In short
This episode is a Bloomberg Tech/Business segment focused on AI-driven tech investment and market moves, plus adjacent tech policy and business news. Topic: Nvidia’s earnings-driven rally and what it signals for AI infrastructure demand; how hyperscaler capex and “NeoCloud” buyers expand the chip ecosystem; competitive pressure from custom ASICs (Google TPU) and the role of training vs inference.
Guest
Mandeep Singh, Bloomberg Intelligence global head of technology research, explains the stock reaction and Nvidia’s guidance.
Key claims
Nvidia’s 2027/fiscal 2028 visibility (including supplier capacity commitments) supports optimism despite lower margins from higher memory costs. China is not the main growth driver in the near term; hyperscalers and new compute providers (including SpaceX) matter more.
Notable examples
Google TPU used by Anthropic for training/inference; Anthropic’s ARR cited; Salesforce shares jump on deepening partnership with Anthropic; CrowdStrike benefits from AI-fueled cybersecurity demand.
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Chapters
Tap a time to open that second in VONVIDIA's Market Impact and Future Growth
0:00 to 0:35
Analysis of NVIDIA's market performance and growth prospects amid AI demand.
“Some people treat ChatGPT like some kind of smart search engine, and some use it to get work done.”
NVIDIA's Market Impact and Future Growth
1:41 to 2:12
Analysis of NVIDIA's market performance and growth prospects amid AI demand.
“When you send money abroad using your bank, you could get hit with hidden fees and exchange rate markups.”
NVIDIA's Market Impact and Future Growth
2:39 to 9:48
Analysis of NVIDIA's market performance and growth prospects amid AI demand.
“It had more than$440 billion in market cap just today.”
Salesforce's Strategic Moves
9:48 to 13:56
Discussion on Salesforce's partnership with Anthropic and its implications.
“And that's where, you know, the fact that everyone is going all in in terms of their capex spend is what's enabling them to maintain this pace of growth.”
Introduction to the Bloomberg Studio
14:00 to 14:19
Introduction and studio context for the show.
“joining us here in our Bloomberg Interactive Brokers Studio.”
Introduction to the Bloomberg Studio
15:33 to 17:25
Introduction and studio context for the show.
“It's time to plan ahead and make sure your brand is showing up in ways that can have an impact.”
Podcast Overview
17:30 to 17:43
Information about the Bloomberg Business Week Daily Podcast.
“Catch us live weekday afternoons from 2 to 5 Eastern.”
Meta's Settlement Overview
17:43 to 19:16
Discussion on Meta's deal with state attorneys regarding user safety.
“Well, we continue our coverage of Meta's landmark deal with state attorneys general across the U.S.”
Impact of the Settlement on Families
19:16 to 22:48
Exploration of the settlement's implications and family testimonies.
“I mean, if you look at a lot of the allegations that the families were making in Can't Look Away, that endless scrolling caused their children to be addicted, that the companies were doing this on purpose.”
Accountability in Social Media
22:48 to 24:06
Discussion on the responsibility of social media companies in protecting children.
“I believe that these platforms need to be held responsible.”
Show all 22 chapters
Future of Children's Interaction with Technology
24:06 to 25:29
Conversation about the ongoing challenges and future of technology for children.
“Really really I'm hopeful will be the beginning of a sea change now This is gonna be happening for us for you people in the u.s.”
Conclusion and Resources
25:29 to 25:46
Wrap-up and information on accessing the film and materials.
“He's co-producer and co-director of Can't Look Away, The Case Against Social Media.”
Conclusion and Resources
28:01 to 29:01
Wrap-up and information on accessing the film and materials.
“Let's talk about healthcare for a second.”
S&P Global Quarterly Results Overview
29:06 to 30:11
Learn about S&P Global's recent quarterly performance and challenges.
“You're listening to the Bloomberg Business Week Daily Podcast.”
Debt Issuance and AI Impact
30:11 to 32:35
Explore expectations for tech debt issuance and the influence of AI.
“Your CEO, Martina, said last month that you expect$250 billion to$300 billion in debt issuance this year from hyperscalers or large tech companies expanding AI capabilities.”
Strategic Portfolio Changes
32:35 to 34:29
Understand the strategic reasons behind S&P Global's portfolio adjustments.
“And also, is there more portfolio work that you're expecting at this point?”
AI Integration and ROI Challenges
34:29 to 37:26
Discover S&P Global's approach to AI and the challenges of measuring ROI.
“And so there's really a couple of features.”
Managing AI Costs Effectively
37:26 to 41:07
Learn how S&P Global monitors and manages the costs associated with AI tools.
“On the revenue side, what we're seeing is higher retention rates, larger pipelines, more usage, which over time comes back into our pricing structures and our economic value that we offer to clients.”
Managing AI Costs Effectively
42:17 to 44:14
Learn how S&P Global monitors and manages the costs associated with AI tools.
“It's time to plan ahead and make sure your brand is showing up in ways that can have an impact.”
Xlab's Launch and Market Strategy
45:14 to 49:58
Exploration of Xlab's background and market entry strategy.
“Now, Patrick, even though people haven't heard of XDS International, unless they're in the bike industry, they've probably ridden a bike that's been made by XDS International.”
Cost Management and Competitive Edge
49:58 to 52:28
Discussion on how Xlab maintains competitive pricing and quality.
“Let's just turn all of this expertise into a genuine line of performance bikes that we can do ourselves.”
Growth Metrics and Future Outlook
52:28 to 52:59
Patrick Pan shares Xlab's growth projections since launch.
“And also equally important is passing that on to the dealerships as well.”
Transcript
Automatic transcript. May contain errors.0:00Some people treat ChatGPT like some kind of smart search engine, and some use it to get work done. ChatGPT Work is a new way of working in ChatGPT that can take action across your apps and files, stay with a project for hours if needed, and turn a goal into finished work. It's designed to help you move from a chaotic starting point to a reviewable first version. So all the source materials, briefs, and scattered information that you have to grind through to turn into something useful can just become something useful. Put ChatGPT to work on your most ambitious ideas and projects. Get started at ChatGPT.com by selecting Work Mode, available on Plus and Pro plans.
