AI Trade Stumbles as Chip Stocks Slide

21:43Whether you're planning a big tech event, launching a new campaign, or just stocking up on team gear, finding the right promotional products makes all the difference. 4imprint offers thousands of options, from on-trend apparel and premium drinkware to tech, totes, and giveaways, so you can find the right fit for any audience, purpose, or budget. You can customize it all, your logo, your message, your look, and many items come with no setup charge to help you save. And if you're really watching the bottom line, you'll find standout choices at every price point so you can make a real impact while staying on budget.

22:16Plus, you'll get expert help, fast turnaround times, and their 360-degree guarantee. So you can be 4imprint certain your order will arrive on time and look exactly right. Whatever your goal, 4imprint makes it easy to find your perfect promo match. Explore the possibilities today at 4imprint.com. 4imprint. 4certain. Support for the show comes from public.com. If you're actively involved in your portfolio, you probably catch yourself repeating the same actions. Buying the dip, manually sweeping idle cash, putting on a hedge. On public, you can now create AI agents that handle all these tasks on your behalf.

22:53Just describe what you want to do in plain English. Like, if the VIX hits 25, buy a put option on the S &P 500. Or, if my cash balance goes above$20 ,000, move the excess into my direct index. You approve of the workflow and your agent handles the risk. Monitoring the market, watching for your conditions, and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com slash market and fund your account in five minutes or less. That's public.com slash market.

23:31Paid for by public investing. Brokered services by Open to the Public Investing, Inc., member FINRA and SIPC. Advisory services by Public Advisors, LLC, SEC Registered Advisor. Complete disclosures available at public.com slash disclosures. I'm Ihaira Anand, and this is Talking Tech. First up, Visa is eliminating about 2 ,600 jobs or roughly 7 % of its workforce. A CEO writing in a staff memo viewed by Bloomberg that the cuts will mainly impact the technology and product teams. Plus, a new lawsuit brought by 26 former and current Meta employees alleges Meta is using discriminatory AI to fire workers.

24:12They say Meta did not consider factors like workers' protected leave or disabilities when it used AI to help select employees for a 10 % layoff. layoff. And sticking with Meta, it is planning a one gigawatt data center complex in Texas with BlackRock. The project is expected to cost about$14 billion and come online in 2028. It's the latest sign Meta isn't backing away from its AI spending, even as investors scrutinize the returns on those investments like today. Ed.

24:43Ed Ludlow:Yohaira, thank you. Let's stay with that story. Joining us is Bloomberg's Kurt Wagner. And as Yohaira said, it's the latest example of Meta's commitment. It sounds like a lot of money. It sounds like a big project. Is it in the context of everything else that Meta's doing? A few years ago, I would have said, whoa,$14 billion. That's a huge project. Nowadays, when you think about all of these data centers being spun up and built, I would say it's sort of the kind of thing that we're hearing from them more often. Now, to put it in some perspective, I believe they recently announced that they were going to spend about$50 billion on their big data center in Louisiana.

25:17Ed Ludlow:And that doesn't include a projection of, you know, 200 billion or so in the chips that are going to go inside that data center. So this is a big project. Sure. Is it their biggest? No. And I imagine this is the kind of thing we're going to continue to see more from them. Real quick, Meta reports earnings tomorrow. What are we expecting? I think it's going to be spending. We saw Google last week raise their CapEx guidance and that sent the stock down. Meta did the same thing last quarter. They raised their target for CapEx. We'll see if they do so again. But the spending on this infrastructure for AI is really a focus for investors right now.

25:54Ed Ludlow:It is a big one as part of a big week in big tech earnings. And Bloomberg's Kurt Wagner leads the big tech team. Thank you very much. So coming up, Apple has big plans to reenter the smart home market after years of delay. Another Bloomberg report on the progress there. This is what markets look like right now. The Nasdaq 100 near correction territory. The socks down for a fourth straight day for the first time since December and in a technical bear market. And why not? Let's throw crypto in there. Bitcoin caught up in the risk off attitude of the financial market this Tuesday. $63 ,816 per token.

