AMD Soars on Blockbuster AI-Fueled Forecast

I'm Francine Lacroix, an award-winning journalist, and I've got a new podcast, Leaders with Francine Lacroix from Bloomberg Podcasts. I've interviewed everyone from heads of state to fashion icons about the news of the moment. But I've always been curious, who are these people as leaders? I don't think there's one right way to be a leader. Make decisions. A poor decision is always better than no decision. Listen to new episodes every other Monday. Follow Leaders with Francine Lacroix wherever you get your podcasts. Bloomberg Audio Studios. Podcasts. Radio. News. Bloomberg Tech is live from coast to coast with Caroline Hyde in New York and Ed Ludlow in San Francisco. This is Bloomberg Tech coming up. Our AI enthusiasm is back as AMD rallies on a blockbuster forecast and NVIDIA inks a deal with fiber maker Corning. Plus, Disney posts stronger results than expected thanks to improved profitability and its streaming business. And we speak with Uber's CFO as the ride-hailing platform posts a second-quarter outlook that also beat expectations. First, we return to these markets that are risk-on. Look, a lot of that has to do with geopolitics. There is hope of a de-escalation between Iran and the United States. Could a deal be getting closer? The market trades on that. Stocks rise higher and indeed bond yields pull back. We see a move in the dollar too. Oil on the downside means we're up 1.4% on the Nasdaq 100. But there's a whole host of other news as to why technology stocks are on top. And it comes from earnings and AI ambitions. We've got AMD pumping up 15%. Once again, taking the breath away from investors. Then not only are we seeing GPU traction, but CPU is seemingly on fire. despite, of course, also concerns about memory. We're still seeing growth in that trajectory. And NVIDIA, up 4%, managing to play a bit of catch-up after it's sold off for the last few days. But that's as they ink a deal with Corning. They could be buying up to $500 million worth of shares. And it's all about optical fibers. It's all about the AI data center too. So let's talk AI infrastructure with a man who's been doing it for years, Ian Kings, with us in First AMD. Lisa Su managing to show that the total addressable for the market, for CPU in particular, really on fire as well as GPUs. Yeah, no, you're exactly right. They put out earnings that were sort of pretty good, not as maybe exciting as some had hoped. And then on the conference call, she gave a very bullish projection for the CPU, which is one of their core parts, a part that's kind of been neglected in this AI race and said, look, things are really strong there. And guess what? In this current quarter, things are going to be up 70% for that particular business. And that was affirmation of what a lot of other companies have said. Wow. I mean, how is she navigating some of the issues that we've seen from a supply chain perspective, some of the memory issue that, of course, hits the PC side of the business? Yeah, I mean, she got a lot of questions on the conference call exactly on that point, as you would imagine. And her answer was like, look, we've seen this coming. We've been working really hard. Guess what? If you're a memory chips player, you want to be selling this extremely expensive memory to me and to data centers. So don't worry, we can meet our forecast was what she was essentially assuring people. AMD managed to pay off and we are seeing them ramp up sales. But when you compare like an $11 billion guidance for the quarter coming compared to, well, $70 billion we expect from the likes of an NVIDIA, it's still a second versus the giant and the giant making news today, Ian. What did you think about the deal with Corning? And once again, is this circular financing in some way or just making sure that AI infrastructure can get built? I think Jensen would explain it as he did at the Milken conference this week I was like look we are going to go out and we are going to use our money to remove or to do our best to remove any possible bottleneck that's out there and fiber is a big potential bottleneck going forward speed of light is as fast as you can transmit information traditional copper is reaching its limits guess what we need to make sure we have a lot of fiber optic connections out there for our forthcoming chips to keep this whole thing going so he's obviously been putting his money to work in that kind of company as well. Company based right here in New York State, Ian King. We so appreciate you out on the West Coast for us. Thank you. Let's speak about more of all of this. Srini Pajuri is with us. Semiconductor and semis equipment analyst, RBC Capital. Look, your latest note I loved, and you highlight how AMD's strong CPU growth, a doubling of projections, is that achievable? What could chokehold that? Well, right now the demand is very strong. You know, agentic AI is the primary reason, but overall AI CapEx has been going up as well. And on top of that, we're seeing strong demand on the enterprise, you know, server side as well. So I think, you know, part of it is AI, part of it is, you know, traditional server demand. Overall, demand is very strong. And in addition to that, you know, supply has been tight. You know, Intel talked about, you know, not having, you know, enough supply to, you know, address the current demand. And as a result, you know, the visibility is extending. The backlog is extending through the year, even into next year. But I think there's also the structural, you know, tailwind from, you know, what we call the CPU to GPU ratio. If you look at the systems today in AI, typically it's one to four is what we see in some cases one to two. But the view is that that's going to go to one to one, even, you know, more than one to one. So, you know, that'll be interesting to see. Srini, for our audience, talk through that step function. It's all about agentic AI. It's all about the need for inference, right? Yeah, I mean, look, in training workloads, you know, historically, we have seen, you know, a CPU to GPU ratio of, you know, one to four, even in some cases, one to eight. And as we move to inferencing, that is changing, primarily because of agentic AI. You know, of course, you need to run the models still on, you know, powerful GPUs. But to manage, you know, because users are creating so many agents to manage these agents and to make sure that agents