Micron’s Rosy Memory Outlook Lifts AI Hopes

0:00Hello, I'm Stephen Carroll. I'm in Brussels where many of Europe's biggest decisions get made. And I'm Caroline Hepker in London with the hosts of the Bloomberg Daybreak Europe podcast. We're up early every weekday keeping an eye on what's happening across Europe and around the world. We do it early so the news is fresh, not recycled and so you know what actually matters as the day gets going. From Brussels, I'm following the politics, policy and the people shaping the European Union right now. And from London, I'm looking at what all that means for markets, money and the wider economy. We've got reporters across Europe and around the globe feeding in as stories break.

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1:02Bloomberg Audio Studios. Podcasts. Radio. News. By the way, we are expecting very shortly the launch of Blue Origin's latest rocket. You're looking at a live shot in West Texas of it. It's set to launch its latest crew of six on its flagship space tourism rocket. To date, Blue Origin has flown 80 individuals above the Carmen Line, the internationally recognized boundary of space. Let's bring in Bloomberg Tech's Caroline Hyde. Caroline, what exactly do we know about this specific rocket launch, which we're waiting for in about three minutes' time? It's on hold. T-minus ten minutes. We're currently pausing, waiting to see if this will indeed go ahead as planned.

1:42This is New Shepherds rocket, the 37th, as we've been thinking, NS-37. It's the 16th human flight. As you say, there's six individuals on board this time. Actually, it's the first time that we ever see someone with a wheelchair go in across the Carmen line as well, so a significant step there. and it's its 37th overall that we've seen with New Shepard. And remember, New Shepard named after Alan Shepard, who was the first ever American astronaut in space. It's about 60 foot tall that you're currently looking at, gazing on your screens. It's topped with what is sort of known as kind of a gumdrop shaped crew capsule.

2:18And that, of course, is what will then come back down to Earth, supported by parachutes a little bit later. They're only going to be about a ride of 11 minutes when they take off from West Texas, Danny. And it operates completely autonomously. There are no pilots on board, but we are waiting to see whether Indeed does go ahead as planned. So Matt Miller, Danny Berger, thank you very much indeed for what was another amazing stretch of time of the opening of this market with open interest. But we want to get to what's happening here live, as you see. That's the gumdrop-shaped crew capsule, which currently has on board a German aerospace engineer, the first person who uses a wheelchair that could reach space, but also plenty of others are going alongside her.

3:04So that's Mitchie Bunthaus. But we're seeing Joey Hyde, no relation. He's a physicist and a hedge fund investor from Florida. We're seeing a German-American aerospace engineer go into flight, a business executive and entrepreneur. That's Neil Milch as well. Other entrepreneurs, other adventurers going on this particular flight from the company's private ranch facility known as Launch Site One in Texas. It's located north of the town Van Horn near U.S.-Mexico border. So let's just get a little sense of how important this is in the general stretch of Jeff Bezos' Blue Origin, the spacecraft that is New Shepard, and indeed the missions that they've currently run, suborbital missions.

3:41We want to go to space reporter Lauren Grush. We're also welcoming Chad Anderson, Space Capital founder and CEO. So Lauren, we're on pause. Do we know why? I don't believe I know the cause of it yet, but these holds are fairly common when we do these New Shepard launches. They used to happen with a lot of frequency, which would be a bit frustrating for us as we were waiting for the countdown to reach zero. So this is pretty standard. I know that earlier this morning they had pushed back the launch because of high winds over the launch site. That's a pretty common reason that they will delay. So I believe the hosts might come on and give some indication as to what is causing the hold.

4:25But at this moment, I don't think I currently know. The Federal Aviation Administration, the FAA, has a plan advisory which suggests a backup opportunity is available, we understand, as soon as tomorrow, if indeed this one is postponed. Chad, we go to you of Space Capital, widely known investor thought leader in the world of space and its ecosystem. How important is that Blue Origin can seem resilient and purposeful with the way in which it gets its 37th launch off the ground? Well, this is great for them. I mean, they have a very solid track record of launching these new Shepard vehicles, launching them to the edge of space, delivering humans and experiments safely and bringing them back down.

