Investors Question AI Valuations

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1:04Bloomberg Tech is live from coast to coast with Caroline Hyde in New York and Ed Ludlow in San Francisco. This is Bloomberg Tech coming up. Palantir shares fall on concerns about the company's valuation and the sustainability of the AI rally. Plus, we'll break down more tech earnings. Spotify, Uber, Grab All Out with results as well. And we push ahead to AMD tonight. And the world's largest sovereign wealth fund votes against Tesla's proposed pay package for CEO Elon Musk. We'll discuss the impact on the company's shares. But first, we check out what's happening in these markets more broadly, Ed.

1:43And I'm looking at a Nasdaq 100 that is under pressure. Look, we're only down to levels, well, that we've seen this month. And indeed, it's the worst sell-off since, ooh, Thursday. So this isn't seismic, but there is a tension here about some of the levels of valuations and certain people speaking out about putting on some short bearish bets. Looking at Bitcoin, though, has been under far more pressure. It's the lowest level that we've seen since June of this year, off by another 3.3 percent amid the risk-off tension. You're looking at some big movers underneath the hood. Yeah, Tesla's down 2.8 percent.

2:14It had been down 4 percent at the open. Norway's sovereign wealth fund, Tesla's ninth largest shareholder voting against the Bay Package. We're going to head out to Europe in a minute and get more on that. And then there's Palantir, strong beat in the third quarter, raising annual outlook for revenue. But the sell side and investors and the Internet all going to valuation is a point of discussion, Caro. Commercial growth and government growth. But this isn't about fundamentals, or maybe it is. Let's talk about both fundamentals and valuations and talk about Palantir's earnings and the sustainability of these numbers.

2:49of Mariana Perez-Mora. She is an Aries-based and defense analyst at B of A Securities with a buy rating, $215 price target for Palantir more broadly. And I think you're even upping it to$255. Tell us about why Palantir is just outperforming, is peerless in your perspective. So first, thank you so much for having me here. I'm happy to share this with you too. And I think Palantir has proven that has been the winner of this AI implementation. And I mean, not only about investment, but actually the growth they are unlocking. The customers actually go into them because they can prove that they can actually extract value from these AI implementations.

3:31And it doesn't only stop with those customers, but also other software peers that are partnering with Palantir because they also want to be part of this. They have really good software, but they are still struggling to actually make that software work. And Palantir is like, from a fundamentals perspective, actually proving that they can extract value from those implementations. Your note is such a joy to read because you're using wonderful analogies going back to the matrix, whether you're going to blue pill or whether you're going to red pill. But what's interesting is you're thinking that ultimately the red pill is there with Palantir.

4:05And they are unlike the 95 % of failed pilots that MIT drew a focus on. They're managing to make AI work. But why? What is it different about Dr. Karp, Daddy Karp, however you see him, and indeed the go-to market focus that they have? I think what is different first is that they have been working on this infrastructure that is actually what makes AI be operational for more than 20 years. This is something that today has more value than anything because of the acceleration on AI and the new software that we have. But this ontology that they have, that is the data integration that can actually unlock value from all these different data pods and have the human to be able to interoperate with that, that has been in the works for more than 20 years.

4:57And that's why they are a real winner. And from a customer perspective, you have to take into account that they work with the U.S. government. And they have worked with the U.S. government for so long. so they know how to do complex operations. And they are translating all that know-how into the commercial world. That is why I think they're a winner. They were prepared for this. Mariana, a part of the pressure on the stock this morning, and we need to acknowledge it, is that Michael Berry of the big short fame or scion asset management, his firm, have disclosed some bearish wages, including on Palantir put options is the form that they've taken.

5:38but there's clearly some bigger picture worry about valuation and are we or are we not in an AI bubble? The way that you put it in your note is to discern what is real and what is not real. What is it you see in Palantir that gives you the conviction it is real? What makes me convinced about being real is what, when you hear about the customers and the transformation they are seeing from implementing Palantir's product, they are like actually saving money they are doing things faster cheaper better smarter those real changes are the ones that make me optimistic about it and I we have said this over time I'm really convinced that even if they I bubble were to burst volunteer will survive because it's the structure to actually extract that value and do more with AI agents or whatever is next from a stochastic models or anything in software and computing and everything.

6:39You write that seeing is believing, Mariana. I've attended quite a few AIP cons. And what happens is you have these customers go on stage and demo how they actually use Palantir. There are so many people out there that are like, what does Palantir even do? I've seen the demo and you get a sense for how it works. So then that takes me to the commercial growth, 121 % growth year on year in the US. the nervousness out there is that it's only the US. That commercial business isn't growing internationally. I think when you think about international, you have to take into account two things. Number one, there are larger customers there that were already hardly penetrated and that Palantra is putting their focus in the US.

