Arm Warns of Phone Market Weakness

23:37Let's take a look at today's big number, 85 ,411. That's the number of planned cuts in the tech industry so far this year, up 33 % from the same period in 2025, bringing the total for 2026 to a three-year high, even as overall private sector layoff announcements receded. This is all coming from data from Challenger. Bloomberg's U.S. economy reporter, Julia Panzeres, joins us now on the trend that we're seeing. Look, whether it's anecdotal, whether you think of the announcements coming from Block just over this week, we've heard from Coinbase, from PayPal. But we then get the more macro piece of data that, yes, tech is the industry that has the highest number of layoffs right now.

24:18That's absolutely it. You've been seeing a lot of headlines from Microsoft to Meta to Snap. And that's what Challenger looks at. Challenger tallies up these job cut announcements. And the tech industry is leading layoff announcements. And the reason is for the second month in a row, artificial intelligence. And you brought up a great point. It's not necessarily at the moment that artificial intelligence is replacing workers, but the spend that is necessary, that is what is taking over. And that's why job cuts have been occurring is because these companies need that extra spend. It's so interesting because I think everyone's got this anxiety that AI is going to replace me.

25:00But actually, maybe it's just your salary that needs to be taken out to be redeployed into AI investment. Julia, when I take a step back, though, the hand-wringing is getting more ferocious. But when you look at Challenger data, look, since 2023, is it, that they've been tracking how many jobs are at the expense of AI? It's still only about 3.5 % of all layoffs that have been announced since that time, right? It's still only very small. It's only very small. And if you look at the broader macroeconomic picture today, we got initial jobless claims and they're still hovering near decade lows, even though they rebounded a little bit.

25:38Continuing claims are near two year lows. So that's showing that even though we are having a lot of these announcements, these job cuts are either not translating significantly to the broader data or also that's just not necessarily moving the needle in the broader picture. Yeah, I guess the question is whether this is a leading indicator, whether this is just the start of something in terms of a wave. Julia, just briefly, what other data do you look at to make sure that this is real or whether this is AI washing? I think that's the difficult question. I mean, the numbers that we're looking at, even if it is AI washing, what is significant is that there are these job cuts.

26:16And so we're trying to assess, is the economy still in a low-hire, low-fire environment? because even if it is AI washing, if these jobs are being removed from the economy, that is significant, something that you have to keep an eye on. It is, and it's something that workers too keep an eye on. At the end of the day, it might be statistics, but it's actually really people's livelihoods that we're talking about here. Bloombergers, Julia, Panzeres, it's great to have you on.

26:45Welcome back to Bloomberg Tech. We check in on these markets that are at a new record high. We're on pace for a sixth straight week of gains on the Nasdaq 100. We're up 0.5%. Again, amid the clouds on the macroeconomy side of things, the worry anxiety about US and Iran conflict, we're still managing to see the AI trade still power a lot of these stocks. We've also still got earnings coming thick and fast. And for some, we are seeing absolute rocket ships in terms of moves. I'm focusing in on Datadog, up, let's call it 30%. They raise the guidance, they're showing strong growth. And in many ways, this is the biggest moves at one point since 2019.

27:22And this is as software really manages to sort of alleviate some of the angst here. They had a strong report on the guidance implying a healthy outlook for the second half. It's how Evercore call it. And TD Karen saying revenue growth is nicely above consensus for the outlook much better than expected. Less so for DoorDash, which had been trading higher in earlier, when certainly after it reported earnings yesterday after the bell. The gains that we saw in gross order value had impressed in many ways. The firm giving a second quarter marketplace gross order value forecast that really beat average analyst expectations.

27:54But maybe expectations got ahead of themselves as Uber's numbers have been strong as well. We're just down six tenths of a percent. But earnings is one of the key drivers in the market at the moment. And Sylvia Jablonski is with our CIO at Defiance ETFs. And talking to discuss investor appetite, whether it be for software in some respects, we're finally seeing some love for Datadog, but you're also seeing love for what's happening in terms of the AI trade more broadly, infrastructure, quantum. We just said IonQ on. What are the driving forces you're seeing in the ETFs? Well, I think the driving forces are very much that these companies are doing quite well.