0:42When you're running a business, the best days are the ones where priorities stay on track. For midsize and large companies, that isn't always easy. Risk can touch multiple parts of an organization at the same time, often in ways that aren't immediately obvious. It might involve property, liability, or cyber. It could stem from regulatory requirements or challenges tied to a specific industry or the scale of an operation. At that level, managing risk becomes an ongoing discipline, not a one-time decision. At The Hartford, the focus is on helping businesses manage risk before it turns into something more disruptive.
1:16That means working with companies to identify where they're exposed, decide what matters most, and put practical standards in place so risk is managed as part of day-to-day operations. And when losses do happen, the Hartford can pair that risk-control work with insurance coverage grounded in underwriting, risk engineering, and claims experience developed over time. Learn more at thehartford.com slash risk mitigation. WISE is the smart way to manage the currencies you need around the globe. When you send money abroad using your bank, you could get hit with hidden fees and exchange rate markups.
1:49There's a better way. Try Wise. Wise uses the exchange rate you'd usually find on Google with no unwelcome surprises. Plus, most transfers happen in under 20 seconds, which means your money arrives in less time than you've been listening to me. It's simple and free to sign up when you download the Wise app. Be smart. Get wise. T's and C's apply.
2:12Bloomberg Audio Studios. Podcasts. Radio. News.
2:39Masser and Tim Stenebeck on Bloomberg Radio. Today's trade all about NVIDIA. Shares were up by more than 8.7%. It had more than$440 billion in market cap just today. That's incredible. Yesterday we talked to the CEO of Lamb Research. It's a big company. $400 billion in total market cap. So what does it tell you? Well, that's a question that Mandeep Singh is going to answer for us. Salesforce shares also having their best day in six years, up more than 22.5%. that. Mandy Singh is Bloomberg Intelligence, global head of technology research. He joins us here in the Bloomberg Interactive Brokers Studio.
3:15Wow. So I'm going to pose the question to you that I posed to Ian in the two o 'clock hour. And it's something that Elizabeth on our team pointed out earlier today. This post-market reaction from the company's stock versus what the stock did after the call. A huge delta there. Why was that? I mean, that 70 % number that they gave for 2027 and their fiscal 2028 is what drove all that optimism. So should we just ignore everything about NVIDIA numbers on an earnings day until we hear from the CFO on the call? Well, they don't normally give a future one-year guide. So this was sort of an aberration in terms of how they guided in the second quarter.
4:01But look, that's where they have the visibility and also the supply commitments that they have made. It was up almost$160 billion to their suppliers. So this is your memory makers, your TSMC. They have committed this much so that their suppliers can expand capacity. And still they feel the demand is almost like 100%, but they are guiding for 70 % and they can meet that demand. So this is going beyond the hyperscalers. This is absolutely going beyond the hyperscalers. And look, with hyperscalers, we've seen the CapEx expectations have gone up because of what Microsoft said and what Google said on their earnings call.
4:46And what they said was, not only is the upside coming from new clouds and these new players, which you alluded to, SpaceX could be huge in terms of, the$100 billion that they've added to that guide for 2027. I mean, this company could do $650 billion in data center revenue next year in 2027. So a lot of that upside is coming from the likes of SpaceX, hyperscalers raising their CapEx, and NeoClouds. And that's what they want. They want a much bigger ecosystem of buyers of their chips. We're getting more just superlatives coming as the market closes and Ian King writing that NVIDIA sales forecast sends shares on its biggest rally going back to 2025.
5:32I'm wondering about the mode, Mandeep, and how deep NVIDIA's mode is when it comes to its semiconductor technology. I mean, look, there is no doubt they have competition and Google TPUs is the best example that a custom ASIC is very effective both in training and inference workloads. Okay, you're going to have to explain a little bit of the jargon. So training versus inference, right? I think a lot of people understand what that is. But in terms of what Google's TPU is doing versus what NVIDIA's core product is. So Google TPU, which is in its ninth generation, they have been creating this custom chip to run first the search workloads and then the AI workloads.
6:15and Enthropic has used this chip for both training their LLM and Enthropic is the best frontier LLM right now. So they didn't train on NVIDIA. They've used Google TPUs for training. They've used Amazon Tranium and Google TPUs for inferencing workloads. And now they have started to use NVIDIA chips. But so far, your best LLM has not used NVIDIA chips. And so even then, And NVIDIA continues to do so much better every year, partly because of what they have done with regards to the ecosystem they have created, the NeoCloud base that they have, the likes of CoreView, Nibias. These companies are growing faster than your hyperscalers, which are growing fast as well.
7:02So because this pie is so big and these LLM companies have shown the revenue, had it not been for Enthropic reaching an ARR of$65 billion and going public soon, this would not have been possible. But the fact that LLM companies have shown the revenue has allowed these chip companies like NVIDIA and Broadcom to say, OK, we can guide for, you know, next year because the LLM companies want the gigawatt capacity. And so that's where the revenues have enabled these companies to really maintain this pace of growth. And so far, you know, the LLM companies haven't disappointed. Now, once Enthropic goes public and we learn about their margins and open AI's margins, and if they're burning a lot of cash, that story could change.
7:52Then people may not be willing to fund this, you know, at unlimited pace. But for now, it sounds like everyone is looking at the growth that they are able to generate from AI. And then that's why the infrastructure players who are the beneficiaries of the CapEx continue to do well. Well, you're talking about the growth, all the numbers that you were spitting out to me. At that same time, this is the time that they're hiking the prices for the servers. So do companies not care? Are they just going to pay the price and move on? So NVIDIA did guide to lower margins. And so they are absorbing some of the higher memory costs.
8:28They are passing some of the costs as well to their customers. So you're right. You know, there will be a margin impact to companies that are buying these servers. and we will see that in their margins over time. But for now, AI has become an imperative for every boardroom and there's no choice. I don't know. At that same time, the China market, it's something we've been all talking about. How important is it to NVIDIA? Is that the key for their future growth? I mean, in this quarter, clearly China was very little in terms of the revenue contribution. And even in the guide, it didn't sound like they're really depending too much on China.
