Samsung Inks $16.5B Deal with Tesla for AI Chips | Bloomberg Tech 7/28/2025

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Bloomberg Tech is live from coast to coast with Caroline Hyde in New York and Ed Lelo in San Francisco. [Music] This is Bloomberg Tech. Coming up, Samsung will produce AI chips for Tesla in Texas. A new multi-year deal worth $16.5 billion. Plus, the US and EU agree on a deal that will see the block face 15% tariffs on most of its exports, including chips and cars. >> And what to expect from the big tech earnings coming up with Microsoft, Meta, Apple, and Amazon all reporting this week. >> That is a huge market capitalization that we watch out for in terms of those mega caps coming with earnings. Ed, we're on tent hooks ahead of it. Look, we are fading some of the rally that we've seen in big tech today. We're still clinging on to gains, the NASDAQ 100 and a new record high. We're up a third of a percent, but those rallies that we saw in Europe have faded completely. We're in the red as that 15% tariff looks ugly on the EU side of things. But you're digging into the micro stories today. Yeah, Tesla and Samsung and this arrangement to make AI chips in Texas is driving markets. Tesla's gains have really accelerated up 3.8 almost 4% overnight in Korea. Look at Samsung shares. It's for the AI6 chip, the next generation uh of full self-driving silicon that goes into the vehicles. Samsung already does quite a lot with Tesla on prior generations and at the same time Tesla has some diversifying and some hedge with TSMC, but this is a big one and Elon Musk has been talking about it on X, of course. >> Funny that. Well, let's get the inside track with Peter Strom who joins us now for more on this. This is a vote of confidence in Samsung's chip manufacturing when it been losing market share. Peter, >> yeah, that's exactly right. Uh Samsung of course makes a whole bunch of things including smartphones. They've really made most of their profits though recently out of their semiconductor business. They're the leading maker of most memory chips out there. Um but they've been trying to build this foundry business so that they could compete with TSMC, compete for some of that high margin business from the likes of Nvidia and Apple. And now what they've got is really a marquee customer in Tesla where they can point to them and say, "Hey, Tesla is trusting us with the ability to make their high-end chips, these AI6 chips as as Ed was mentioning earlier, which is very important for their self-driving uh technology, which they hope to really bring on and force next year and the year after. So for Samsung, this is a big step forward. Uh it is a decent amount of money. Uh as we were talking about, it could increase their growth in the foundry business by about 10%. But probably more importantly than that is the strategic importance of being able to say they have this big marquee customer for the foundry business. >> Bloomberg broke the story that it was Tesla that was this at that time unnamed marquee customer. And it was interesting because Elon Musk actually gave us a lot of detail on social $16.5 billion over multiple years but Musk seems to be indicating it's bigger than that. And also Peter he talked about why it's important that it's in Texas. He seems to be suggesting that his proximity to the fab means that Tesla can be involved in the engineering and the ramp, but that he himself can wander the the lines himself, >> right? Yeah. How many businesses can Elon Mus Musk get involved in? Now, apparently, he's going to do semiconductors, too. Yeah. It's quite interesting that he has said he he uh says that this deal allows him to be able to be personally involved, intimately involved, to be able to walk the lines and help with production. I don't know how much he knows exactly about semiconductor manufacturing, but you can imagine that having such an important customer there on premises is going to put some pressure on them to be able to build out quite quickly. Now, it's important to kind of step back here. Of course, the US has been trying to rebuild their semiconductor industry for a number of years. We saw the Biden administration come out with the chips act that offered $39 billion in incentives. Samsung is one of the big beneficiaries here. And one of the reasons that they're expanding their capacity in Texas is specifically so that they can supply US customers. They're going to skirt their way around the Trump tariffs uh if they're able to produce within the country and Elon Musk will be able to go there to Texas to be able to try out some of these things and then use them in the self-driving technology. So it is a step forward for that chips act and that effort to kind of rebuild the domestic industry. TSMC and Intel are both also beneficiaries of that effort. It is interesting though, isn't it, that it is overseas manufacturers building in the US that are able to make big tech win in terms of the chip supply chain. What surprised me was also how integral of course Samsung is once again to the Cosby. I think the Cosby, the South Korean index is one of the best performers globally this year. SKH Highix has a lot to thank for it as well, though, >> right? Yes. SKH Highix has jumped out ahead in the the memory chips that are most used for AI, these HBM memory chips. They've actually gotten quite a bit of Sam ahead of Samsung on that front, which is a bit of a blow to Samsung, but Samsung is making some progress kind of climbing its way back trying to get um authorization to be able to sell those HBM chips to Nvidia, which is the most important partner at this point. But your broader uh point, yes, it's really TSMC has been leading the way in advanced