OpenAI's AI Test, AMD's Anthropic Deal & Apple's Roadmap

22:54so your team can spend their time on what actually compounds. It's time to get Brex AF. Learn more at brex.com slash AF. It's time now for Talking Tech. I'm Yahaira Anand. First up, Tencent shares in Hong Kong fell the most in over a year today, sparking a sell-off in other Chinese gaming stocks. Investors cited worries that the company's mobile gaming revenue could have declined in the June quarter. This says the global games industry is already under pressure. Plus, Samsung is in talks to join the funding round of Mistral AI. That's according to the Financial Times. The South Korean company is in discussions to invest hundreds of millions in the French AI startup at a valuation of about$22.8 billion.

23:42And here in New York, Uber and Lyft have won a temporary legal victory. a federal judge has paused the city's new law that would have made it harder for ride share companies to deactivate drivers. The judge saying the companies are likely to succeed in their constitutional challenge. Ed.

24:01Ed Ludlow:Yahaira, thank you. One other story we're watching. Super Micro surging 24 percent, offering signs that AI infrastructure demand remains strong. There's a strong backlog and a lot of numbers. Bloomberg's Dina Bass covers AI infrastructure, joins us now. Now, what is the Supermicro story? So, look, their backlog indicates that not only demand is strong, but that Supermicro is taking a good amount of it as they compete with other folks like Dell and HPE. I think, you know, given Supermicro has had a bunch of issues around investigations of its employees for whether they're sending things to China in ways that might violate rules.

24:37And there's been a persistent concern about, you know, is that going to scare off customers or something like that? And based on the numbers that they pre-announced yesterday, it doesn't seem like it.

24:47Ed Ludlow:Dina, today's big number, more than$30 billion. That's how much OpenAI is paying to spend on a build out of this massive new data center in Savannah, Georgia. A story you reported this morning, lots of readership here. What do we need to know? Where does this fit in with the OpenAI infrastructure plan? Look, and part of OpenAI's infrastructure plan is just getting more as quickly as they can. But, you know, there's two interesting things that we see in the way that they're announcing and doing this data center. One is that this, in this case, they have designed and are designing the data center and went out and secured the power contract themselves.

25:23This is, you know, a bit of a change from what we saw earlier on in their infrastructure deals and the earlier Stargate things, is where they're relying a little bit more on partners, you know, and then moving into compute that was already kind of developed for them. Here, they're doing that design work. And when I spoke to their head of compute, Sachin Kati, yesterday, and he said, look, like, you know, we've done a couple of these now. We know what we want. We have a specific design that works. And the other interesting thing he told me is that, you know, over time, they're hoping to have a design that they can standardize and then open source and share with other people.

25:57He mentioned kind of similar to the Open Compute project that Meta developed in 2011. He thinks it's better for open AI, better for the industry if there's some sort of standardization around what people need for these AI data centers. The other thing that we're seeing is they're...

26:14Ed Ludlow:Sorry, Dina. We're halfway through the show. We've got to go. But I would say it's a must read on Bloomberg on the terminal and.com today. Bloomberg's Dina Bass leading AI infrastructure coverage. Okay, Apple's planning new versions of every single Mac that it sells, including updates to its desktop computers and the laptops. Yes, another Bloomberg Mark Gurman special coming right up. It's halftime from San Francisco. This is Bloomberg Tech.

26:51Ed Ludlow:Welcome back to Bloomberg Tech. Treading water a little bit on the Nasdaq 100, symbolic of treading water ahead to Alphabet's earnings after the bell. I would say that since we've come on air, there's been a change in fortunes of semiconductors. We've seen a rebound on the socks in line with AMD that continued to gain. Having opened lower, but that$5 billion equity investment in Anthropic and a multi-year deal for 2 gigawatts of compute. Another big story breaking this morning, Apple readying a major overhaul to its Mac lineup. Beginning later this year, the company is going to be introducing new computers, including a refreshed low-end MacBook Pro, new iMacs, and a high-end MacBook with a touchscreen.

27:34Ed Ludlow:That is all according to sources. And Bloomberg's Consumer Tech and Apple managing editor Mark Gurman broke the story. I find this so interesting because like in the AI age, we've been through the cycle of the AI PC, who needs an AI PC. That Apple side of the story fascinates me. You have a lot of detail in the report this morning. What are the main highlights? There is so much coming from Apple over the next three months, over the next six months, nine months. The next two years are going to be a blockbuster period of new products. We've already detailed the iPad roadmap last week. Now we're talking about the Mac roadmap.

28:11There's about a dozen new Macs in development right now. You're going to see the first new iMacs in two years, new Mac Minis, new Mac Studios. There's a new MacBook Air and new MacBook Neo coming next year. But a lot of the focus is going to be on the high-end MacBooks, so things like the MacBook Pro. There are a few new MacBook Pros in development. There's the first M6 model, which is a major new chip, great for AI, coming out September, October time frame. And then between the end of this year and early next year, you're going to see probably the biggest overhaul to the MacBook Pro in that computer's basically 20-year history.