26:37Ed Ludlow:Also out there is earnings and spending and a whole lot more. We'll go over it. It's halftime from San Francisco. Beautiful. This is Bloomberg Tech.

26:55Ed Ludlow:Welcome back to Bloomberg Tech. Good morning from San Francisco. Today's big number, $5 trillion. That's how much briefly Apple was valued at at one point this morning with the iPhone maker becoming just the second company ever to hit that market valuation. Shares rose as much as 1.8 % in the session, we were off those session highs. But the company's market cap was pushed just above$5 trillion for the first time. We've dipped back below that. If the stock closes above$340.43, it will cross and stay at that threshold. This is what markets look like. It is a tech wreck where there are concerns about AI spending.

27:32Ed Ludlow:There's an ongoing rotation out of AI stocks and chip stocks are continuing to be under pressure. The stock's down for a four straight session, the first time since December in a technical bear market, down 25 % from a June peak. Bloomberg's equities reporter, Ryan Vestelica, is across all of the tech market. The chip story is so interesting. There are so many factors behind what's going on. What are you seeing from the equities desk right now? Hey, there is a real reversal in momentum really across the tech space, but especially in the memory and storage part of the chip sector that we're seeing today.

28:08Obviously, this is a group that has done extremely well this year. The chip index had doubled in the first half of the year. But like you said, it is now in a bear market. There have been pretty dramatic reversals. I think there are a lot of concerns about the AI spending outlook, especially in the wake of Alphabet last week. We are seeing these major hyperscalers either go cash flow negative or otherwise their cash flow has been severely diminished. And I think that is having people really question how much longer are people going to tolerate this level of spending. And what does that mean for the chip demand outlook?

28:41At the same time, we're seeing increased competition out of China, just more greater efficiencies with new AI models. That also throws a wrench into the demand outlook for these groups. If we have more efficient models, then arguably you don't need as much infrastructure. So there is a lot that people are dealing with right now, in addition to just how much they rose over the first half of the year and some kind of natural profit taking off of that?

29:05Ed Ludlow:It's not just U.S. names. I mean, a case study that's interesting is SK Hynix, right? Because we have the ADRs. We were there for it at the NASDAQ. But again, memory, an area of pressure. I think Micron today down significantly. Tell me a bit more about that specific space. Yeah, well, again, this is an area that has been of particular interest throughout the year. Some of these names rose two, three, fourfold, even more than that. So one I would highlight is Sandisk. I believe it's on track for its third straight session with a double-digit drop. It's lost a third of its value in just the past couple of days.

29:39These are pretty remarkable moves. And again, it does come after an extremely strong first half of the year. Memory has been very much in focus throughout 2026. There's been so much demand for these components, which are a part of the AI data center build-out. We've also seen really higher prices as a result for these components. DRAM prices, I think, are up something like 800 % since the end of August. So amid all of that, it maybe isn't surprising to see them pull back some just because of how well they've done. But again, with prices up so much, there are some concerns about really how much can companies absorb these higher prices.

30:17And again, what does that mean for their outlook? How much has already been priced in? Is it some kind of blue sky optimistic scenario? And if not, then you really need to assess maybe are these companies trading at peak earnings? And if they are, what is their outlook? What is a fair valuation for them? I think that's why you're just seeing so much heavy volatility really in both directions. But lately, it's really been to the downside.

30:38Ed Ludlow:NVIDIA CEO Jensen Wang told me Friday, memory is still the bottleneck. Bloomberg's Ryan Vestelica, thank you very much. Let's get back to shares of SpaceX. The stock had been extending a post-IPO slide that at one point this morning had taken the value erosion to$1.2 trillion since last month's peak. George Ferguson of Bloomberg Intelligence covers all things aerospace defense and has the SpaceX deck on the terminal. I would point out the stocks rebounded a little this morning. Wall Street continues to value this company based on AI. But everything that's happened in the last two weeks has been about a rocket.