28:24We just talked about IonQ off camera for a minute. There are 755 % revenue growth. This is a company that's doing full stack services. They're involved in defense. They're involved in quantum infrastructure, deals with Azure, deals with AWS. And I think that a lot of these disruptive and thematic themes are playing out because these companies are starting to generate revenues. They're starting to go from being science projects to actually being commercial. And that's really what the retail investor needed to see. And I think why you're seeing some momentum in these spaces. Isn't it interesting that the science project, I mean, some days we can be very enthusiastic about the project of AI and large language models more broadly.

28:59We think that they're going to be driving absolute productivity gains. And then there's other days where we have anxiety about just supply restraints, whether they're able to build out compute, whether they're able to afford compute. How much are you seeing on a day-to-day the shift in sentiment? Well, I think what's great is actually if you look at some of these themes, AI and even quantum, right? Like just look over the last two or three years. It's good news comes out, earnings are positive, the stocks rally 30, 40%. You know, someone says, oh, we're 10 years away from this coming to fruition and the stocks fall 20, 30%.

29:29So what I would say is that opens up opportunities for investors. When you have this uncertainty and it's a nascent field, you know, you can actually buy dips here and hold these stocks for longer periods of time, hold these AI-powered infrastructure ETFs and things like this. But what I will say is that it also just shows you how much demand there is and what the runway is for these companies. Now we're talking about photonics that are needed to power data forward. The Corning deal, for example. The Corning deal, Lumentum Coherent. We're talking about different forms of energy, whether it's nuclear energy.

29:59And all of this is needed to drive this forward. And we're in the early stages. So I think the picks and shovels are going to have a long runway ahead of them. Where there has been a lot of anxiety has been software. And look, Datadog actually calls itself an AI-powered software provider. They're giving tools for AI coding. They're also all about the networking infrastructure. But how are companies getting sort of wheat and chaffed by investors right now as to whether they can harness AI growth or whether they're going to be left behind? Well, I think when the market had that chat GPT moment so long ago at this point, it was the Microsoft investment news.

30:31All of a sudden, every single company in the S &P 500 tied itself to the word AI. And when it tied itself to the word AI, that company tended to do well and the stock price went up. And then the market has figured out like, OK, not everybody is AI. And so I think Datadog has done something differently. You know, how that bodes for the rest of software. I think that if you see these major software companies integrating AI into their infrastructure, they will be potentially fine. And also you have larger companies like IBM, for example. You know, they might suffer on their software side, but they win on their quantum side, right?

31:04So the diversified exposure to technology and these, you know, again, disruptive trends in AI will help move them forward. This is all in the context of disruption from a macro perspective, from a geopolitical perspective. How does a long-term investor who loves the idea of AI and quantum deal with the here and now of the straight-up Hormuz, which does affect helium, which does affect chips? Right. And it's really interesting that the market has rallied the way it has when we still have this geopolitical uncertainty. Is the war over, is it not? Where do we stand? You know, I think that the market could turn at any time, and that's something that investors should be aware of.

31:38However, when you think about, you know, the way that you invest, when specifically talking about disruptive themes, you want to be a longer buy-and-hold investor, right? you want to kind of weather the COVIDs. You want to weather the Russia, Ukraine. You want to weather what's going on in the Middle East and keep that long-term outlook because you're not going to be able to predict geopolitics. That being said, investors should be aware that there could be volatility and the things that get hit could be the higher growth sectors. Where are you seeing new appetite? Like you're someone who thinks around opening new ETFs.

32:10You like, you harness the appetite that there was in crypto, particularly in AI infrastructure, in space, in quantum. Where is the puck moving? Well, the puck is moving to, you know, a lot of these picks and shovels of AI. It really is. You know, you're talking about memory. You're talking about photonics. You're talking about the AI infrastructure and build out the picks and shovels. Last time we were on, we talked about modern warfare because of what's going on in Iran and around the world. There's been so much growth in, you know, drones, manless drones. You know, Palantir, the type of AI that is going to be funded by governments to grow out defense is just, you know, a massive opportunity.