chip manufacturing. It gets that high margin business from Nvidia and Apple right now and many other customers. There were many hopes within Washington that the next competitor in that foundry business would be Intel. They have not made that progress. We saw that last week in the earnings report and Lip Bhutan's questions about whether maybe he's going to pursue that foundry business. But we're seeing that Samsung is emerging as probably the the strongest alternative to TSMC. Everybody in the industry wants some uh competition in that market. They don't want to just have TSMC making the most advanced chips in the industry. They want to have some alternatives. Whether it's Samsung, whether it's Intel, whether it's somebody else, >> got a lot of questions about those alternatives. Bloomberg's Peter Elstrom, thank you very much. Let's dive into all of this with Michael Green, chief investment strategist and portfolio manager at Simplify Asset Management, which has over 8 billion in assets under management. And it's interesting. I I want to take advantage of the timing, Michael. Last time you were on, we were talking about Elon Musk alienating himself from both political parties, if you remember. Now, this is an example of uh a leading American company, an individual in Elon Musk doing a a big big deal over multiple years with a foreign technology company to onshore industry in this country. What do you make of that and the economic opportunity it presents? >> Well, I think this is actually the the tension that exists, right? onshoring into America, particularly bringing back high value added tech tech manufacturing like chips that's not going to overly stress the labor force that has relatively low employment levels but a large fiscal impact and a large economic impact. This is fantastic and it's exactly what we would hope to see under a Trump administration raising the costs of companies doing business abroad and shipping stuff to the United States. How successful it's going to be as as was alluded to earlier. These are two companies that are both kind of struggling in their respective fields that have announced a major investment. Um, is it enough to, you know, bring both companies significantly higher? Clearly, the stock market thinks that it's helpful. I don't see how it's not. Um, but it still is something that remains to be seen in terms of its long-term impact. >> Of the contract manufacturers, we mentioned Samsung, TSMC, and Intel. Which do you like and why? Well, the quick answer is is that I'm a strategist. I don't spend as much time on the individual securities. It's very hard to argue with TSMC's overall technical lead in the space. They have managed to build an extraordinary business that has slowly taken out competitors like Intel and for that matter Samsung. Um, you know, they're all extremely capable. This is an industry with tremendous growth. But if you're putting bets on on change, you have to look at companies like Samsung, etc. to undercut or Tesla. The whole story effectively is is that increased competition is coming for both TSMC and Nvidia. I think that's probably the biggest takeaway on this. >> Give us the broader context here then as a strategist as well, Michael, as to how overexposed investors are writ large on the semiconductor space, semiconductor equipment more broadly. I'm looking at how Goldman at the moment is saying the US prime book is really heavily weighted and overexposed to that and we've seen hedge funds in particular dial back ahead of earnings. >> Yeah, you you definitely have seen that and one of the factors that we've seen in this rally as it has extended off of the April lows has been extraordinary retail participation and dramatic increase in the quantity of margin that is being utilized and equally important a dramatic decline in the quantity of short interest. That's really what's hitting the hedge fund positioning because they tend to have that bias of being long the more quality oriented names short the shorted names that's causing distress in the hedge fund space that I think is causing them to take all exposures down as compared to isolating to particular risk for those leading companies. I think most people anticipate that this earnings report, this earning season is going to be relatively favorable if for no other reason than the stocks are near all-time highs. That lowers the incentive to introduce special charges or anything else that you would you would classify. So, I I think most people are actually expecting a pretty good earnings season. >> It's just the market conditions are extraordinarily difficult for hedge funds right now. >> They got to be pretty perfect these earnings for us to live up to the hype in a way, Michael. What's also so clear is that hedge funds have been underexposed to software to services. Does that change in the near term? >> Well, I think ultimately that hedge funds are going to follow whatever is working. So, if it if we continue to see underperformance in the high quality uh hardware space or the um impressive performance that we're seeing from cyclicals right now versus defensives, you will see hedge funds ultimately rotate because they are more interested in making money than they are in being right. Oh, there's always the quandry. Michael Green from Simplify Asset Management putting it straight on where the focus has to lie for hedge funds right now. Coming up, we thank him and we move over to Victoria Espanel of the business software alliance just talking about how software has been a bit unloved. But where are we going to be seeing the differences in regulations across the globe? How is that impacting software companies and the approach to AI? This is Bloomberg