9:08So that's where a new hyperscaler like SpaceX is really making a ton of difference. And SpaceX is talking about 100 billion in ARR by the end of the year. So they are talking big in terms of ramping up capacity. And they want to be that compute provider that uses NVIDIA exclusively. So that's where I think it's not really about China at this point of time. But I just wonder in 2028, now they have guided for 2027, the numbers would be so high that maintaining this kind of growth rate, even double digit growth rate, will become tough for NVIDIA at some point. But they keep pushing that out. And that's where, you know, the fact that everyone is going all in in terms of their capex spend is what's enabling them to maintain this pace of growth.
9:58Should we talk a little bit about Salesforce? No, it's not just NVIDIA. It's software, too. Salesforce jumped the most since 2020. It was actually like August of 2020, the last time the stock was up at least this much today. This after it gave an outlook for strong revenue expansion, deepening its partnership with Anthropic. This is a really interesting one because we talked to Brody Ford earlier, and I thought it was notable that you had Mark Benioff sitting side by side with Dario Amadei of Anthropic because this is the company that is supposed to be, Anthropic that is, the threat to the software as a service companies and like Salesforce is the poster child for that.
10:36What did you think of this anthropic Salesforce deal? I mean, to my mind, Salesforce up until last quarter kept touting their AI products, the fact that they have their agent force and, you know, they want to upsell that. So clearly they seem to have deviated from, you know, really trying to upsell their own AI. And now this partnership with Anthropic, to me, it suggests that they are OK with Anthropic taking, you know, the AI and the analytics piece. But they want to remain the system of record because that's the sticky part of their business. But there's no doubt that Salesforce is losing that upsell that they were able to do to their customer base.
11:19So I wouldn't get too excited. Really? Yes, because at the end of the day, it wasn't worthy of a 22 % stock move, if you ask me. You think this is overdone? Well, it was overdone before in terms of the SaaS apocalypse and how much the market had reacted and how the positioning had become. So from that perspective, it was more like overdone before. And now this 22 % move is more of a reflection that, look, this company still has a very sticky business. And by partnering with Entropic, some of the near-term risks around complete displacements have gone away, and they are able to retain their customer base.
11:57So you talk partnering. What about acquisitions? Anything else on the horizon for them? We know they acquired Fin back in June. Yeah, I mean, the only company that can do acquisitions right now is NVIDIA. We heard rumor about them buying Hugging Face for$13 billion. And look, they have the cash. They will generate$200 billion in cash. so they can do backstops, they can finance NeoCloud, they can do acquisitions. And that's what has changed in terms of earlier, it used to be all software companies doing acquisitions. And now it's your semiconductors and your chip makers doing acquisitions. Okay, what about CrowdStrike?
12:34Shares of CrowdStrike jumped the most in over two years on this Outlook beat. Do you still cover all of these companies? I have a team, thankfully, that helps me out. We're going to every company in the NASDAQ composite with Mandeep. This is interesting, though. The company projected revenue for the full year that exceeded NLS estimates, evidence that the cybersecurity industry continues to benefit from AI-fueled demand. Still, this was a surprise to some folks, evidenced by the reaction in the stock. Yeah, I think all these companies, whether it was Palo Alto Networks, CrowdStrike, Okta, They said Mithos and, you know, some of the latest LLM releases have created so much fear.
13:14Paranoia. Paranoia in the minds of all the CIOs and CISOs that they want to figure out what vulnerabilities they have in their software. But are these companies effective in protecting companies from those threats? It's too early to say that. But for now, the enterprise plays, let's boost our security posture and, you know, make sure we don't get hacked by one of these hackers using LLMs to, you know, penetrate your defenses. And so that's what's driving, I think, a lot. And look, the agentic AI is also a driver. So as enterprises roll out agents, they need to secure their agents. So that's where they're seeing some benefit as well.
13:55Mandeep, we needed this. Thank you. Mandeep Singh. It's not different at all. Bloomberg Intelligence, global head of technology research, joining us here in our Bloomberg Interactive Brokers Studio. He can do it all. Check out his research on the Bloomberg Terminal and his entire team's research on the Bloomberg Terminal. Stay with us. More from Bloomberg Businessweek Daily coming up after this.
14:19This is the Bloomberg Tech Minute brought to you by ChatGPT. Now with ChatGPT work. I'm Carol Masser. Bill Gates Breakthrough Energy Ventures is betting on a cheaper way to produce clean jet fuel and made its first investment from a fund that is backed by Alaska Air, American, and several other carriers. The investment is aimed at accelerating the commercialization of clean aviation fuel. The recipient is Boston-based Lydian, which is developing lower-carbon jet fuel made from hydrogen and carbon dioxide and is one of a growing number of companies developing next-generation clean jet fuel technology.
14:56Lydian says it can reduce capital expenses by more than 50 % compared with competing technologies. Lowering those costs is seen as crucial to making sustainable aviation fuel, or SAF, commercially viable, as it remains far more expensive than conventional jet fuel. Today, clean fuels represent a tiny fraction of the overall market. That's the Bloomberg Tech Minute, brought to you by ChachiPT. Put ChachiPT to work on your most ambitious ideas and projects. Get started at ChachiPT.com today by selecting Work Mode, available on Plus and Pro plans. It's time to plan ahead and make sure your brand is showing up in ways that can have an impact.
15:39That's where 4imprint comes in. 4imprint have promotional products that work as hard as you do. Durable, useful, and designed to make a lasting impression. Think quality apparel your team will wear again and again, including popular and exclusive brands. Drinkware that's enjoyed again and again. Bags, notebooks, tools, and tech items that don't just look good, but actually get used. With thousands of customizable options, 4imprint makes it easy to find what fits your brand and your budget. You'll get expert help, free samples, and their 360-degree guarantee means you can be 4imprint certain your order shows up just right, right on time.