are, you know, getting the appropriate data and they're talking to, you know, other APIs, you know, CPUs, you know, play a critical role. So we are seeing, again, it's early days. It's difficult to draw, you know, too many conclusions. But the trend is moving in the direction of, you know, that ratio improving in favor of CPUs. So, you know, our view is that at least, you know, we have visibility based on, you know, some of the architectures that we have seen from NVIDIA and AMD and Google, et cetera, into 2027. You know, it's moving in the direction. We think it's going to get to like, you know, one to two by end of next year. But whether it gets to one to one or even higher than one to one, that remains to be seen. Can I talk to you about valuations? Because when you look at AMD on a one-year chart, it's extraordinary. We're at a new record high. We're up 300% over that one-year basis. We're up more than 60% on the year and a new record high of, look, it's $600 billion market cap. That's nothing compared to the $4 trillion of NVIDIA. But when do you start to get a little bit anxious about where the stock trades? Well, the valuation is rich, right? NVIDIA is trading in high teens when you look at calendar 27 numbers. And AMD is probably trading close to twice the multiple. So it is at a premium. But as I said, it's a smaller market cap name. You could argue maybe it's growing faster because it's smaller in size. But, you know, for us, I think CPU certainly helps the short term. But longer term, if you look at the GPU opportunity, that's much bigger. I would say GPU is probably we're talking, including the custom chips, you know, a trillion dollar type SAM. And the CPU, as Lisa said, it's about 120 billion. It used to be 60, not too long ago. So I think it's essential that AMD make progress on the GPU front. And they've announced new customers, OpenAI and Meta. And those customers are expected to ramp later this year and into next year. So we're actually sitting on the sidelines right now, even though the demand is very strong because of valuation. We want to see some evidence that AMD can actually gain and compete against NVIDIA and gain some incremental share as we go into next year. So it's about execution for Lisa Su. Talk to us a little bit about what we're seeing in optical fiber exuberance today as well. Corning up 14 percent. NVIDIA saying, look, I want in on your shares up to $500 million worth with the right start. Purchase them. What can Corning bring to AI data centers? Well, at a high level, you know, AI demand is putting pressure on connectivity. You know, it's one thing to process the data, but you also need to move the data at a super fast speed. And the demand has been so strong that, you know, all those connectivity, you know, bottlenecks are emerging. And optical plays a key role in moving the data, not only between, you know, the servers, but also between data centers. So, you know, we are seeing, you know, the supply constraints emerge across the board. And I think NVIDIA, what NVIDIA is trying to do is make sure that, you know, those supply constraints are not going to limit their growth. And they're using their balance sheet strength. And that's one of the reasons, you know, we like NVIDIA because, you know, they not only have the best products in the industry, but also have the balance sheet strength. I think that is a structural advantage in an environment like this where everything is so tight. RBC analyst Srini Pajuri, it's really great to have your analysis on the show today. Thank you very much indeed. Meanwhile, sticking with all things chips, Germany's Infineon also reporting earnings, forecasting revenue of around $4.8 billion for its fiscal third quarter. That did beat expectations. The company's saying it's benefiting from spending boon on AI infrastructure with its power supply solutions for data centers and very high demand. But as you see, the stock has been under pressure in European trading. that 2026 they stay on track to grow about 10 percent. Coming up Disney gets a profit boost from some successful sequels improved streaming results and guests spending at their parks. We'll dig in this is Bloomberg Tech. Check in on shares of Disney having their best day in a year currently up 7 percent the company posting stronger than expected results thanks to improved profitability from its streaming business. And guests, they're spending more at the parks. Here to discuss is Helena Wang, she's Philip Securities Research Analyst. You were impressed by the numbers and all being given by the new CEO? Yes, I think it's a pretty solid number for the Amaro's first earnings. Both revenue and EPS beats estimate. And they've guided for 12% EPS growth for 2026, so that's for the acceleration. So I would say it's a pretty good start for the new CEO. Good start when actually we thought maybe things didn't look so pretty when he first took up the reins. There was Sora unraveling the deal with OpenAI. There was concerns with what's happening with Epic Games and their partnership. But more broadly, how do you think the consumer is feeling right now getting into the park? Because we've got a lot of macro headwinds. Yes, looking at their experience division, they are seeing a slight decrease in their U.S. park attendance. So that is probably some impact from the wall. So fewer foreign tourists are traveling to the U.S. But we are seeing guests spending more at the U.S. parks. So per person spending grew 5% year on year. So that means people are spending more on the tickets, on the food, on the merchandises. They're seeing very strong booking in their Disney World. Another factor that's coming is they're seeing the cruise ship having higher volume, probably because of the new introduction of their Disney Destiny and Disney Adventure that was introduced in March 2026. So that kind of gives them a 40% increase in cruise booking capacity. I love how in your notes you really think about the flywheel effect, the IP flywheel effect. This is how this business makes sense. The fact that they've got new frozen experiences coming online. They're investing in the IP and the entertainment, but also in the experience space. Are you willing to take down more of that investment at the moment? Because they have spent a lot on cruises. They are updating the way in which they're serving people at the parks. yes they're definitely investing very aggressively right