31:16Ed Ludlow:What's the latest BI thinking on that? You know, I think, though, the slide is all a function of AI, right? The model we built out on SpaceX just showed that if the AI business worked, it could potentially grow into valuations that were similar to peers by the end of the decade, right? You know, the peers, the hyperscaler peers. And so I think whenever you have a slide in the tech world and the hyperscalers, I think you're going to see it felt extensively inside the SpaceX shares. I think that's what you've seen the last couple of days and weeks. Again, I just want to point out for the Bloomberg Tech audience, George, the stock has really rebounded.

32:02Ed Ludlow:It's up almost 3 % now in the session. At one point, it'd be down like 2%, which is why we say it was$1.2 trillion or down 20 % from the IPO price. Starship still feels important. If you read the prospectus, go back and read it, all of that future business on the AI side, be it Orbital Data Center, be it the sale of enterprise software, is predicated on Starship working to deploy the payload to orbit. What did you make of the test flight and the success of it? Yeah, again, I think it's another step in facilitation of the strategy. But really what I want to do is I want to start to see Starship lifting extensively into orbit.

32:44They also have to increase capacity on Starship as well. So every success is important. It's also important for Starlink in the near term. but Starlink just won't generate the revenue and profitability in the long run. But so, yeah, always happy to see a successful test flight, but it's just a facilitator for AI data centers in space.

33:07Ed Ludlow:Okay, again, SpaceX had opened down almost 4%, dropped to 5%. It's now back up almost 3%. George Ferguson, part of the team at Bloomberg Intelligence, covering SpaceX. Apple wants to get inside your home. The smartphone maker is preparing a new push into the smart home market with devices that have Siri at the center of it all. That's according to sources. Bloomberg senior tech editor Dana Wallman joins us now. We're talking about the market where Apple takes on Amazon with the Echo devices, Google Nest. But it's something at the center of your home where there's an interaction with voice. And in Mark Gurman's latest report, there's a lot of detail on what happens next.

33:45Ed Ludlow:What do we need to know? Yes, absolutely. So this is a smart home hub, and I think the competitors you mentioned are really good comps to start, the Echo devices and Nest devices. This will have, he says, a roughly 7-inch display. You could use it for things like video conferencing, controlling the smart home objects in your home. I imagine something like recipe use in kitchens would also be a really great and popular use case. And according to our report, Apple has been working on this a long time and really wanted to enter this space earlier, but it was waiting for its software engineers to catch up on the AI side, where, of course, it's been a noted laggard.

34:17So finally, the company has Siri AI out. And really what's one of the new details in our report out today is that the company is ready to unveil some new devices in this area this fall at last.

34:29Ed Ludlow:We also got confirmation of something that Bloomberg reported on July 21st, which is Apple upgrade with Klarna financing. And we have some pricing. What do we need to know? Yes, this will be a device leasing program really meant for the growing generation of people who have gotten more comfortable with buy now, pay later models for buying things. And this is a nice boost for Apple services business, which is already its fastest growing unit. So that should please investors as well, alongside the news that it's making this delayed effort to boost its home and wearables business, which is the unit where the smart home devices will go.

35:11Ed Ludlow:Bloomberg's Dana Wallman, Consumer Tech Editor. Thank you so much. Now coming up, our next guest believes we're entering the next phase of enterprise AI. It's all about deployment. Joining us, Sapphire Ventures partner, Kathy Gao, back on the show. This is Bloomberg Tech.

35:32Whether you're planning a big tech event, launching a new campaign, or just stocking up on team gear, finding the right promotional products makes all the difference. 4imprint offers thousands of options, from on-trend apparel and premium drinkware to tech, totes, and giveaways, so you can find the right fit for any audience, purpose, or budget. You can customize it all, your logo, your message, your look, and many items come with no setup charge to help you save. And if you're really watching the bottom line, you'll find standout choices at every price point, so you can make a real impact while staying on budget.

36:05Plus, you'll get expert help, fast turnaround times, and their 360-degree guarantee. So you can be 4imprint certain your order will arrive on time and look exactly right. Whatever your goal, 4imprint makes it easy to find your perfect promo match. Explore the possibilities today at 4imprint.com. 4imprint. 4certain. Support for this show comes from Public.com. If you're actively involved in your portfolio, you probably catch yourself repeating the same actions. buying the dip, manually sweeping idle cash, putting on a hedge. On public, you can now create AI agents that handle all these tasks on your behalf.

