Anthropic Gets a Warning, SpaceX Shares Fall on Fourth Day

23:02Ed Ludlow:That was Anthropic CEO Dario Amadei speaking with Bloomberg's Emily Chang. You can catch that full episode of The Circuit later today on Bloomberg TV and on Bloomberg.com. SpaceX shares come back down to Earth, dropping for the first time. It's only the company's fourth trading day since that blockbuster IPO. It puts the stock on track to snap three days of gains where the shares have pushed nearly 50 percent above the IPO price and added almost a trillion dollars of market cap. Bloomberg Equities reporter Carmen Reinecke is trying to keep track of numbers that in real time keep changing. I mean, what is the what is happening right now?

23:42Ed Ludlow:Right. There is scarcity. There is only four percent of this company available for trade on the flow. What's the big thing here? Yeah, so I think we're seeing some of the key note, you know, volatility that can be associated with new IPOs in their earliest days of trading right here today. I mean, shares are down 6 % right now. We're a little bit off the lows of the day for SpaceX, but this is a pretty extreme drop. It was up about 6 % earlier in the session, has paired all of that to decline here. We know that there's low flow. That can make swings in the stock price look extra large or bigger than they usually would.

24:17And that can also then have an impact on market cap. So yesterday we reported that SpaceX had jumped over Amazon in market value. That's a little bit up in the air today. We'll see where it ends at today's close.

24:29Ed Ludlow:There's also like the listed options, right? The options market came into play over the last 24 hours. Is that a factor in the volatility? It definitely can be. I mean, you know, traders are obviously now making bets on where SpaceX shares go next. You know, they're buying puts and calls. They're trying to additionally sort of game this system or see if they can. There's extra, you know, alpha here. One thing that we have heard or seen that is that options contracts are pretty expensive. You know, investor Michael Burry wrote in a sub stack note yesterday that he was looking at puts and they were just too expensive to buy right now.

25:08So I think we have a lot of traders looking there. We have more options trading actually coming online in the next few weeks from other.

25:15Ed Ludlow:That's a volatility premium. Just really, really quick. And I know this is unfair. Do we even look at price to sales ratio for SpaceX? What's the point? That's a great question. I mean, I think the point is just in comparing it to some of these other large companies where it now has a similar market value. Right. I mean, it brought in about 19 billion dollars in revenue last year. And if you compare that to Microsoft, that is, you know, it's 15 times higher. So it's good to keep that in mind sort of as we look at the value of this company. We hope to talk a lot more about the company a little later in the program.

25:49Ed Ludlow:Bloomberg's car and Reinecke, thank you very much indeed. There's a lot of news from Bloomberg as well. Apple's investors are frustrated. The iPhone maker has been slow to deliver on AI promises, even with its latest Siri AI features. And after a disappointing performance at its annual worldwide developers conference last week, investors are becoming a little bit impatient. Bloomberg's Michael Reagan leads the team that's been writing about this. It's interesting, right? Actually, I was staring at the chart and being like, what are the shares telling me in the days since I was in Cupertino? But that's still the same story.

26:22Ed Ludlow:Everyone wants to see a little bit more from Apple. Yeah, I think that's pretty much it, Ed. As you're familiar with, it's not uncommon for there to be a lot of optimism ahead of a developers conference from Apple. And then a little bit of a letdown when there's not really a big bang product announcement. So, yeah, the investors we've talked to are basically saying we're just hoping for a little bit more oomph from their AI offerings, their Apple intelligence offerings. So there's a little bit of disappointment that Siri will only be in beta mode in September, only available in English, not available in Europe or Asia.

27:01So a bit of a disappointment there. But I would say, you know, Apple stock is still it's up 10 percent this year. It's right in line with the S &P 500. But I think it goes back to those chip makers you're just talking to. People are turning their head over there and seeing these triple digit gains. You know, there's something like a dozen chip makers in the NASDAQ 100 with triple-digit gains this year. And just saying, you know what, we wish Apple had been a little bit more ahead of the curve, a little bit more aggressive with AI. Now, that said, we do have these days in the market where everybody starts second-guessing all the CapEx involved in AI.

27:36And that's when Apple sort of becomes almost your defensive tech stock play. So there is a little bit of disappointment. But, you know, at the end of the day, this is Apple with this fortress balance sheet still looking at 15 percent revenue growth for this fiscal year. So, you know, I don't think we can make too much out of the disappointment from the from the developers conference.

