're seeing the sort of level of innovation.
Do you have vcs knocking?
Do you have the new vcs that putting boots on the ground here in New York City knocking?
Well, let me start by saying our first investors were boots on the ground in New York before it was popular to be in New York City. So I'm obviously steadfast about believing in the ecosystem here. And yeah, there are people knocking at the door, I think because the importance of the problem and the job to be done is huge. That said, I think fundraising is a very
specific thing and it shouldn't be just done casually. And what I love about the current environment as there's time now built in unlike twenty twenty twenty twenty one, where you're deciding in a weekend between you and your investors, you can make a decision about what this is going to look like because you are signing up for a very long term, lifelong relationship with people are going to sit on your board, and we've endeavored to have our
board be at least fifty percent female. We've endeavored to have our rounds focused on having representation for female and underrepresented investors. And so I can't rush that process despite interest in.
The current environment.
I think it's really important to establish incredibly good relationships so that when you say, let's handshake and put capital into a business that's growing, you know that you're doing it in a way that's designed to fuel the next chapter and not just because that's what the environment is promoting today.
Okay, interesting, so you've got a real focus on a diverse board. I'm sure you're therefore also got a real focus on diverse talent. Is the talent from a tech perspective more diverse here in New York?
Do you look to hire in New York?
Do you look to just be sort of agnolstick as to where.
You people sit well ORAM is actually a COVID baby, which means during all of our growth and fundraising, we were doing that during pandemic time. So we do have the advantage of having both a footprint here in New York and the opportunity to think about our core value of diversity of thought through diversity of people broadly across
the US. I think the diversity of talent here is exceptional because people come to New York for some of the world class engineering programs and design programs that are based right here in Manhattan. And as a result of that, you have not only talent that's rolled out of other successful, well built companies that want to go back into earlier stage companies, you also have an influx of folks with
engineering talent coming out of the education system. And because New York is already such a diverse place, that naturally creates a population of opportunity. But we wouldn't I think we would be remiss in not looking broadly where we can find the most diverse talent to build frankly, the best team, and that doesn't always have to be from Stanford or Harvard. Diversity and obviously incredible talent comes from everywhere.
Well said Stephanie, it is great to have you here in the building. She's got a whole load of other
events to run off to. We thank you for it, Stephanie Kirkpatrick of AORAM great to get some fintech perspective there and talent perspective, and we want to dig into that angle a little bit more now because Spaniel Goodell is with US Chief Economist and indeed's hiring lab leading hiring platform, and I want to really get your assessment of what the talent pool looks like here in New York, in particular, how big an ecosystem, a bigger pool of tech jobs is it compared to the industries.
You know, overall. I think New York is unique in that has a larger sheriff tech jobs than we're seeing for the nation as a whole, roughly double. But keep in mind tech jobs still make up a relatively small percentage of overall jobs, and New York roughly five percent of all jobs.
Spaniel AI has had a pretty dramatic impact on cities around the world, frankly, you know, from a sort of wealth creation standpoint, job at creator standpoint, Caroline and I sit there and look at some of the job postings and the salaries on offer here in the Bay Area as an example, do you see that happening in New York as well, where there is a fight for talent and.
They're paying over the noise for it.
Yes, and no, you know, it's a good economists, I'll tell you the one end. On the other hand, I think taking a step back and looking at tech as a you know, as a category as a whole. There, we, particularly in New York, saw this extreme boom bust development happening. Right So, we saw during the pandemic a lot of tech companies hiring fiercely and demand for tech jobs was
very high. We saw that in R and D job postings and right around you know, early twenty twenty two, we saw that demand really start to scale back, and now tech companies have right scaled. We've seen a lot of action on the front, a lot of headlines where tech companies are going through layoffs and that particularly hits you know, software developers, engineers out there. And with that, we've seen actually job postings, particularly in the New York
metro area, really take a step back. Demand has really come down quite a bit, and now we're back to below pre pandemic levels. We're actually thirty percent below in terms of job postings in the New York metro area to where we were early twenty twenty. So we've taken a distinct tech step back on tech in New York, however, and this is a big however, you know what you're talking about in terms of GENAI jobs, they're really booming what we've seen there, and we've just came out with
a bunch of research. We have a GENAI tracker that we published and we look at jobs that's you know, really demand GENAI skills. So think about machine learning engineers, data scientists that can work with these algorithms for large language models and so forth. And there you see, off of a very small base, tremendous growth that you're really starting to see. There's a lot of demand there. And yes,
you're absolutely right. Those jobs are getting paid very well, and there's a small pool of people that have these skills to be able to work with these models, and they're in very high demand right now.