32:47So we really see investors starting to allocate and look into the cousins of AI outside of just straight chips. And we've got a key IPO to be talking about in the world of satellites. And I know that you've got exposure to the world of satellite and defense tech. Sylvia Javonsky, it's great to have you on of Defiance ETFs. Coming up, we talk to that CEO, Hawkeye 360. It's a satellite surveillance firm. It just raised$416 million in its IPO. This is Bloomberg Tech. A business gift is never just a gift. It's a thank you, a milestone, a moment of appreciation. It's a message about how much someone matters and what your brand stands for.

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35:48Another tech company is going public today in the latest sign that the IPO market is picking up steam. Hawkeye 360, priced at the top end of the range, raised$416 million, and the firm provides satellite-based signals intelligence for U.S. government agencies. Hawkeye CEO John Serafini joins us now. And look, your shares are currently indicated to pop at the open, $30 to$32. How does that make you feel, John? It's a wonderful day. It's a wonderful day for our company and for our customers around the globe. Okay, so we could see that sort of movement higher, $26 is where you priced. You were 25 times oversubscribed.

36:23So for those that didn't manage to get in, what's the thesis here? What are the growth opportunities for Hawkeye 360? Well, it's a very durable, all-weather company. We obviously have a value proposition of providing signals intelligence to the warfighter community during times of geopolitical volatility. But our capabilities are orchestrated to provide value in all environments and all business conditions. And we have a track record of having built a very durable company that works in any operating condition in any economic environment. You only operate a constellation of more than 30 satellites.

36:57How does that look to grow and what actually do those satellites perform right now? Yes. So our constellation today is over 30 satellites. It provides an exceptional revisit rate over anywhere on Earth as well as very low data latency. So we can get that data to our customers, the warfighters, in a timely manner. All these conditions provide for capabilities that the warfighter is using in places like the battlefield or in the South China Sea to be able to detect and track dark vessels. We have a very exquisite value proposition of being able to geolocate, analyze, process RF data and deliver that to warfighters on a timely basis.

37:36How does that expand? Is it just the U.S. government and it's more of the budget that is an expanding budget coming from the Pentagon? or is it other allies that you work with? How are you seeing the growth of Hawkeye 360? Well, we've orchestrated our company to be very diverse in our revenue base. So we have a US government business that's significant. Today it represents about 75 % of our work. In the past, our international business has been upwards of 50 % of the Hawkeye heritage capability. We have a number of great international customers. We're very pleased to be able to support them and the growth drivers on the international side are very robust.

38:13You are using the money the funds raise to repay debt and to help fund deferred payments related actually to an acquisition you made in December. What about that? I mean, you bought a Dallas-based provider of signal processing technology. Could you add on anything else or is acquisitions and inorganic growth a way to continue to expand? Well, we're quick to want to combine the organic growth of over 70 % last year in 2025 and the exceptional profitability of over 20 % on adjusted EBITDA basis in 2025 with continued inorganic growth opportunities. Now that we've acquired ISA, which is a meaningful acquisition, both in revenue and profitability and an exquisite fit for our technologies, and we have the institutional muscle to do this, we anticipate doing more acquisitions.

39:00And certainly, the IPO provides the proceeds for us to enable that. What's interesting, John, I mean, you raised, I think,$173 million in a Series A e-funding round. You were nearly$2 billion, according to PitchBook. Why not stay private? What we've seen is massive companies wait for extraordinary lengths of time to eventually tap the public markets. Why was it right for you now? Well, the warfighter deserves the very best suppliers of capability to them. And the IPO process provides exceptional validation to ensure that a company like Hawkeye 360 is capable of delivering valuable intelligence to that warfighter.