7:26So it's also, demand is amazing for AI in general. And we see that with all the topics being invested. But if you have to actually catch up with that demand and execute on that, you have to take into account where you put your efforts and your resources. And I think it's aligned with that. Palantir is putting most of their commercial resources focused in the U.S. Mariana Perez-Mora, Bank of America Securities. Price target up to$255, reiterating a buy on Palantir. Appreciate it. Let's get to the other top story in Tesla. Shares down after the world's largest sovereign wealth fund voted against Tesla's stock award proposal for CEO Elon Musk.

8:05The biggest show of opposition yet by a major shareholder in London. Bloomberg's auto czar Craig Trudell joins us with more. We're trying to tabulate and tally who's voted no so far ahead of November 6th. Norway's sovereign wealth fund is the ninth largest Tesla shareholder, I believe. Hence why we're saying this is the biggest no vote so far. Yeah, that's right. And they were pretty diplomatic about it. They praised the value that Musk has created over the years. They refer to him as, you know, having played a visionary role. And yet they're concerned just about this sort of magnitude of this award, about dilution and also about the issue of sort of key man risk.

8:50This is something that has been has come up time and again with Musk. you know, the moment that he has had someone who's emerged as sort of, you know, who sort of looks like a number two, that person doesn't seem to last very long. So in Tesla's defense, I think the board has tried to take some steps with this package to try and mitigate some of that risk and sort of have Musk play a role in, you know, succession. But the planning for that still seems to be, you know, pretty much, you know, sort of to the side as they really sort of focus as a board on retaining him and on incentivizing him. Can you take us to how they have voted in prior votes on pay for Tesla or the relationship between the Norwegian Wealth Fund and Elon Musk going forward?

9:42What that means for really the retail base, which is the big push here for many. Yeah, I think as much as this no vote is concerning, if you want to see this measure pass, you know, we only have to go back to last year to an example of when this fund voted against a Musk pay package. This was the vote on re-ratifying the 2018 award that a judge in Delaware threw out. And there's there's kind of a juicy story to that in that the CEO of this wealth fund, you know, kind of got raked over the coals by Musk. We found out later for the way that the fund voted on that pay package. There was a freedom of information request for for messages between the head of the fund, Nikolai Tengen and Elon Musk.

10:29And Musk, you know, referred to this notion that he needed to, quote, make amends for the way that the fund voted. So there is a backstory here. And as much as this is maybe a negative signal, again, if you want this to pass, we've seen that it's been the case that even when this fund has opposed a measure that the board has wanted to see through, the board has managed to get its way with its, in part, thanks to its very substantial retail investor base. Great context, as always. Bluebeck's Craterdale. So I appreciate you joining. Coming up, Grab, well, it boosts its earnings forecast for the year.

11:05We speak with the CFO, Peter Uy, about the company's latest results. This is Bluebeck Tech.

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12:37AI is headed for the grocery aisle. Instacart is launching new AI tools, including an assistant that can make product recommendations as it really leans the e-commerce business into more profitable software. One of those, Natalie Lung joins us to talk us through it. Tell us a little bit about how these actual Instacart AI tools are working. So Instacart is building this AI chatbot as a white label service for groceries. So they can actually have a chatbot within, let's say, Kroger's own iOS app or the Sprouts website and app. Natalie, let's head out to Uber, one of the big decliners. Rideshare, good.

13:14delivery good profit not good what's the story there yes uh so uber sort of uh reported some disappointing operating income and adjusted ebitda uh this morning out of the third quarter as well as some disappointing uh forecasts uh earnings forecast for the four four q um and so it's the profit has not been catching up with some of the growth recovery we're seeing their growth re-accelerated to more than 20 % on the top line growth Spokane metric. And this is sort of a testament to their strategy to go into new products, some of which may not be profitable at the beginning, such as autonomous investments, which they have been doing a lot of recently.

13:59Bloomberg's Natalie Lung, thank you very much. Food delivery and ride-hailing company Grab raised its earnings forecast for the year after quarterly profit topped estimates. The Singapore-based Grab introduced new products like group food orders and less expensive shared rides that help draw in customers. Here to discuss, Peter Uy, Grab's CFO. That's so interesting, right? You just heard Natalie talking about Uber. Bringing in new products, that hurts profitability. Your strategy seems to me to be like more affordable products for a wider audience-based, customer base, but you're doing it in a way that is accretive to your bottom line?

