Intel Shares Fall on Report Nvidia Halts Production Test

0:01Bloomberg Audio Studios Podcast Radio News. 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 it's christina kino sitting in for scarlet fool i'm paul sweeney live here in our bloomberg interactive broker studio always love uh chatting with kim forrest founder and chief investment officer bouquet partner we love talking to kim about markets, about technology, AI. And maybe I'm going to run this one by Intel. The news on Intel shares fell after a report said that NVIDIA halted a test to use Intel's production process to make advanced chips.

0:47Kim, you mentioned in the notes that your firm is an investor in Intel. How do you view this news? Is it big news, game changer, don't worry about it kind of thing? Oh, I think, you know, as a portfolio manager managing other people's money, you always worry about everything but on this I'm not terribly worried about it. It's a new process for Intel. They've been trying hard to compete against Taiwan Semi and I think this is a setback for sure but maybe Nvidia really wasn't going to ever use Intel's processes. We have to think about that. And it's good that they tried it against, you know, the absolute pinnacle of chips at this point, or at least the pinnacle of chip makers at this point.

1:34So I think that the CEO of Intel is someone who actually learns and changes. And I believe that this is probably a good thing ultimately, as they probably gain, Intel probably gain a lot of knowledge about what's right and what's wrong with the process. Yeah, Kim. Well, very interesting. That seems like really the AI trade at this point, a lot of discussion around chips, right? And the diversification of where these companies are going to be getting their chips. NVIDIA no longer perhaps the only player in the game. But yeah, what does that tell you about where we are in the AI trade cycle? Is it a good thing that we are starting to see more producers stepping up and saying like, hey, we can make these chips too if you want to take a look at our business?

2:22I do, actually. I think I'm a big fan of capitalism, which should be not a surprise to anyone. And what the very best thing that capitalism does is create a competitive environment. And even last year at this time, well, maybe especially last year at this time, because 2024 was the year of NVIDIA, I think everybody thought it was game over. There was no way for any company to be able to compete with them. And yet here we are looking at a whole slew of not only new competition for the training kind of chips, but we're broadening out. We're understanding that AI may not just be asking chat GPT things, but there's other uses for it.

3:06And guess what? We're going to need other chips. So vendors are lining up to try to figure out how to best serve this market. again, an advertisement for capitalism. So, Kim, has the discussion around AI, to what extent has it evolved, if it has at all? It feels like now we've got to ask some different questions, like maybe the return on some investment, like maybe what's it really going to do for productivity, asking some harder questions. How do you think, where do you think we are in that evolution? I think we're just beginning to scratch our head, and it's disappointing to me. I came from software.

3:46And the reason why I sit before you is because I worked at AI companies that weren't asking the question, how much does my solution cost? And what problem am I solving? And what's the cost of that problem? Right? So how technology has to work, sorry to tell people, that it has to solve a problem less expensively than the problem itself. That's just it. And I don't think we're asking that. The price of training these large language models is incredible. And I'm not sure that investors are really asking the questions that need to be asked, like, who's going to pay for this? And what's the return and all of those kind of good things.

4:28Will this cause a train wreck? Maybe. But I think it again, I'm such an optimist. I think it would be a good thing because then would narrow down on how we can use this technology to actually get a benefit from it, not just because it's cool, interesting, or whatever drives people to look at tech. Yeah, well, Kim, your question of who's going to pay for it, that was definitely the question that markets were asking a few weeks ago, if you recall, when we did get a little bit of that AI bubble worry permeating the markets. Where do you stand on that? Is that actually a good worry for markets to have at this stage?

5:03And who do you think is going to be the winners and losers coming out of that? Sure, I do. I think it's a great question. I think it's the only question an investor, not a technologist, an investor should ask is, you know, who benefits and where should I put my money? Yes, it is early days, but I'm looking at companies that are very much married to the large language model. Most of them are private and, you know, they're talking their own book over and over again. And I think that should serve as a warning to investors. So So I think the bubble thing still is out there. But ultimately, I strongly believe that AI is productive when targeted correctly, when asking the right questions, and when delivering solutions.

