AI Bosses Risk Clash With Wall Street and Trump Over Safety

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2:01Scarlet Fu:Listen on demand wherever you get your podcasts or watch us live on YouTube. What's happening this week is very much a continuation of this now debate among AI bosses about whether to rein in to check the growth of these cutting edge AI models so that everyone can better understand the risks posed by the technology. There have been a series of security breaches, public opinion poll after public opinion poll show Americans are very weary of AI and what the AI models can do. Let's bring in Sarah Fryer. She's our managing editor for technology coverage. And, you know, we hear the CEOs and founders of Anthropic and OpenAI saying, let's maybe tap the brakes to slow down development here.

2:45Scarlet Fu:This is still very much an intellectual debate, right? I mean, nothing has been slowed down yet, has it? Nothing has been slowed down. In fact, if you read that 3 ,800-word manifesto, So there's not really a lot of concrete commitment to stopping pre-training or deciding not to release certain things or pulling back on data center spending. That is all very much in the mix still. They still plan to grow their company. They're going to have a major IPO in the coming months. So really, this is about planting a flag and saying we're ready to do something should everyone agree to do it. Because if we don't or if we do it without everyone else doing it, then it's not going to have an impact because people could still develop this harmful technology.

3:39Sarah is a graduate of the University of North Carolina at Chapel Hill, and I thought we had a policy on that. Oh, I know. Sometimes we have to suspend our policies. Sarah, I'll tell you, President Trump has come out on the other side, and Vice President J.D. Fance as well just minutes ago saying, don't slow down, for a variety of reasons, not the least of which is China is not slowing down. It is so central to Trump's agenda that these AI companies continue to grow at the pace that they're growing, because that is what he's leaning on. the economy, the stock market growth. That is what he thinks is going to propel Republicans to win in the midterms.

4:18Now, if you look at the polling, if you look at the general sentiment of citizens in the USA, there is a lot of negative sentiment about data centers, about AI development. Most of it is about taking jobs, about building data centers. not as much connected to the safety conversation, but that does, as of the last few days, bubble up into the mainstream. And I think more people are talking about that now as this existential threat. However, we haven't really seen a lot of major threats beyond the cybersecurity angle, right? We've seen these AI tools escape their protective testing environments and hack.

5:02That is concerning. We have not seen some of the other things that, you know, this existential race of race of humanity, extinction idea that that has bubbled into the consciousness.

5:17Scarlet Fu:But the idea is that that is out there and it could be something that we need to confront. And, you know, that's adding some urgency to all of this. Congress has not been super productive. I think it's fair to say for the last couple of years. Is anyone in Congress, are lawmakers taking this up, talking about it, addressing this in any way? Because, you know, if we're going to come up with regulations, they should kind of play a role. They should definitely play a role. I think we're seeing some some, you know, really prominent voices come out here and there. Steve Bannon is meeting with Bernie Sanders tomorrow.

5:49I mean, there's some strange bedfellows are being created. But I think that some of the issue here is that so far it's OpenAI and Anthropic, the two market leaders, saying that they want to lead the way on regulation here. And that has potential antitrust implications, right? If you have these two companies coordinating on their development of the technology. So there there's going to have to be a little bit of of direct communication with government about what they can do and how do they do it in a way that doesn't, you know, endanger growth in the rest of the industry or benefit them only.

6:35Scarlet Fu:Stay with us. More from Bloomberg Intelligence coming up after this. Some 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.

7:16Scarlet Fu:Get started at ChachiPT.com by selecting Work Mode, available on Plus and Pro plans.

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9:28Scarlet Fu:You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. The AI story twists and turns. Now the story is people thinking about, you know, should some of these developers put their brakes on it or not? And a lot of folks are wondering, is that going to impact maybe some of the capital markets activity coming out of the AI space, including some potentially big IPOs coming? Our next guest has some thoughts on this, Isabel Friedheim.