Tech. [Music] [Music] So, I just want to congratulate you. I think it's uh I think it's great that we made a deal today instead of playing games and maybe not making a deal at all. Well, I think it's uh I'm going to let you say, but I think it's the biggest deal ever made. >> That was President Trump there speaking in Scotland. Many of the details from the US EU trade deal are still to be announced. The semiconductor industry, though, rallying on the news that it will not face a separate tariff rate. Instead, it will be included in the 15% rate applied to all EU goods exported to the United States. want to get out to Washington DC and Bloomber's Kaylee lines. Give us the details of what we do know what was agreed and the president saying there it's the best deal he's ever done. >> Yeah, the biggest deal ever made to use the president's uh words, Ed. I'll leave that up to determination as to whether or not that is actually true. But of course, this is a big win for Europe which was facing the threat of a 30% tariff come Friday, August 1st, if this deal was not struck. 15% obviously a much lower rate than that. And key here is really the fact that they got that 15% rate to apply to sectors in particular, not just automobiles, but as you mentioned also semiconductors and pharmaceutical tariffs, which of course there is a section 232 investigation underway into both of those sectors already in which the end result could be that other non-EU countries face a higher tariff rate than that uh on those specific uh materials. Europe was able to secure a 15% rate that will be applicable effectively across the board with the exception still of steel and aluminum which of course faces a 50% tariff. Key to doing so we understand though no details are yet on paper. We haven't actually gotten a formal uh readout or or full list of what this deal actually will entail beyond what we've been told and what officials familiar have told uh Bloomberg. But key according to sources familiar with the matter was the fact that Europe has also agreed to make more investment into the United States as part of this deal including $600 billion investments into the US and $750 billion of purchases of American energy over the course of the next several years in addition to what President Trump described as vast purchases of US military equipment. So all of that is what we understand this deal to essentially look like in the broadest of terms, but we're still waiting for that granular detail. And of course we assume and understand that there's a carveout for chip equipment in particular where they face a zero tariffs in ASML is on the higher side. Kaylee, what's really interesting is pushing us forward is what this 15% number means for the China negotiations. That's actually happening in Sweden, we understand. >> Yeah, they're underway in Sweden right now. It will be two days of talks spearheaded by uh Chinese uh Premier Tong as well as the Treasury Secretary Scott Besson. They are underway. China of course already uh is facing a higher tariff rate than most. 20% is the level specifically applied uh in retaliation for the trade of fentinyl. That is going to be something specifically that we understand is one of the focuses of the US at these talks. They're going to be uh talking about whether or not China is actually able to tamp down on the flow of fentinel out of the country. Though China obviously disputes that, saying it's a US domestic problem. But in addition to trying to get that tariff rate lower, which there may or may not be progress on, the real crux of these talks, as has been for the previous iterations of this, as we've seen multiple uh rounds in the last several months, is going to be around export controls. On the US side, of course, that includes export controls of uh critical technology, including semiconductor and equipment uh for the manufacturing of that. We've already seen some easing of that with the allowance of H20 chips from Nvidia to start flowing back uh into China for export. But on the Chinese side, it's really about rare earths and critical minerals that of course they have a chokeold uh on at this time. And it was been the easing of the flow of that allowing uh American importers to get the licenses to actually bring those critical minerals in that has been critical for advancing uh this this at least day shall we say forward which is also going to be one of the key pushes for these talks. The Treasury Secretary Scott Besson indicating one of the primary outcomes they're looking for here is an extension of the current truce that is in place beyond the deadline that currently stands of August 12th. >> Been important for Nvidia's H20s as well to get back into China. Bloomberg's Kaylee Lines brilliant wrap-up of all things trade. But let's get more on how these deals and indeed developing global regulations for artificial intelligence are really impacting developers. Victoria Espanel with us, CEO of the business software alliance. And the context here, Victoria, is one of the AI action plan announced by the US government really to take on China and the AI race that the US wants to win. From a regulatory perspective, how do you think the US is winning or not? >> So, um I think there's a lot of good that's in the AI action plan, but here is one part. You know, there's a lot of conversation about who's going to win the AI race, and a lot of that focus is on who's going to be at the cutting edge of innovation, and that is obviously important, but a conversation that is just starting to happen that I think is will potentially have an even bigger impact is who is going to win the race on AI adoption. By that, I mean, which are the countries that are going to figure out how to use AI best