OpenAI Staffers to Sell $6 Billion Worth of Shares

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1:47Bloomberg Tech is live from coast to coast with Caroline Hyde in New York and Ed Ludlow in San Francisco. This is Bloomberg Tech. I'm Matt Miller here in New York City. Coming up, OpenAI employees plan to sell about$6 billion worth of shares to an investor group. That values the company at$500 billion, almost double what it was valued at last time it raised capital. Plus, the Trump administration considers using funds from the U.S. Chips Act to take a stake in Intel. So using Biden money to do Trump's work. And we'll take a look at the EV race between the U.S. and China as we await results from Chinese car makers Xiaomi and XPeng this week.

2:35But first off, let's take a look at what's going on in the stock market. The Nasdaq right now off just about one-tenth of one percent. So although it's coming down a little bit today, it's coming down from all-time highs. 23 ,695, still quite an elevated level for the NDX. Current and former OpenAI employees are planning to sell nearly$6 billion worth of shares, as I said, to an investor group. and that is one of the top stories that we're following. But before I get there, take a look at what's going on with Intel shares. Right now down about two and a third percent, I should say, Intel falling after that news on Friday and Meta down on a story out of the information that the company is going to revamp its AI unit for the fourth time in six months, splitting it into four, also down two and a third percent.

3:31Now let's get to that open AI story. As I said, current and former employees planning to sell$6 billion with the shares to an investor group. That's a big number, but the bigger one is$500 billion. The maker of ChatGPT is now, according to sources, valued at almost twice as much as it was last time it raised capital. For more, let's bring in Bloomberg's Kate Clark here on set at 731 Lex. Kate, it's a massive amount considering a month ago it was worth$260 billion. Has it really grown in value that much in four weeks? Not necessarily, but really you have to look at this as a talent war story. And OpenAI employees are getting offers from big tech companies for tens of millions, even hundreds of millions of dollars to leave OpenAI.

4:17Secondary transactions like this help OpenAI retain their talent. In terms of why we're seeing these big secondary offerings, and at the same time as we're seeing Mark Zuckerberg paying people$100 million bonuses. Is every valuation just lifting out on the West Coast if you're involved in AI programming? Absolutely, yes, is the short answer. And partly that's because investors are incredibly excited about these companies. They think OpenAI, Anthropic, and others will be trillion-dollar companies like Meta, like Google. And employees, like I said, are getting these offers. So there's no choice but to lift these valuations continually.

4:58So what's the next stop? I mean, why, say,$500 billion? Why isn't OpenAI worth a trillion already? I mean, it's a good question, and these valuations are pretty arbitrary at times. I mean, jumping from$300 billion to$500 billion is pretty crazy, and I've never seen anything like this. But I think you can expect OpenAI's valuation in the private markets will continue to rise, and who knows how far it will go. So there's another story from Bloomberg about Meta's offering in AI in terms of a standalone app, right? Does ChatGPT absolutely dominate or are people using Meta? Are people using Perplexity?

5:36Are people using Gemini? People are absolutely using all of them. People are experimenting. And there are a lot of questions about the durability of the revenues of a lot of these products because there is experimentation. But ChatGPT is one of the largest apps of all time. I mean, the use is undeniable. People absolutely love it. It's part of everyone's every day now, or most people's every day at least. So I do think that there's real argument for the future of this company, but I think everyone's correct, too, to be very skeptical of how far these valuations are climbing. All right, Kate, great having you on this story and look forward to more reporting.

6:07Kate Clark there from Bloomberg News. Now let's get to a story about building AI in the U.S. Hanhai, also known as Foxconn, is set to take charge of a U.S. factory owned by SoftBank, setting up what could be the first manufacturing site in the company's$500 billion Stargate venture with OpenAI and Oracle. SoftBank will acquire Hanhai's electric vehicle plant in Ohio, But the Taiwanese manufacturer will continue operating the complex, transforming it into a hub for producing AI servers. For more on the broader tech market, including the impacts of tariffs, Ayako Yoshioka joins us, Wealth Enhancement Group Portfolio Consulting Director.

