OpenAI Joins a Massive IPO Pipeline Now Worth $3.6 Trillion

0:00At Brookfield, we invest in the thing, behind the thing, behind the next big thing. Our focus across infrastructure, energy, real estate, private equity, and credit is helping build the backbone of the global economy. We combine deep operational expertise with disciplined long-term investing, uncovering value and partnering alongside clients to shape tomorrow's economy today. Brookfield. Own what's next. Learn more at brookfield.com. This is not an offer to sell or investment advice. Investing involves risks, including loss of capital. The thing about AI for business, it may not automatically fit the way your business works.

0:38At IBM, we've seen this firsthand. But by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business.

0:59Dan Ives:Let's create smarter business, IBM. At Venture Global, we think about what can be done, not what's usually done. Through innovation, Venture Global is not only building some of the largest energy facilities in the world right here in the United States, but delivering American energy at a fraction of the cost in a fraction of the time. So while others are busy talking, we're busy building. That's Venture Global. That's unstoppable energy.

1:35Bloomberg Audio Studios. Podcasts, 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. Open AI, that's the latest big AI tech company to announce its intention to go public. And of course, it comes on the heels of SpaceX, potentially listing as early as this Friday. The IPO is supposed to be priced on Thursday and Anthropic filing confidentially for an IPO in the recent weeks. So let's bring in our next guest.

2:19he is dan ives dan is global head of technology research at wedbush securities and dan i'm curious to hear from you whether um being the last of the three mega tech ipos is a good place or potentially a troubling place for open ai is the company is any company really at risk of the public market capital exhausting itself because there's a lot of money um that needs to find a home for these companies?

2:45Dan Ives:Yeah, I mean, I'd start at the latter. I don't think there's a risk, you know, in terms of if you're last, there's no more to happen. I mean, look, we're talking about three of the core foundational pieces of the AI revolution, Anthropic, OpenAI, of course, SpaceX. But look, first to market, there's an advantage. It's important. And that's why this is going to be a continued sort of battle arms race between OpenAI and Anthropic. And that's essential what investors are watching. Obviously, SpaceX, you know, very important, almost a watershed moment for the overall markets this week. But to get the popcorn out, I mean, it's just starting.

3:23For our viewers on YouTube, I always try to figure out where in the world is Dan Ise when we have him on via Zoom, because it could be anywhere literally on the planet. He's joined us from Asia. I know, everywhere. I don't know. In the middle of his night. Today, I can't figure it out. I think he's in a bunker somewhere like in the Pentagon. But So, Dan, talk to us about what's the feedback? Just got off the red eye. But I know what a better place to be than with you. Exactly. Appreciate that. Dan, we're day three of the roadshow for SpaceX. What are the what's some of the feedback you're hearing from your institutional investor clients?

3:55Dan Ives:Look, I think the big focus is just is it a space play? Is it a data play? Right. I mean, I think that's really how investors overall are focused on SpaceX. And I continue to believe, like, when it comes to SpaceX, it's much more around data and AI and the ecosystem than maybe just when you think about space in its first sort of phase. But we're talking about what's going to be a decade build out of space. And it's not just about SpaceX. It's about the broader sector that now investors are really starting to focus. You're now going to have a lot of institutional funds, not just tech retail. You're going to have a space analyst.

4:36Very well said. And I guess the question is, how do people value it going forward? Because there's different explanations for whether this is a rocket company, a data company, as you put it, or kind of a vertically integrated new technology company, which is kind of what Elon Musk is envisioning here in the same way that Tesla started off as an electric vehicle company and has become a lot more. How are you anticipating Elon to kind of set the benchmark for how he's going to talk about the the kinds of numbers that SpaceX can achieve? We got a sense of it through the IPO prospectus, but, you know, he's going to have to manage expectations quarter after quarter here.

5:16Dan Ives:Yeah, no doubt. And as well as what's on the horizon. Look, I think Tesla is a good blueprint because, look, if you go back, right? I mean, when we came up here, many bet against Musk, Tesla, the numbers in terms of the near term, and then ultimately what's proven out to be now the system has really changed the world. I think to some extent, if you're buying SpaceX, you're buying Musk. I mean, you're buying into the Musk ecosystem. Now, the challenge and the opportunity is building that out, execution, step by step. But it's also our view, like in a year, have some merger. We've said over 80 percent chance between SpaceX and Tesla.

5:58Dan, it was an important day yesterday for our friends in Cupertino, Apple, and with their AI story and the narrative there. What did you learn from their announcement?