10:02She is the founder and managing partner of Athena Capital. Isabel, I'd love to get your kind of most up-to-date thoughts on kind of how you're viewing AI here. Because I think the story, again, over the last week or so, it's resulted in some leading players within the AI space to say, you know what, maybe we should consider putting the brakes on the development here. Others don't agree, citing competition with China. How do you think about that? Yes. Hi, Paul. Thank you. We are particularly interested in AI investments in the private market. So in the public market, it's hard to really access value because a lot of the value has been created and those companies have been repriced in the private market.

10:46So by the time they reach the public market, it's a different story. It's a different investment thesis. And you're betting on a pure transformational technology. So when it comes to private market investments, there is a vast wealth of opportunities that exist in the middle layer. So we particularly like the layer that exists between data centers and LLMs.

11:15Scarlet Fu:So what does it mean if Anthropix CEO says there should be a slowdown in AI development? What does that mean in the private industry among these private companies? Well, that makes it harder to invest in a pure transformational technology. And we are now investing in, when you invest in an LLM, you're really underwriting the technology. And so there's, for a number of reasons, there is a slowdown in the pace of growth of that technology. So different reasons that have existed in the past, but it is there. So where is the opportunity? And because of the risk that exists with underwriting a technology, the risk isn't just the technology itself, it's the mispricing of those companies.

12:08And the opportunity that we see is the opportunity that exists in that layer that I mentioned, where we're not betting on which LLM will win. We are betting on the picks and shovels. That expression comes, by the way, from the gold rush, where those that made money weren't necessarily the big miners. They were the merchants that sold the picks and shovels. And this is the opportunity that we underwrite, and that is that layer of tools that are needed to operate the technologies. So do you expect the pace of just AI investment to continue at the rapid levels we've been seeing over the last, I call it, four years or so?

12:54probably again because there's been a lot of capital deployed in the llm layer but there is an entire industry that's emerging to facilitate the use of those technologies whether it's to lower the cost for example or to improve the performance to lower the computing cost lower the electricity cost we just invested in a company multiverse computing and that for example, will compress the data to make for lower cost of computing power that is needed and lower electricity. So I think, yes, the capital will continue flowing into AI. And we are now in a very different environment that we last saw in 2021, for example, when investments were being deployed into tech companies.

13:53Again, very different environment.

13:56Scarlet Fu:In terms of going public for some of these startups that, you know, where the early investors are looking for an exit, is now the right time to do so if Anthropic, you know, perhaps doesn't move forward with its IPO and OpenAI has already indicated it's not going to do anything in 2026. How much are these startups, these smaller companies looking at the schedule for when the big AI labs go public to determine their own timing? They are currently looking to go public. There are a number of them that will explore IPOs, SPACs, maybe direct listings to really tap into what is a deep pool of capital that is available to them that might not, that does exist for now in the private market, but not at the size that they can find in the public market.

14:48And right now, there's no question there is demand for these types of tech stocks. So I think companies will continue to explore. Again, we are just recovering from a long down IPO cycle. It's not unusual to see IPO cycles that will last four or five years. And inevitably, when the IPO cycles recover, it's very typical to have larger companies go public first. I mean, these were beyond large, they were mega deals. But there continues to be demand both in the public market and in the private market. Stay with us.

15:21Scarlet Fu:More from Bloomberg Intelligence coming up after this. Some 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.

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18:13Scarlet Fu:You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at 10 a.m. Eastern on Apple CarPlay and Android Auto. with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube. Let's switch gears and go to the theme park business, to the cruise line business. Royal Caribbean, how about this? They're beginning construction on their fifth icon class ship. Those things are just monster. Those are the big ones that if they actually show up in port, they kind of take over everything. Everything, everything. And they're also going to do their first river ship.

18:51How about that? All right. Trying to compete against Viking, I guess. Let's talk to Jody Lurie. She covers all these consumer-facing, entertainment-type facing companies here from the credit perspective. So, hey, Jody, thanks so much for joining us here. So how's Royal Caribbean going to pay for all these new ships?