36:42Just describe what you want to do in plain English. Like, if the VIX hits 25, buy a put option on the S &P 500. Or, if my cash balance goes above$20 ,000, move the excess into my direct index. You approve of the workflow, and your agent handles the rest. Monitoring the market, watching for your conditions, and executing your strategies exactly as defined. An investing platform driven by your intent, not just your clicks. You can also get full read and write access to your account via the public API. Go to public.com slash market and fund your account in five minutes or less. That's public.com slash market.

37:21Paid for by Public Investing. Brokered services by Open to the Public Investing, Inc., Member FINRA, and SIPC. Advisory services by Public Advisors, LLC, SEC Registered Advisor. Complete disclosures available at public.com slash disclosures. Let's talk about healthcare for a second. It doesn't always work the way people expect it to. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling. The system should just work better for everyone. That's exactly what the people at Optum are trying to do every day. They're a healthcare company linking patient care and pharmacy services and using data and technology to drive the whole system so care is connected, not complicated, for patients and providers.

38:03Things like making it easier to get care that looks at the whole person, from primary care doctors to mental health support and even in-home care, and then using technology to make sure they all work together. Technology designed to help doctors spend less time on busy work and more time with their patients. And those prescriptions? Optum is working to bring costs down, save patients money, and make it easier to get refills. Little by little, Optum is helping make healthcare work as one for everyone. Head to business.optum.com to see how.

38:41Ed Ludlow:If public markets are debating whether AI spending has peaked, venture investors are asking a different question. Where does the next wave of value actually get created? Increasingly, our next guest argues, the answer isn't another foundation model. It's AI built for industries like healthcare, real estate, legal services. Joining us now back on Bloomberg Tech, Sapphire Ventures partner, Kathy Gao. That's where you focus, vertical AI. I reflect that over the last year and more, at the very early stage, we've seen insane seed rounds of Neo Labs. Yes. Still intense news headline domination of Ampropic and OpenAI.

39:22Ed Ludlow:You think there's a lot more out there? So we're at a very interesting point in time right now where we've shifted from the first stages of enterprise AI adoption, where it was all about the race to intelligence. Who has the better models? Let's find the use cases. And now we're entering an era of true deployment. Right. So fitting these solutions into everyday workflows, into existing systems, figuring out precisely what the use cases are, and, of course, having measurable ROI. This shift dramatically favors, I would argue, vertical AI companies. These are companies that have deep domain expertise, they have deep understanding of their customers, and they have the capability to solve the long tail of things that could go wrong.

40:09And as intelligence continues to commoditize, everything else around intelligence will become more important.

40:16Ed Ludlow:You were raised by a software engineer. You have had a lot of experience in the world of finance, financial markets, and you've been a software investor. You still need to model somehow that there is an addressable market for vertical AI. How are you doing that? Like, is it there a public proxy? Is there an example to follow? So the pitfall is when you look at historical software spend for some of these verticals, because it could be very, very small. Take residential real estate, for example. If you just look at the comms and look at historic software companies focused just on that sector, it's not interesting enough for many VC investors.

40:55However, what we're seeing now with AI, in particular AI agents, is that the agents are taking ownership of the workflow end to end. It's no longer just about digitizing paper, but it's about automating entire workflows. And that lets you tap into a much bigger market, which is the existing labor market and the services market. So the best vertical AI companies that I'm seeing are very TAM expansionary. They're creating net new market.

41:25Ed Ludlow:The hard question is, why don't the foundation model companies and Frontier Labs just go after that addressable market too? That is a great question. And I think it all comes down to a difference between breadth and depth. The reality is that these foundation models have been and will continue to build massive businesses, but they can't do everything. And it comes down to focus. When you think about these very specific vertical AI companies, they are hyper-focused on going that last mile to make sure every edge case is covered. They're integrating deeply into existing legacy systems, some of which haven't been changed in decades.