6:09Dan Ives:Yeah, I mean, look, being there live, I think this was one where a lot different than the last two years in a great way. Because two years ago, there was all the promise and none of that really came true. Last year, it was kind of really absent in terms of AI strategies. I mean, Paul, now you finally have an AI strategy. It's finally a foundational piece that you could sell into the ecosystem. They're no longer watching us from the sideline. They're not going to be an anthropic or an open AI, but they don't need to be. You have 1.5 billion iPhones. I think this is really going to be the start of monetization when it comes to AI.

6:45Dan Ives:They laid it out, but now devices will follow the hardware ecosystem buildup. And I think what this is going to do is services. I mean, obviously, stocks off in terms of what we've seen in New York. But I think this is one that leaves the foundation for Ternus as the baton's handed from Cook. Were you disappointed that Ternus didn't speak? Some people have cited that as one reason why overall the unveiling of the AI-infused Siri is not impressing investors today. The stock is down 2.9%. And yesterday when the stock gave up its early gains. Yeah, I think this was, it's Cook's show. I mean, you're talking about, you know, a Mount Rushmore Hall fan or CEO.

7:28Dan Ives:You don't want turn this there. I think that would take away a little of the spotlight. I mean, this is really Cook handed. But his last WWDC after what's obviously been just a historical, legendary, you know, market. But Scar, it's going to be execution. Now it's like executing. It's showing developers. It's building it out. I think investors, they always tend to be skeptical on Apple. I think this time is different. Okay, so let's talk about the fact that this time it's different. What does the unveiling of this new Siri mean for developers? Do they walk away with a clear roadmap for how to integrate their offerings with Apple's ecosystem?

8:08or does this remain a wait and see like it has been for the past two years?

8:13Dan Ives:Well, I think they finally got what they want. I think as developers now, they actually have the platform to build out. This is no longer something on a whiteboard or there's some conceptual. I mean, now it's actually going to be deployed. And also it's about the app ecosystem built in. It's about Gemini obviously as a foundation, which isn't just cookie cutter Gemini in terms of what they built. And now Apple is basically saying, like, from a privacy security, your data is not going to be shared externally. And now it's the start of how they monetize it. Cloud, more applications, more devices that ultimately will feed into this.

8:52Dan Ives:The consumer AI revolution, Apple, they're essentially, they're a toll collector on the AI consumer highway. Stay with us. More from Bloomberg Intelligence coming up after this.

9:32Learn more at brookfield.com. This is not an offer to sell or investment advice. Investing involves risks, including loss of capital. So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need. Now, a global workforce of 300 ,000 can use AI to fill their HR questions, resolving 94 % of common questions. Not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off. Deep in the work that moves the business. Let's create smarter business.

10:08IBM. Get the news you need in just 15 minutes. Start your day with Bloomberg Daybreak, the podcast with a global view on the stories that matter. I'm Nathan Hager. And I'm Karen Moscow. Join us each morning for curated stories on current events, politics, business, and foreign relations. Plus one conversation on the day's biggest developments, all in just 15 minutes. Subscribe to Bloomberg Daybreak for a precise, thoughtful take on the stories that matter. Listen to Bloomberg Daybreak each morning on Apple, Spotify, or anywhere you listen. You're listening to the Bloomberg Intelligence Podcast.

10:44Catch 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. Carmen Arroyo joins us here. She's a tech reporter for Bloomberg News. She and Dana Hall have a great, great story out today. SpaceX IPO forces investors to bet on Musk's entangled AI empire. Carmen, thanks so much for joining us here in studio. I guess this IPO is really just a bet on Elon Musk and his vision and all that type of stuff. But he's got a lot of interest out there and a lot of different companies.

11:23How do investors think about that? Yeah, that's exactly kind of like the point we tried to do with the story. It's like it's not only a bet on this specific company. It's like all his companies have like intermingling businesses and it's becoming more so. He's trying to create this like vertically integrated AI company, basically, that has all the supply chain in it. So if you're buying SpaceX stock, you need to take all of Elon's world into account, not just the company itself. It kind of reminds me of how Tesla was once upon a time an electric vehicle company, and it's become something much more than that.

11:57SpaceX was a rocket company, a rocket launch company, but now it's got AI in there. It's got what was formerly known as Twitter in there. And a lot of people are expecting it's going to also have Tesla in there as well. They're going to combine the two. Yes, exactly. It feels like both Musk's key companies, which are Tesla and SpaceX, had their own goals. at one point and then in the past six years he's turned both of them into ai and now with the purchase of like xai and x into spacex that's become a lot more clear like tesla's like no focusing on human aid robots and spacex want to do the satellites on space and um it's kind of like all in search of like agi like a artificial general intelligence and like who's going to get there first and how they're going to do it and elon clearly doesn't want to lose and he's really concerned with like having the right infrastructure in place.