because it is those countries that are going to see the biggest economic benefit from AI. that is the race and that is that is largely up for grabs right now. I think the United States has an advantage there and I think the AI action plan has a number of aspects that are focused on adoption. Um but that race is up for grabs and I think that is going to be uh a big indicator of where we see the biggest economic benefit over the next decade. So enough focus therefore from your perspective on AI adoption on training talent to ensure that in enterprise we're actually getting bang for our buck productivity actually goes up and to the right. So there are a few aspects that I think are critical to AI adoption. Um and actually at BSA we released an agenda just before the AI action plan came out earlier last week that focuses on three aspects. One is talent and workforce and that is that is critical. I think there's no aspect more essential. The second is infrastructure and data. And the third is the governance framework and making sure that we get that right. And those three elements are things that the United States but governments around the world need to be figuring out right now if they are going to win the race on AI adoption. Victoria, last week on the program, Michael Katzios, who leads the the Office of Science and Tech at the White House, came on and he talked about um packages that he sees America being a net exporter of everything in the stack from hardware through to to the models themselves. You were talking about adoption a moment ago. How does America as an exporter of AI fit into that? >> I think that's a critical piece. So a lot of the innovation is happening here in the United States for governments to be able to adopt AI to have their private sector using AI in a way that they get the most economic benefit. A big piece of that is going to be um AI exportation from the United States. And there was, you know, conversation last week about the data centers and the chips, but obviously an important element of that is the software and the cloud services because it is literally not possible to adopt AI unless you have cutting edge cloud services, unless you have cutting edge software and a lot of that's going to be coming from right here in the United States. >> There was also a discussion about uh copyright and the president talked about this during his address. Given that you you kind of represent more the software side of the stack, how did you think about that? You know, Cara and I, it increasingly comes up in the show as a point of priority particularly for the frontier model or just model makers generally. >> It's a big issue. It's an issue here in the United States and in other markets as well. So um as you know in the white high in the AI action plan that was released last week um there's not a lot of discussion of the copyright issue specifically but um the president in his public remarks spoke to it quite forcefully in terms of the importance of training data and for the AI LLM builders to be able to get that training data and use it with relative ease. So he was very very clear on that aspect and that's something that we are anticipating seeing the White House say more about in the next year or so. But the president was very clear in terms of his opinion on the importance of training data and how important that is for the United States to stay ahead of the AI race with respect to China. >> Briefly, Victoria, today's a day we focus on the EU. It's smarting today in terms of competitiveness. They're worried about 15% tariff. How much should they be worried about their own EU AI act on competitiveness? >> So again, I think the the EU has huge potential opportunity to benefit from AI if it starts focusing on adoption and part of that is addressing some of the digital sovereignty barriers that the EU has put up. Um there are aspects of this trade deal as you know um the details of the trade deal are not yet fully public. Um but Ambassador Greer was talking just this morning about looking at things like mutual recognition of cyber security of streamlining regulations of steps that Europe can take and those steps are important not just for US software providers but for the EU if they are going to be able to adopt and use AI effectively. >> Victoria Espanel, CEO of the business software alliance. Thank you very much. We have some breaking news crossing the Bloomberg terminal. Figma is boosting the pricing of its IPO to 30 to $32 a share. It previously seen the IPO at 25 to$28 per share. Remember Figma is trying to raise just above a billion dollars and they had this kind of auction style process where they went to prospective investors and said how many shares do you want and how would you price them? The logic being Carol that they want to try and get near to that $20 billion valuation that Adobe had valued the company at when it tried to buy it. Now, the IPO, which we think will price on Wednesday, to recap, pricing between $30 and $32 a share. We'll keep a close eye on it throughout the week. >> And that previously marketed range had it at a market cap of about 16 billion at the top end. So, we do the math. Coming up, AI competition sees the rapid releases of free open-source models. More on that next. This is Bloomberg Tech. It is time now for talking tech and first up, OpenAI rival Jepu has released its biggest open source models to date. Now, the Chinese startup unveiled hybrid reasoning models, GLM 4.5, GLM 4.5 Air. It's the latest update to the company's flagship models as it joins a growing number of Chinese firms ramping up free AI offerings. Plus, PayPal, well, it's set to allow businesses to accept crypto at checkout. Over the coming weeks, the