Joby to Buy Blade's Helicopter Ride-Share Business

26:25So it will be interesting to see when exactly that is supposed to happen. Obviously, Trump is going to decide on a dime when that's going to happen. But as of this very moment, there is still that exemption in place for smartphones and a series of other products. Apple's belief is that they're going to take a$1.1 billion hit during this quarter, right? But I would imagine this tariff situation is going to change in the next couple of months, and these companies will need to start paying that, and that is going to be very difficult for Apple to deal with. Bloomberg's Mark Gurman, all across Apple.

26:54We so appreciate it. Meanwhile, coming up, how will commercial and government contracts feature in Palantir's quarterly earnings? We'll discuss what's expected next. This is Bloomberg Tech.

27:17Welcome back to Bloomberg Tech. I just wanted to get this story in quickly. Spotify is raising prices in some markets by as much as 9 % and the stock's actually on track for its biggest jump since early May. I was reading the kind of sell side reaction and a lot of analysts saying, well, it's got all these different tiers now of plans so they can pick and choose where they raise prices obviously being seen as a good thing. We have some Monday M &A as well. Joby, the EV toll or flying air taxi company, is acquiring the helicopter rideshare business of Blade Air Mobility. This is a story that we broke over the weekend and the companies confirmed this morning later in the hour, we hope to speak to Joby's CEO, Joe Ben Beavitt.

27:57But clearly, both companies getting a look. It's an incredible gain. Usually in M &A, you've got one going down, one going up. Both of them going up, Caro. Looking forward to that conversation. Yeah, let's talk about incredible gains when it comes to certain stocks. Hal and Tired. It reports its quarterly earnings after the market closed today. Its ultra-high valuation has in many ways been spurred in part by that devoted retail investor. Is also on Wall Street a little worried. Bloomberg's Lizette Chapman is here to tell us what investors are going to look to to really vindicate a 229 price-to-earnings ratio, Lizette.

28:30Talk about the commercial side. What wins do we need to see? Right. Like you said, it's been on this earnings tear. It's been on this, you know, price tear for the past year. What people are going to be looking at, what investors are going to be looking at is whether that growth is sustainable, whether it's continued to accelerate, and really specifically what the breakdown is between the United States versus the rest of the world. We've seen a huge split in demand that's been insatiable in the U.S., but it's really lagged in Europe and in other parts of the world. So that's one thing that we're going to be looking at.

29:04The other thing that we're going to be looking at is the commercial versus government clients. So those are the areas that Palantir is going to be breaking down. We'll see which one they've been doing better at or perhaps not meeting those expectations. Lizette, generally, we've come to know Palantir as being a software provider to the U.S. government or U.S. defense apparatus, right? What kind of technology does it provide and how big a share is each of those businesses, the government bit and the commercial bit? Right. So what Palantir provides is AI-powered data analysis software. So it uses the large language models, whether it's OpenAI or Anthropic, and it leverages that against all of the data that's mapped inside of a company or an agency, whether it's the DOD or whether it's IRS or the Veterans Affairs or whether it's Tyson Foods or Ferrari.

30:03And so what we're going to be looking at now is, like you said, Ed, there's been a big growth in demand for its intelligence software as used for the U.S. government, including the defense forces, the DOD. They just announced a big deal last week showing that they can consolidate what has been 57 contracts into one large one for the army, which shows that it has the ability to perhaps spread this across other divisions in addition to the army and lock in that money for a long-term annual recurring revenue. We know that Dr. Karp is a flamboyant fellow across technology, Lizette. What do you expect him to talk about when it comes to vindicating the valuation, the growth opportunity?

30:58And I'm sure many are going to be asking about the talent wars that are on our hands, too. Yeah, great question, Caroline. As you said, he's very flamboyant, very, you know, directed with his words. And I'm expecting and most people are expecting another victory lap from him. You know, the stock has, you know, increased 1 ,400 percent over the past three years, over 540 percent this year alone. Its market cap is larger than Lockheed Martin and many other standard defense contractors. And, you know, Alex has, you know, written a book about it. He takes every opportunity he can to talk about the importance of Palantir and others backing defense efforts in the U.S.

31:45and the fact that he believes that Palantir is vindicated now after years of not turning a profit and not hitting the marks that many had hoped. Bloomberg's Lizette Chapman with Palantir coming after the bell. Thank you very much. AMD reports earnings tomorrow with CEO Lisa Su facing mounting investor scrutiny as pressure intensifies across the chip sector. Here with more is Bloomberg's Ian King, who leads our coverage of chips. And this was in your tech in depth. And there was a line in it that I find a really interesting point of analysis. This is the best performing chip stock so far this year.