now but i see it comes from a point of confidence because they're doing so well in their current business so they're trying to expand more in order to lay out more on the long-term growth runway so they're coming up with a lot of major park expansion globally they're coming up with another new cruise ship in japan and they're also coming up with a new steam park result in abu dhabi so i guess the wall impact is very minimum for them. I guess it's a good thing because their unique value is rooted in the strong brand reputation and the flywheel effect. I think that was a really good point that even though we've got conflict geopolitical anxiety in the Middle East they still going ahead with what happening in Abu Dhabi Just one area of concern is just the cost of doing business when it comes to sports as well right ESPN did show that weakness there Is that something that you also have to take down in terms of investment? They need the content. They need to win the rights. Yes. ESPN actually the increasing revenue because of the higher subscription and affiliate fee due to their NFL transaction. but it's definitely they're showing a decreasing operating income because of the higher sport right and production costs. But I guess everybody in the streaming industry right now is trying to increase their live sport because it's a large market. It has a very loyal fan base that will always be there. And everybody wanted a piece of that juicy pie. And sport really is so expensive right now, especially if you want it as skill. And Disney, they already have the skill. So I think even though the cost is a little bit high for them, but they do have the advantage in that sector. Helena, it's great catching up with you. Thanks for joining again. Helena Wang of Philips Securities there on All Things Disney. Now it's time for Talking Tech. First up, White House Economic Advisor Kevin Hassett says a potential executive order is in the works to provide a, quote, clear roadmap for AI safety. Now, the directive is taking shape weeks after Anthropic revealed its mythos model that could pose a global cybersecurity risk. Plus, Morgan Stanley is rolling out cryptocurrency trading on its e-trade platform, charging clients at just 50 basis points, half the cost of some major rivals like Robinhood. It's the latest move in a massive Wall Street pivot. The biggest banks are no longer just watching the crypto space. They're looking to own it. And Samsung has officially entered the trillion-dollar club, making the firm only the second Asian firm after TSMC to hit that $1 trillion milestone. Now, the company's gain also pushed the Cosby Index past 7,000 for the first time in history. Coming up, we're going to be speaking with the Uber CFO, Balaji, Krishna Murphy. As the ride-hailing platform posts a second-quarter outlook, the beta expectations were talking all things AI as well as delivery. This is Brima Tech. This is Tom Keen inviting you to join us for the Bloomberg Surveillance Podcast. It's about making you smarter every business day. I'm Paul Sweeney. We bring you complete coverage of the U.S. market open. We cover stocks, bonds, commodities, even crypto, all the information you need to excel. And I'm Alexis Christophorus. Bloomberg Surveillance also brings you the analysis behind the headlines. We do that through conversations with the smartest names in economics, finance, investment, and international relations. We do all this live each and every weekday that bring you the best analysis in our daily podcast. Search for Bloomberg Surveillance on Apple, Spotify, YouTube, or anywhere else you listen. On the East Coast, listen at lunch. And on the West Coast, listen as soon as you wake up. That's the Bloomberg Surveillance Podcast with Tom Keen, Paul Sweeney, and me, Alexis Christophorus. Subscribe today wherever you get your podcasts. Bloomberg Surveillance, essential listening each and every business day. Checking in on shares of Uber. Company reporting second quarter bookings outlook. The beat expectations look up 8.4%. Let's break down what's driving bookings growth in particular. Uber CFO is with us. Belaji Krishnamurthy. Belaji, talk to me about why we're amid the macro concerns, amid maybe a slightly worrying environment with oil prices, for example, you're still managing to push forward on bookings on demand. Thanks, Caroline. So I think, you know, if you think about a quarter, the first thing I'd say is we're incredibly proud of the pace with which our teams have been introducing new products. And you would have seen just recently at our annual GoGet event, we introduced a number of new products and features that meet our customers where they want to go. Whether they're developed internally at Uber or through our partners like Expedia, we're bringing them best of breed solutions. So that's setting us up for incredibly strong top line momentum. And we delivered 21% growth in the quarter. This is the third successive quarter where we've done that kind of a, you know, mock for the company. And we are also, in addition to those product innovations organically in our core, we also reported that we were able to scale our nascent autonomous vehicles business 10x year on year, which is, again, a really good starting position for us to be at. Now, we're doing all of this in a very choppy macro environment, as you rightly pointed out. I'm happy to talk about some of the detracting items there, but what we have been doing as we get this growth, we've been focused on extremely disciplined operations from a cost management standpoint, and we are embracing AI increasingly to drive more efficiency for the company. So that's allowing us to report EPS growth of 44% year on year as well, on top of that 21% top line growth. And it's setting us up really well for the rest of the year. And you see that in our outlook, which I think met and exceeded expectations on both top and bottom line. Let's dig into that Uber Expedia partnership. It's only about a week old or so. And I can understand that it's all about adding hotel bookings. Is this some sort of real uptick to subscriptions, do you think, in the longer term? How does it help just bring more and more people back to the app time and again? Yeah. Yeah. So I think the important thing to know there is we think consumers who engage with our products across our portfolio are incredibly valuable to us. And today, only about 20% of our monthly active consumers engage across the platform on both mobility and delivery services. But when they do, they drive significantly higher gross bookings, profits for the company. and underpinning all of that activity for us is our Uber One program, right? And we talked about getting to about 50 million members as of this quarter. We added about 20 million members in the last year alone. And now these members drive 50% of our gross bookings for the company. When you think about a partnership like Expedia, what we are trying to do is to expand the surface area of what we consider cross-platform. And today it's mobility and delivery in the core, But hotels are a very adjacent opportunity for us where 15% of our mobility growth bookings comes from airport trips. 