5:50But I hate to tell investors this, especially on Christmas, because I am an optimist. It's going to take way longer than anybody thinks. Way longer. Way longer. The good things usually are worth waiting for, they say, as well. Kim Farris, thank you so much. We appreciate it. Kim Farris. She's the founder and chief investment officer, Bokeh Capital Partners. She's out there in Pittsburgh, one of my favorite towns. It's a great town, Pittsburgh. Stay with us. More from Bloomberg Intelligence coming up after this.

6:18You'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. All right, Christina Kino sitting in for Scarlet Fo. I'm Paul Sweeney live here in our Bloomberg Interactive Broker Studio streaming live on YouTube. Well, a federal judge said the Trump administration can move ahead with a$100 ,000 fee on new H-1B visa applications providing setback for U.S. technology companies. Get some more color there. We're joined by Eric Larson.

6:51He is a U.S. legal reporter for Bloomberg News joining us live here in our Bloomberg Interactive Broker Studio. I mean, there's like a handful of people in this building. Eric's one of them. Eric, Eric, just give us the background of this$100 ,000 H-1B visa thing. Sure. So the president put this fee in place, sort of surprised everyone with it. One of his many rules that he put in place, sort of slowing immigration, targeting immigration, saying that individuals who are using these particular visas were taking jobs from skilled American workers who could do those jobs but get paid more, essentially.

7:27So they accused these companies, these industries of basically profiting from importing cheaper labor. And there are several lawsuits were filed and we've got our first ruling. Yeah, well, given the popularity of these visas, particularly in the tech sector, Eric, count for our audience, kind of what's been the response from these companies involved and how do they envision moving forward with the labor supply? Well, I mean, it remains to be seen what will actually happen with this$100 ,000 fee. This is one ruling. There's a couple of other big lawsuits out there where there haven't been rulings yet.

8:05So notably, none of those lawsuits are filed by the big corporations who use these visas. Maybe perhaps they're waiting it out to see what happens with the lawsuits. But at any rate, there is another big lawsuit filed by Democratic-led states, led by California's attorney general. There's another big lawsuit filed by unions and a group of nurses, and we haven't gotten any rulings on those yet. So theoretically, we could get a ruling that goes the other way. This could be one of the many cases that goes up to the Supreme Court eventually. What is the reality or what does the data show about the need for H-1B visa workers?

8:42Is there a lack of high-tech workers coming out of the U.S.? Is there, in fact, a need for these people? Well, it depends who you ask. Each of these lawsuits gave a slightly different perspective. The Chamber of Commerce lawsuit, which is the one we just had the ruling on, representing the ideas of businesses. The states are saying that this fee harms the states in the capacity of hospitals needing H-1B visa employees, teacher, like universities, things like that. And they're saying that pretty much every part of American society somehow uses these visas. So it depends on who you ask. The government says you can find these skilled workers here in the U.S.

9:25You're just going to have to pay them more. But that is not at all how these plaintiffs see it. They say that there's just a huge shortage, especially when it comes to hospitals, nurses. And these tech companies say that this creates innovation and having more diverse views from backgrounds coming in from around the world. That are people who are deeply steeped in this in the tech sector. it's impossible to really say. Both sides are pushing pretty hard here. Do we have a sense of what's been going on in the ground in terms of companies and workers involved in the process currently of trying to obtain an H-1B?

10:03I imagine there's a lot of confusion and maybe delays in the process now? Yes, I would think so. I've spoken to immigration lawyers who say that this is a huge problem for them and their clients and expectations of people who thought they might be able to use this visa. But for now, I mean, this ruling makes it pretty clear that this might be the law of the land for a while. This was an Obama-appointed judge who said that the president has this broad authority that Congress gave him in the Immigration and Nationality Act, gave the president this type of authority when the president believes that someone is or a group of people are a threat to the economy.