32:26But it's not really a pat on the back. It's more of a like a target on the back at this stage. Why are things so tight and pressured for AMD? Yeah, it's not just AMD. It's basically the latest in line here. I mean, you had Cristiano Amon of Qualcomm on this show going, what is there not to like about our earnings? And that's really the pattern that we've seen this time, which is investors have put quite a lot of money to work in chip stocks. And now they're like, live up to our expectations, very high expectations and good isn't good enough. You have to be exceptional. So that's the kind of situation that AMD is in tomorrow.

33:02Look at that stock rally year-to-date, 46%. We're expecting in excess, though, of 27%, I think, growth in revenue. Where do they want to see market being taken from? Because we know they've been winning out against Intel, but really everyone always compares them against NVIDIA. Yeah, I mean, this should be, or at least the forecast quarter, should be sort of good news for AMD for a couple of reasons. They've got more competitive AI accelerator chips, which go head-to-head with NVIDIA coming to the market. And also great news for them and for NVIDIA, which is, hey, we can go back to China. Some of these restrictions on shipments of older products to China have been lifted, or so we've been told.

33:42So that should also mean good news for this quarter and for the future for that particular market as well. You and I reflected together a couple of weeks ago about how prominent Lisa Su was in Washington, D.C. when the president gave his winning the AI race speech. He asked Lisa Su to stand up. But the reality is Jensen Huang and NVIDIA still have a technical monopoly, I guess, more than 70 % market share, call it what you will. Is there evidence that Lisa Su is catching up, that she's orchestrating the company in a way where they can make gains in the AI accelerator market? I mean, looking at the numbers, this is the best way to look at this.

34:18This is a great business for AMD. You know,$5 billion a quarter on a sort of$30 billion run rate for annual revenues is fantastic, right? But it's not$120 billion. So that's the way to look at it, I think. Always comparing the two, Ian King. It's great to have you. We thank you ahead of AMD. Meanwhile, coming up, Tim Tully is going to be joining us from Menlo Ventures, joining us to talk about where enterprises are putting their AI spend. Which LLM? This is Bloomberg Tech.

34:56The AI boom. Well, it spurred a series of so-called reverse aqua hives. Tech giants like Google, Amazon, Meta, Microsoft, they get top talent and AI licensing without the so-called burden of government regulatory approval for these deals. For those hired, though, it often means a big payday and access to more resources. But what about the fledgling AI businesses and workers who are left behind? Kate Clark has just been writing about this very thing. And Kate, if you go back to some really tangible examples of a lot of people being left behind almost, how does it make them feel? There was many, many emotions from the employees that we've spoken to, but some of them were in tears after this was announced because these are companies that they joined hoping that one day they would see a nice windfall.

35:40And that's not always the case when these so-called reverse accu-hires happen. Kate, maybe like the most recent example that Caroline and I have experienced is what was left of Windsurf with cognition. But I think back to Inflection and Microsoft and what happened there. In your reporting, did you get any sense of like what often happens with the leftover part after an acquihire, the company that remains? There's such a wide range. But in the case of Inflection, for example, they're still trucking. They've worked really hard over the past year to keep that business going. We spoke to executives at that company.

36:14They said they plan to raise more money for the business. Same goes for Character AI, another company that did a reverse AccuHire. But it really just depends. In other cases, Covariant, which was reverse AccuHired by Amazon, not a lot is still happening at that company. And actually, the kicker of your story is about Adept, also a reverse AccuHired target of Amazon's. And I think your line is, it's now unclear who, if anyone, is running the company. So are things changing, particularly when people are taking on new talent? They're joining a startup. And the unwritten contract was, you do well with me.

36:47Me as a CEO of this business, I'm putting everything on the line so that you can benefit too. Are people starting to change the way in which they're hired by these businesses? I think people are starting to question this because there's been at least six of these now in the past year or so. And that's a trend. It's really become a trend in Silicon Valley. And I think investors, venture capitalists, and prospective employees are wondering, if I join this AI company, is this founder going to stick along with me or is he going to leave me behind? Blueverse Kate Clark with the reporting out of New York.

37:14Thank you very much. Let's stick with AI. Tim Tully is a partner at Menlo Ventures, which recently published its mid-year update on the LLM market. Tim, we have a lot of data to get through, but in the enterprise domain in particular, you guys are saying that anthropic leads in terms of market share, then open AI is just behind, just for transparency with our audience. Of course, Menlo is on the cap table of Anthropic, and you have a sort of partnership with them for compute access. But break down the data and how Anthropic's pulled ahead in that space. Yeah, I mean, there's really three things that stood out in the report.