40% of our U.S. riders take trips outside of their home cities. Right. And then last year we did 1.5 billion trips globally that happened outside users' home cities. So when you bring in a program like this, it allows us to bring the best prices to our consumers on hotel bookings from Expedia's platform. And in addition, we're giving them 10% cash back, which is quite valuable, which they come back and spend on our platform. Can I talk about the B2B business? You want it to become a $10 billion plus business. Briefly, what are the growth markets for that? Yeah, so very exciting trajectory there for us as well. We noted that we are at now 5 billion in gross bookings on that business, and it's growing 45% relative to that 21% total that we talked about. When you think about our B2B business, it's effectively bringing Uber's services across both mobility and delivery to enterprise-grade sort of modality to customers across the enterprise stack. where we are today. We are at about 300,000 organizations globally that are using our services through this offering. And we do think that over time, we can service as many as a million organizations globally. And that would allow us to get from $5 to $10 billion there. Uber CFO, Alarji, Krishnamurti, thank you very much indeed for joining us today on all things earnings. Let's turn our attention to energy now because Microsoft is considering delaying or abandoning its ambitious clean energy targets, according to sources. The reason? AI race. I'm most grateful for joins us for more on this. Just spell out what the targets were for Microsoft, why they were so perhaps over and above others in the space. Yeah, you remember there was a point in time where we heard big companies talk a whole lot more about the climate than they do now, right? Microsoft was one of these large tech companies that was quite vocal, And they said that we're going to match 100% of the energy we use in our offices and data centers by putting clean energy back onto the grid. That might be solar, battery, wind, stuff of that nature. But, of course, these targets were set before the AI boom. And now they're racing to get as much power as they can and starting up gas power plants. And so our understanding is that inside the company, there's a growing sense that we're going to have to revise and take back some of these ambitious climate targets that were so important, at least to our marketing. You say talks inside Microsoft are ongoing. There's no final decision. In fact, you spoke to a spokesperson for the story and talking about how they're continuing to look for opportunities to maintain that annual matching goal. But look, they're not commenting on the much tougher hourly commitment. Was that a tell? yeah it's one of these things that's quite wonky i mean i certainly had to learn a lot of these differences but matching on the on the annual level is not quite as difficult because essentially during the daytime there's a ton of clean energy largely due to solar matching your energy use in the night time is the big challenge especially because data centers run 24 7 and so you could maintain your annual matching and it still sounds pretty good but what this is and it's important to recognizes it's a step back on climate goals, assuming they go through with this decision. Bloomberg's Brody Ford. The impact of AI, we appreciate it. Thank you. Sticking with AI costs, OpenAI expects to spend $50 billion on computing power just this year. That's according to the company's president, Greg Brockman, testifying in OpenAI's courtroom battle against Elon Musk. Brockman also said he and other co-founders were concerned that Musk lacked the patience and AI understanding to run the chat GPT maker. The trial continues today. Coming up, Disney's bottom line. Well, it gets a boost from some hit sequels. It's got some more to come as well. We're also talking about the streaming turnaround. Resilient spending in the parks. There's a new CEO. And it was pretty good news to him as the stock reacts up 7%, the best day for Disney in a year at least. Let's talk about Nasdaq 100 up 1.5%. The stocks, again, chip stocks are on fire. We see NVIDIA inking deals of Corning to ensure that there's AI infrastructure supply and AMD really impresses on its earnings. This is Bloomberg Tech. Welcome back to Bloomberg Tech. We have got tech stocks in demand. There's geopolitics at play. There's hope that there is some de-escalation between US and Iran and that plays into the markets. But so too do earnings. I'm looking at the Nasdaq up 1.6%. We're at a record high again for the tech-heavy benchmark. And we think about what's leading the pack in terms of points. It's a lot to do with earnings. I dig into one of them. Disney currently having its best day in a year. New CEO, Josh DeMuro, able to deliver strong results in particular. Look, we're up 6% on the name. We're just rolling over from our previous peak. But this is all about a company that's getting more optimization, more monetization from streaming in particular. And look, Bloomberg Intelligence is pointing to the strengthening growth outlook and more consistent earnings trajectory more broadly. as the company brushes off park concerns with higher and expert share guidance too. Geetha Raganathan from Bloomberg Intelligence joins us now. And look, can you talk about perhaps the anxiety going into this about the consumer and they show resilience? Is it the box office? Is it the parks? What's working? Everything seems to be working right now, Caroline. And of course, coming into this quarter, there was a lot of concerns about whether Disney would in fact lower their guidance for the full year. And