10:46But that's in the Immigration and Nationality Act. So this Democratic appointed judge who's ruled against Trump on other things is saying he has this authority. And that's kind of not saying that every other judge will rule the same way in these other cases. But that is how these individuals are going to have to look at it, these companies, in terms of planning for the future and as well as workers. Yeah, I don't see this dispersing. I don't see this as a big issue for the big tech companies. They can afford it. They can whine. They can afford it. But you mentioned health care. And I'm thinking I keep hearing and reading about nursing shortages and things like that.

11:19And I would think they try to fill some of that, those shortages with non-U.S. workers via the H-1B visa situation. That could be a problem if you're a hospital. And now you're saying, you know, I got to pay more to get my nurses in from wherever I get them. That would be a problem, I would think. Absolutely. And that was a highlight of the case filed by the 19 or 20 Democratic attorneys general. Most of them in the country said that, you know, this is a particular problem. And that's how they the states in one of the ways they say they have standing to sue, you know, that they have a right to sue is saying that the threat to the health care industry in particular makes it a public issue that that the states have a responsibility to to sue over, essentially saying that they need to keep the flow of these skilled health care workers coming in.

12:07Is that also for students as well? How do I get is that student visas are different, I guess. Yeah, that's a different. different. Because that's also been a challenge for universities, all the uncertainty about immigration. A lot of their international applicants are down significantly because those people are unsure about what the policy is going to be in the U.S. And that's hurting the universities who depend upon them to some degree. Eric, thanks so much. Appreciate it. Eric Larson, U.S. legal reporter for Bloomberg News, joining us in our Bloomberg Interactive Broker Studio. Extra star today, Eric, for coming in on Christmas Eve.

12:41Stay with us. More from Bloomberg Intelligence coming up after this.

12:48You'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 check in with Seema Shah. She's a vice president, research and insights at Censor Tower. Seema, thanks so much for joining us here. What are you seeing out there in, I mean, it's Christmas season here. What are you seeing out there in the marketplace? I mean, I would say like we're talking about retail. I will say that, you know, our figures are slower than they were in the prior years in terms of monthly active users.

13:28And in terms of traffic we're seeing and some of the mobile apps, it's definitely been a little bit slower. And we're also seeing a sort of a skew to value. So if you think of like the team moves of the world, there's a sort of seen a resurgence, but also like wholesale and other value players. That's what we're sort of seeing in the retail landscape. But I think from a broader step back, if we just look across categories in the U.S., I would say that there's still a pressure on discretionary sort of expenditure. So based on how we look at the mobile app universe, if you look at like dating apps, subscriber revenue and interaction is down.

14:07Same with streaming as a whole. So that's kind of what we're seeing at like a 50 ,000 foot level. I mean, net net, how is this season going to be in terms of the Christmas season and just the holiday season? I mean, there's lots of reports out there that the consumers stretched and all that type of stuff. Yeah, and our data sort of confirms that both our mobile and our web data. And the other thing that we saw is when we looked at the advertising spend in prior years versus this year, we can already see that in this fourth quarter, there's been a slowdown in overall ad spend, which typically means that presumably the advertisers think that there'll be a pullback in spending.

14:48And we've sort of seen that slow down across the metrics that we follow and that we sort of use to infer how people are spending. What our metrics don't take into account, though, would be inflation and anything to do specifically with price. So I think when we get the retail sales numbers and other sort of comp numbers, we should be cognizant to see how much of that was price versus traffic, because from our end, the traffic part seems to definitely be weaker. All right, Seema, I was throwing for a loop here because I know you in the context of talking about retail. But yes, so now. OK, so now you've brought your remit here and you can talk about, I guess, some of these media deals out there.