37:47First is, you know, Anthropic really pulled ahead in terms of enterprise spend. It's something on the order of 32 % of spend in the enterprise right now. I think the other thing that really stood out and maybe didn't mention yet is that But closed source models are really dominating how people use these things these days. The open source models are really starting to fall behind in terms of usage. And we see it when we talk to developers. I mean, the way that we invest in companies is we basically disarticulate their architectures and understand how they're building their products. And you can see it anecdotally when we talk to developers in those companies.

38:16An executive from OpenAI was posting this morning on X that chat GPT is up to 700 million weekly active users. But therein lies the distinction, right? There's the consumer use. You have a subscription basis revenue that comes in. And then enterprise, that seems where the volume of dollars are going right now. What do you make of that ChatGPT stat? Yeah, it's really not that surprising. And we hear it when we talk to folks again in the same way that we talk to developers. We talk to users of these products. I mean, it's pretty well known in Silicon Valley, at least in the circles, that OpenAI sort of really wins in the consumer space, at least for now.

38:53And Anthropics will be winning in the enterprise span with developers who use it programmatically. Tim, I'm really interested to go more on this closed source versus open source, considering that the AI action plan really is leaning into this open moment. At the same time, people reading in between the lines from Meta's earnings, for example, and Mark Zuckerberg's pitch that maybe because of safety, they'll have to build more closed rather than fully open as they had previously seemed committed to. What does an enterprise need right now? Yeah, what really an enterprise needs is what's, at least in technical circles, called the so-called illities of a product, the manageability of the product, the security, the observability, everything that sort of comes with being able to run that product.

39:33It's really hard to just take the weights of a model and just go run it. I couldn't put weights of a model and put it on a hard drive and just hand it to you and say, hey, go run it. There's a lot of services and sort of software that has to stand up around it to be able to make it usable. And so that's really what you're seeing is folks reaching for enterprise, close-to-door solutions that have programmatic access to these capabilities. And going back to your anthropic numbers, leading enterprise LLM provider, 32 % of the market. How early are we, though, in this rush and this commitment to money by companies into large language models?

40:05How much more is there to take? How quickly could we see the landscape shift? I think you're still seeing early days. The amount of spend that you're going to see from model spend over the next few years is going to continually increase. In the report you saw, just in the last six months, spend went from$3.5 billion to$8.4 billion, which is more than double, again, just in the last six months. So it's early days, and I think the spend is going to continue to increase dramatically. So I've read through the report, and I always look for data that kind of gives us the other side of the story. So you have all this enterprise revenue coming in at Anthropic, but what is their cost, OPEX cost, compute cost, on a per-token basis?

40:45Like, is that data that you track that tells us if these companies will ever be profitable. Yeah, it's not data that we put into the report, but Dario has been pretty open that he feels like the gross margins in the company are going to be respectable and increase over time. And I think what you're going to see is efficiency gains from the models and how they're used. You're going to see things like token caching really start to dominate how people use the models. And so they'll become more efficient over time and the cost of running them will sort of go down over time, I fully expect. It's a really great report.

41:13Urge people to go and read it tim tally thanks for talking us through at parno at menlo ventures now coming up joe be set to acquire helicopter ride share company blade we're going to speak with a ceo that's next this is blueberg tech the people who seem to get more done than everyone else they're not working longer hours or running on more caffeine they've just stopped wasting time on the stuff that doesn't move work forward switching apps re-explaining context hunting for files those aren't small inefficiencies. They're hours wasted every week. Superhuman Go gives you those hours back. From the makers of Grammarly, Go is an AI assistant that sits inside every tab and tool you already use, always available and already aware of what you're working on.

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42:59Bloomberg's Natalie Lung reports the company says it has been conducting pilot programs with various restaurants. some of which have seen their order volume grow during the test period. The effort marks an expansion of DoorDash's in-house robotics efforts to reduce reliance on human couriers for some orders, as their wages constitute a key expense to the business. Drones are also a way for DoorDash to cut delivery times on orders from more remote locations that some dashers may not want. That's the Bloomberg Tech Minute, brought to you by ChatGPT. Put ChatGPT to work on your most ambitious ideas and projects.