39:37So we appreciate the bona fides and the validation that we've gained from becoming a publicly traded company. and obviously we appreciate the resources that are now on our balance sheet that will enable us to execute against special initiatives that will provide growth to support the warfighter. John, it's great speaking to you. We look forward to when the shares start trading. John Serafini, he's the CEO of Hawkeye 360. Congratulations on the listing.

40:06Shares of Chime, they're actually trading lower today, 7.9%, but the company reported earnings that beat expectations. They raised full-year revenue outlook. It's kind of synonymous with what we've just seen with Arm a little bit earlier. The more notable change that Bloomberg Intelligence focuses on is the fintech raising its EBITDA outlook up 9 % at the midpoint. So let's delve into all these numbers, the growth, the new users, with Chime CEO, Chris Britt. And look, the stock not doing the work, but more broadly we are seeing that you outperformed in your fiscal first quarter. How are you seeing growth for the company?

40:39Well, thanks for having me, Caroline. It's great to see you again. We felt great about the quarter. We once again added a huge amount of new members into our customer base. We added 700 ,000 new actives. So we got to 10.2 million for the quarter, which is a new high for us. And third-party data from J.D. Power once again showed that Chime was opening up more checking accounts than any bank in America. In fact, almost 50 % higher than the number two player in terms of opening up new accounts. And you can see that translate into our results. 25 % year-over-year top-line growth and great outperformance on not just top-line, but also in terms of efficiency and EBITDA.

41:22We achieve an 18 % adjusted EBITDA margin and gap profitability for the first time. Look, this is all on the arc of having gone public and continuing to build out as a company. Look, there is seasonality to your business, and the second quarter brings that seasonality. Perhaps revenue gets hit a little bit, maybe acquisition costs. How do you continue to build through that seasonality? What is it that you can bring in terms of AI within the product and also within your business? Yeah, that's right. Q1 is always an outperformance quarter for us because we get outsized amount of spend and deposit as a result of the tax refunds that come into our accounts.

41:57So naturally, Q2, you see that start to fall off a little bit. So I think the best way to look at this company and what we try to educate investors on is to really be looking at the year-over-year results of the company. We feel really good about the remainder of the year. In fact, we raised our guidance for the year on revenue and adjusted EBITDA, as you mentioned. And I think it's really the product portfolio that's going to drive that. We were on this show just about a month ago, and we announced the launch of Chime Prime.

42:27And we're just about a month in, and it's been great. We offer 5 % cash back on the category of your choice. So you can pick fuel, restaurants, you know, bills, you name it. And it's really been a big hit with our members so far. You also get 3.75 APY on your savings. And we've got a whole host of other products, including AI products, that we think will be a nice tailwind for growth over the course of this year. It's all about member engagements, about cross-selling. Talk to me about how that AI that maybe shows up in the product also is showing up in just the coding you're doing, the work that those that work with you are currently deploying.

43:05Yeah, we really see AI as an accelerant to our business. We've embedded it inside of the company. We have a Chime-built software factory called Archimedes, which allows employees within Chime to create agents that can work simultaneously to build products on our behalf. So literally, starting from idea and conception all the way to product rollout, we have agents that are now doing a lot of the work for our members. It's over 80 % of our code that we shipped last quarter was done with AI. And so it's a huge accelerant to the velocity of what we launch. But then in addition to that, we have a service for our members, an AI co-pilot that we call Jade, that we think is an opportunity to move the banking experience from looking back at history and just getting reports on how you spend and these sorts of things, but actually being more proactive and helping people, helping drive behavioral changes that can help drive people towards the best financial results.

44:05paying off high interest debt first, getting a savings account, making sure that you're investing on a regular basis and not missing any bills that are due at a particular time. We're really excited about the opportunity to use AI to help our members make financial progress inside the app. How does your employee base feel? Look, this week has been tough in fintech. PayPal, and look, they're not saying it's because of AI, but they want to lean more into AI. And you're seeing with Coinbase, that is a total focus on trying to rewire, reframe the business built around AI with just humans at the edge.