15:26I'd love to get your thoughts on kind of what's happening in Warner Brothers Discovery. Yes, absolutely. So as everybody knows, there's two competing bids, Netflix versus Paramount Skydance. And from our perspective, the results of each merger, if they were passed, are very different. And what Warner Brothers brings to each group is very different. Right. Netflix is the leader by far. Nearly 50 % of all monthly active users globally are on Netflix. For Paramount, on the other hand, it's only 4%, with HBO around 10%. So if Netflix acquires Warner Brothers, it becomes even larger and more likely that people will not be able to get caught up with them.

16:08For Paramount, the addition of HBO is huge. which it jumps them up to the same level of active user penetration as Disney Plus and Amazon Prime. It gives them access to tentpole content, you know, like the Game of Thrones, White Lotus. It kind of puts them into the higher sphere of streamers in terms of content. For Netflix, it gives them the opportunity to maybe jumpstart their subscriber growth, right? It's been pretty stagnant to down because they're so large. but HBO is really the fastest growing international streamer that we follow. So this would be an opportunity for Netflix to pick up those users potentially, but also to leverage its content creation, you know, behemoth that they can make local language content and apply that to HBO's content.

16:57So I think there's a lot of opportunity, but it just really depends on who, who ends up getting the deal or not what it does for each player. Yeah, well, it sounds like we're nowhere close to finding out who ends up getting the deal because, you know, Warner Brothers leadership, very clear, they want to push their investors to go with Netflix here. But then Larry Ellison wading into this battle and personally guaranteeing some of that bid from Paramount. So where do you think these firms stand in terms of who's closer to be able to finally clinch the deal at the end of the day? Well, I think just generally because the Warner Brothers board is on board with Netflix, that definitely makes that seem like a more likely deal.

17:39However, and I think that if Paramount wants to get the deal, they have to continue to increase their bid. I know that they recently offered the same breakup fee as Netflix, but I think there might be some other fees that they would have to increase the value of that bid in order to make it worth their while. You know, so and I think it also depends on the value of discovery, which I have heard valuations from one dollar to almost four dollars per share for that portion of the business for the linear TV. So, yeah, I think it really depends on how people view that because the Netflix bid does not include that.

18:16So what do you think the regulators are going to say about this deal going forward? yeah so i mean to be fair look netflix is so large if they acquired warner brothers and they had hbo they would be by far the largest but in the grand scheme of life like hbo is only 10 percent of mAUs netflix is already almost 50 percent so it does make it a little bit more difficult i think for the average streamer to try to catch up to them but i don't think it's completely uncompetitive But I think that it'll be viewed potentially as uncompetitive just because if other streamers also start consolidating, there's fewer or fewer options for consumers.

18:58And we're already seeing price increases for subscriptions, both ad-supported and non-ad-supported. So I think that will be a concern for regulatory purposes for Netflix. Look, for Paramount, I don't really see a real regulatory issue, given that its size is very small. And even with HBO, it would just be on par with Disney Plus and Amazon Prime. So it seems like it would have less of an impact from a regulatory perspective. And Lucina, you make an interesting point about kind of how this could potentially change the streamer landscape, right? And especially when it comes to consolidation. Where do you see that going?

19:38Which other streamers do you think might be primed for a similar deal like this? Well, you already saw Disney Plus sort of buy out the rest of Hulu. So that is one form of consolidation, right? They're all owned together. I'm not sure if the other streamers are part of some of these larger companies, so they are less likely to be acquired. But I do think that if we're thinking from a competitive standpoint, if you really want to understand this, you have to realize that the streamers are not just competing with themselves. They're basically competing with anything else that takes time. And so we view that as like short form video and social media.

20:14So if you broaden the landscape to include those, neither deal is really anti-competitive, right? Because users have so many options on the ways to get content and the way that they view content. And I think short form video and social media are very growing and competitors that the streamers need to look for. So on the consolidation question, I don't think that's necessarily going to be a roll-up of the industry. And I think from the anti-competitive portion, we should really look at the broader space of how consumers spend their time. Yeah, well, speaking of the broader space, then what's your outlook for 2026?