6:50Ayako, great to have you on the program. How much of this$500 billion Stargate story is real? I mean, is it actually going to happen in that size? You know, hi, Matt. I hope you're doing well. You know, we do think that the, you know, Stargate thing is really real, at least so far. We're seeing it across a lot of the tech companies. There's so many that are involved. But it's such a large number, and we still have to see it come through. So is this going to be a situation where we have foreign-owned companies coming in here and just operating manufacturing plants in the U.S.? because it seems like that runs to some extent counter to what Donald Trump was hoping for.

7:35I think any investment here in the U.S. is being looked at very positively. You know, overall, just digital infrastructure really is something that the U.S. government, you know, needs to make sure that we are at the forefront. Similar to having a strategic petroleum reserve, we really need to make sure we have that digital infrastructure that is strategic, just given the proliferance of AI, just how it's going to be used going forward. And there's so many unknowns still related to AI. So are we going to see a jump in employment? I mean, is the Fed going to have to pay attention to this? Or are we looking at just giant sort of server farms and electric plants that are going to be needed?

8:21Sure. I think we're still in the early phases of discovering what the productivity improvements are going to be. I think it's really clear so far that there are some, but I think there's also some challenges in regards to what is this going to mean for the entry-level workforce, those kids who are just graduating college? And when knowledge is being democratized because of AI, how do you get them trained? How do you give them the experience that they need in order to validate what AI is telling you? It does look like, Ioko, this is, you know, the tariff strategy is forcing TSMC and Foxconn and other foreign-owned companies to come here and produce.

9:05What about American companies like NVIDIA and AMD that are going to have to pay 15 % of the revenue on the Chinese business they do? What about these export taxes? How is that going to affect businesses here? Sure. I mean, I think it's sort of just the pay to play issue that we're seeing here. But on the flip side, I mean, NVIDIA noted that China is a$50 billion total addressable market. And I don't think we want to exclude that. And we want to make sure that it's American technology that is going to be the base of overall AI. I notice in your notes you're very focused on the economic data coming in.

9:51the Fed meeting at Jackson Hole, which obviously is key. Rates are incredibly important to your business. What do you expect from Jerome Powell? Are we going to see a policy shift? I'm not sure if we're going to see a policy shift so much. Perhaps they'll talk about the average inflation targeting that they sort of introduced a few years ago. But, you know, for the most part, we are looking to see if they are going to signal any sort of openness to that rate cut in September that the market's already pricing in, just given some of the numbers that we've seen so far this year regarding both inflation and unemployment.

10:31But that PPI number last week really threw a little bit of a wrench into the story. Yeah, 3.7 % on the core. Does 4.5%, does the Fed target rate right now feel restrictive to you? A little bit. I believe that in normal times, I think we're looking at a Fed funds rate closer to three to three and a half percent. And so having current rates above four is still a little restrictive. And you're seeing it with those cyclical companies. I mean, thankfully, most corporations have pretty solid balance sheets just given the opportunity to refinance back during the COVID years. But we're, you know, five years post that.

11:15And so having a little bit lower interest rate in order to refinance further is going to be helpful for many of those cyclical companies. It does seem like cyclical companies, industrials, real estate investment trusts are now far more important to the tech picture than they once were. Absolutely. You know, the digital infrastructure really is something that investors have been looking at beyond just the actual chips and, you know, servers that are powering AI. You know, we're definitely looking at real estate, definitely looking at, you know, industrials that provide power, cooling infrastructure and all of that to the data centers.

11:56And so, you know, there's definitely a broadening out. It's just that it's all still related to one major theme, which is AI. All right. Iaco, great to get some time with you. Really appreciate it. Iaco Yoshioka of Wealth Enhancement Group talking tech as well as, you know, the old economy because the two are coming together with digital infrastructure. Coming up, shares of day four surge after reports Toma Bravo will take the HR software firm private. More on that story next. This is Bloomberg Tech.