Spendier, our last guest, brought the thin tech perspective and that that's an industry that we do associate with New York given the sort of legacy finance industry there, But in which corner of the technology sector is the highest concentration of New York or East Coast jobs.
You know, we're seeing, particularly in New York, we're seeing a high concentration just overall in software development and full stack engineers, and we're starting to see that pick up in GENAI type type jobs. And of course New York has a lot of the fintech in there as well, given that it's New York, so we do see that
concentration there. But it's worth noting that remote work has really played a role here as well, because we have seen some dilution on that front, right because now the companies particular that are you know, have multiple you know, bases around the country, are able to diversify their workforce and also hire people in other locations and have them work from home and have their nearest office speak relatively close and dial into important things are happening in New York.
So partically on the tech front, we see that the share of remote jobs is very high and that has that dilution effect happening with that as well.
Espania, I know you have an economist hat, but I'm interested in your regulatory take, if you're read in on the idea that New York has in many ways sort of try to lead the charge on regulating around the youth of AI in hiring and ensuring that there isn't bias built into the system and that was I think brought in in April. How is that changing the landscape do you think for hiring here in New York?
You know, I think it's too early to tell exactly what, you know, how we integrate these new technologies, these new tools, because they're constantly evolving. How companies are using them as constantly evolving. And I do think that it's incredibly important to think about bias and how we.
Use these tools.
And you know, it's we often think about of AI is this own entity that it's being imposed on us and we don't know what to do with it. The good news is that we have all the control here. We're able to figure out how we want to apply it, where we want to apply it, and make sure it's applied in a fair and equal way across different industries,
across different people, across different jobs. And you know, from a policy perspective, that's really important, and now is the time to start thinking about these issues so that we can properly, you know, really use these tools to their greatest advantage without causing additional issues.
It'spania really great to get your take, and we look into that data that you provided on jen AI and jobs with thank you Spenn and Goodell to indeed chief economist and what for got coming up?
Yeah, well, technology jobs has been one of the stories of the year. Another has been Tesla's shares doubling in twenty twenty three. We're going to break down what's watching Tesla's upcoming earnings with former board member Steve Wesley from the Wesley Group. That's coming up next. This has been Burg Technology.
Let's get into tech earnings land.
Now we've got Netflix reporting today after the market closed. So much to monitor here from the company's push into video games, the writers strike that's impacted all the Hollywood of course, and still look, the co CEO, Ted Surroundos thinks Netflix has some good days ahead.
Just take a listen.
We've a ton of room to grow revenue from here, and I would say that we're pretty underpriced based on those kind of statistics of ten percent of screen time and five percent of revenue.
That was, of course at last weeks Bloomberg screen Time event in La where Ted Surrandos sat down with our very own.
Luca Shore Companies to say, joins us now, and so that room to run that revenue push. Are we going to see at this quarter?
Well, we'll find out in a few hours.
Obviously, they have spent much of this year instituting a roleing out two of their big news strategies. That's their advertising tier, which creates a lower priced option for some cost sensitive consumers, and the crackdown on password sharing, which amounts to a price increase for a lot of people. You know, One question on a lot of investors' minds and frank with a lot of customers minds, is whether Netflix is going to raise prices for its basic tier.
Again, there's been some reporting to suggest they will.
The executives have suggested as much as well. That's sort of what Ted surround Us I think was getting at there when he said that the company or they are underpriced. Whether they'll announce that after earnings today remains to be seen.
And Lucas that posted a perspective the ad supporting tier right because it will inform that decision on raising prices, And there seems to be a micro focus on Netflix's ability right now to sell commercials and feed its ads supported tier.
Yeah, well, we've just gone through or I think we're in the middle of advertising week in New York.
One of their senior advertising executives.
Peter Naylor, who came from Snap and was pre at Hulu, spoke and unveiled some new features, And I think the challenge for them in advertising right now is they just don't have a lot of scale. They've taken a different approach from from Disney and others.
You know, they have made it an opt in.
Kind of tier, which means you can choose to sign up for it, but existing customers see no change in their pricing. And Netflix hasn't been growing fast enough to add a ton of new customers to it.
But their approach is I.
Would say more customer or consumer friendly than most of their peers.
What about the gaming landscape, because this was an interesting area a focus for investors too.
You know, it's it still feels very early.
There was a pretty good piece in the Wall Street Journal earlier this week looking at the kind of the state of things with they're gaming. They've commissioned a ton of games, They've released a lot of games. We have yet to hear of any Netflix game that's been a
big breakout. They've been very cautious in their language around it, you know, talking a lot about this sort of walk, crawl run language that they like to use guesses that we're still a few years away from seeing anything meaningful from them in games.