27:58Ed Ludlow:Just very quick, Mike, there was there was a part of our report on this that basically seems to indicate the market's more focused on the next hardware upgrade cycle. Just real quick. What are they talking about? Yeah, exactly. I mean, when you're looking at the iPhone that's coming out in September, what is sort of baked into the assumptions about how much growth we can see because of people refreshing buying new iPhones just because they're excited about the new one? Right. So far, the revenue estimates are pretty much staying where they are, so it doesn't seem like they're really adding on to the estimates following the conference.

28:36Ed Ludlow:bloomberg's michael reagan with the apple stock story thank you very much meanwhile the company holds steady with its ai ambitions planning camera equipped airpods smart glasses and new foldable iphones as part of this like major product push which will span the next two years bloomberg's apple and consumer tech editor mark german is with us with the latest reporting i just i read it a few times airpods with camera and and the new bit i think is the kind of timeline for launch. Go with that. What was the important bit of what you reported, Mark? Yeah, so these new camera AirPods are going to launch at the end of 2027.

29:12It's going to be a pretty blockbuster fall of next year. That's the 20th anniversary of the iPhone. So they're planning a lot of stuff to go hand in hand with that. In addition to these AirPods with cameras, and just to give you some context, these are not for facial recognition. These are not for taking pictures and video. These are for being able to see the world around you and feed that information into Siri. So you can say things sort of like, what can I make with the food on this table, right? What recipes can you concoct for me? Tell me more information about that object or that plant or what have you, or things for visual reminders or more specific turn-by-turn directions.

29:50In addition to that, you're going to see the second generation of the foldable iPhone, as well as the 20th anniversary iPhone, something I'm calling the iPhone 20 or the iPhone 20 Pro, coming out at the end of next year. So it's going to be pretty jam-packed. And if you look at the more near term, this year is going to be pretty extensive as well. You have several new iPads. You have several new Macs, new Apple Watches. And, of course, you have the first foldable iPhone as well as the iPhone 18 Pro, 18 Pro Max. And if you recall, Apple made that big design change with the 17 Pro and Pro Max last year.

30:25Typically, when Apple does a new design change, the first two years of that design are extremely successful in terms of upgraders. Some people don't do it in year one. They like to wait for year two. And so I think the 18 Pro and Pro Max are going to be pretty hot sellers this fall as well.

30:40Ed Ludlow:Another big story that played out in markets, it played out on social media in a huge way in the last 24 hours, is Snap and Snap Specs augmented reality glasses. You know what the stock reaction was. You spoke to the CEO yourself. Summarize everything we need to know about this, please. I think the stock reaction is more in response to how much was spent on this product and investors and Wall Street knowing that this is not going to be a hit out the gate. This is a conceptual product right now. This is something like when the Vision Pro launched a couple of years ago. This is going to be for developers, for the biggest tech fans, for the earliest of early adopters.

31:21This is not something that's going to light the world on fire from the get-go. But this is the future of computing, I believe, as well. And this is what Evan Spiegel has been saying. These are augmented reality glasses that allow you to overlay applications, your work, notifications on top of the real world. And eventually, this is a product category that is going to click. but it needs to get a little bit lighter and it needs to get a lot less expensive. These are about$2 ,200 right now. Certainly not the priciest device in the category. The Vision Pro obviously being over$1 ,000 more expensive than that.

31:55But there is some work to be done. But this is another stepping stone towards that vision that Snap and several other companies have. So maybe I'm not optimistic about this first generation of the product from Snap. But in terms of the category, this is going to be the future. and Snap clearly is placing a foothold there.

32:12Ed Ludlow:That's Mark Gurman who leads all of our coverage of consumer technology. Thank you very much. Did you see this one? Allbirds is now Smartbird, completing its pivot from footwear to AI infrastructure after selling off its shoe business and the brand's assets. The company tapped former DCAI CEO Nadia Carlston to lead the next chapter. Smartbird also doubled its convertible financing facility to$100 million and says it's already talking with potential customers as it builds out its first AI computing clusters. Wow. Okay, coming up, we're going to talk about the challenges facing space-based data centers, including satellite-to-satellite communication.

32:57Ed Ludlow:The deep dive next. This is Bloomberg Tech.

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35:08Ed Ludlow:The U.S. is the clear winner in the AI race. That's according to ASML CEO Christophe Fouquet. He sat down with Bloomberg Tech Europe's Tom McKenzie earlier today on the sidelines of the VivaTech conference in Paris. Here's what he had to say about his thoughts on the global AI race. If we compare how we do on the entire ecosystem, versus the U.S. and China. I think today the U.S. is a clear winner. I mean, they are looking at champions across the entire AI semi-ecosystem. I think the one place they were missing a bit out was manufacturing, and I think they have been extremely aggressive in bringing some key company to manufacturing in the U.S.