20:55How do you think the media space is going to shape up? Are there any underestimated risks or surprises that perhaps investors aren't necessarily paying attention to? Yeah, I think that one thing that we've noticed has been sort of an acceleration of what we call the fast, the free ad supporter streamers. Think of the Tubies of the world that have increased their live sports content, which is really great for grabbing subscribers. They're free. Everybody knows that they come with ads. I don't think there's any confusion as to the subscription that they have or what they're getting. And I think that probably resonates with a lot of the younger consumers like Gen Z, where finances might be a little bit tighter and you really can't have all these subscriptions.

21:37So with these free ad supported players improving their content and their live sports, I think that's something to look for as we go into 2026. You see, if Paramount doesn't get Warner Brothers, what do they do then? Because, boy, they're left kind of holding their bag there. Yeah, I mean, like from all aspects of our data, they are by far one of the smallest. They only have 4 % of advertising dollars in the U.S. compared to the other streamers, 4 % of active users. I think that, you know, it's going to be very hard for them because people have so many subscriptions already. It's hard to add another one.

22:14So unless they really bump up their content and have, you know, a show that's in the zeitgeist like Stranger Things or White Lotus, it's going to be very difficult for them to sort of move out of their positioning, regardless of whether or not the Netflix deal goes through. Seema, thanks so much for joining us. Appreciate chatting with you. Seema Shah, she's Vice President, Research and Insights at Censor Towers. Stay with us. More from Bloomberg Intelligence coming up after this.

22:43You'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. Christina Kino sitting in for Scarlet Fu. I'm Paul Sweeney, live here in our Bloomberg Interactive Brokers studios. Let's focus on commercial real estate these days. I'm going to call it better than stabilized. It feels like it's kind of back for a lot of sectors and a lot of parts of the country here. Now we've got interest rates coming down. should be another support beam for commercial real estate.

23:20But Liz Hart, she's the president of leasing for North America at Newmark based in San Francisco. I have no idea where she is now. I'm not sure I want to know. Liz, characterize kind of you would right now. How's the commercial real estate market in this in this country? Well, I think you nailed it. 2025 was really the pivot year. It was the year that we started to have positive absorption across the country halfway through the year. And we're heading into 2026 on quite the optimistic note. Trophy performing exceptionally well in New York City, where you guys are today, 4.6 percent availability at the top of the market.

23:54Demand double that right now and with no supply expected until the early 2030s. Yeah, well, you know, the trophy at Space in Manhattan especially very much thriving here, as you mentioned, Liz. Do you think that means that rents will continue to stay elevated even if overall vacancy is also still elevated? Well, certainly in that part of the trophy market, we would expect it to be elevated in New York City and across the markets. But as you're kind of referencing, rents aren't going to be going up across every single sector. At the trophy, definitely. And in the class A market, where we see that we're doing, one third of the product inventory is doing half of the leasing, we'd expect rents to increase there.

24:36But it's not going to happen across every single part of the category. in the lower end, we're still struggling. How about retail here? How's that looking these days? Retail's looking pretty strong. Again, it's a story of outperformance at the top of the market. But what's looking like it's going to be very interesting in the beginning of the year, particularly for those New Year's resolutions, wellness. Wellness is really expected to be a standout in 2026. Yeah, well, definitely seeing a lot of yoga studios, Pilates studios, climbing gyms popping up in the neighborhood. So very much the - How about on the industrial side there?

25:09We've got this reshoring, nearshoring mandate. Does that make industrial a good place to be? It's showing up in the data that what's showing up well is the new construction, so certainly doing well, and then also intermodal cities. So think of areas like Dallas and Phoenix, very close to Mexico. They're showing to be very strong performers and expected to do so in 26 and beyond. Yeah. What do you think is, well, moving to kind of like the less optimistic part of commercial real estate, Liz, do you think there are kind of sectors that will be challenged heading into next year? Well, I think when you look at the vacancy that's been on the market for a long time, there's parts that are just not really moving, particularly in retail.