All right, bloom Beerswig for sure, thank you very much. The other big name after market is Tesla. The stockdown four percent in the session, but remember it's up more than one hundred percent year today. Tesla's margins rapidly eroding, raising doubts about the viability of maintaining its sales growth after the TV makers started waging that price for I want to bring in Steve Wesley, Wesley Group managing partner, but also of course a former Tesla board member. Steve
the equation for Tesla has been really simple. They're happy to sacrifice the bottom line, cut prices, impact margins, but maintain fifty percent.
Annual growth growth.
The question for investors is how much profit erosion they're willing to take?
What do you think The answer is?
All right, now, they're just grabbing market share, so it's a slow corner. They delivered four hundred and thirty five thousand vehicles, down from a record for sixty six and Q two twenty four point three billion in rev new on track thirty five percent year over year growth and one hundred million dollar a year. That's not bad, but expect Tesla to come roaring back in Q four. Most people don't realize the IF cut price is twenty five percent in twenty twenty three and they're still profitable, so
our margin is compressed. Yeah, but you can now buy a Model three or a Model Y for roughly thirty two to thirty four k after rebates. That's less than the average gas powered card America. So Tesla's currently is like fifty percent of all evs in America. That's more than everybody else in the market combined.
I think they're going to have a record to Q.
Four deliveries, probably close to five hundred and fifty thousand. It will be big, at least one point eight one point nine million units for the year. But the big question is can they hold off byd and the Chinese makers. That's going to be the big SmackDown.
I hear your big question. I raise you one other big question. Is Tesla a car company or is Tesla a technology company? And what we're writing about in Bloomberg today is automotive gross margin forecast to fall from around twenty eight percent, which is like tech margins, to nineteen percent more in line with traditional car makers.
So here's the answer you may not have expected. Tesla is a car company. It's absolutely a tech company. The leader is selling over the air of software new features like autonomous driving. But they're also an energy company. And it is no should be no secret or surprise to anyone that the two dominant leaders in the EV vehicle world and every auto company is going electric. Make no mistake, the two leaders, Tesla and BYD, are also energy companies. So the big SmackDown here, the big battle is can
Tesla pulled off BYD. BYD is the clear leader in China, in South America and Mexico. In places where you're selling cars in the fifteen to twenty five thousand dollars range, Tesla obviously has a big ef advantage thirty thousand dollars
in uprange, but Tesla has thirteen percent net margins. BYD at four to five percent, those margins may come down a little bit, but as long as Tesla continues to grow at this rate thirty five percent year over year, I think Tesla's going to be in the driver's seed for a little longer than people think.
China is such an incredibly important story for so many across tech an ev thanks to see Wesley Westy, Greek managing partner and of course former board member at the EV Maker character.
Talking in the importance of China.
Apple CEO Tim Cook one backing from Chinese Commerce Minister today who told Cook that China welcomes Apple to benefit from the country's market and engage in quote win win development. Now this is all according to a sagment from the Chinese ministry. It all comes at a time when Apple's sales outlook in the world's number two economy look has
been under scrutiny. Meanwhile, as the US, of course, is tightening rules on AI chip sales to China, iPhone Maker and Fox Gone and Nvidia said they would build AI factories together. It's all according to the financi Times spots. Corn has been trying to diversify its revenue based from manufacturing electronics to building the computing infrastructure powering autonomous technology. See how we just tied that all in one beautiful bow.
Taie fu China and the impact on US tech. This is reely make Technology.
X, the social network formerly known as Twitter.
It's just begun testing a one dollar per year subscription fee for new accounts on the web that want to post or interact.
With other users.
Now, the company says the measure, which is called not a bot, has a potential to reduce spam, automated bot accounts, and manipulation of its service.
Ed.
This is all, of course happening overseas New Zealand. One of the test beds the Philippines as well, and Elon Musk called it, you know, one dollar a year to write, but you.
Read for free.
Yeah.
So when x first introduced subscriptions, the idea was that it disincentivizes people that want to be spam or bot account operators. Right, who pays nine dollars to have an account that has the sole purpose of being spam or a bo They're just doing it a much lower bar, one dollar. I don't know if that will work, but now they have a case study, and.
This is all about monetization. Of course, they got one point two billion to pay in interest payments. Bloomberg understands and in the Acarina already been articulating there might be a three tier subscription level that we're going to see.
Yeah, squeezing out dollars, but you know how pervasive a box on the platform. We still don't have a good handle on that. Must says they're down, but many of us experience them day to day.
Well said, that does it.
From this edition of Bloomberg Technology.
Though ed.
Yeah, recap the podcast and thank you for listening.
Wherever you get your podcasts.
From New York City and SF, this is Bloomberg Technology.