5:08Like you said, this is a really interesting vehicle that has helped set the stage for their larger vehicle, New Glenn, which we've seen come online this year. That was one of the big milestones in 2025 was to see New Glenn not only launch once, but they launched twice successfully. And then they landed their vehicle, becoming the second launch vehicle ever to land. And now they're looking to reuse that vehicle in a similar manner to what SpaceX has been doing. So, you know, so this is a really important sort of test vehicle for them as they scale up. And then they use New Glenn, you know, their larger vehicle to scale up and do more things across their lunar ambitions, their space station ambitions and data center ambitions.

5:51And so this is a very ambitious company that all sort of started with this new Shepard vehicle. For me, it's a very interesting launch today because it kind of demonstrates how accessible spaceflight has become. where it used to be reserved only for the best of us, you know, the select few who were lucky enough to sort of get selected by NASA or ESA and go through the program and become government astronauts. You know, now you can, you know, you mentioned 80 individuals across 16 flights, right? You probably know someone or you're two degrees removed from someone who has flown to space now. and we're launching all different kinds of people, including people with different accessibility needs.

6:36And so, you know, this is a big moment for me for those reasons. Lauren, we talk about that ambition, many talking about the data center opportunity. We were just having you on yesterday to discuss how Eric Schmidt has become CEO of a space company as well. Give us the context of how fast and furious it is to ensure that there isn't just one monopoly here when it comes to rockets into space. well i mean i think the the thing we are demonstrating with companies like blue origin spacex relativity as we mentioned all sorts of commercial companies is that there is quite a very vibrant and diverse space economy and clearly everyone is looking for what is going to be the next big thing that provides that big profit that everyone is looking for i think over time we've kind of question whether launch alone is enough to sustain these companies.

7:26And I think we've seen that, you know, when it comes to their business portfolio, it, you know, that is why when the likes of Blue Origin, SpaceX, a lot of these launch companies do more than just launch, because I don't think it's launch alone doesn't seem like it's enough to sustain the business. So we see them building satellites, you know, talking about space stations, launching people. And so data Center seems to be this next big thing that I think a lot of these entrepreneurs think might actually be kind of the space goldmine, as it were. We're just seeing pictures of William Shatnow, and he was the eldest person to go to space on Blue Origin there.

8:04Chad, just lastly to you, at this moment, when we think pushing forward, what is New Glenn rocket expected to achieve? How much more resilience do we need to see for the larger rocket in 2026? Well, they're off to a fantastic start where SpaceX goes out and is known for trying and testing and running their test programs very visibly in public. You know, all of the mishaps and the learnings and everything that we get to follow along. Bezos and Blue Origin has gone the exact opposite route, right? They have done a ton of testing before they launch. And so that's why we've seen the first two launches of that vehicle be successful and the second one even landing successfully.

8:41So, you know, if 2025 was the year of launch frequency, and it was, I mean, we were launching orbital rockets almost every single day, sometimes multiple times per day. If that was the case, then 2026 is going to be the year of mass to orbit. We have massive new vehicles coming online. SpaceX is Starship, Blue Origin is New Glenn, and they've announced a larger variant that is similar in size to Starship. We have two massive vehicles that are going to launch an enormous amount of mass and enable more and different types of infrastructure like orbital data centers, like space stations and manufacturing facilities.

9:23And it opens up an entirely new sort of piece of the market that didn't make economic sense before. So it's a really interesting foundation for what I think is going to be a fantastic and massive 2026 in the space economy. Important year for a new NASA chief as well, who recently just got Senate approval as recently as yesterday, that of course being Gerard Isaacman to lead the space NASA. Blue Moves, Lauren Grush, Chad Anderson of Space Capital. Pleased to say we'll be sticking around as this launch happens. Stick with us. There's more to come. This is Bloomberg Tech.