14:37How have you done that? That's right, Dad. We've been on point in terms of strategy, making our product more affordable. And we really widened the top of the funnel for us. If you look at the third quarter, we have now 48 monthly transacting users on our platform, which is another record for us. And we're also seeing more users spending on the platform at the same time. So that affordability also is pushing the average spend also on our platform because they're transacting more on the platform. If you look at the number of transactions on our platform, we grew at 27%, so it was actually growing faster than our GMB also at the same time.

15:14So what we're seeing is a number of things. One is people are engaging more on the platform, but also cross-selling more also. As they're coming in into certain funnels that we have on the affordable side, they're also trying other products that we have, whether it's the group order that you just mentioned, where it's the dine-out features that we have also for them to be able to go to restaurants. So there's a lot more products that we've actually been monetizing, and that's producing some of the results that you're seeing. If you have a strategy where group food orders and shared rides are a driver of demand, do you need big volume in order to make this a profitable exercise for Grab?

15:56Obviously, scale is important. The more scale that we have, the more users using the platform, the more we can actually leverage the cost structure of our business and also scale the big driver base that we have also at the same time. So it does play a role. And hence, what you've been seeing is that now over a third of our user base, especially in deliveries now are coming into what we call more the affordable product stack. And it's a great entry point for them to use. You're looking at over 25 million monthly transacting users just interacting in those affordable products, just on the food delivery side of the business.

16:36And it's a great way for us because it enables us to, for those users who are a little bit more price sensitive to try the product first, get a taste of it also. They're a little bit more price sensitive on the delivery fee and we've managed to be able to lower the delivery fee for them but they also get to experience the platform and once they've experienced the platform they get to also experience other products like grocery delivery which is still a very nascent business for us it's about 10 percent of our deliveries gmv and at the same time also we're cross-selling them to other products like dine out for an example for them to be able to go to restaurants at the same time it's interesting that you also offer fintech as well and loans but i've just got to target the elephant in the room is that we hear all these growth stories.

17:17We see analysts raising their price target on you, but the shares are down on the day, Peter. And from the conversations you had with investors and analysts, what was it that perhaps there was a little bit of concern about? I wouldn't say it's any concern. A lot of the investors are really focused on how we are going to finish the quarter. And I've reiterated them that we're on track to finish a very strong quarter. If anything that reflects on the guidance that we've given out also, We've increased the EBITDA guidance now to$490 million to$500 million. And that also shows our confidence in terms of how we're exiting the quarter.

17:54I've also told them that in terms of our GMV growth, we're continuing to sustain this growth acceleration in our business today. So we are looking to finish strong in the quarter. One of the areas that we're focusing also is the fintech business. We've given out a$1 billion loan outstanding by the end of the year, and we're on target to hit that also. So all the different parts of the business are on track for us to have a very strong finish of the year. What's also on track is early 2026, RoboTaxi, Chinese RoboTaxi company, WeRide. You've been partnering there. How are you seeing AV as the key area of focus?

18:28Just briefly. Yeah, we're leaning into AV. It was the biggest platform in Southeast Asia. We're leaning into the various parts of investments that we're making. One is across learning the tech and whether it's the WeRide partnership that we have in Singapore. We're hoping to have these cars deployed on the streets in the first quarter to be able to take on public passengers with the safety driver. And also we're looking at U.S. technology such as May Mobility. We made an announcement partnering with May Mobility also. So we're looking at all the different tech and taking the best of it and really bringing it to Southeast Asia.

19:01Peter, quickly, you know, across the jurisdictions you operate in, do you recognize one that is a better regulatory environment to deploy robotaxi in? You know, in all the countries, especially when we're starting in Singapore, because really Singapore, when it comes to the government regulations, the standard are very high here. And a lot of the other Southeast Asian countries tend to look to Singapore as a proxy. So we've been working very closely with them. And that's around safety, which is really important. And also the customer adoption of an autonomous vehicle itself. But at the same time also, we're leaning in terms of how we can reskill the existing driver base that we have here also.

19:44So we identify new opportunities for driver base where they become safety drivers, they become remote drivers, fleet operators, etc., which is really important. So the way we're approaching AV is working with the government, but also working with the driver community and also the end user also for them to be able to adopt these new technologies. I mean, the labor impact of AI is front and center. It's interesting that you're really leaning into that, Peter. The prioritization of innovation, how much are you able to do that while still driving the bottom line because profitability is being asked of you?

20:17Yeah, well, actually, AI is something which is very core to grab. It's not something new also. So we've been focusing a lot on AI about four or five years ago. We've developed our own models actually very early on. We now have over a thousand models in production that we're running here. And the way we've been operating in the last 18 months since the technology has advanced so much is really internally. We are also using a lot of AI. Over 98 % of our engineers today use some sort of AI code assist. Also, we started to deploy is the products to our customers also. We have voice activation now for the visually impaired, where they can actually just speak to our app and able to order a food or order a ride, for an example.