they did exactly the opposite, which is why we're kind of seeing the shares really react with so much more confidence today. So, you know, on the theme parks, which is 60 percent of total company profit, we were expecting a very, very modest profit increase for the fiscal second quarter. They actually outperformed with five percent increase in profit. And, you know, they attribute that to pretty strong per capita spending, even though visitation was a little challenged. So international visitation to their domestic parks has been heard by a stronger dollar and some of the geopolitical tensions. But despite that, they kind of delivered. And really I think the upbeat commentary for the fiscal third quarter where they talked about a pickup in demand and some of those attendance headwinds kind of fading away really lends credence to their very optimistic outlook for fiscal 2026 and even fiscal 2027 It's all about what we're discussing at the top of the show, the flywheel effect of the IP and how attractive it is. That plays into the streaming, into the content. Just listen to Josh DiMaro on the call yesterday, what he had to say. We centralize television programming within Disney Entertainment DTC. So we're programming for Disney Plus and Hulu while being smart about windowing content to linear so that we can expand reach and maximize monetization. And we also integrated our games business into Disney Entertainment. And this creates new opportunities to cross-promote franchises and use games to extend storytelling and ultimately develop new IP. And, of course, it was this morning, not last night, my days are all lost. when we're in earnings. I'm interested as to what Josh did to convince about perhaps his big Epic Games bet, the Fortnite bet that people have been worried about to start of his reign. Yeah, so it's really, you know, as part of that whole content strategy, yes, you're right to point out video games. And they're basically trying to create, you know, this one-stop shop, really using Disney Plus as kind of the hub for so many more products. Because, you know, at the end of the day, Disney has such a fantastic product portfolio with, of course, streaming, but then you have movies and you have theme parks and you have merchandise and you have video games. And it's really, you know, Josh Tomorrow kind of setting the stage for achieving that whole next phase of growth by leaning more heavily into that Disney Plus experience, right? With video games, you have access to a whole new audience, a much younger audience, you know, whom you can sell into. And that's exactly what he's planning to do. But it's really about reinvigorating the content engine as a whole. And I think he did a pretty good job of convincing investors that he knows exactly what he's doing and he has a plan in place. We're all excited for Devil Wears Prada, too, if you haven't already seen it. But he took us to another place where content is coming. Warner Brothers Discovery, got their earnings after the bell. Yeah. So for Warner Brothers, it's just such a completely different story. I mean, I think, you know, fundamentals, their earnings, that's a little bit of a sideshow here. It's all about M&A. We do know that one of the numbers that we're going to be looking for, as the street will be, is TV advertising revenue and advertising revenue in general. We do expect a pretty dismal quarter, if you can call it that, for TV advertising, just because Warner Brothers Discovery lost its rights to the NBA. And so that is definitely going to have a huge impact. But other than that, any color that they can offer just generally from an M&A perspective, although I doubt they will do that. It's a busy time of year for you too, Keith Ranganath, and we so appreciate you of Bloomberg Intelligence. Let's stick with those earnings. We're getting back to AMD. Why? Because it's the biggest points contributor on the NASDAQ 100 that's at a record high. Its shares are a record high. We're up 17%. Bloomberg's Ryan Vlastelica has been writing about, well, some of the competitive threats that are coming in Vidya's way. Let's go in on AMD because this isn't actually just a GPU story. This is CPU story. This is about a total addressable market that doubles. Yeah, good morning. Thanks for having me. So what I would start with is that AMD coming into this report was coming off its biggest one-month gain since the dot-com era. So expectations were really elevated for this report. And even with that, it really just blew everyone away. Very strong results, very strong forecast, at least a couple of upgrades I saw, including from Goldman this morning. People were very impressed by their ability to draw really impressive growth and really sort of establish themselves as a major player within AI. Some of the price target changes were actually eye-watering. I think some of them, Bernstein, were doubling their price target on AMD. So big moves, Ryan. What about NVIDIA playing a bit of a catch-up today? Because you've been writing a lot about how maybe it's been beaten up when the rest of the market in the Sox, at least, have gone up and to the right. We've been worrying about competition. Yeah, what's really interesting is if you look at the Sox, it's up, I think, about 60% since late March. However, NVIDIA, the biggest company really in the world, certainly the biggest semiconductor company, really hasn't been participating in that rally to the same degree. And it does seem like there is a growing appreciation that a couple of years ago, it basically had a monopoly on AI chips. Now we are seeing more and more people come into this market, including some of NVIDIA's biggest customers. So Alphabet last week talked about how it's going to start selling its TPU chips to other clouds. Those are specifically designed for AI applications, so there's a lot of demand for them. People even view them as superior to NVIDIA products in certain use cases. Amazon has its own chip. Meta is developing its own chip. Microsoft is. These are all of NVIDIA's biggest customers. So while it is dealing with competition from the likes of AMD, Intel, Qualcomm, all these sort of traditional chip makers, it is also seeing more aggressive moves into the space from its biggest customers. Like I said, Alphabet probably being the most notable one. Certainly, people are starting to wonder, what does this mean for NVIDIA's growth, margins, pricing