44:40What are you thinking of it, Chris? Well, look, we already operate a very efficient company. We generate over$1.5 million of gross profit per employee. So, we feel like we have the right-sized company at this point in time. And our employees here, our chimers, are excited about this opportunity. We are really entering into a golden era of what can be done with software products as a result of AI. I know all the attention goes to the sort of frontier tech companies and AI companies for good reason. But I think what's often underestimated is just how AI can be leveraged by industry leaders that are technology companies to create better products, to make it happen faster.

45:25And our employees are really excited about using this technology to create great outcomes for our members. I think many of your members might not think it's a golden age for their economic circumstance. When I think of the pressure they're under from oil prices, and you talk about how you're trying to help some of your customers get money back when they spend on gas, for example. How is the customer feeling? Well, I think, you know, for the past few quarters, there's been a lot of questions about the health of the consumer. And I think for good reason. obviously the geopolitical uncertainty, the sort of broader macro pressures, but we aren't seeing it in the results.

46:01We're seeing a healthy consumer in terms of spending, double-digit increases in areas like entertainment, streaming services like Netflix, home delivery like DoorDash and Instacart, and then also big box purchases. These are all up double digits for our members year over year. We're also seeing balances that are higher, sure, because of the tax refund season, But even beyond that, we're seeing elevated savings account and checking account balances. And we have not seen an uptick in unemployment benefits. And we see we are the primary account for millions of our members. So if there was a bump in terms of the labor market, we would see that among our customer base.

46:42They just haven't been affected yet by it. And I think you've seen in the recent numbers that have come out around labor, like for everyday consumers, we're close to full employment still. I think a lot of the gloom and doom is more around the white collar work that is starting to be replaced by AI. Chime CEO Chris Sprit, it's always great to catch up with you. Thank you for joining on the back of your earnings. Let's turn our attention to more earnings that are coming out. CoreWeave, shares, as you'll see, wow, year to date, up 79%, surging in 2026. And look, AI demand fuels the need for compute capacity, of course.

47:17Investors are looking for proof that the NeoCloud provider can execute on his ambitious plans and its reports results after the closing bell. Dina Bass joins us now. And look, phenomenal appetite for compute, phenomenal appetite for the stock that's been volatile though, Dina. What do we need in terms of fundamentals from CoreWeave? Sure, I think that people want to see continued signals on the demand. The demand signals last month from all of the large cloud providers that reported as particularly Google, but also AWS and Microsoft, were that demand for AI capacity, as you said, It remains extremely strong.

47:52We just saw Anthropic sign a deal with XAI to take up some of their capacity. Everyone's looking for as much as they can. CoreWeave themselves in April signed deals with Anthropic, Meta, and Jane Street. So people want to see further details on what the demand looks like, but so far all indications are that it remains really strong. The question is how is CoreWeave paying for expanding capacity, right? In order to meet all that demand, you have to acquire, build, develop more AI cloud capacity. And that's pricey and has been a little bumpy for Corwee and others in the industry. Yeah, there is this on again, off again anxiety as to bottlenecks or as to how good customers are for the money, Dina.

48:38But when they're branching out and it's not, say, an open AI exposure so much, but it's a jump street. As you say, it's finance, it's other enterprises. How much do investors understand that opportunity? I think CoreWeave has tried really hard all along since their IPO to both diversify their customers and make sure investors understand that. Early on, the concern was that a very large percentage of their revenue was tied to Microsoft. Then we saw, you know, with reports of OpenAI possibly not selling as much as they might hope, you know, CoreWeave shares and other providers reacted to that. and CoreWeave came out pretty quickly to say, look, we have a lot of other customers.

49:16And so they're trying to make that clear. They're also trying to sell more software services. Part of their deal with NVIDIA involves figuring out, having NVIDIA market other things that CoreWeave can sell besides the raw compute power. Dina Bass is going to be busy after the bell. Thanks for joining us on it. That does it for this edition of Bloomberg Tech. Don't forget to check out our podcast. Find it on the terminal as well as online on Apple, Spotify, and don't forget to tune in to those numbers breaking after the bell. This is Bloomberg Tech.

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