19:10Scarlet Fu:How are they going to pay for the new ships? Well, debt is usually the way to pay for them. But more than anything, it's the cash flow. And for Royal, we are seeing that despite the hiccups related to the Iran war and sort of hesitancy around that, that bookings are still extremely strong for them and for a lot of their competitors. I think what's interesting when you talk about the river portion of it is that what we saw with Viking was a little bit of a cautionary tale related to global warming and unexpected events, meaning we saw that river levels were very, very low. Now they're improving and Vikings make comments that it's improved.

19:52Scarlet Fu:But it does raise questions for Royal. And now, you know, there's talks of MSC entering the game. And so everybody's fighting for these river cruises, but are the river levels high enough? So that's just a weird global warming effect. OK, so there's a lot of debt here and we know that rates are elevated and the Federal Reserve is likely to hike rates later on this week as well. How does that affect Royal Caribbean? So, Scarlett, I mean, it definitely affects them in terms of the pricing that they're going to get. it does benefit that they have gotten their investment grade rating and they're solidly investment grade.

20:28Scarlet Fu:So we are seeing that despite the fact that rates on an absolute level are higher, their relative pricing is better. So relatively speaking, they are doing better, at least from a cost of capital. But yes, obviously having these rates rise and inflation affect just the input costs, never mind the way that the interest rate environment is. I think that certainly management is going to be much more proactive in how they think about it and how they sort of consider where they're getting the financing from and looking at the capital markets versus their export credit facilities like we've seen recently.

21:11Let's switch gears, Jody, to the theme park business. I know you cover Six Flags, United Parks. Just talk to us about the theme parks business and how that's looking with, you know, just higher inflation out there.

21:24Scarlet Fu:Paul, I mean, the the average theme park goer for the regional theme parks has a lower income than what we see for the U.S. Census Bureau. And so what does that mean? That means that they're definitely feeling the effects a bit more as it relates to gas prices, as it relates to basic goods. And while these companies are benefiting from selling season passes, from doing these promotional components, the attendance isn't necessarily what I think they're hoping. So once they get people in the park, people are willing to spend because they see the value proposition there. But to get them into the parks might be a little bit more of a struggle than they anticipated.

22:06Scarlet Fu:And what we're seeing with our alternative data, if you go to Alt-D go, you could see alternative data such as foot traffic from police or AI. And you could see that for 2026 so far this year, it's actually been weaker than 25. And 25 wasn't necessarily a year to write home to mom about. How much of that is because we've had things like the World Cup, you know, just distract people. And I hear what you're saying about how these are higher or lower income consumers than perhaps the census average. But it kept a lot of people at home watching TV. Sure, Scarlett. Yeah, there's definitely a component that there was a competition, particularly United Parks talked to this, that the World Cup affected the June, July volumes.

22:50Scarlet Fu:But we saw in August that things didn't get better. So if it was just the World Cup and you saw that blip that starting the summer season wasn't going to be as strong, but it really is something that has continued into the rest of the summer. And so for the destination parks, you're not necessarily seeing a return of international visitors. That's a function of the fact that the U.S. conversation with ally countries hasn't been so great. So international visitors into the U.S. has been a little bit not as strong as what we've seen, particularly Canada, unexpectedly, very much expectedly. And so that is definitely affecting destinations.

23:30Scarlet Fu:Stay with us. More from Bloomberg Intelligence coming up after this. Some 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.

24:11Scarlet Fu:Get started at ChatGPT.com by selecting Work Mode, available on Plus and Pro plans. You already know how AI is changing how everyday work gets done, how much ground you can cover, and how fast a team can scale. To stay ahead, you need the tools that give you a competitive advantage built for this new era. Welcome to Agentic Revenue. Adio is the CRM for this world. It meets you where you work, compounds every customer signal into context, then acts on it across your pipeline to let you move in on match speed and scale. With agents and automations for every job in revenue, Adio orchestrates your work around the clock.