12:49He doesn't he thinks like compute and power are going to be like bottlenecks for the industry. So he's trying to make sure that he doesn't have those bottlenecks. When I first started on Wall Street nearly 40 years ago today, somebody taught me go to the when you go see an IPO prospectus and pick one up, go to the related party transactions. That's the first place you go. And boy, there are a lot of related party transactions here. Are we getting any reporting back from this roadshow that there's pushback from investors or investors wouldn't give Elon benefit of the doubt? It depends on who you ask.

13:23There's like some investors that really believe in Elon. You have to like bet on him. Yep. That think that if it's more integrated, it's just because it's like it's going to become a conglomerate and it makes sense for innovation. There's others that don't really like it. They think like there's not enough corporate governance and it's going to be less, especially if SpaceX ends up buying Tesla. And sometimes it's hard to figure out what's the valuation if like Elon has had both sides of every transaction. So there's definitely concerns around what's the value here. Not just that. I feel like a while ago, there was a lot of premium put into the idea that you could have a big conglomerate with businesses that are kind of loosely integrated, but just tangentially.

14:07And now companies, especially those industrials, want to be very, very narrowly focused. On the other side of the equation, you're looking at some of these big tech companies like SpaceX, like Tesla, get bigger and bigger and kind of mimic what those industrials were doing. Is SpaceX kind of like the new GE? That's what some investors are starting to think about. Does it become too unwieldy and it ends up like GE? Or does he manage to actually have it vertically integrated? Other tech companies have gotten bigger, but sometimes they spin off their ventures. It doesn't seem like that's what Elon wants to do.

14:44It's kind of the opposite. So that's definitely a question on everyone's mind. All right. What I like about your story, in addition to the deep reporting, is you have this nice graphic that tries to explain Musk's universe and how it's become more intertwined. It's a graphic here, and it tries to show you how things are interrelated. It's not helping me here, dude. I mean, there is so much stuff out there that he owns, kind of owns, influences. This is a lot for investors, isn't it? Yeah. I mean, the graphic is a lot, but it kind of shows how Tesla first bought SolarCity. And like all his like more successful ventures tend to buy his more flailing ones.

15:25So SolarCity was struggling and then Tesla bought it a decade ago. Oh, okay. Twitter was struggling under the dead load. XAI bought it. Then XAI was burning a lot. SpaceX spotted. So it just feels like every single struggling company and stuff swallowed. Is the expectation that SpaceX will buy Tesla? That's part of the market chatter now. I don't know. I mean, it would make this graphic a lot more simple if the day it gets swallowed up all by SpaceX. All right, so folks, you have to go out on the Bloomberg terminal, go into Bloomberg.com and check out this story. It's really, really good. If you're trying to get a handle on one aspect of this deal, which is the interparty and the related transactions, this story, really.

16:10Stay with us. More from Bloomberg Intelligence coming up after this. The Bloomberg Sustainable Business Summit returns to Singapore on July 22nd. Our fifth annual Asia-Pacific Summit will explore how business and finance leaders are shaping the next phase of globalization by strengthening resilience, advancing climate adaptation, and driving a multi-speed energy transition across Asia's diverse markets. Join us for solutions-driven discussions, interactive workshops, and networking opportunities. Learn more at bloomberglive.com slash SBS dash Singapore. You're listening to the Bloomberg Intelligence Podcast.

16:49Catch 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. Talk a little healthcare here. We do That was Sam Pizzelli, Director of Research for Global Industries and a senior pharmaceuticals analyst at Bloomberg Intelligence. He's based in London. I have no idea where he is, but he's based in London. Sam, talk to us about Eli Lilly and their obesity products, offerings. Where do they stand in this market? Where are they going to go going forward? So, Paul, they continue to lead in terms of efficacy.

17:28So Z-Bound has the better efficacy proven in a head-to-head trial versus Wigovi. And they now have this drug called retrotride or retatrotide, as I like to call it, which is a triple mechanisms of action. And that has got blowout efficacy, particularly, obviously, they tried it in people with a very high level of obesity, where you can lose 30 % of your body weight and not be seriously suffering. So, again, they have this mechanism of action, this triple product that seems to be doing very well. A whole bunch of other companies have reported, and they still lead. In the oral space, AstraZeneca has had some good data, and that looks good, that looks competitive, and they're moving to phase three.

