BI Weekend: Nvidia Chips, Dating Apps, Tesla Vote

0:00When your options are limited, so are your opportunities. At SIBO, the global exchange that pioneered options trading, we offer more ways to move with the market. From VIX and SPX options to global market data solutions, SIBO helps investors diversify, manage risk and stay ahead of whatever the market does next. SIBO. Life is better with options. Your investments could be too. There are risks associated with SIBO Company products. Review the disclosures and disclaimers at SIBO.com slash US underscore disclaimers. Some people treat ChatGPT like some kind of smart search engine, and some use it to get work done.

0:36ChatGPT 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. When you're running a business, the best days are the ones where priorities stay on track.

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2:34I'm Paul Sweeney. And I'm Lisa Mateo, filling in on Bloomberg Intelligence. On today's show, we dig inside the big business stories impacting Wall Street and the global markets. Each and every week, we provide in-depth research and data on some of the 2 ,000 companies and 130 industries our analysts cover. worldwide. Today, we'll look at Bloomberg Intelligence's deep dive into dating apps and how Gen Z is using them. Plus, a look at how Trump administration policies are impacting the transition to clean power. But first, we begin with the tech sector. Well, this week, we heard that tech giants NVIDIA and AMD, they plan to resume sales of some AI chips in China.

3:09This came after U.S. government officials told the companies these shipments would get approved. For more, Lisa and I were joined by Mandeep Singh, Bloomberg Intelligence's senior tech industry analyst. We first asked Mandeep to explain the policies of the U.S. government as it relates to chips. In mid-April, the current administration banned the sale of NVIDIA H20 chips. And remember, H20 is a deprecated version of the Hopper 200 chip that NVIDIA sells in the U.S. and other markets. So it's not the highest-end chip in terms of performance and power consumption. But at the same time, what they were able to do is to sell this deprecated version for a while.

3:53And then since mid-April, it was completely banned. And so what NVIDIA did was they took down the guidance and they pretty much wrote off the inventory of the Edge 20 chips for their 1Q. Part D was around$2.1 billion for 1Q. And then for 2Q, they guided for an$8 billion sort of headwind from the lack of sales to the China region. Now, with this new guideline around NVIDIA being able to sell those H20 chips, I believe it's a similar version to what they were selling before. I think you could pretty much add, you know, I would say up to a$25 billion run rate annually in terms of sales to China. So think of NVIDIA sales next year are going to be around$250 billion.

4:51That's the current consensus. Add$25 billion to that because that's how much they are able to sell to China as of right now. It could be much higher, but at least a 10 % lift from being able to sell into China with these kind of lighter version of their highest end chips. So I think it's a net positive. Same thing for AMD. AMD, the market is much smaller for them, given their market share in GPUs. But I would say AMD would get a similar lift, at least 10 % of their sales expectations. So is there a difference between what NVIDIA can sell and what AMD can sell in China? Is it about the same as far as what the White House would say?

5:35So AMD also has a deprecated version of their highest end chips that they are selling into the U.S. market as well. Just because the administration doesn't want either AMD or NVIDIA to sell their highest end chip that's made on three nanometer node that has got a certain performance spec. And so they don't want the latest technology to be sold into the China region. What they're okay with is an older version of NVIDIA chips that doesn't have the same level of performance as the current version. And that they can sell into these Chinese companies and the administration is okay with that. All right, Mandeep, I have no idea why the government's changing its policy, but it's good for these companies.

6:22Negotiation. Certainly. So we'll keep an eye on that. Do we know just offhand why they changed the policy? I mean, it's part of the bigger negotiation. The administration is focused on building more data centers here in the U.S. For the companies to be able to do that, meta, talking about super intelligence and all the CapEx spend, they need some stuff from China as well. So this is more about you have the rare earth stuff, we have the chips, and it's part of the bigger negotiation. Our thanks to Mandeep Singh, Bloomberg Intelligence Senior Tech Industry Analyst. We recently focused on a Bloomberg story entitled Stealth Stake Sales Helped UnitedHealth Beat Wall Street Targets.