35:49Ed Ludlow:They can do that because they buy chips. ASML CEO Christophe Fouquet. Back to SpaceX. Despite today's decline, SpaceX has soared. since its IPO four days ago. A big part of investor enthusiasm stems from Elon Musk's goal to put data centers in space starting in 2028. We've heard from those bullish on the prospect, including SpaceX investor Sean Maguire, who said this about orbital compute. Every individual component here is kind of fully proven by SpaceX, except for the compute side. But that is not, it's just not that hard. But space does present specific challenges for compute, including communication between satellites and with the ground.

36:41Ed Ludlow:That's an issue Dan Roca, former head of software engineering at SpaceX, set out to address when he co-founded Observable Space. And Dan joins us now. I'm really grateful for you to come in with your expertise, right? When you read the SpaceX prospectus, it's like, okay, the big picture, get it. space uh data centers in space as early as 2028 one of the things we focus on the show is the ability for communication rf but also laser try and summarize the challenge for us yeah you know like everyone's known for a long time that laser communication is the next generation of communication for space you saw that really uh starlink was getting built with the isl links between satellites that are in orbit uh it's you know because it's in space there's no like atmospheric conditions or challenges really establishing optical links.

37:33One of the big challenges you kind of have, though, going from space to ground and ground to space is obviously the atmosphere. But everyone kind of knows that solving those technical challenges or what's going to provide the really like 10 to 100 times the bandwidth throughput that you're going to want and continue like low latency that we need for kind of expanding the space. That's what we're doing here. Yeah. Go ahead.

37:54Ed Ludlow:No, no, no, no. I'm sorry to interrupt you. I guess that the easiest way to help the tech audience understand is like what are the current limitations of existing generations of hardware and software in that environment in space? Yeah, so I think from being able to deploy these ground stations for laser communications at scale on Earth to communicate is definitely one of the challenges. There's a lot of technical challenges as well around being able to correct like the kind of waveform and wavefront for laser communication and around adaptive optics as you're basically receiving the light on our ground stations.

38:30These are all very active challenges, but we've actually made as an industry a lot of advancements to make this feasible at this point. The data centers in space now is really going to require laser comm to be the primary mechanism of communication moving forward. So the timing works out really well. There's still challenges ahead, but it is, I'd say, commercially viable at this point. And so that's why we're really excited about being able to get these deployed at scale over the next 6 to 12 months.

39:05Ed Ludlow:Observable Space, the world's largest vertically integrated hardware and software company for space observation. But you are working on the laser component. Why is laser the best technology? there's a few different things that make it clearly the the winner over rf uh first just pure speed it's a 10 to 100 times faster the second is there's no spectrum management uh you know a lot of times with the rf bands you have to work with different countries to be able to manage who owns the spectrum and and how that's that's uh kind of being used and serviced from space and then the other one that is really important especially for kind of military defense purposes is the privacy of it.

39:49It's a very point-to-point communication. So it's extremely hard to eavesdrop on and be able to collect that communication. You have to be in a very specific area where the ground station is located at in order to collect any signals. So from a military perspective, this is like a clear winner and most future constellations for defense purposes are going to be optical first and do forward.

40:12Ed Ludlow:Dan, the basic idea of SpaceX going public is also that it will shine a light on commercial space. You know, SpaceX likes to do a lot of stuff itself. But do you see a kind of ripple effect or even an opportunity to work with SpaceX on those technologies? Yeah, totally. Like, you know, SpaceX, like, we're, we love SpaceX. It's really the company that's defining the future of space. So, you know, partnerships with them, like, we work with them and we continue to, like, would love to expand our relationship with SpaceX moving forward. I do think you're going to see over this next phase of space technology development, you know, people starting to unstack, kind of pull out the different stacks in the space technology spectrum.