12:42Shares in day force surging today. That's because Toma Bravo is in talks to buy the HR software maker, according to sources, with plans to take it private in a deal that could be announced as soon as the coming weeks. For more on this story, let's bring in Bloomberg's Leanna Baker. She runs our deals team here in New York. And Leanna, it's interesting because a lot of these software companies, I feel like they need to sell quickly before they're made obsolete by AI. So that's one opinion. But this company, Dayforce, has been around a long time. It used to be called Ceridian. It used to be private, actually, you know, before 2018.

13:21And they make software that helps with HR, payroll, and they have their tentacles deep into enterprises. So maybe they won't be disintermediated right away. There's been a little bit of a surge in deals related to HR and payroll. There was a deal for Paycor earlier this year. Paychex bought that and ADP also did a deal to buy workforce last year. So these are just some of the acquisitions that have been happening in the space. We're seeing consolidation and not necessarily AI taking over. There's a couple take privates. The Soho House story I'm talking about also today, but is this part of a trend?

13:59These private equity firms have just raised so much dry powder over the years. Toma Bravo has tens of billions to deploy. They've been one of the more active acquirers. We've reported there in talks to buy another company in the tech space called Verant. And earlier this year, they did a big car vet out of Boeing. So they're definitely one to watch Orlando. Bravo's appeared on Bloomberg TV many times to talk about their strategy. rolling up software companies. So, and they're one of the more acquisitive firms out there. How is private equity doing in general in terms of making purchases? Because I thought they couldn't find exits now.

14:33That's a great point. We are seeing the IPO market starting to come back and we'll be watching to see whether there's these candidates that are backed by private equity that could finally exit through the public markets. But so far, a lot of them like trading assets to each other. I mentioned that Dayforce used to be backed by private equity. So T.H. Lee, as far back as 207, they were backed by another firm. So this would sort of be a return to private equity for Dayforce. So what's next in these deals? What are you and your team watching out for? So you mentioned that we reported that this could still be a few weeks away, so there's still news to break.

15:11What does Toma Bravo pay for this company? The company has$11 billion enterprise value, but what's the exact price they're paying? Does this go to up to 15 billion, for example? So there's plenty of details to break that investors will be watching. All right, Leanna, thanks very much. Leanna Baker runs the deals team for us here at Bloomberg. Now, Swedish AI startup Lovable called itself the fastest growing startup in July, and now it's eyeing nearly a billion dollars in annualized sales next year. That's according to the CEO, Anton Osika. Speaking with Bloomberg Tech's Tom McKenzie, he says Lovable's approach to developing allows anyone to be a coder.

15:47I think everyone in the gauge of AI really had to relearn which tool to use when. And if you are technical, you know how the coding works, you're actually more productive with Lovable. So we're seeing a lot of technical people loving the tool and then being able to talk more productively to the AI. Anyone can learn to be productive talking to the AI, but there's an advantage for technical people. I think what we're going to see is that everyone is a developer. Now there's been much less than 1 % of the world population. Everyone is becoming a developer now, and 99 % of the best ideas are from people who don't know how to code.

16:29So this is, for me, a very clear example of AI having a positive impact. More people can start successful businesses without being bottlenecked by not having time or the skillset required to build software. When you think about listing, even if it is a further away prospect, Anton, is Europe the place that you would consider or does it have to be the gravitational pull of the US? I'm really betting on Europe and one of the reasons we're here is to prove that you can build a world-class team and execute better and faster than from the US. I would love to list in Europe, but I haven't looked at any of the details.

17:08Okay. And in terms of when we look at, for example, Google absorbing Windsurf and earlier on, of course, in this innovation story, Microsoft absorbing a reflection, is that potentially what happens to you and Lovell? Would you be open to that kind of acquisition where the talent is absorbed into one of the mega cap US tech companies? Or is that something you would fight against? That's something I would fight against. I think most of the value that we're going to accumulate as our, like, the bottleneck right now is on the technology. In the future, most of the value is in the relationship we have with our customers, the trust and the community around it.