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44:20Shares of Joby Aviation and Blade. Well, they're searching today after announcing that Joby will purchase Blade's helicopter ride share business for as much as$125 million in stock or cash. Now, the acquisition really encompasses all of Blade's passenger business, including the U.S. and Europe operations. And here to talk through it, Joby CEO, Jobin Bivert. Investors like it on both sides of the equation. We don't often see that. Tell us the rationale here. Why buy that part of the business? Yeah, thank you so much. Great to be here. First, I'd like to lay the foundation for where we are. Please.

44:54And so the first piece is that we're seeing unprecedented levels of regulatory support from the White House, from the DOT, from the FAA really leaning in. You also have regulators around the world so excited about this new age of aviation. Second is where the Joby team is. We've been knocking out of the park on certification and really delivering on manufacturing where we're doubling our manufacturing rate. And all of this sets the stage for commercialization. Of eVTOL. Exactly. And the key piece is the work that Blade has done, where they've built out an incredible network of takeoff and landing locations, exclusive lounges, and an attention to detail and attention to customer service that are really unparalleled in vertical aviation.

45:52And so this is the right moment for us to partner, both by acquiring the passenger business, but also partnering on the medical business. Joe Ben, when we broke this story over the weekend, and thank you for your time and coming on the show, the question I kept asking myself was, does this accelerate the EV toll bit to market in the United States? Absolutely. And one of the things that's so exciting, as I mentioned, on the regulatory support that we're seeing from the administration with the recent executive order, we really see the potential where that pulls forward the timeline. And that's one of the big catalysts for why we decided to pull the trigger here on the Blade acquisition.

46:33In the interim, will you continue operating the helicopter rideshare bit? Does that business continue or you just buy the assets and start planning from there? Absolutely. we're looking to not only operate it, but to grow it and turn it into a much bigger business. And then we think that with the quiet aircraft that we're building, that we're going to see an explosion in the number of takeoff and landing locations that we can operate from. We're seeing real estate developers both here in the U.S. and around the world who are so excited about our technology and are clamoring for takeoff and landing locations at their developments.

47:14And so we just see unprecedented momentum in the market today. Unprecedented amount of money that you're going to be committing to it, therefore, with$125 million in stock or cash. But where are the details on that, Jobin? How are you architecting the actual deal so it wins out for both? Yeah. So I think that's one of the beautiful things. Whenever I'm working on doing a deal with somebody, I'm looking for something that's going to be accretive for both sides. And this is accretive for Joby in that we get this incredible business that Blade has built on the passenger side. It's accretive for the Blade medical business because we're going to be able to put our Evitol aircraft and our next generation hydrogen electric aircraft onto their platform, onto their medical platform over time.

48:04And so this is, and it allows the medical business to be really laser focused on growing medical to have the resources they need and the focus they need to really grow that business. So this is an incredible win-win. Let's be really focused on the regulatory process right now. What is the next step that you need to meet to be able to make sure that when I go to a Blade, it's not gonna be a helicopter, it's gonna be your eVTOL? So we are taking our aircraft, We have multiple aircraft that are going down the manufacturing line right now, which are our type intent TIA aircraft for TIA flight testing.

48:41And so we have FADARs who are in the factory with us on a daily basis, inspecting the parts and systems as they're going together. And then we're going to begin TIA flight testing with FAA pilots on board early next year. So this has been a long journey, and it's so exciting to be right close to the finish line and ready to begin the commercialization journey. Joe Bent, how much more room is there for you to do more M &A, particularly in other geographies of this type? We see incredible opportunities, and I should be really clear. Blade has built an absolutely spectacular business, not just here in the U.S., but also in Europe.

49:24and we see opportunities around the world. So there is so much demand and so much congestion in cities around the world and we can't wait to really lean in. Joe Bem, just real quick, often when you get a deal, the acquiring company doesn't see their stock jump by the same level that the acquisition target is. Just what do you make of that? What do you think investors are signaling to you? That we built a really fantastic deal that's a win-win for both Blade shareholders and for Joby shareholders. This is going to be a massive accelerant for Joby and for our rollout both here in the U.S. and around the world.

50:05The operational expertise that we're acquiring, the infrastructure we're acquiring, and the attention to detail and customer service. We can't wait to scale this service and really bring the magic of flight to people's daily lives. Joe Benbevit of Joby. Thank you very much for your time here on Bloomberg Tech. That does it for this edition of Bloomberg Tech. Karen, what an edition it was. I mean, M &A sprinkled in. We continue on the IPO path. Don't forget, check out our podcast. You can find it on the terminal as well as online on Apple, on Spotify, whose own shares are popping today, and on iHeart.

50:40This is Bloomberg Tech.

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