40:57It's kind of similar to like how this happened in the early days of the Internet, when if you were going to be an Internet company, you had to do all the things. You know, you were a data center. You were like a Web site. You were doing networking. you know as the space economy and and kind of space uh technology matures you're going to see these different layers being pulled out we're that communication uh optical communication infrastructure layer that is now pulled out and people can just buy our products off the shelf turnkey solutions to to establish optical cons from earth to space and space sir

41:30Ed Ludlow:lasers in space no longer science fiction dan brolker ceo of observable space thank you so much Blue Origin is rebuilding the launch site where its New Glenn rocket exploded last month, aiming to fly again later this year. New Glenn is a key part of Blue Origin's plans for space exploration, but also NASA's Artemis program. But it's years behind schedule. And as Blue Origin founder Jeff Bezos said earlier today, this is not a sector where it is easy to move fast. Traditional aerospace, I think, often suffers from slow decision-making speed. and it's and i know how aerospace gets there but i mean you know you're building things that often have you know hazardous operations life safety critical missions and so again not every decision is like that though and so you end up making every decision as if it's life safety critical let's talk more about the challenges space presents the things we send up into it mackenzie listrip joins us a former director for the goddard spaceflight center which is nasa's primary hub for building and operating scientific satellites, now principal consultant at Peridot Services and just an absolute expert in space systems.

42:43Ed Ludlow:So there are different degrees of orbital compute, right? Different variations of a space-based data center. But at the extreme SpaceX is presenting, it is at hyperscale. It is running massive AI workloads, inference. Explain the distinction between those three grades of compute and why it's hard. Absolutely. So the first is really on orbit edge computing. So this is about taking imagery data, radar, weather, maritime, climate or defense data that's collected in space and then using, you know, AI, you know, edge computing, some kind of inference, some kind of processing in the space system itself before sending it down to Earth.

43:28So this is real. This is near term. So a satellite sends raw data to an orbital compute node. The node performs filtering or AIML inference, and then only the higher value or smaller data products get sent to Earth. So this is a process that the company Axiom says that it deployed as a prototype unit on the International Space Station and and has an orbital data center node as well. Now, the second is really resilient or sovereign storage and computing. So infrastructure that is physically separated from terrestrial threats, so disasters, political borders or ground based attacks. That also has some real defense continuity of government and critical infrastructure use cases, but still not entirely explored.

44:13Now, the third is hyperscale AI work in orbit. And this is really the moonshot. It's potentially enormous, but it is not merely about the launch cost or even the orbital downlink nodes. It really requires some challenges to be met in power, in heat rejection, in radiation tolerant computing, high bandwidth optical networking, orbital reliability and other issues. So it's a it's a real challenge.

44:42Ed Ludlow:So let's zero in on some of those challenges. Your job was to get systems ready to be in the environment of space. The sci-fi nerd in me thinks about the vast coldness of space. But in thermal, it's a very different challenge, right? It is. So space is not cold sometimes in the way that people think. And I would say that in orbit, a data center is a heat engine first and foremost and a compute platform second. So a terrestrial data center rejects heat through chillers, through air, water or liquid cooling, through evaporative systems as well. Now, in orbit, there is no convective air heat sink.

45:23So heat has to be moved through the spacecraft and then radiated away. So this means that radiator area, radiator emissivity, the attitude control of the spacecraft, contamination, degradation, these are all effects that have now become first order economic variables.

45:42Ed Ludlow:And then there is the power challenge. There's the belief that the sun is always on, infinite solar panel, as long as there's nothing blocking the path. But again, it's not as simple about that as that when it comes to access to that power. Correct. So, you know, the pitch for orbital data centers is often that, hey, sunlight is stronger and more continuous in the right orbit. Google's project Suncatcher argues that solar panels in the right orbit can be up to eight times more productive than on Earth. So that is true. But just because you have space energy access doesn't mean that you have space energy infrastructure.

46:19So you're going to have to deal with some real constraints. And that means the close formation orbital dynamics, the radiation effects, the thermal management, the ground communications. All of this depends on a reliable access to power. And that means power generation, but also power storage, distribution. Again, that thermal issue of heat rejection and also redundancy. Now, this has to be flight qualified. It also has to be able to be reliably operated in space and maintained. And maintenance is one of these hidden costs right now that we're not talking a lot about.

46:57Ed Ludlow:Mackenzie, we have literally 10 seconds. Do you think SpaceX can do it? Well, they're a vertically integrated company that has demonstrated many technical challenges before, so I wouldn't count them out. Mackenzie Lister, Principal Consultant at Peridot Services, former director to NASA's Goddard Space Flight Center, and a top expert in space-based systems. And get used to that. We're going to be talking about it a lot. That does it for this edition of Bloomberg Tech. Really interesting mix of market news, political news, but the technology sector has a lot going on right now. Recap on the podcast, Apple, Spotify, iHeart, and all of the Bloomberg platforms.

47:34Ed Ludlow:From San Francisco, this is Bloomberg Tech.

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