16:16Whether you're gearing up for fall events or simply planning ahead for the season, 4imprint can help your brand show up, stay useful, and make connections that last. Explore the possibilities at 4imprint.com. 4imprint. For certain. Let's talk about healthcare for a second. It doesn't always work the way people expect it to. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling. The system should just work better for everyone. That's exactly what the people at Optum are trying to do every day. They're a health care company linking patient care and pharmacy services and using data and technology to drive the whole system so care is connected, not complicated, for patients and providers.
16:57Things like making it easier to get care that looks at the whole person, from primary care doctors to mental health support and even in-home care, and then using technology to make sure they all work together. Technology designed to help doctors spend less time on busy work and more time with their patients. And those prescriptions? Optum is working to bring costs down, save patients money, and make it easier to get refills. Little by little, Optum is helping make healthcare work as one for everyone. Head to business.optum.com to see how. You're listening to the Bloomberg Business Week Daily Podcast.
17:33Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app. Or watch us live on YouTube. Well, we continue our coverage of Meta's landmark deal with state attorneys general across the U.S. in which the company agreed to pay up to$18 billion and implement design changes such as limiting the amount of time users under 18 can spend scrolling on its apps. Here's California Attorney General Rob Bonta and West Virginia Attorney General J.B. McCuskey speaking on this deal yesterday on Bloomberg. This is a major breakthrough because when it comes to protecting our children's mental health, there is no time to lose.
18:15It has always been our goal to make sure that every platform protects children in the same way that Meta is going to be protecting children. That was California Attorney General Rob Bonta and West Virginia Attorney General J.B. McCuskey speaking on Bloomberg yesterday. This news really got us thinking again about the Emmy and DuPont Award winning documentary Can't Look Away, The Dangers of Social Media. It follows a team of lawyers taking on tech giants, advocating for families whose children have been deeply impacted by social media. The original reporting of Bloomberg News investigative reporter Olivia Carville is throughout the film.
18:49Back with us is the co-producer and co-director of Can't Look Away, The Case Against Social Media, Matthew O 'Neill. Matthew, good to have you back on the program. We thought of you a lot yesterday. I'm glad to be back here. I think I've been hearing from people all over the country and the world with that settlement because it resonates so much with the themes in Can't Look Away. Well, what was your reaction when you first heard about the settlement? The most, I mean, obviously the headline of$17 billion seems like a lot, but the real meat of the settlement are the changes that are being made by Meta as part of the terms of the settlement.
19:22I mean, if you look at a lot of the allegations that the families were making in Can't Look Away, that endless scrolling caused their children to be addicted, that the companies were doing this on purpose. These are things that, again, Meta admitted no wrongdoing, but these are elements that are going to be changed on the product as part of the settlement, which is incredible. Well, where does Meta go from here? Because we talk about the guardrails, right? They're going to be setting up some guardrails. But how do companies, how are they able to find out the actual age of kids? Because kids are savvy.
19:55I mean, let's be real. They can kind of get around different things. So what's Meta's kind of thought process as they go through this? Well, I can't speak for Meta, but I can speak for what the terms of the settlement are. In terms of they've committed to having essentially an inspector general of sorts that is going to look into this and using more cutting edge technology to root out and identify what 13 year old, like what users are actually underage. It's one of the points we made often talking about the film is that if they can figure out that I need a lawnmower or want to be advertised for to wrote about Rogaine, they can figure out the age of their consumers.
20:29Right. And so they're being held to that. Yeah. Ensuring. I want to read from a statement from Meta quote, ensuring teens have a safe and productive experience on our platforms is an absolute imperative for Meta. We want to get this right for parents and teens. The company said this in a statement yesterday. After news reports emerged of this settlement or what's going on with the state attorneys general. I'm wondering, Matthew, if you think you spent so much time with these families, you've spent so much time understanding what they've gone through. If this is enough. I don't think that for the loss that these families endured, often the death of a child, there can never be enough.
21:14but having spoken with some of the families since the settlement, there is some salve in this in that their story, they're speaking out, they're being part of Can't Look Away, part of multiple lawsuits, talking to the AGs, being part of this movement, really, that has led to change. Their children's stories are going to make other children safer. And this is a huge step forward in this because critical in this, the statements that used to come from Meta and the other social media companies always put the onus onto parents, what they can do, offering them products that were designed to be safer for teens.
21:49This settlement really puts the onus back onto the company, where the responsibility will lie with the maker of the product as opposed to the user. Well, since you mentioned that, I'm going to go there. These changes are going to take some time. So what can parents do in the meantime to protect their kids? I know you have a couple of documents, too, that go along with the film that you have. Well, shameless plug, if you watch Can't Look Away, there is a watching guide and it's in front of the paywall on the Bloomberg site so that anyone can access it and anyone can access the Talking Points guide to watch it with their children.
22:22I just had a friend yesterday who bought his daughter a phone and said that one of the requirements was she's entering eighth grade, was that she sit with he and his wife and watch Can't Look Away. And they had used those documents to have a conversation about it because talking to your kids about what exists and what is possible on these platforms is really, really important. And I hate to, as I'm saying, don't put the onus on parents. I'm saying, parents, here's something you can do. I believe that these platforms need to be held responsible. Meta's now being forced to take a step in that direction.
22:55What's interesting about the lawsuit is that it also there's incentives that if the other social media platforms also settle, those protections for children become even more stringent. And there's an increase in the amount of money that's paid so that this really could be the beginning of a shift for all the social media companies. You say it's the beginning. It could be the beginning of a shift. What does the shift ultimately look like from your view? Well, I think it changes the way that the companies rely strictly on engagement of children. They're being held responsible. It's the same thing that goes back to the tobacco settlement, of which many people have made analogies through the big tobacco settlement in the 1990s.
23:36It's not a perfectly fair analogy, but one of the things alleged in that lawsuit by the attorneys general was that the product was designed to addict people. And that's what was happening with tobacco. It was designed to have the maximum capacity to get young people addicted to get you addicted Adults can make that decision with open eyes children can't that's also part of this You know these products are being designed to addict children and now these companies specifically meta will be held accountable and Really really I'm hopeful will be the beginning of a sea change now This is gonna be happening for us for you people in the u.s.