10:05Let's go to a quick check on these markets. We're in rally mode. We have relief beset the market as inflation pressures come down some. And that CPI reading showing a lot less than the market had anticipated. But we're also seeing individual stocks on a tear. Maybe a little bit of AI exuberance again on the day. We're seeing NVIDIA, Microsoft, Amazon, Tesla as some of your biggest points contributors, as is Micron. Up 11 percent. It's actually not at a record high, but it is having its best day since April, as it managed to really ease concerns when it comes to high bandwidth memory demand and indeed demand across the board for memory chips in this new AI world.

10:41Let's talk about it all. Bloomberg's equity reporter, Carmen Reineke, who joins us now. And we needed a bit of soothing on the AI anxieties and Micron delivers. Yeah, totally. And this was actually really great because there was some anxiety building around this trade. We've seen this for a while, but following specifically Broadcom and Oracle's reports last week, and then some of the news we saw yesterday that weighed on Oracle as well. So investors were very happy to see Micron do so well. As you said, shares are up 11%, and it's also lifting some of the other digital storage and memory stocks.

11:12So we're seeing SanDisk, Western Digital, Seagate, all on the top performers board today on the S &P 500. And we're seeing a little bit of enthusiasm come back into that AI trade. So, NVIDIA, Microsoft, Amazon, Meta, finally back in the green. NVIDIA, especially after the sell-off yesterday. What's interesting is, I mean, the only laggards are Dell, HP, those that depend on memory as part of their own supply chain. And, of course, if prices go higher, that's hard for their margins. But really, Micron is showing that it can deliver in terms of price increases that we're seeing also over at Samsung and SK Hynix.

11:49Yeah, it's totally true. And you're right. The Apple is lagging today. So is HP. So is Dell. I think what we're really starting to see is that the AI trade is still going, but it's becoming, I think, more and more company specific, right? Investors are really rewarding the shares of companies that do deliver and are showing that they can, you know, do well, that they have future growth and are much more cautious on the stocks of companies that don't or that stumble at all. And, you know, this can change quarter to quarter. I mean, we just saw that with Oracle. So it's really a story that just continues to unfold.

12:22Carmen Reineke, always unfolding it for us. We appreciate it. Let's get more of the broader tech context. Janet Mui is here with us, RBC Brewing Dolphin, Hedder Market Analysis. And look, we saw really strong revenue growth from Micron. The fundamentals clearly outperforming. Is that what we need? We need earnings proof points right now? Hi, Caroline. Yes, absolutely. I think investors are being more picky. In general, I think as the AI trend continues to accelerate, I think we need solid evidence that it is actually delivering commercial benefits, broadening its application and, of course, delivering earnings.

13:04And I think that that is really the primary thing that investors are going to focus increasingly in 2026, basically going to be much more selective and also being cautious on anything that is leverage related. So do you think there's more pain to come for those like an Oracle that have to spend significant amounts to be able to build up the infrastructure needs? I think that will be certainly increasing scrutiny because the thing is, if you look at the commercial commitment of Oracle, it stretches along decades. And we know that although you kind of see that the demand is very strong, you just can't actually confidently predict the future.

13:53And also, of course, is profitability. And I think the key question is, it is really the amount of debt that is fueling this AI infrastructure, particularly for Oracle. I think for hyperscalers or companies that have abundant cash flow, a strong balance sheet, that would be less of a problem. But I think a lot of those pain has been released after the share price decline from Oracle. So hopefully we are setting for a better stage from here. What's been interesting is the desire with which to sell companies that have significant exposure to, say, an open AI. And there's been this generalization really out there that you've been buying the Google winners, Alphabet winners instead.

14:32Is that trade still on? Are we seeing actually that you can have exposure to open AI? Look, Amazon with another seemingly circular deal where they give equity to open AI so that it can afford its cloud and compute in the future. well i think the thing is the market for ai is is huge right is expected to keep growing keep accelerating so there there that isn't necessarily just going to be one winner out there like one software uh one model that is going to conquer everything so there's this competition between germani and open ai which worries investors because germani seems to be getting a lot of recently.