17:50And that value can only be realized as a standalone entity. So that's what I'm expecting us to continue to be. that was lovable ceo anton osika coming up comcast gets serious about its customer losses but it's a long road ahead details next this is bloomberg tech

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20:59Comcast has a problem. The company is losing customers in its most significant business, the one that provides internet access to nearly 30 million American households. Comcast has been reporting record losses in broadband subscribers for three quarters in a row now. Bloomberg Telecoms reporter Kelsey Griffiths joins us now with more. So, Kelsey, what's the problem? Why is Comcast losing all these subscribers? Where are they going? That's right. So Comcast is kind of caught in this confluence of several factors. We're seeing competition from the mobile companies as they are offering their own version of home internet service that's boosted by or powered by their 5G infrastructure.

21:40We're also seeing the end of the Affordable Connectivity Program, which offered subsidies that Comcast greatly benefited from. It kind of helped boost their subscriber numbers. Now those subsidies don't exist anymore and those customers have dropped off. And we're also seeing that Comcast has struggled to kind of maintain some of these customer relationships. And that has been a pain point that has led to some of these cord cutters. So what are they doing about it? How can they turn this around? Yeah, so Comcast has a multi-prong structure. They've started a five-year price guarantee to sort of help lock in some of these customers and give them certainty in what they'll be paying from year to year.

22:20What Comcast had been seeing is that customers weren't responding well to the cable subscription model of what some folks like to call the exploding prices. So you sign up for an introductory rate. It's really great for a year. And then you're hit with this big increase. And so that's something that Comcast is trying to move away from. And they are hoping that that will be successful. So when are we going to see results then? It sounds like obviously a longer term strategy, but when you've had subscribers falling for three quarters in a row, I guess you want investors want you to turn around this quarter.

22:56That's right. The market is typically focused on subscriber numbers from quarter to quarter. And so the fact that we've seen them falling for the last three quarters doesn't look great. Comcast says that folks are responding really well, even though it's still early days. People seem to really like the free mobile lines that Comcast is throwing in to kind of help anchor that bundle a bit more and in a more modern service. We also see that people are potentially responding to this price guarantee by upgrading their Internet service. They say, look, we know that we're not going to be paying huge price increases over the next five years.

23:32Maybe we go up in a speed tier or something like that. So Comcast says that it's still early days, but they are feeling encouraged. All right, Kelsey, thanks very much. Bloomberg's Kelsey Griffiths covers the telecoms for us. And now let's talk about one of the companies that may be eating Comcast lunch. YouTube is said to be looking at making a play to host the Oscars. According to sources, the Google-owned video site has inquired about buying the rights to the Academy Awards. For more, Bloomberg Managing Editor of Media and Entertainment, Lucas Shaw joins us now. And Lucas, obviously, YouTube isn't offering you an internet connection, but rather than paying for a cable package, a lot of people are likely to watch TV on YouTube instead.

24:15Yeah, I mean, look, YouTube is the single most popular video platform by any metric, right? You look, just viewership on television in the U.S., it's much bigger than Netflix and Amazon and all the different Disney channels. In fact, people spend more time watching YouTube on a TV than all of Disney's television networks and streaming services combined. That would be the big reason why an award show like the Oscars would at least consider what would be an incredibly controversial move within the Hollywood industry. So how likely is YouTube to get the Oscars? Because I imagine a lot of Oscars viewers do still have cable television packages or even watch just the networks with rabbit ears, if you get my drift.

24:59The average age of the Oscars is probably a little bit older. Now, some of that is because it's still something you watch on television. And some of it's certainly because it's an award show that I think means more to certain generations than the youngest generation that was raised on YouTube. As for the odds of YouTube getting it, it's hard to say at this point. So Disney, which has had the rights or ABC has had the rights for about five decades. They had an exclusive negotiating window that they let lapse. They had spent a bunch of money getting the Grammy Awards, which some people think means it's likely or at least possible that they will let the Oscars go, which would have been unthinkable previously.

25:34And so you now have about a half dozen different companies looking at it. Disney, Paramount, Netflix, Amazon, YouTube, and even Comcast, NBCUniversal, which you were just talking about. I would say YouTube, I have a hard time seeing YouTube being the most likely winner. I just don't see why the film academy would go with a company that doesn't really have anything to do with the traditional movie business. But if they're thinking about it just as an award show, that's one great way to maximize the audience. Well, and maybe a sign of things to come as well. Great reporting, Lucas. Really love reading your take on the media industry.