24:13Who use the product so what about? internationally? I mean, did you cover any of that in the film about what's going on around the world? Like you look at Australia, they tried to ban it and it just didn't seem, it's not, doesn't seem to work very well. There've been a series of different legislative moves all around the world in the United Kingdom, in Australia, not yet successfully here in the United States, although there has been movement in Congress and bipartisan movement is one of those few areas where both parties agree there needs to be change. However, this is a, in the financial incentive in their largest market, the United States.
24:47So that is likely to lead to design changes. I certainly hope it does for children all around the world. Before we let you go, I'm just curious about if you're working on any sort of follow-up, if other projects that are relevant to this right now, very briefly. The changing role of technology in children's lives is going to be the most urgent issue that we face. And it's not just about social media. You cover the big AI companies all the time. And we want to be telling stories that help make sure that technology is responsible in the way it's designed so that children can use it safely. That's Matthew O 'Neill.
Read the full transcript
25:29He's co-producer and co-director of Can't Look Away, The Case Against Social Media. He joins us here in New York. If you are interested in seeing the film and looking at the supplemental materials too, you can do that on Bloomberg.com. Bloomberg.com slash features. That's Bloomberg.com slash features. Stay with us. More from Bloomberg Business Week Daily coming up after this.
25:54This is the Bloomberg Tech Minute brought to you by ChatGPT. Now with ChatGPT work. I'm Carol Masser. Bill Gates Breakthrough Energy Ventures is betting on a cheaper way to produce clean jet fuel and made its first investment from a fund that is backed by Alaska Air, American, and several other carriers. The investment is aimed at accelerating the commercialization of clean aviation fuel. The recipient is Boston-based Lydian, which is developing lower-carbon jet fuel made from hydrogen and carbon dioxide, and is one of a growing number of companies developing next-generation clean jet fuel technology.
26:32Lydian says it can reduce capital expenses by more than 50 % compared with competing technologies. Lowering those costs is seen as crucial to making sustainable aviation fuel, or SAF, commercially viable, as it remains far more expensive than conventional jet fuel. Today, clean fuels represent a tiny fraction of the overall market. That's the Bloomberg Tech Minute, brought to you by ChatGPT. Put ChatGPT to work on your most ambitious ideas and projects. Get started at ChachiPT.com today by selecting Work Mode, available on Plus and Pro plans. It's time to plan ahead and make sure your brand is showing up in ways that can have an impact.
27:15That's where 4imprint comes in. 4imprint have promotional products that work as hard as you do. Durable, useful, and designed to make a lasting impression. Think quality apparel your team will wear again and again, including popular and exclusive brands. Drinkware that's enjoyed again and again. Bags, notebooks, tools, and tech items that don't just look good, but actually get used. With thousands of customizable options, 4imprint makes it easy to find what fits your brand and your budget. You'll get expert help, free samples, and their 360-degree guarantee means you can be 4imprint certain your order shows up just right, right on time.
27:52Whether you're gearing up for fall events or simply planning ahead for the season, 4imprint can help your brand show up, stay useful, and make connections that last. Explore the possibilities at 4imprint.com. 4imprint. 4 Certain. Let's talk about healthcare for a second. It doesn't always work the way people expect it to. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling. The system should just work better for everyone. That's exactly what the people at Optum are trying to do every day. They're a health care company linking patient care and pharmacy services and using data and technology to drive the whole system so care is connected, not complicated, for patients and providers.
28:33Things like making it easier to get care that looks at the whole person, from primary care doctors to mental health support and even in-home care, and then using technology to make sure they all work together. Technology designed to help doctors spend less time on busy work and more time with their patients. And those prescriptions? Optum is working to bring costs down, save patients money, and make it easier to get refills. Little by little, Optum is helping make healthcare work as one for everyone. Head to business.optum.com to see how. You're listening to the Bloomberg Business Week Daily Podcast.
29:10Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business App. or watch us live on YouTube. Well, last month, S &P Global posted quarterly results. They fell short of analysts' average estimate, hurt by factors including the U.S.-Iran war, making it harder to boost pricing on contracts for its energy data news and analysis unit. At the same time, though, revenue from the firm's ratings business rose 17%. Revenue from its indexes business, its indices business, was up 20 % year over year. That sets a little bit of the stage for this edition of the CFO Briefing.
29:45And for that, we welcome Eric Abwoff, CFO and EVP of S &P Global, the more than$130 billion market cap financial information services firm. You know it for its credit ratings, benchmarks, and of course, the indices. Also, the leader of our CFO coverage, Nina Tratton, she's Bloomberg News Senior Editor and Editor of the CFO Briefing Newsletter. You can subscribe to it if you don't already at Bloomberg.com slash CFO dash briefing. A big welcome to both of you. Eric, I want to start with you. Your CEO, Martina, said last month that you expect$250 billion to$300 billion in debt issuance this year from hyperscalers or large tech companies expanding AI capabilities.
30:25I mean, we're talking about NVIDIA today and the impact on the trade. I'm curious if we have any visibility beyond this year into 2027, 28, 29, 30, as we're hearing from some of these companies. What are you hearing? We're hearing a number of scenarios, right? scenarios that are at about the same level, some higher, some a lot higher, right? And that's what, you know, keeps, you know, investors excited. But over time, you know, we'll see. In a way, as a CFO, you know, my job is preparation, right? Preparation for those upsides, preparation to be there for our clients, preparation to make sure that our ratings teams are ready with methodologies that they've designed independently and then supporting them as they go.
31:08To follow up, maybe the AI-related borrowing that we've seen in recent quarters, of course, has smashed all records. How far does S &P see a growing credit risk at some point? You know, it's hard to tell. And in fact, what we do is we help provide benchmarks and transparency to the industry. Think about the$45 trillion of debt that we rate each year. Right. That gives investors all the way from retail, all the way to the biggest institutionals an ability to really understand what is going on in the space, both for the hyperscalers, the project finance they're doing, the data center builds. And in a way, you know, that's our business to create that transparency, that insight.