company will introduce more than 100 cryptocurrencies like Bitcoin and Ethereum as payment options for merchants. According to PayPal, the pay with crypto transactions settle instantly. While initially cost 0.99% per transaction and TDK, one of the biggest suppliers of iPhone batteries, says it is closely monitoring the tariff impact globally due to their worldwide operations and the importance of relative tariffs compared to other countries. And the TDK CEO spoke exclusively to Bloomberg about how the company is seeing the trade deal between US and Japan. >> We'll need to keep monitoring the other cases not only you know limited to here in Japan but also the other countries. I hope that the impact right will be is going to be minimized but uh it's actually out of our control. the TDK CEO there. Now, coming up, tech IPOs could be making a comeback. We speak with Matt Wither of Wellington Management on the landscape for going public. A conversation that you do not want to miss. That's right. Next, this is Bloomberg Tech. [Music] Welcome back to Bloomberg Tech. A quick check in on these markets that are still at record highs when you think about the NASDAQ 100. But we are fading this rally a little bit, up 310 of a percent. We've got 11 trillion worth of market capitalizations on deck this week in terms of earnings. We've also got a lot of micro data, not to mention trade. Remember, August 1st, end of this week is that so-called deadline for the tariffs. And we get some clarity on tariffs with the EU, 15%. Germany, it's smarting. It's feeling that's anti-competitive to some of its key industries. We're off by a quarter of a percent. But dig into some of the details and the individual movers. I want to shine a light that the market capitalization for Nvidia is once again climbing above that $4 trillion level and it was key contributor to the upside of these benchmarks. Tesla 2 in terms of points up 3.6% 6.5 billion deal to make chips via Samsung in Texas. The AI6 chip is on deck and that is both embolding in Tesla investors as well as Samsung today. for ASML up two and a half% key semiconductor equipment maker there's a carve out 0% tariffs for these sorts of parts of the chip sector and we also get clarity that look semiconductors will face that 15% tariff for the time being Ed on a Monday morning sometimes you just got to look at the calendar and just say all right what am I in for this week well investors are bracing for a busy week of tech earnings with Microsoft Meta Apple and Amazon all reporting in a 48 hour 24-hour period. Bloomberg's Carman Rienki is with us. And Carmen, I have to congratulate you as well because one of the best headlines I've seen on the Bloomberg terminal. S&P 500 rally faces 11 trillion dollar gauntlet of big tech earnings. Uh the headline tells us the story, but we're braced for a very, very concentrated and busy period. >> Yeah, it's true. So, we have Wednesday and Thursday are the big days this week. And honestly, we're going to see a little bit of the bifurcation, I think, that we've seen in the MAG 7 this year really play out this week. So on Wednesday, we have Microsoft and Meta, which have been two of the biggest point leaders on the S&P and really driven the rally, especially from sort of that April trough that we saw. Those are going to report on Wednesday. And then on Thursday, we have Apple and Amazon. And these two companies have been under a little bit more scrutiny. Investors aren't quite as sure. Amazon, I think, is about flat on the year. Well, Apple stock has rallied a lot from April. It's down about 15% year-to date. So, people will really be watching to see especially what they say about AI, what their plan is for using artificial intelligence going forward and also what the impact is with China. They are the company that has the most exposure especially out of the magnificent 7. So can you come and detail a little bit of how investors are going into this week that we know that hedge funds have actually been dialing back some of their exposure to some of the big tech names because they have been such winners and because valuations are so high. Have we seen a little bit of more caution coming into this? I think so. I mean the bar is set so incredibly high and something that's interesting is that earnings expectations have actually come in a little bit for this group of companies from the last report. I think they're expected to deliver earnings growth of about 16% quarter over quarter down from 19%. So there is a little bit of a lower bar in terms of like clearing it. But that makes it all the more important that these companies do beat and raise especially to extend the rally in their stocks. They really have to prove that they can deliver and that their valuations are worth you know paying for. As you said they're very stretched. Um some of these companies are at or near all-time highs. Um, but we also have a second group of companies that are not like I I just said Apple, you know, is still 15% off its all-time high. Amazon is off its record high. Those companies also though have to deliver and they could be really important to extending the rally in the S&P. You know, Apple is one of the biggest companies in the index and so if it, you know, think about where we could be if it were to pick back up and sort of see a reinvigoration in its stock. So people are definitely really watching the earnings this week and I think just there is a very high bar as always for these companies. >> Common just give me a little bit more on on those latter points. There's two charts in the story about the points contribution of the key names to the upside and the downside which I think is a beautiful illustration of the story but also