42:03and they're deploying armies of experts as forward deploy engineers to actually sit with the customer and work out all the kinks. Can the model companies do this? Yeah, they will do this for some of the largest models, but they can't cover everything. So interesting to hear about legacy industries,

42:23Ed Ludlow:entrenched industries that have a hard time changing their habits, right? Legal services, healthcare, but they're very different from one of those. Is there one particular domain that you are most bullish on right now that will be just completely upended by a vertical AI offering? That's a great question. I tend to think that the most interesting vertical AI markets are actually hiding in plain sight. And what I mean by that is at first blush, these industries don't look super attractive. They tend to be super operationally complex. A lot of edge cases. I like to call them very gritty industries.

42:59and many founders might take one look and run away. But it turns out that grittiness is not a bug. It's actually the moat, right? If you can crack that and really get into the workflow, it becomes really, really sticky. So a great example, I mean, I called this out already. In one of our portfolio companies, Elise AI is focused on residential real estate, right? That market is, again, not a huge software market historically, but probably around$200 billion when you consider labor and services. Elise has now built products that cover the workflows end-to-end, really expanding into that market. And today, they've crossed over$200 million ARR.

43:44And shockingly to me, they cover one in six U.S.-based apartments.

43:50Ed Ludlow:Let's go macro a little bit. the news cycle has been dominated in the last seven days about open models. Yes. You know, a number of prominent leaders in technology, Jensen Wang, Satya Nadella, as a sort of coalition came out and said, we need America to do more on open weight models. You know, what was your reaction to that? And why do you think they timed it such as they did? Well, first of all, the letter was not surprising to me at all. If you just follow the incentives, especially around economics, it makes all the sense in the world. The companies that signed the letter that supported open weight models are exactly the companies that stand to gain from having a wider ecosystem.

44:34Right. The more models there are, the more money NVIDIA makes. So none of that is surprising to me. I think what was surprising a little bit is the timing. Right. Why now? And you could guess, you know, a lot of these companies are getting ready for IPO and they want to take control of the narrative.

44:53Ed Ludlow:It's interesting. I was going to say the timing also immediately post OpenAI and Hugging Face. I mean, in that example, right, you know, Hugging Face looked to open models to defend itself. It was a cyber case study as a venture capitalist, as someone that helps companies get off the ground, but is trying to make AI a positive story, frankly. How did you interpret that? Well, I'll say that open weight models, I think in general, are great for the industry. A lot of our apps companies, if they have more access to models, more competition at the model layer, it'll drive down costs and they'll have more options to choose from.

45:34And I definitely believe that's where the future is moving. In fact, the best AI companies are already multi-model companies. On the other side, there are real risks that we have to think about as an industry from security to safety to IP. And part of the reason why I think it was such a wake-up call to see the hugging face open AI story is reminding ourselves that security is not something that we could diminish. And in fact, we actually spend a lot of time investing in cybersecurity as well at Sapphire Ventures.

46:08Ed Ludlow:Let's finish by reflecting on Sapphire Ventures. You know, what I recognize is even at the earliest stages, there are private growth equity, mutual funds, crossover funds, public-private funds from some of the biggest Wall Street firms involved in that field. You're a$10 billion firm, but what's that been like in the last 12 to 18 months? That's such an interesting question, Ed. We're really starting to see a barbell distribution in terms of our investments. We're seeing some companies really break out, especially in particular verticals, but also horizontal companies as well as infrastructure companies where they've taken the leadership position.

46:47They've built distribution channels. They've built platforms that we feel like give it a better shot at defensible durability. And it's no longer growth at all costs. Growth is very, very important. But the narrative has switched to what about durability in the long run? And so we're investing in later stage companies that we see follow that arc and we feel like are initially cementing themselves as leaders. But we're also looking at the very early stage companies, post-product market fit, but still early stage companies. And there we're backing the best founders in thematic areas that we really like.