7:03You can find it on the Bloomberg Terminal and Bloomberg.com. It discusses how until this year, UnitedHealth Group had managed to pull off an impressive feat, more than 60 consecutive quarters of earnings that beat Wall Street estimates. But now analysts are starting to question how UnitedHealth is arriving at these numbers. For more, Lisa and I were joined by Michelle Davis, Bloomberg senior deals reporter. We first asked Michelle about what she found out when she looked into UnitedHealth's earnings. They had kind of a pristine record for more than 60 quarters. They beat estimates. Analysts love them.

7:35And at the end of last year, that got a bit harder for them to keep up. You know, medical costs were rising. The government's been cracking down on reimbursements, and that was eating into profits. And so what we reported is that at the end of last year, they approached several private equity firms and asked them if they wanted to buy stakes off of them, of their businesses. And a couple interesting things happened here. Not only did they quietly do this, but the deals were structured such that UnitedHealth can be forced to buy the businesses back down the road. So it's temporary in nature. And United booked the gains in an interesting place.

8:12They booked them as part of operating earnings, or adjusted earnings, which is normally where you look to see kind of how a business is doing, you know, excluding one-off gains or one-off events like this. And so it was just interesting to see not only the fact that they stealthily did this, but where they put them. And without these gains, they would have missed estimates and profit would have dropped in the last quarter of last year. So as I'm going through this article, this certain quote stands out for me from an analyst that you spoke to. He said, if the company is manufacturing earnings by chopping up their furniture or selling their assets, that's not exactly a great business model.

8:46OK, so is the risk that it might be kind of masking this weakness in the operations? That's the concern. And just to be clear, you know, there's nothing illegal about what they're doing, per se. You know, they disclosed that they did this. Most people didn't see it. It was in a footnote in their 10K that kind of went under the radar. And there are no details about what exactly they sold. That's what we're trying to report on here. But yeah, the concern is it clouds, you know, your ability to see how the business is actually performing. And we heard from sources that there's a culture inside UnitedHealth of, you know, kind of there being this pressure to do whatever you can to meet targets every quarter.

9:23Yep. It's a huge company, huge player in the managed care business. What's the underlying concern for investors out there, do you think, around this company? UnitedHealth has been dealing with a lot of things. I mean, even before we knew about this, There was obviously the tragedy of one of their executives being murdered last year. And then there was a Wall Street Journal investigation this year about potential Medicare fraud, which they have denied. They also, in the first quarter, reported their first earnings miss in more than 60 quarters. So that shoe finally dropped. They ousted their CEO.

9:58So investors are just concerned about the story here. What is the UnitedHealth story? I think that's what the big concern is. So are there any other companies, like maybe other health companies or something like that, where this same story that you've been talking about kind of plays out? Not that we could find. It seems like UnitedHealth is really, you know, unique in its ability and history of, you know, really carefully managing its reporting every quarter. Our thanks to Michelle Davis, Bloomberg Senior Deals Reporter. We move next to the IT space. This week, we heard that the IT company Hewlett Packard Enterprise is creating a new strategy committee.

10:36And HPE is agreeing to work with activist investor Elliott Investment Management on ways to help the software company boost value. For more, Lisa and I were joined by Woojin Ho, Bloomberg Intelligence Senior Technology Analyst. We first asked Woojin about the new committee HPE is creating. It is a hand-picked board member by Elliott Management. Keep in mind, Elliott is an activist investor that has a 10 % plus shareholding of HPE. I believe they made their position early in this year. And who they appointed was Bob Calderone, who has done similar type of deals in terms of taking companies private or, more importantly, operational streamlining.