18:20They have other plans for that space. So Nelly still really is in the lead here in terms of efficacy, particularly. How much do consumers, patients care about efficacy? I mean, all of these drug makers have treatments that are effective, but are they making the distinction between 27 percent versus 30 percent? It's a very good question, Scarlett. The interesting thing here is that you are coming, and I'm sure you have, across more and more people who talk about microdosing, right? So they lose the desired amount of weight that they want, and then they just want to keep it at bay, so they go into a lower dose.

19:02I don't even know how they calculate that. Their physician maybe helps them calculate it. It gets rid of some of the side effect profiles. So really, these big numbers, and you know, and I've said this before, and although the answer to your question was, really leads on efficacy, but when you think about it, does it matter for me if I'm, I don't know, 95 kilos and I lose 10 kilos over the space of six months, whether that was 12 or eight, I'm still losing quite a lot of weight and getting into shape and then allowing me to do everything else that I need to do. So I agree with you. It's not as important.

19:41And the market's telling us that, except Zedbound is the best drug out there. So Sam was quoting weight in kilos like we know what a kilo is. But at least he didn't go stone on us. I lost a stone. 2.2, 2.2 to get to pounds. There you go. Sam, Eli Lilly in 2022 had$28 billion of revenue. You guys out there on Wall Street are projecting$85 billion this year. Where did that$60 billion of revenue come from? It's majority of it is obesity. Wow. So, you know, I mean, this has been a great company for a long time as because how do we measure pharma companies? Their growth profile, their earnings profile, their margin evolution, but also their pipeline.

20:24And so they've hit the jackpot today. And I'll tell you what, Paul, they're out there deal after deal. We talked about it last week, I think, the Amazonification of being a pharma company. Do everything. right they go after infectious diseases everything they can get their hands on and just to you know feather that nest so and we've had another deal in the sector right yes i wonder to what extent eli lily going out there and being and doing this from a position of strength means that they're um setting new benchmarks and overpaying and forcing everyone else to overpay maybe they're not overpaying but i i defer to you on that well they certainly have bigger firepower right i mean my checkbook's bigger than your checkbook is the kind of situation I think they're in.

21:09But I think they're very disciplined. I think you sometimes look at things, you go, wow, that's a big number for a deal of this size at this stage of development. But then what do you find after six months, nine months, 12 months? Of course, drugs fail. There's issues that happen. But we just have been looking at one called Colonia that they've done. And the data is looking really good. It's a totally novel way of treating cancers using what we call in vivo CAR-T. Let's not go into the detail, but totally novel way. And at the time, they did the deal, scratching a little bit. They must know something.

21:41And, of course, as the data has come out, yes, they did know something. Some of that data is looking better. So, you know, I think pharma companies have to think strategically, too. It's not just about a multiple today or an NPV analysis. Does this really give me a great portfolio to go and make a difference in this disease and be heard by physicians? Real quick, Sam, GSK, a big pharma company, bought Nuvalent for$10.6 billion. What is Nuvalent? So Nuvalent is a biotech company that did what a lot of these new biotech companies are doing, finding ways of making fourth generation, third generation drugs with the science and technology that's been evolving over the past five to 10 years, 15 years.

22:28And that's exactly where this deal comes into. You look at the headline number, you can go, that's really, you know, it's a full price if you don't want to say it's overpaying. But then, of course, for GSK, it's a strategic decision, right? They need to have, they're getting into lung cancer. Here's two drugs to put into your lock-in bag. Stay with us. More from Bloomberg Intelligence coming up after this.

22:56Some follow the noise. Bloomberg follows the money. Because behind every headline is a bottom line. Whether it's the funds fueling AI or crypto's trillion-dollar swings, there's a money side to every story. And when you see the money side, you understand what others miss. Get the money side of the story. Subscribe now at Bloomberg.com.

23:25You'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. You know, we're looking at Paramount Skydance, $110 billion takeover, Warner Brothers Discovery. This is right in my backyard. I spent decades putting these companies together, and now we've got Paramount Skydance looking to buy Warner Brothers Discovery. But apparently, the UK's got a problem with it. Apparently, some U.S. states have a problem with it. I think a lot of people have a problem with it.

23:57I think so. Apparently, you know, so I think it's just something that's not necessarily going to be passed without some big-time review. And we want to review the antitrust. We go to Jennifer Reece, senior litigation analyst at Bloomberg Intelligence. Jen, thanks so much for joining us here. Talk to us about what's going on with this deal and the United Kingdom. Thanks for having me, Paul and John. I mean, you know, what's happening here is that like most big global deals, this deal triggered these notification requirements across the world, not just in the U.S. and the EU and U.K., but elsewhere also.