15:13But I think the market is just very broad. So in general, I think it is normal for investors to get a little bit worried in the near term. But I believe that ultimately, there will be multiple winners and they are likely to be those large in scale, which is already building on very strong existing foundations. Janet, your view on breadth, because there hasn't been much in 2025 and you can rack up almost like 40 percent of all the gains of certain indices are down to one particular name or a sprinkling of them. For the broadening to happen, do we have to see valuations fall for some of the previous winners or can they remain elevated and others continue to run up alongside?

16:02I think it's the latter case. I do think that investors are willing to pay a higher premium for these strong AI leaders. It can continue as long as they continue to deliver strong growth. And I think the broadening out story, we've seen that recently. And I think a lot is because of the Fed's upward revision to growth forecasts. So we really need to see the economy continue to stay strong or at least resilient and also having some more rage cuts from here. So I think another case is that we may see broadening out in terms of the AI productivity story. If that happens, we see more evidence of that, then it could keep the rally in the small mid-caps going.

16:52Yeah. What about U.S. being the only game in town or broadening out more into Asia? We just referenced Samsung, SK Hynix as big winners and have high bandwidth memory. Yeah, we have a slight overweight position in Asia equities and probably that's based on the AI story. It's also, as you're right, it's more diversification away or in addition to that U.S. AI story. I think Asia got some really great and important names in that AI ecosystem, which is worth looking. And I think the other thing about diversification is that we are constructive on the AI story. But, you know, as investors, it's good to think about diversification in a portfolio.

17:35And I think UK actually offers good diversification because the market has very little in tech. It's more defensive in nature and the valuations remain attractive. So if you think from a total portfolio perspective, having that UK exposure actually helped to balance that out, that AI exposure. Janet, how many calls are you getting from clients who want exposure more to the private markets and private assets, the 16 trillion out there rather than just the public market exposure? Yeah, that's interesting. So I think currently there are interests, of course, but I think for us mostly it's still in the public market space, but we're certainly looking more into that space.

18:20Janet Miu of RBC Brew and Dolphin. Thank you very much indeed.

18:29private tech firms they are commanding record valuations particularly as some of the biggest names in ai stay private for longer now according to patrick mcgoldrick managing partner at jp morgan private capital this is leading to perhaps a bit of a blurring of boundaries between the public and private markets please say patrick joins us now so talk to us about that blurring how much are investors institutional anyone really wanting to get more exposure to private markets right now? I think it's a core theme that we're seeing across asset classes, both in the equity market and the credit markets, of course.

18:59But as it relates to the equity lens, companies are staying private a lot longer. It's well understood from 1997 being five years on average and$20 million of sales to 2025, where it's$220 million of sales and 14 years of being a private company. But the demand is there. The depth of the private markets is there. And I think the growth we're seeing is fueled by great innovation in the private markets. And so it's a theme that we're excited about. It's something that we think we're well positioned for as a firm and excited to see what the year ahead brings. I mean, look, your positioning is showing up in these valuations,$134 billion valuation for Databricks in an almost unheard of Series L.

19:38I mean, is there the depth in the public markets to support the ambitions of these CEOs and the need for capital to continue to expand? I think it's a really important question. I'm glad you ask because inherent in every valuation, of course, is is it supported by the fundamentals? OLLI and the Databricks management team have done an exceptional job of positioning themselves effectively for the AI wave, making sure that data and that infrastructure layer is well supported and that they're the market leader. And it shows up in the metrics. They're growing two times the rate of public high growth SaaS comps.

20:09They're positioned effectively with net expansion rates of 140%. There are no public companies in the software space growing at that level. So I think that drives the valuation. It drives the demand for the company. They've also been aggressive in their pursuit of assets on the acquisition side that have effectively positioned them. So to us, it was a privilege to co-lead the financing. We think the public markets will view this as one of the premier darling assets in the private markets. And so when they go public, it will be an exciting moment for the company and certainly for us. There's a few other darling assets out there.