11:21So any changes, I think Elliot is going to try through Bob to affect a lot of changes at HPE. Muj, just remind us what HPE is today, number one. And number two, what do they need to fix to move this thing forward? Yeah. Hey, Paul. So HPE is one of the leading enterprise IT infrastructure vendors. They provide servers, storage, now a bigger networking presence with the Juniper acquisition. And actually, quite frankly, there's quite a bit to fix. From an operational standpoint, they fumbled the first quarter results by mispricing their server business. And it seems to be reconciled now, but it flags some of the operational issues, number one.

12:12Number two, they have made a lot of M &A that just didn't create the synergies that they had hoped. So, you know, they did hire the former HP CFO to streamline the financials. And with the Juniper merger starting underway, I suspect that, you know, the new strategy board will try to find more operational synergies between the two networking businesses. Raghuram Gawaino, can you dig more into how it's under pressure, kind of like lagging behind Dell and growing AI? What kind of pressure is it facing in that market? Raghuram Gawaino, Yeah. So if we think about AI, right, you know, HPE actually owns Cray.

12:57And we think about high performance compute, they are the market leaders there. HPE has not been able to transition that trade business elegantly to the AI side of things. Let me put this into context. I think HPE should be on track for about$3 billion to$4 billion in AI sales this year, possibly$4 to$5. Dell is going to be on track for about$15 billion this year. and Supermicro is probably on track for about$20 billion this year. So, you know, they've lagged on the AI front, even though they have some of the leading technologies on high-performance compute. That's an area that, you know, could be fixable under the right hands.

13:45One more here before we let you go, Wuj. You mentioned they own Cray, they own Juniper. If I'm Elliott Management, am I thinking about maybe they could be selling or spinning off some of these businesses to enhance value? Well, you know, Bob Calderoni used to be on the Juniper board and they actually helped with the operational streamlining of Juniper, right? So I think you want to keep Juniper. Okay. There are other aspects of the networking business that you could probably parse away, right? The Cray business you'd want to keep because AI is going to be the growth engine and also help you transition to the enterprise AI.

14:25Our thanks to Woo Jin-ho, Bloomberg Intelligence Senior Technology Analyst. Coming up, we'll look at Bloomberg Intelligence's deep dive into dating apps. You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in-depth research and data on 2 ,000 companies and 130 industries. You can access Bloomberg Intelligence via BI Go on the terminal. I'm Lisa Mateo. And I'm Paul Sweeney, and this is Bloomberg. When your options are limited, so are your opportunities. At SIBO, the global exchange that pioneered options trading, we offer more ways to move with the market. From VIX and SPX options to global market data solutions, SIBO helps investors diversify, manage risk, and stay ahead of whatever the market does next.

15:07SIBO. Life is better with options. Your investments could be too. There are risks associated with SIBO company products. Review the disclosures and disclaimers at SIBO.com slash US underscore disclaimers. 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.

15:50Put 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. This is Matt Rogers from Las Culture East. That's with Matt Rogers and Bowen Yang. This is Bowen Yang from Las Culture East. That's with Matt Rogers and Bowen Yang. You know when people try on new food and suddenly it's like, wait. That's the reaction a lot of people are having when they first try Kewpie mayo. It's the one with the red cap and the little baby on the bottle. You've probably seen it in the grocery store before. And if you've ever just walked past it, some people would say that's a huge mistake.

16:26Because this mayo is different. Most mayonnaise uses whole eggs. Kewpie only uses egg yolks, which gives it this rich umami flavor. It's smoother, deeper, and almost buttery. Once people try it, they start putting it on everything. Egg sandwiches, fries, burgers. Some fans even swear by dipping pizza crust in it. And once you notice it, you start seeing it everywhere. Chefs use it. Restaurants use it. People who really care about flavor use it. Never tried it? Grab the bottle with the red cap next time you're at the store. Put it on just about anything. Then you'll understand. Cupid, the original Japanese mayonnaise.