profit estimates MAG7 stripped out from the S&P 500. >> That just sets a really high bar like what if it all goes wrong for Microsoft later in the week? Uh then at the index level we're going to have some I don't know let's call it turmoil. >> Yeah definitely. I mean we know that these companies are the heaviest weighted. They are the biggest point gainers. So Microsoft and Meta I think are two and three. Nvidia being number one. So of course there could be huge ramifications if these companies don't deliver. We've also seen from last week with Alphabet and Tesla that companies that do beat and raise are getting rewarded. They're seeing their shares go up while companies that don't are getting punished by by investors. they're, you know, selling off. So, it's super important going forward and um it'll be really interesting to see how it plays out. >> Carmen Ranicki, we thank you so much. A week to brace ourselves for let's just stick with the public markets. Let's talk about a potential newcomer. All eyes were on Figma going public this week. Figma now seeing its IPO pricing between $30 to $32 a share, increasing the size of its offering to about 1.2 billion and a fully diluted value of as much as roughly $18 billion. So tech IPO is coming back. Let's discuss it with Matt Wala who leads latestage growth at Wellington management which got a cool $1.3 trillion in assets under management. Part of that is private and that is under your remitt Matt. Are we going to see the windows crack open broader because you sat here in August of 2024 and we were hoping the same thing. We were hoping that and I think where we sit today is the VC backed IPOs are coming and you see it in Figma and I think it's because we really had three conditions met in the past year. The first one was we had stability in interest rates that kind of started at the end of last year when the Fed said that they're not going to raise anymore started to cut and now forecasting to cut some more. So first thing was rate stability. I think the second thing that we got was we had a public market that is relatively stable >> and at records. >> Yeah. All at records and with a VIX that's at a 12-month low almost. So stability in the public markets despite the bump in April. And then I think the third piece that we had was we had companies actually go out and go out successfully. We had Circle, we had Coreweave. Both those are up big. And we also had smaller companies, companies like E Toro and Omada Health that performed very well in the public markets. And so those three conditions I think set up for a really exciting back out for this year. >> A lot of those had flavors of regulatory tailwinds when I think of crypto or the AI trade that just keeps on being a winning formula. Do you need those within the portfolio companies to go public or do you just need to be profitable revenue generator? I think you need to to benefit from some of those trends that you mentioned before. I mean, I'd point to Figma, which as you just discussed, raised its range. It's not a pure AI play by any means, but does and will leverage AI and its capabilities. And I think that that helps promote and will help pricing of these companies as they go out. >> Matt, it's really great to have you back on the program. We were just reflecting on the mechanism that Figma's using. We're calling it an auctionlike mechanism where they go to prospective investors and they say, "Well, how how many shares do you want to buy and what price would you set?" Which which I'm not as familiar with, but if you are like a late stage growth investor, right? You're almost like an anchor investor going into some of these companies preo, how do you respond to the auction so to speak? >> Well, I think you have to respond to where the market is setting the price. And I think that in today's environment with as we discussed a market backdrop that is kind of at all-time highs, the response that the collective group will make, I think is such that it will continue to raise pricing expectations for high-profile companies that are benefiting from AI to some degree like Figma. >> I called you an almost like anchor investor. When Wellington's name comes up in my world, it's kind of like that late stage that's preIPO. Is that your strategy, Matt? >> That's right. Let's find the next generation of great public companies and invest in them while they're private because these companies 20 or 30 years ago, companies like Figma would have been public. They would have gone public at a billion dollars of market cap and grown to the 18 billion that they're now raising their uh expected market cap to and done that in the public markets, not in the private markets. But if you look at how the market's changed, the market has changed such that these companies are staying private longer. Not foregoing an IPO, just delaying the IPO. And that's the role that we can play is to help those companies go from great private companies to great public. >> I mean, Cler, we all still wait and we watch and that's in your portfolio business. But what I'm really interested is as a late stage investor, what are the metrics now? because these companies fueled by AI are growing at such a rapid rate that suddenly they're already 100 million AR are generating in in but a few quarters. What meets your criteria? >> I think it's a great question and something we talk about a lot because as you point out AI is just fueling so much revenue growth at unprecedented pace. If you think about a company in the model space like Anthropic, they're rumored to have gone from a billion of ARR to 4 billion of ARR in 6 months. So 4xing their business at scale. So what do we look for? We are really focused on companies in