21:00And also we've deployed co-pilot equivalent to our driver base where they could really rely as on with a really effective pilot to be able to navigate throughout their day. And also with the merchant, a merchant bot, actually, that we have also like an interact with our merchants. Staying up late for us. We so appreciate it. P2A of Grab, the chief financial officer. It's election day in the U.S. and millions of Americans heading to the polls to cast ballots in local and state races. In New York, the mayoral contest is in the spotlight. Zoran Mamdani, Andrew Cuomo, Curtis Sliwa, battle for City Hall, an outcome that could have major implications of big tech's footprint right here in the city.

21:38Let's get the latest on an extraordinary race for Miles Miller. What are you watching out for? Yeah, you know, this is going to be a race that really is going to be either a landslide and a mandate or a squeaker with Andrew Cuomo. But the one thing that I think the tech community is looking out for is if Mamdani is to win, will these tech firms stay in New York? And the answer that he's given is yes. He says that in a city that is more affordable, tech firms will be able to recruit and retain much quicker. And what he has said is that that is what will be born out of some of his big proposals.

22:19You're talking about everything from free child care, discounted child care to free buses. And he's saying that that'll have a measurable effect on the tech community. You know, as I speak to folks like Jeff Blau at Related and some other real estate firms, they say that tech is really starting to continue to work and stay in New York. and you know those were some of the people who were backing Eric Adams and Andrew Cuomo's campaign will they be able to move over and work with Mamdani? Mamdani thinks yes if he is elected because he will have this affordability message and that will bore true. We also know that if Andrew Cuomo were elected you know he spent 10 years as governor and really worked very well with the tech community.

23:09And that's what he is making his pitch as as well. Bloomberg's Miles Miller, thank you very much. Meanwhile, voters in New Jersey and Virginia are heading to the polls in key gubernatorial races, contests that could shape how states approach big tech, artificial intelligence and data center development. Bloomberg's Remain Bostic in New Jersey with the latest Remain. Whether a Republican win or a Democratic win, the considerations are very clear here. Yeah, and in fact, this has actually become a bit of a sleeper issue in this campaign. Remember, it was just about a year ago when one of the main wholesalers in this region actually ended up delivering to utilities a more than 10-fold jump in wholesale electricity prices, and that was driven almost entirely by a big build-out in data center demand.

23:55Earlier this year, just in the summer of 2025, there was a fresh auction, and prices went up again, more than 20%. Remember, these are wholesale prices, and these are prices that are effectively a barometer on future demand for AI capacity. And I want to put this in context for you, Ed. As of right now, there is about 500 megawatts of AI data center capacity up and running right now. Within a year, that's likely to double. There are two big projects under the works, about 100 plus a megawatt project being built by CoreWeave in central New Jersey in the town of Kenilworth, and one even larger than that down south near Atlantic City, Caroline and Ed, that's going to have a big impact on energy prices.

24:36Great context. Bloomberg's remain bostic. In the earnings landscape, we're thinking a lot about Spotify. This is kind of the Daniel Eck farewell tour, I guess, a little bit. Ashley Carman's about to tell me that I might be a bit wrong on that. But the core data, pretty good. Let's get more on what's going on with Spotify. Bloomberg is Ashley Carman out there on the East Coast. You know, we've been through this story with you, Dan Uwek taking a step back, the new co-CEO structure. And I'm just looking at earnings. The key metrics that matter seem to be good. They seem to be OK. Yeah. Yeah. No. Great quarter.

25:10I think investors, you know, there's a little bit of a loss at one point today. I think investors really just want to hear that Spotify is going to raise prices in the U.S. and they didn't exactly hear that. So there was a little trepidation there. But otherwise, broadly speaking, things are looking pretty good. It does seem to be pricing power, doesn't it, that everyone's focusing in on and whether advertising can just go up and to the right in terms of that sort of ARPU. What are you hearing for the trajectory of 2026? What are analysts and investors focusing on under the new co-CEOs? Yeah, so, well, they're focusing on a few things.

25:45AI definitely is a big topic. Spotify is now partnering with ChatGPT. So Spotify shows up in ChatGPT. They talked a lot on their earnings calls about this idea of ubiquity. So their Apple TV app, ChatGPT and other places where Spotify can show up to be used everywhere people are. So AI is a big conversation for sure. But also, again, those prices, the investors and the music rights holders want to see higher prices. Actually, I want to go to a story that you broke about Netflix. It's in talks to license video podcasts from iHeartMedia. On the surface, a simple headline, but it was impactful in the moment.