power, market share, all of that, if we start to see some of its biggest customers looking to reduce their reliance on NVIDIA? Bloomberg's run, Vlaselica. We thank you very much for the roundup on chips. Let's stick with chips. The semiconductor market is on track to hit $1 trillion. But global tensions, rising demand are forcing the chip supply chain to adapt. That's the focus of this week's episode of Bloomberg Primer. Take a look. AI is booming. AI chips accounted for more than one quarter of all chips sold in 2025. That figure is expected to reach more than half by 2029. Chip demand is no longer dictated by which new iPhone or PC will have customers lining up. What has changed over the years in the semiconductor industry is since we're seeing such a surge in the need to build data centers for AI deployment and applications, we're seeing a more sustained growth period in semiconductors as opposed to the old-fashioned cyclical when we used to have Intel come out with chips that everybody had to upgrade their computer for. Spending on AI infrastructure like data centers is projected to soon cross the $1 trillion mark, so the demand for these chips is there. There's just one maybe not-so-nanoscopic problem. How concentrated is too concentrated for this supply chain? Hear more from the team at Bloomberg Originals on today's episode of Primer. That's tonight, Bloomberg, 6 p.m. ET, or on Bloomberg Originals at 8 p.m. New York time. Now, sticking with chips, let's take a look at today's big number. $55 billion. That is how much SpaceX is estimating Elon Musk's TeraFab chip factory will cost to build along with Tesla, according to a public notice, which shows the estimated total capital investment could actually rise to $119 billion if additional phases of the project are completed. Coming up, Apple is going to let users choose their own AI models across iOS 27. More on that next. This is Bloomberg Tech. Hello, I'm Stephen Carroll. I'm in Brussels, where many of Europe's biggest decisions get made. And I'm Caroline Hepker in London. We're the hosts of the Bloomberg Daybreak Europe podcast. We're up early every weekday keeping an eye on what's happening across Europe and around the world. We do it early so the news is fresh, not recycled, and so you know what actually matters as the day gets going. From Brussels, I'm following the politics, policy and the people shaping the European Union right now. And from London, I'm looking at what all that means for markets, money and the wider economy. We've got reporters across Europe and around the globe feeding in as stories break So whether it's geopolitics, energy, tech or markets you're hearing it while it happens It's smart, calm and to the point And it fits into your morning You can find new episodes of the Bloomberg Daybreak Europe podcast by 7am in Dublin or 8am in Brussels, Berlin and Paris On Apple, Spotify, YouTube or wherever you get your podcasts And it's trying to turn its devices into a comprehensive AI platform. With the iOS 27 this fall, users will be able to choose from multiple outside AI models, like Google's Gemini or Anthropix Claude. Greenberg Mark Gurman is here with us. And Mark, is it trying to be agnostic here in some way? In some way, it's trying to be agnostic. But what it's really trying to do is understand where it's at in artificial intelligence. And if you look at Siri, you look at the Apple intelligence capabilities, that are nowhere up to par, what you're seeing on Android, what you're seeing from competing devices, what you're seeing from ChatGPT, Claude, you name it. So they recognize that. So the name of the game is making the default offerings, Siri, Apple Intelligence, competent and good enough. In the same way that the built-in apps on an iPhone are competent and good enough. But then you have an app store where you can outfit your iPhone with a bunch of apps that many people consider superior. But you're still using an iPhone and you're still driving services revenue to Apple and obviously the hardware revenue because you're buying their products. And so in the same way, they want to make the AI stuff good enough, but also offer customers the ability to put their own choice of AI models on top of features or to power certain features. So you're still using an iPhone and maybe you're even making the more money by subscribing to different AI services like ChatGPT or Gemini on their platform, which they'll get a cut of through the app store. So at the moment, Mark, you can interact with ChatGPT. that sort of got the first in with Apple across some of its functionality. But when it comes to Siri, we understand that it's Alphabet's technology that they're sort of turning towards. Where are we going to see and feel it differently? So there's a couple of things going on here, right? So Apple Intelligence, when it first launched in 2024, Siri, that was based on Apple models, but there was what's called an extension to be able to tap into chat GPT. Now Apple's rebuilding Siri, So it's in-house Siri using Google Gemini models. But that doesn't have Google Gemini functionality. It's basically like they hired the engineers from Google to fix Siri because, you know, obviously they're doing a better job building their models. But now, in addition to ChatGPT, you'll be able to tap into outside AI services, Gemini being one, Claude being another. And we'll see if they end up allowing Meta, Alexa, and you name it. In terms of when this is all coming, so they'll introduce these new features, as well as the revamped Siri, in June on the 8th at WWDC, and they'll roll it out in September. And I think if it rolls out any later than that, another disaster on their hands. But I think this is going to happen this time. Is this going to be enough? Is this Apple being, in the longer term, making the decision that they are just going to outsource this? Well, let's start with the short term. In the short term, if you're a customer, You really can't ask for more other than to have access and have optionality to have anything, right? As Gemini improves, as Cloud improves, ChatGPT improves, you're going to get the best stuff on an iPhone. So from a customer standpoint, that's great. From a long-term standpoint, I still think that Apple needs to get improved models. They need to be on the frontier of things when it comes to AI because they have all sorts of hardware plans in the future. And if you're a hardware company