the AI space that we think can be both durable and defensible. So durable meaning can these companies be ongoing businesses not in six or 12 months from now but in five or six or 10 years from now and then defensible can they build on top of something that is not easily copyable. >> Right. And then I think of data IQ, glean, vant, some of the rounds you have recently led. A lot of it's in the enterprise. Is that really the sweet spot at the moment? How we bring generative AI productivity into enterprise rather than consumer for you? >> I think that is a really key observation which is how does the enterprise software stack benefit from AI and really leverage AI? >> Matt with Wellington Management, it's really good to have you back on Bloomberg Tech. Really appreciate it. Now, coming up on the program, we're going to hear from Alibaba Cloud founder Wang Jian as the company navigates a global AI talent war. You don't want to miss that one. This is Bloomberg Tech. [Music] Now, Ed, over the weekend, did you see it? China hosting the World AI conference in Shanghai. Look, we got to show our audience robotics front and center. Some of them boxing like we see here. Some of them pretty messily dispensing drinks. They're even playing the piano. But Ed, like you're the person sitting down there with some of the leading robotics and humanoid makers here in the US. And it's interesting that in the story they're really really articulating the US isn't there with a cost effective competitor right now. >> But with this event in China, right, there's the bit that's for show. It's just like CES or GTC where you put all of this cool tech in one place. But the forecasts are that this is going to be an industry in the trillions of dollars by by 2050, 2030, whatever. The the skepticism in the story, which I really appreciate, is like how much is this is translatable to the real world? But China, as we keep hearing from Jensen Wong and everyone else, has has leading researchers in the field of AI and an amazing supply chain for robotics because they can control it domestically. That seems to be a big theme. >> It is. And a shame we didn't get too many back flipping dogs in that video for you in some of those pictures, but apparently they were there. >> Yeah, the the robots are coming. Uh the battle for AI talent is creating huge pay packages as Silicon Valley and Beijing battle for AI dominance. Bloomberg's Annabal Druler spoke exclusively with Alibaba cloud founder Wang Xian on the global AI talent war. >> I don't think it's it's the let's see it's a typical way of doing things. Okay, I will see that the reason very simple you know is my own example when I when I start uh the the the Alibaba cloud you know the first thing I did that was in 2008 the first I did v the Silicon Valley and to try to get tenant okay >> and uh and after talking all the people and you realize actually we don't have much tenant there because it's Okay. >> So, and also with some of the talent it's just too expensive. Okay. And uh to expense basically means okay uh you don't know whether the competence is there >> when need high when need people. So it's really about the innovation. So when you're in the early stage of innovation, I don't think the talent is a problem because you know have the only thing you need to do is to get the right person >> not really is the expensive person because if the new business uh if this true innovation that basically mean the talent nobody care about them okay >> other working on that >> so for the today what happened for the like matter is because they are very much focused on the existing success of the business and existing establish of technology that's the that that's that's that's my view okay so I think we have a tremendous opportunity to look at technology nobody knows today and these talent these are talent but but these are I I I can't say it's cheap but but it's you it's available for you okay so that's really about the vision you know where you want to where you want to go and uh there's a lot of similar things you know happened during the last 20 years also whenever everybody knows that these are talent and uh it's better for you not to get in >> and at least that's not new that's that's my that's my so like uh personally that I hide the sojing now he's head he he's a leader for the queen okay the We met him you know when you were in Hanzo you know I personally interview him you know 15 years ago and we got talented now he's leading the queen >> yeah but so that that that's >> so there's not really there's not really any justification then it sounds like you think for for such >> you you that's not you know what the math you know I'm sorry that what what the what happened in Silicon Valley is not the the the the winning formula that's what I >> that's But I believe you know. Yeah. >> Alibaba cloud founder Wangjian there speaking with Bloomberg's Annabelle Drooers. And let's let's stay on those rather expensive AI hires happening at Meta. It is named Shangjia Jiao its chief scientist for its new super intelligence AI group. Jiao joined Meta in June from OpenAI. For more let's bring in Kurt Wagner. And let's just go through the leadership here because there's Alexander Wang of scale AI. Then there's a chief scientist and Yan Lakum is somewhere as well. Yeah, that's right. It's been a total reorg Caroline in the last couple months. So, there's obviously Mark Zuckerberg at the top and I do mention him specifically because he's incredibly hands-on with it when it comes to Meta's AI related projects. Uh Alexander Wang, the scale AI co-founder who they just sort of brought over in June after that massive investment they made in scale AI. Uh Shang Jiao you just mentioned is