17:01You'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. I'm Paul Sweeney. And I'm Lisa Mateo filling in on Bloomberg Intelligence. We next move to the world of online dating. Bloomberg Intelligence recently did a survey on dating apps and how Gen Z is using them. And the survey found that Gen Z is dating less than most other generations. For more on this, Lisa and I were joined by Nicole D'Souza, Bloomberg Intelligence Internet and Software Equity Analyst.

17:35We first asked Nicole to explain her findings. We at Bloomberg Intelligence conducted the survey to better understand how people are navigating dating, how they use dating apps, and then also how they feel about AI within dating apps. And so some really interesting findings. First, that, you know, specifically Gen Z tends to be single but not dating. Gen Z is what age again? 16 to 28. 16 to 28. All right, so I got two of my four into that one. Okay, go ahead. And so they're not using the apps? They're not even dating, single and not dating. So this is, I mean, there's a few reasons. Studies have kind of shown they do have higher rates of loneliness, but they are also prioritizing independence.

18:18They are also feeling a reduced stigma around being single. So it could really change dating patterns generationally. I can kind of say it. My son was on a dating app and then he stopped because he got tired of it. And he's in that Gen Z kind of group. and they're not going to pay for them too. So how does that change for these different dating apps out there? How do they have to change their approach? So right now, a lot of what we're seeing from Gen Z is that even though they are dating less, they are looking for long-term relationships, those that are dating. They are looking to form meaningful connections.

18:55So some of the products we've seen from these dating apps that really introduce AI are more around how to create a profile, how to make it easier to talk to people, using AI to generate prompts. That might not necessarily correlate with what Gen Z is looking for in terms of forming a meaningful connection. I'll tell you, Lisa, go to the Parker House in Seagirt, New Jersey, on a summer Saturday. Thousands and thousands of kids of Gen Z type are there. At like 4 o 'clock in the afternoon, they're not on the beach. They're all made up, dressed to the nines. And I think they're looking to meet somebody.

19:31I know, I've been there. I had to wait on my kids. I mean, I don't know what's going on. How about millennials? How do they fare? So millennials are, they kind of came of age during the time of dating apps. So a lot of dating apps are really created to target dating patterns of millennials. So millennials have a more favorable relationship with dating apps. And they also are much more comfortable with AI in dating apps versus Gen Z, which was surprising to us. Now, what about, okay, people always forget about Gen X. The Gen X folks. Your Gen X. Yeah, so what about Gen X and then, you know, my mom, you know, single, like she wants to find out about these apps.

20:10I'm telling you. What about the older generation? They're on dating apps. So they're on it. There are, yeah, there are a lot of Gen X and baby boomers on dating apps. And there are a wide variety of dating apps to kind of address different age groups, different, you know, things that people are looking for. So they're available. How does AI, I have to ask the AI question, because we had a guest on earlier about it. I walked out of there thinking AI is going to take over Wall Street. How about AI and dating apps? That, I would think, could be helpful to better select somebody who might be a good match or something.

20:44So we've seen dating app companies roll out a lot of AI products. I would say right now, it seems, at least based on our survey, that they haven't been that well received. it seems like people don't necessarily need AI to build a better profile. They don't need AI to help them engage in conversation. I think where it has been helpful is user safety. So to weed out profiles that are fake or, you know, potentially people who are sending harmful messages. And that is a common complaint. But as of right now, it doesn't seem that, you know, at least Gen Z and even some millennials are really, really adopting these new AI products.

21:22So are there certain dating apps that are more popular than others? I mean, which are the hot ones right now? So right now, at least by users, Tinder has by far the most users. That's owned by Match Group. And then Hinge is actually one of the few dating apps that is continuing to grow users. And that's probably because Hinge focuses a little bit more on kind of long-term relationships, building meaningful connections. Tinder still has a reputation of kind of a hookup app. Yes. Which one is that? Tinder. Yeah, that's what my son was on. Our thanks to Nicole D'Souza, Bloomberg Intelligence Internet and software analyst.