31:50And and over time that that gives them the tools to make better decisions. You know, forecasting the future is not what we do. right we try to help folks interpret what's going on today what to extrapolate what to explore what to think about as upsides and downsides and help them take it from there with the most trusted and you know uh valuable and uh data that we have yeah i guess we we're all curious to see what the future might hold i guess we have to ask the eight ball again you know we don't know none of us know go ahead if we all still have jobs in three years time thank you the robots will be You made also significant changes to the portfolio.
32:29The company recently spun out its automotive business. I'm curious. Talk to us about the considerations for that change. And also, is there more portfolio work that you're expecting at this point? Yeah, we've been clear that we're done with transformational M &A, right? We felt as we had navigated the last, this goes back two years, that we had one area, Yeah, the auto data mobility business. That wasn't as core to what we do. It didn't integrate with some of our other benchmark businesses, you know, ratings, indices, market data, energy. It had different client bases, right? And so it wasn't as core to the rest of the company.
33:07In some ways, it was going to be more successful on its own. So, you know, we spent, oh, 15 months carving it out. That's a lot of work from a finance and CFO standpoint, but legal, comms, all the other people team help with that work. And finally, on July 1st, we spun it out. And it's been a success. So we're real pleased. And now we feel like we're on our way, and they're on their way too. Thinking about the IPO markets this year, do you regret in hindsight that you didn't choose the route of an IPO? No. I think the most natural way to separate a unit is actually to spend. Because what we do is effectively hand over the shares, literally the paper electronic shares to our existing shareholders, and they can choose what to do with it.
33:52And we didn't need the capital. We're a capital-rich company. We create an enormous amount of capital. We've just subsized our buyback. We've got all the capital we need. And this was about doing the best thing we could for our shareholders, which is giving them the right to choose. Well, a couple of things you've talked about. You've talked about M &A activity, hyperscaler issuance, refinancing. They've all supported ratings. So the question is, how durable is that? You know, we see a lot of opportunity ahead of us if you look at what we call the refinancing walls, right? The amount, the trillions of debt that we expect to refinance out of that$45 billion, it's quite high.
34:28It's at some of the highest levels that we've seen over the last few years. And so there's really a couple of features. One is core economic growth creates a need for debt and issuance and rated issuance, which is what we provide. And part of it is you have a natural refinancing that's going on. And then that's supplemented by the ongoing M &A activity. We're in a period where we've got large M &A backlogs, lots of announced M &A, and so that's playing out. And we also have the hyperscalers coming through as well. But each one of those is a different sector. You know, we have global, local, governments, mortgage-backed securities.
35:05We have a wide range. We have leveraged loans. We do both public and private debt. So in some ways, what we're trying to do is be there in all the market segments and actually help support those clients across all those. We're speaking with Eric Abwoff, the chief financial officer over at S &P Global. And Nina Tretman, she is Bloomberg News Senior Editor and CFO Briefing Editor. Thank you. Just wondering, thinking about AI, it's one of the topics that comes up in pretty much all of the conversations for CFO Briefing that we have these days. Talk to us a little bit about how you're using it in the business and also how you're thinking about ROI, which seems to be the biggest challenges that CFOs are facing at this point.
35:50Sure. AI is really an accelerant for us and primarily on the client and revenue side. First, we've been building AI functionality into our products. So as clients access the benchmarks and the vast amount of data that we have, they do it through a set of interfaces that they're increasingly moving towards. So we do it within our products and across all of our different products. There are different kinds of AI functionality that we're rolling out. We're also connecting directly with our clients in their technology suites where they are tackling and adopting the LMs, the frontier models, the open source models that range.
36:29And we're plugging directly into them. We've signed up on a kind of intercompany basis, 500 of those clients. They're using AI more and more. And so in a way, it's a way for them to access our trusted data, right, just in a different way. Historically, they sometimes used it directly through some interface that they used to over time through APIs, which is computer-to-computer connections, and now through LMs. So in our minds, it's just another access point, either through our own products and services or through the new avenues that are open to them. Eric, we just had this fascinating conversation with Jack Manley over at JPMorgan Asset Management, a key question that we posed to him that everybody's trying to figure out is productivity as a result of these tools.
37:16Is there a way that as CFO over at S &P, you've been able to quantify the ROI that you're getting from these tools, like how much you're spending and how much it's giving you? Yeah. On the revenue side, what we're seeing is higher retention rates, larger pipelines, more usage, which over time comes back into our pricing structures and our economic value that we offer to clients. So we're seeing that kind of activity that can give us the information for ROI. And on the productivity side, there's a whole set of areas that we're rolling out AI internally to do what we do more efficiently. And those in particular are very well measured because in a way, what we want to do is just make sure that we're putting AI in the best use cases where we can actually get those returns.
38:07What customers, what are they willing to pay more for today? I think customers are willing to pay more for what is most unique and not accessible generally on the web, right? Our data is all within our ecosystem, right? It's behind a set of walls. And even clients that want our data through LMs and AI tools, it needs to be permissioned, right? They need to have a direct link and account with us so that they can take advantage and benefit from our data, much like they do through the other venues that they source. And what we found is, you know, the first step is we're encouraging usage because usage begets value and value begets over time product, service, expansion, you know, broader set of services that they're buying for us.
38:55In some product lines, there's direct offerings of AI-ready data that's curated and populated and designed in a way that makes it very facile for the large language models to benefit from. In other areas, it's part of the core service. But over time, as we renew with clients, we come back to them and play back to them, hey, here's how you're using our data. Here's how you're using our data through AI. As you use more of our data, let's have a thoughtful conversation about how you benefit and how we should benefit. And so it comes through over time as well. Coming back to the cost part of the conversation, we know that companies across the U.S.