the new chief scientist of the super intelligence labs. Um basically that's the group internally that's going to hopefully for meta develop this new model that will be super intelligent right that will achieve that human level capability and then Yan Lun is still at Meta he is still a chief scientist by title as well he is running the fair group which is the AI research division of Meta uh they were very clear over the weekend and and on Friday that Lacun is still there still doing the research for Meta >> I'm grateful you you talked about Zuckerberg's role, right? This announcement at the end of last week was on his social media platforms and channels personally. Do we know if the team is finished? Like the Avengers been assembled and they're they're done now or are they still out there in the marketplace trying to find more people? >> I believe they're still hiring. Uh when we originally broke this story back in June that the super intelligence group was being brought together, we had heard that there were going to be around 50 people was the target. I've been keeping a spreadsheet, Ed. I'm up to like 30 or so. So, you know, we're maybe a little over halfway done. But, um, I do think clearly they're at a point where they feel that they have a large enough group that they can start talking about this publicly, start talking about the chief scientist, things like that. But, I don't think we're necessarily at the end of the road uh for hiring. I would think they would hire, you know, no matter uh how many people they get if they're getting good people. I think Mark Zuckerberg has made clear this is a collection of talent and I'm not sure that he's going to simply be like, "Oh, we've hit 50, therefore we're going to say no to other good people. I'm sure they'll bring as many good people in the door as they can." >> We're actually about to talk a little bit more about earnings and lots of investors thinking that the cost of talent is going to be something that comes up. Bloomber's Kurt Wagner, great reporting. Thank you very much. Now, coming up, what to expect from the big tech earnings that are coming up later this week. There are many of them. They're important. We'll be right back. This is Bloomberg Tech. [Music] Let's get back to the big week of tech earnings ahead. And here to talk about what to expect, Bloomberg's Ryan Blastella. And and across the equities team, we've done a lot on the terminal this morning to get us ready for the week. Let's just start with the calendar. what's coming our way over the next four or five days. >> Hey, thanks for having me. So, we have four real highlights coming out this week. Uh we have Microsoft, we have Meta, followed by Apple and Amazon on Thursday. So, four of the Maxifen 7 following Alphabet and Tesla last week. So, obviously just a huge week for earnings. Uh we're going to get a lot of detail about AI, about growth rates. Uh we're going to get some more insight into the impact of tariffs. There's going to be a lot going on this week. >> There is. And I'm wondering how analysts and investors alike have set themselves up for what ultimately has to be perfection. It feels like if you're Alphabet or Tesla or anything to read across from >> So I would say that when it comes to Microsoft and Meta, both of these companies have been performing extremely well this year and these are two companies that are really seen as being at the cutting edge of AI and among the companies that are showing among the early benefits uh in terms of an ROI and all their AI spending. Now, we're going to be also looking to see how much these companies are spending going forward. Their capex plans are going to be a real focus this week. Uh last week, we did see Alphabet come out come out and really increase its capex target. Market seemed pretty okay with that, suggesting that if they're able to justify this level of spending, they're not going to get dinged by that. So, that's a real focus for Meta and Microsoft, which I believe both report on Wednesday. >> You also have a street wrap on the terminal about uh the sellside sentiment toward Apple. How is the feeling right now about the iPhone maker ahead of later this week? >> Yeah, so Apple is the one where I'd say the sentiment is by far the most negative. There are sort of a lot of headwinds that are being stacked up against it. It does not really have a strong AI strategy or product. It faces the most exposure to tariff related issues. It hasn't been growing uh you know certainly not at the pace of some of its big tech peers for quite an extended period of time. and the valuation is still on the higher end of things especially relative to companies that are growing much faster. So certainly the picture there is a lot more cautious. I guess the uh the flip side of this is maybe it's a lower bar. Maybe expectations are so low that they're able to kind of jump over that. But that's one that I think there are a lot of question marks on this quarter. >> Meanwhile, after the bell tomorrow, we get Spotify which is up 56% year to date. Ron Vaselica, we have you across all the earnings. Thank you so much for breaking it down. Meanwhile, that does it for this edition of Bloomberg Tech Head. >> Yeah, I feel like there's a lot of tension in the week. Like, we've really set it up to be huge. Recap some of that hype, maybe some of that excitement for the week to come on the podcast. You know where to find it and all the platforms. It's everywhere. But, I don't know, that's just how it feels. It feels like everything's a little bit tense. >> Macro, micro, earnings, got a little bit of tariff anxiety coming into August the 1st. There's plenty to digest. Stick with us for the week. This is Bloomberg Tech. [Music]