22:00We move next to news from the EV giant Tesla. This week, we heard that Tesla shareholders will vote on whether to invest in CEO Elon Musk's artificial intelligence startup, XAI. That's according to Elon Musk. Musk made the statement in response to an account on X that said the carmaker must be able to invest in XAI to be fair to Tesla retail investors. For more, Lisa and I were joined by Craig Trudell, Bloomberg Global Autos editor. We first asked Craig what kind of message he thinks Musk's recent statement is sending. It's sending that, you know, Elon's business empire is becoming all the more intertwined.

22:36So this has been, you know, sort of a case on and off for years. We can think back to, say, you know, the Tesla SolarCity acquisition, you know, and that's going back quite a ways. But, you know, in this case, it would be Tesla, you know, his most valuable company investing in sort of his up and comer and one where he's spent an awful lot of time and energy focused on lately as Tesla's electric vehicle sales have been slowing. He's been really sort of dead set on taking on open AI and sort of standing up as a competitor to chat GPT. and as with all the companies in this space, spending an awful lot of money to try and compete in that realm.

23:23So where do we stand here in terms of kind of how investors are viewing their investment in Tesla? Are they invested in an auto company? Are they invested in an AI company? Are they invested just in Elon, Inc.? How do they think about it these days? Yeah, I mean, I think Musk has been trying for several years now to sell and position Tesla as much more than just a car company, right? And, you know, it's definitely in the energy space and, you know, has a battery business to show for that. And in AI, he's talked a big game about developing self-driving technology. He's not gotten there yet. As we've seen with the company starting to offer rides in Teslas around Austin, Texas, they still have Tesla employees in the front passenger seat to sort of take over in events where the cars have not been able to handle navigating the streets on their own.

24:28And yet with SpaceX, I think, interestingly, for them to have just pumped$2 billion into XAI, I think there's a little bit of FOMO on the part of some in the Tesla shareholder base where they've seen XAI go from not all that valuable a startup to suddenly an extremely valuable startup. And they feel like they've missed out on some of this appreciation and won in on that. So with all that said, Craig, I mean, does Musk support a merger between XAI and Tesla or maybe XAI and SpaceX? You mentioned SpaceX, too. too. He says he does not. And I think there's been talk about this for years, right, that, you know, and on and off again, there's been, you know, questions as to whether or not Musk is, you know, sort of stretched too thin and doing too much.

25:18Would it make more sense to turn his companies into into one and sort of, you know, sort of the think about it as sort of the general electric of the new age, right, which is kind of fascinating, because, of course, That didn't work out too well for GE. And and yet, you know, even some of Musk's own allies have sort of alluded to, you know, viewing him and his empire as sort of, you know, a modern day General Electric. So he did take pains to say on X that he does not support a full-blown merger of Tesla and XAI, but he has, you know, signals on there multiple times now that he would be in favor of Tesla putting money in.

26:06And, you know, that's that's, of course, you know, a proposition that could be helpful if XAI continues to grow its valuation. We should note, however, that our colleagues have reported just in the last month or so that XAI has been burning through about a billion dollars a month. So this is a company that is is really sort of cash hungry and needy as it's trying to stand up a business, you know, with all of this capability. Yeah. And Craig, it's been, I don't know, a month or two since Elon Musk left the U.S. government Doge. Is there any evidence that he is meaningfully engaging with Tesla? You know, I think he's messaging more about, you know, sort of what Tesla's up to than he was while he was in Washington.

26:54He did also post that, you know, he was in Tesla's design studio and sort of hyped up how excited he was about what he saw. But, you know, the company is, you know, sort of in this really sort of challenging state from a sales perspective. And you've sort of gotten indications that, well, maybe he doesn't necessarily fully have his finger on the pulse in the sense that he told us just within the last few months that sales have turned around. You know, a couple of months later, the company reports that its vehicle deliveries had fallen 13 percent in the second quarter. So either he was, you know, not necessarily up to speed on the state of sales, or perhaps he was more optimistic that they were able to, going to be able to turn things around than they ultimately were able to last quarter.