39:35have found out that AI is actually more expensive than they thought, many of them blowing through their budgets halfway through the year. How are you managing token costs? Well, you know, the heart of the CFO job is measurement, right? Because measurement and information and what we call sunlight is a wonderful enhancement into what's really going on. And so we've got quite a bit of information that we've been building around the usage of AI, the token usage, the token usage by division, by product, by our clients, by us. And then as we roll out AI tools internally, whether it's to our software developers who are able to add and develop software code and add product feature functionality, we're measuring how much more effective they are, right, as well as the amount of token usage.
40:23So to us, it's like other investments. It's something you measure, monitor, refine, adjust, right? Because that is the heart of what a CFO does. And it's going to be a conversation that we're going to continue to be asking people like you about because this is what it is all about right now. Eric Abwaaf, CFO and EVP of S &P Global, joining us here. Also, the leader of our CFO coverage, Nina Tretman. She's Bloomberg News Senior Editor. She's editor of the CFO Briefing newsletter. Check it out at bloomberg.com slash CFO dash briefing if you are not already a subscriber. Stay with us. More from Bloomberg Businessweek Daily coming up after this.
41:07This is the Bloomberg Tech Minute brought to you by ChatGPT. Now with ChatGPT work. I'm Carol Masser. Bill Gates Breakthrough Energy Ventures is betting on a cheaper way to produce clean jet fuel and made its first investment from a fund that is backed by Alaska Air, American, and several other carriers. The investment is aimed at accelerating the commercialization of clean aviation fuel. The recipient is Boston-based Lydian, which is developing lower carbon jet fuel made from hydrogen and carbon dioxide and is one of a growing number of companies developing next generation clean jet fuel technology.
41:44Lydian says it can reduce capital expenses by more than 50 % compared with competing technologies. Lowering those costs is seen as crucial to making sustainable aviation fuel, or SAF, commercially viable, as it remains far more expensive than conventional jet fuel. Today, clean fuels represent a tiny fraction of the overall market. That's the Bloomberg Tech Minute, brought to you by ChachiPT. Put ChachiPT to work on your most ambitious ideas and projects. Get started at ChachiPT.com today by selecting work mode. Available on Plus and Pro Plans. It's time to plan ahead and make sure your brand is showing up in ways that can have an impact.
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43:04Whether you're gearing up for fall events or simply planning ahead for the season, 4imprint can help your brand show up, stay useful, and make connections that last. Explore the possibilities at 4imprint.com. 4imprint. 4certain. Let's talk about healthcare for a second. It doesn't always work the way people expect it to. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling. The system should just work better for everyone. That's exactly what the people at Optum are trying to do every day. They're a healthcare company linking patient care and pharmacy services and using data and technology to drive the whole system So care is connected, not complicated, for patients and providers.
43:45Things like making it easier to get care that looks at the whole person, from primary care doctors to mental health support and even in-home care, and then using technology to make sure they all work together. Technology designed to help doctors spend less time on busy work and more time with their patients. And those prescriptions? Optum is working to bring costs down, save patients money, and make it easier to get refills. Little by little, Optum is helping make healthcare work as one for everyone. Head to business.optum.com to see how. You're listening to the Bloomberg Business Week Daily Podcast.
44:21Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business App. Or watch us live on YouTube. Lisa, we've spent a lot of time in recent days talking about trade and tariffs as it relates to the U.S. and Canada. Yeah, yeah, most definitely. And especially because all the different products and who's being affected, like those small businesses, too. Yeah, we cannot forget about the big one, though, and that's China and the relationship between the U.S. and China. The latest is that China said it would monitor U.S. actions related to tariffs for alleged overcapacity and may take countermeasures, underscoring lingering friction despite a trade truce.
44:57Patrick Pan, closely attuned to trade policy between the U.S. and China, he is joining us here in the Bloomberg Interactive Brokers Studio. He's global head of marketing at Xlab. Xlab is the consumer bike company that comes from XDS International. Now, Patrick, even though people haven't heard of XDS International, unless they're in the bike industry, they've probably ridden a bike that's been made by XDS International. Before we get to what you guys are doing over at Xlab, can you explain the contract manufacturing for carbon fiber frames that XDS International has done for decades in Shenzhen?
45:34Yeah, XDS as a whole, as a company, started in 1995 and began modestly with wheels manufacturing and seat post manufacturing and then built on a vertically integrated manufacturing ecosystem from then on. Eventually, it built its own carbon fiber facilities in, I think, 2005, 2006. As you've said, it's since been a massive OEM for a lot of the big brands that people have heard of, a lot of the brands that are in the world tour. uh it i believe by volume it is now the largest bicycle manufacturer in the world and about a year and a half ago it was decided that now there is a a lot of the conditions are appropriate for its in-house brand xlab to be to be born okay so yeah i want to explain a little bit about this because this didn't actually get on my radar until a few months ago when i walked into a bike shop in brooklyn i had just bought a brand new bike i was there uh getting fitted for the bike a friend of mine manages the shop and he said hey before we jump on your bike come check this bike out he takes me over to one of the the top of the line x lab bikes shows it to me and he says guess how much this thing costs and it's like seven thousand dollars which sounds like a lot of money but for a bike that comes with top of the line components it's so much cheaper than you would get from like so how much do they go for normally 13 yeah a bike of that caliber with those specs would be around a 12, 13,$14 ,000 range.
47:01So here's the thing that I don't understand. Does this cannibalize the X lab or the XDS business? Like why is a company that uses XDS international to manufacture its carbon frames? Okay. With you guys undercutting their core business. It's an interesting question. I think that there are two layers to this, right? The first is, the fact is, we've put a lot of work into building a world-class OEM business. And so that model itself is highly competitive from a quality perspective, from a cost perspective. And there's very little incentive for a brand who's already working with XDS to not, because I think the cost of switching would be significant.
47:49The other side of this is, I think we're assuming that the cycling industry is a finite pie. There's much more merit to say, look, a lot of people can ride bikes. Most of them are not buying bicycles. Why is that? There's a misalignment in the addressable market for who can ride bikes versus who is actively participating in the industry. If we assume that we're always pushing towards the tip of the pyramid, like you said, we keep chasing better specs, naturally meaning higher prices. If we keep pushing towards that tip, we're sort of disregarding a massive opportunity for new riders to enter. If we can be the ones to change that equation and start bringing in more riders, then we're not going to be taken away from competitors.