like Apple, you don't want to be reliant on third parties to power the underlying AI powering those products. So in the short term, they're going to be great. In the long term, they need to get things moving in a far better, more competitive direction. And we're likely, therefore, to see more of these announcements coming. And you, as always, set us up for what to anticipate with Apple. Bloomberg's Mark Gurman in San Francisco on all things Apple and integration of AI. I'm pleased to say now, though, we can get back out to the Milken Conference in California, where Bloomberg's Joe Matthew and Carol Massa are sitting down with Kathy Wood of ARK. Let's listen in. All right, Paul and Scarlett, thank you so much. We welcome everybody on Bloomberg Radio, Bloomberg TV, across Bloomberg platforms. Yes, indeed, Carol Massa, Joe Matthew here at the Milken Institute Global Conference. We have a special guest, and I feel like reading in this morning, the headlines were made. It's like they knew Kathy was going to join us. Kathy Wood, CEO, CIO, and, of course, the founder of ARK Invest. It's so nice to talk with you again. Thanks a lot. Delighted to be here. You gave me my big break in 2015. I'll never forget that. Well, it's so funny because I want to talk Elon because you kind of put him for me on the radar. And I just feel like it was a time when so many people questioned what he was up to. Now everybody is so excited about the SpaceX IPO. We see increasingly how he's kind of melding his universe together. Tell us about kind of that bet. And even today we have that he's building a chip factory, at least $55 billion in investment, maybe as much as almost and he doing this chip factory SpaceX with Tesla How are you looking at Elon right now and what his next era is So this is why I founded ARK Invest We knew that the seeds that were planted in the 20 years that ended in the bubble they've been germinating for 20, 25 years, and now they're flourishing. And what we're seeing is 15 different technologies evolving, and they're all converging. And Elon, about six months ago, and we've been using the word convergence for a long time, he said, you know what? I think my companies are converging more than even I understood. And so we're seeing, of course, SpaceX, XAI, rumors about Tesla. And really, he believes that in the new world or to create the new world, a company has to be vertically integrated. And so that's what's happening here. He is moving into incredible vertical integration as he moves data centers into space. Is it all about our Bloomberg intelligence, George Ferguson, cover space, cover his defense? But he said it's all about Elon controlling the supply chain, Kathy. But I do feel like globally we're seeing countries, companies really thinking about their supply chain. Is that part of his strategy? Absolutely. Absolutely. And also, when a company is breaking new ground, literally, in this case, and really inventing something, the supply chain doesn't exist very often, or not all parts of it exist. And I think also, as he's discussing where he's going and how he's going to do it, he is getting the supply chain ready. He always sets the time frame much sooner than most people would expect. But it's to get his employees and the supply chain focused. Because when he moves, he moves fast. You've really helped to define people's perception of Elon Musk and the company Tesla largely as one that is not about making cars, but one that's about autonomy and robotics. when you walk out the Hilton here, different than where I live in Washington, D.C., driverless Waymos are picking people up and driving away with them all day long. The mainstreaming of autonomous vehicles is just about here. I'd like to know if you see that actually fulfilling itself in the next year and if this is a zero-sum game or you're going to have Uber, Waymo, Tesla all involved. Okay, this is where vertical integration comes back into the conversation. In the robo-taxi world, Tesla is vertically integrated and has created the platform upon which others will build their companies. So I credit our team. So Tasha, Daniel, Brett Winton, we have been focused on this from day one, 2014, when I founded ARK. And yes, slowly, slowly, then all at once. So vertical integration for Tesla means it will have the lowest cost structure by far. Now, it's going to use Uber's umbrella here, $3 plus per mile. But if our analysis is correct, those costs as robotaxis scale are going to drop to 25 cents per mile. Think about it. The cost of transportation is going to collapse here. And no one, Waymo's cost structure, according to our estimates, in 2030 will be 50% higher than Tesla's because they're dependent on other auto manufacturers and others in the supply chain that Tesla is not. How are you thinking about the SpaceX IPO, Kathy? Do you anticipate there's so much enthusiasm going into it? Massive size, massive interest. But do you think there'll be a drop off initially after, you know, once it makes its public debut and then ultimately kind of play out like Tesla did that eventually it goes up again? Like, how do you see the trajectory? Right. So this is only at least what we know so far, $75 billion. There is so much demand out there. We have in our venture fund, so ARKVX, SpaceX is the largest position. And because we're direct to consumer when it comes to venture, although the fund has scaled north of $850 million, investors had to look for us. And how did they find us? They were looking for SpaceX. So the demand is voracious out there. Only $75 billion. Yes, it's a big IPO. But just think about how SpaceX has reawakened the dream of space exploration. This has captured the imagination not just of investors, but really everyone. So does that mean you don't think it'll fly? You think the enthusiasm will continue? Do you think there will be some settling in afterwards? I think there'll be supply-demand imbalance in the beginning. You'll see that pop. It will be volatile, I would imagine. But we hope to serve in terms of providing our research. We've already got a SpaceX model out there on our site, arc-invest.com. We have not added data centers, orbital data centers in. However, our preliminary work suggests that that part of the business could take, relative to our existing model, could take Tesla from a revenue generation point of view, orders of magnitude higher, 10, 20 times higher. I'm so glad you went there. Data