20:41One of them, as reported by The Information, is currently fundraising at a$750 billion valuation. That's OpenAI. That's in your portfolio, too. Are they fundraising? So I will let the company speak for themselves on that. I would say we're very proud and excited investors to be backing OpenAI. I think Sam and his team time and time again, despite a little bit of the negative news or the challenges associated with it, have demonstrated an ability to innovate on the product side, to form formidable partnerships. I mean, Disney and what they're doing there, as well as the partnerships with universities across the countries are emblematic of that.

21:14It's not the first time that there's been a little bit of that focus and intensity of product market fit for them. And so to us, we think it's a great asset. We're excited to be investors in it. And they continue to be synonymous with growth in large language model space. And so I'll leave it at that. But it's certainly an exciting journey for the company. I mean, the same blurring and tussle and mental models are going on in public and private. Too many big names dominating certain indices. Too much VC capital really is totally exposed to the AI trade. How have you talked to your clients and potential future LPs about, well, the economy not supporting what is an AI bubble?

21:55I think there's a few things you have to root yourself in. And just taking a step back at times and zooming out makes it a little bit easier to appreciate the growth in the private markets and AI in particular. You go back three years ago, ChatGPT had just emerged on the scene. We're at a billion monthly active users, and it is one of the most intertwined assets within a tech stack at both the consumer level and the enterprise level. You have growth curves being completely redefined. That's the hardest part, I think, for public market investors is you have companies achieving$100 million of revenue one to two years faster than their public SaaS companies did when they were private at 20 % to 30 % the number of employees.

22:33Think about the compounding effects of that over time. So, yes, there will be in any tech cycle, there are assets that are overvalued. There's excess. There are companies that may completely go bust. But inherent in every single tech cycle, cloud computing, infrastructure, 5G, mobile internet, there is a new cohort of companies that define those generations. And we think we're seeing many of those play out in the private markets. Look, the leading one defining private market valuations at the moment is SpaceX. We're on tenderhooks waiting for Blue Origin to launch. And we're going to go back to it in a moment.

23:04But what are your perspective in terms of where 2026 is going to see really the excitement, the exuberance? Is it going to be all about generative AI, the models, the LLMs, or more space, more broadly? I think it's very clear that defense technology in space is having a moment, and appropriately so. I think the rate of innovation, the Starlink business, just a handful of years ago, there was a lot of speculation on what the monetization profile of that asset would look like. For us, we are definitely focused on core assets where there's defensibility of spend from the chief information officer layer on the enterprise side, right?

23:36We benefit from J.P. Morgan's breadth of$18 billion of technology spend to drive insight there. But importantly, cybersecurity, artificial intelligence, those are resilient areas of spend. Why? Because the efficacy that you're seeing now from deploying AI in your organization exceeds the cost. It is very much an ROI positive trade for people now. So focusing on the right companies, defensible moats, clear and sophisticated management teams to manage the conflicts and competition that comes to the fore, and then being in a position to back the winners is very much where we're positioned. Patrick, it's great having you on.

24:14Thank you very much. Do come back. Wishing you well for the end of 2025. Patrick McGoldrick there, managing partner of JPMorgan Private Capital. Let's get back to Blue Origin now. The launch is back on. we return to our space reporter Lauren Grush alongside Chad Anderson, space capital founder and CEO. Any details Lauren on what maybe just press the pause button? I think it was exactly what I thought. It turned out to be when something that had originally pushed back the launch time this morning. So, but it seems to have cleared. We've got a new T minus zero in about four minutes, I think. Let me just check the time.

24:49Five minutes. Yes. and I would not be surprised if they had another hold for winds again. Fingers crossed that they don't. But as of now, it seems like all systems go. And Chad, just remind us of the business model here because these are sort of short and sweet 11-minute rides almost. This is more pleasure tourism, but also still understanding the capacity of what humans can do and achieve just into inner or outer orbital. What do you make of what this precedent is for New Shepard and where else it takes us for human travel? Yeah, I think, you know, again, this is a small vehicle. It's going to suborbital space, just basically kissing the edge of space and coming back down.