48:34We're going to be growing the pie for everybody as well. I mean, the prices you're talking about is crazy. I go for like a Huffy. It's an insane hobby. Cheaper than golf, I would say. But I'm curious because you had mentioned, you kind of touched upon this a little bit, how the company is coming out now. And you said the timing is right. So what makes that timing right? Why now? A number of things. I think because XTS has now at this point built a massive in-house R &D capability that has since been able to find out what are some of the best ways to improve upon bikes. The other side of this is, you know, going into the pandemic, I should say.
49:11and I know Tim's very well aware of this, going into the pandemic, a lot of people started riding bikes, maybe picking it up for the first time since they were a kid. The conditions were apt. And so bike brands started placing a lot of orders for new inventory. When the market corrected itself, a lot of the dealers and the bike shops, like the one in Brooklyn that Tim goes to, were probably left holding the bag with a lot of excess inventory that they can't necessarily move. And this was a massive imbalance. And XTS was no stranger to that. Some brands had placed massive orders that they cannot fulfill.
49:48So we were left with a lot of stuff, essentially. And so with all that excess capacity, we thought, well, okay, these can all be great bikes. Let's just do it. Let's just turn all of this expertise into a genuine line of performance bikes that we can do ourselves. You know, the brand name is big in the bike industry. And certainly folks who watched the Tour de France this year saw the XDX Astana team in the Tour riding these bikes. But I'm curious how you build. You're in charge of marketing. You're in charge of communicating to customers and potential customers. How do you get somebody to trust this brand name when for years they've been, you know, with one of the big American firms?
50:31Sure. I think a lot of times people that are in the industry are already aware that most of the brand names that they know and trust are made either in our factory or in a similar factory. You think people are aware of that in general? I think those that are deeply embedded in the industry are. I don't know if the average consumer is. Right. That's what I mean. But realistically, there really isn't anybody that's better at carbon fiber than China is right now. And among that group, right, the XTS crop, I think, is quite top of the line. So realistically, I think people are now more and more understanding that if you are chasing a quality build, a quality bike, it is conceivable that the entire thing is coming from China.
51:15And with that assumption, then it's just about the label that's on the down tube. And I think people are aware of that, too. So how do you come about with the price? If it's so much significantly lower and then you're taking on these tariffs at the same time, how do you keep it at that price? Are you absorbing the cost? You know, when tariffs, as they have been somewhat volatile in this past year, we have been able to absorb it. A lot of this, the merit comes from the fact that we own the entire manufacturing end to end. And so this is as early as the raw spools of carbon fiber being woven into sheets that then become the frames with the molds and then all the way through the paint shop.
51:58You know, when I say vertically integrated, it's quite literal. It's one building. First floor is this second floor, you know, all the way up to the paint shop. So it's surprising, I think, once you have all of those pieces in house, what that means for the inefficiencies of having too many suppliers layered on. And this, in essence, gives us a pretty strong control over the entire cost structure. And so coming into this now, our goal is to make sure we can pass some of that efficiency to the consumer. And also equally important is passing that on to the dealerships as well. Patrick, we only have about 30 seconds left, but we're Bloomberg.
52:34We want numbers. We want metrics. What can you tell us about growth of the business, sales growth in terms of revenue and what you're seeing in this early stage? When XLab launched in April this year, we were projecting, well, some number that is significantly lower than what we are right now. I would not be able to share hard numbers, but we essentially 5X'd the initial forecast for coming into the US. And we expect the same as we launch into other major markets in the coming year. Patrick Pan, he's Global Head of Marketing at XLab. This is the Bloomberg Business Week Daily Podcast, available on Apple, Spotify, and anywhere else you get your podcasts.
53:17Listen live weekday afternoons from 2 to 5 p.m. Eastern on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal.
53:39Healthcare doesn't always work great. If you've ever waited on a refill or couldn't schedule an appointment, you get it. That's the kind of stuff Optum is changing. They're using data and technology to integrate patient care, pharmacy, and everything else. So healthcare is connected, not complicated. What's that look like? Cheaper prescriptions that are easier to get and care that looks at the whole person. how you need it. Optum is helping make healthcare work as one for everyone. Learn more at business.optum.com. It's time to plan ahead and make sure your brand is showing up in ways that can have an impact.
54:14Four Imprints promotional products are designed to work as hard as you do and make a lasting impression. From quality apparel, including exclusive brands, to drinkware, tech, and totes, they've got thousands of options to fit your brand and budget. Plus, you get free samples, expert help, and their 360-degree guarantee. So you can be 4imprint certain everything shows up just right, right on time. Explore more at 4imprint.com. 4imprint. 4certain. As industries evolve faster than ever, companies need an environment that accelerates strategic growth, and Michigan delivers on that promise. From emerging startups to global enterprises, Michigan offers what executives value most, a resilient, innovative ecosystem, diverse communities that attract top talent, and a quality of life that supports work-life balance.
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Nvidia, the chipmaker at the heart of the artificial intelligence boom, said revenue will grow about 70% next fiscal year, easing concerns that AI spending is poised to lose momentum. The projected sales growth for fiscal 2028 outstrips analysts’ estimates for a 45% jump, according to data compiled by Bloomberg. Nvidia shares rose as much as 7.6% to $225.50 after trading got underway in New York on Thursday, adding about $362 billion in market value. The stock was already up 12% this year through Wednesday’s close.
On today’s episode:
- Mandeep Singh, Global Head of Tech Research for Bloomberg Intelligence
- Matthew O’Neill, Co-Producer & Co-Director, ‘Can’t Look Away: The Case Against Social Media’
- Nina Trentmann, Bloomberg News Senior Editor and CFO Briefing Editor & Eric Aboaf, CFO and EVP at S&P Global
- Patrick Pan, Global Head of Marketing at X-Lab
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