centers in space, and I mentioned before we got going, it came up on a real estate panel where so many of the real estate investors, even like related companies, have switched their focus to data centers. But we brought up data centers in space. What does that mean, though, then, for all of the data center build-out and money that is happening here on Earth? Does that mean a lot of that goes away? There's a little bit of a bubble. How do we reconcile that? We think, and this is the important judgment call, is this hype? Is this 1999? I can tell you unequivocally, it is not. As I mentioned, the seeds were planted then. Now we're ready. And we think this technology revolution is going to dwarf the industrial revolution by far. So I think that we'll need the orbital data centers. And of course, Elon is informed by his experience in Memphis, Tennessee, and now Mississippi. Memphis became not in my backyard. You're increasing my electricity prices and you're ruining our land. So he's basically saying, I'm not going to have to worry about not in my backyard in space. But does it make a bubble of the stuff on there? I don't think so. I don't think so. We think we're going, we need all of this. Yep. Sorry, I know I'm dominating. I didn't mean to. I mean, you guys should walk away with this. Go, go, go. I wanted to ask you about something that took place today. You woke up and saw your third largest holding just go through the roof in AMD, another blow-the-doors-off quarter. And it's really creating this question now about whether we should be paying a lot more attention. The market is to CPUs after GPUs went crazy. We're looking at people take money out of NVIDIA now and chase stocks like AMD. Do we need both or is that where you're looking? We think we need both. I do think there is more competition. We want it. We need it. But it was interesting. Sarah Fryer at OpenAI, I'm going to give her a shout out because I heard her speak and she was saying, you know, people are chasing GPUs. They're going to be really shocked at how agentic AI activates CPUs and inference generally activates CPUs. Yesterday, Lisa Su provided a stat we had never heard before. Right now, for every CPU, there are four to five GPUs when it comes to enabling AI. Lisa thinks it's going to go one-to-one in the future. I think that has been the sleeper. And you see, Intel has taken off. In fact, we're seeing a lot of stocks that were, you know, they were very big in the bubble. And I just said to our team today, I said, what's going on? We're going back to the future. You know, Intel resurrecting. Isn't that right? Yes. And Flextronics, it's now called Flex. Boom. So I think we need it all. Not to mention data storage, which has been one of the most remarkable examples of a shortage creating a monster rally. So you need these old-fashioned chips to get to this new fashion AI. All hands on deck. We want to ask you about a story that came out, Google, Microsoft, to give U.S. agency early access to AI models. So basically the White House vetting AI models. Is this good or bad? And knowing this administration and David Sachs, our AIs are, I don't think we're talking about heavy regulation here. We might be talking more about national security. National security, we heard this with Mythos, you know, software that, you know, has been a place for 60 years and never been penetrated. AI can find these vulnerabilities. So they're probably trying to tighten up a lot of what we do out there and make sure that our industries are safe. Doesn't that bring a political implication, though, to what may or may not be available to people if the White House is choosing which platform we ought to use? No, you know what's interesting? And this is taking a leaf from OpenAI in its early days. GPT are saying, we don't think we can release this. This is too powerful. It's great marketing. It's true that it's very powerful, but it's also great marketing. A lot of the people at Anthropic came from open AI. So while they're blazing trails, no question about it, and they're leapfrogging one another, which is great. Competition is great for us here, including competition from China. I think that, you know, we're on our way. I want to ask you about stablecoins, Tether and their potential. Do you think it has a chance to become big in the U.S. under the Genius Act? And you've also invested in Circle. Are you looking at other stablecoin related players beyond that? Crypto bill, tell me. There's a lot going on right now. There is a lot going on. There's a big meeting at Mar-a-Lago. Like I know a lot of crypto folks like tell us. Well, and, you know, in the last election, I do think the crypto community was very, was part of the swing factor because they knew deregulation would take place under this administration. That's absolutely true. So, yes, we're seeing the deregulation. You know, this is creating a new financial world order. Many people think the dollar should be going down because of our deficit and debt and all of that. And what we're seeing here in the United States is deregulation, tax cuts, and a very business-friendly, very business-friendly administration. We think the return on invested capital is going to go up in the U.S. generally. And we think that the crypto revolution, we were at risk of losing it. Yeah. And yes, we do think USAT has a shot. You do? Yes. All right. I'm not going to have like a million more questions. Kathy, thank you so much. Really appreciate it. Thank you. Thank you so much. Really appreciate it. Kathy Wood, of course, she's the CEO, CIO, and of course, founder of ARK Invest. Someone like us, it was 10 years ago that we first started talking about Elon Musk. So really tremendous to catch up with her again. And I feel like we didn't even talk about Alphabet, which I know was a great call for you before earnings. The 94 earnings? Unbelievable. This is Caroline Hyde. And I'm Ed Ludlow, inviting you to join us for Bloomberg Tech, a daily podcast focusing exclusively on technology, innovation, and the future of business. Every weekday, we bring you the top headlines from the world's biggest tech companies. From finance to defense, AI to entertainment, and from startups to the magnificent seven. We highlight the latest stories of the people and companies pushing the tech sector to new frontiers and the politics that shape global tech markets. 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