47:23Ed Ludlow:What's the benefit of going with Sapphire and not with another firm? What is your unique selling point? Oh, that's a great question, Ed. first of all, we are very focused on enterprise AI. That's all we do. Everything we do is B2B. And so that specialization and focus really comes across in different ways. We have a massive support team to support our portfolio companies from BD to talent. And everything, again, is geared to these companies where we've seen across the last 15 years that we've been in business. And the second thing I'll say is we strive every day to make our founders happy. I think we're one of the few venture firms that track founder NPS.

48:07We solidly believe that the only way to build a lasting franchise is that our customers, which are our founders, really love us and promote us.

48:16Ed Ludlow:Kathy Gao, partner at Sapphire Ventures, back on Bloomberg Tech. It's been too long. Thank you very much for coming into the studio. Now coming up, the next time you say, speak to an agent when calling a customer service line. You may not be put through to a human. We'll have the latest on AI's replacement of call center workers next. This is Bloomberg Tech.

48:43Ed Ludlow:We've all heard it, that robotic voice asking how it can direct your call. Automation has loomed over call centers for years, but the sector has been very reliant on humans until now. BloomBase Brody Ford joins us with the story. Brody, every time I call a customer service line of some kind, I get a robotic voice that says, how may I direct your call? What's changed? What's new here? You might notice that the voice is a lot less robotic these days, right? That when you contact chatbots or voice systems, you tend to get an AI system for much longer that in many cases can actually help you. Right.

49:20Ed Ludlow:It's more akin to an AI voice assistance level of speech capability. Absolutely. And, you know, that might be a good thing for customers. But what we found is that it can be a pretty bad thing if you're working in these call centers, which, you know, millions of Americans do. And when you hear executives talk about the labor impact of AI, it's often very lofty, a bit squishy. What we found is that in a lot of big companies, it really is about cutting costs and thousands of people are being impacted here. What are the companies behind this? Is there some startup somewhere that's really nailed this on behalf of these call centers?

49:54Oh, there are so many vendors here. More than any other software category I've seen, there are a million vendors trying to identify the contact center. Brett Taylor's Sierra is a name you hear a lot. Decagon is one you hear a lot. But it's a very unsettled market as of now.

50:08Ed Ludlow:We're showing the performance of call center-based company shares, but also the companies that rely on call centers, Commonwealth Bank of Australia, Microsoft, Hyatt Hotels. Yeah. Hotels. Oh, my gosh. Yeah. That's the main one for me. It's very quick. This is happening at all levels. Right. Think about any company that has a lot of consumer inbound, airlines, banks, telecommunications. They rely on thousands of people. And they are really wanting to reduce their labor expenses in most cases. Bloomberg Tech audience, if you're looking at the screen yelling, operator, representative, we get it. Bloomberg's Brody Ford.

50:45Ed Ludlow:Thank you very much. That does it for this edition of Bloomberg Tech. This is what markets look like. Again, the Nasdaq 100 is flirting with correction territory. We're off session lows, but the Philadelphia Semiconductor Index or SOX, it is chip stocks down for a fourth day. Apple, briefly a$5 trillion company, SpaceX rebounding. Check out the pod. This is Bloomberg Tech.

51:15With thousands of options, from apparel and drinkware to tech and totes, it's easy to find the right fit for your brand and budget with standout choices at every price point. And with their 360-degree guarantee, you can be 4imprint certain your order will show up just right, right on time. Explore more at 4imprint.com. 4imprint. 4certain. Healthcare doesn't always work great. If you've ever waited on a refill or couldn't schedule an appointment, you get it. That's the kind of stuff Optum is changing. They're using data and technology to integrate patient care, pharmacy, and everything else. So healthcare is connected, not complicated.

51:52What's that look like? Cheaper prescriptions that are easier to get and care that looks at the whole person. How you need it. Optum is helping make healthcare work as one for everyone. Learn more at business.optum.com. These days, it seems like AI agents are just about everywhere you turn. Every field and every function. But without identity, you can't trust they'll serve your business instead of jeopardizing it. Fortunately, Okta helps you get identity right by securing your AI agent's identities, giving you a single layer of control, a single standard of trust. So whether an AI agent supports a single user or your entire enterprise, with Okta, you'll turn risk into opportunity.

52:32Secure every agent. Secure any agent. Okta secures AI.