28:48For the first time, Apple is going to introduce a touchscreen to the Mac. It's going to also be OLED. It's going to have the Dynamic Island. It's going to be a seriously hot machine. I think it's going to be very popular. These first versions will use the M5 Pro and M5 Max chips, which are pretty good for AI. There will be a subsequent update a year after these first ones come out with M7 Pro and M7 Max chips, which are built entirely around artificial intelligence, on-device models, more advanced processing of both first-party and third-party AI applications. So if you're a computer user, a Mac user, or an Apple investor interested in their AI strategy, there's a ton to like here.

29:30Ed Ludlow:And read Mark's story out on the terminal and on Bloomberg.com this morning. There's a lot happening this morning in the world of consumer technology. Samsung has its big hardware event. Let's start on the smartphone side of what Samsung's announcing. Where is their focus? So three new phones. There's the new flip phone. There's the new Ultra phone, the Z Fold 8 Ultra. That's their high-end foldable phone. But I want to talk to you about the Z Fold 8, which is their new mid-tier foldable. Replaces the larger size they've had for a few years now. It's the one you're showing on screen right now.

30:05It's incredible. It's amazing. It's going to sell super well. It's the same exact form factor that Apple is going to be releasing this fall. The wide format is awesome for gaming. It's pretty good for multitasking. Where it really shines is e-book reading and watching video on YouTube and what have you. It's a little shorter than your typical phone, but wider. It's a really cool form factor. You have to get your hands on it to really understand it. I'm pretty pumped for the Apple version, but the Samsung one's going to do great too.

30:37Ed Ludlow:Okay, smart glasses. Samsung's actually had quite a lot to say about smart glasses. Where are they on the product side? And why are they worried about privacy when it comes to smart glasses? Yes, so they're launching their glasses in concert with Google and Warby Parker and Gentle Monster later this year. We're told these have about nine hours of battery life. And, you know, these are standard fare. All the smart glasses without displays that you're seeing from Meta, from Google, now from Samsung. You'll see them from Apple II next year. They're pretty much all the same product, cameras, audio technology.

31:11But Meta, you know, as fast as the category is growing in terms of sales and usage, is as fast as people are becoming concerned with the privacy of these products. Royal Caribbean has banned them from casinos and bathrooms and children play areas on its ships. There have been courthouses in Wisconsin, New York, and Pennsylvania that have banned these things. There's a lot of concern about the privacy implications. And, of course, that is because of the meta privacy baggage that they've had for years now. So Samsung, Meta with its own pair of glasses, Apple, of course, are really going to need to figure out the privacy story here to get people not only comfortable wearing them, but to get people around people who are wearing them to be somewhat comfortable.

31:55Ed Ludlow:so when i woke up this morning none of this news was out yet and actually the biggest story was what you had written up uh yesterday about um upgrade device lease programs and apple's relationship with klarna like a lot of people were reading about that we have time what do we need to know this is a blockbuster new initiative from apple it's called apple upgrade they're going to announce it next tuesday they're going to roll it out on their online store and in their physical retail stores. This is essentially a hardware subscription program or a leasing program. This is something Wall Street has wanted for a while.

32:29As these Apple products become more expensive, as Wall Street wants to look for ways to get people to upgrade more frequently to new Apple devices, a leasing program is exactly how Apple's able to do this. So you'll be able to lease an iPhone or Apple Watch over 24 months or an iPad or Mac over 36 months. You'll make monthly payments just like you're leasing a car. At the end of the lease, you can either give it back or you can buy it out with a fee. These are going to have less costly payments compared to financing and iPhone upgrade programs that Apple offers today. So this is going to replace those.

33:04And I think it's a gigantic move for Apple to try to lock consumers in long-term, to spur upgrades, and to get people to buy devices that maybe normally they wouldn't be able to afford. Now that you've seen price hikes on all their Macs and iPads, The iPhone is about to get a price hike. And of course, the foldable iPhone that we just talked about a couple of minutes ago, that's going to be a pretty penny as well coming in north of$2 ,000. So great timing for Apple here. They've been wanting to do this since 2022. They originally were going to do an in-house version that they were going to financially back in concert with Goldman Sachs.

33:39Now that the Goldman Sachs relationship has fallen apart, Apple deciding they don't want to do as many financial services in-house, they're partnering with one of the name brands here, which of course is Klarna. And you saw their stock go up about 11 % when we put our story out yesterday.

33:53Ed Ludlow:Apple device lease program, Bloomberg's reporting on the overhaul of the Mac lineup at the high end, Samsung smartphones, latest generation, Samsung smart glasses, all from Bloomberg's Mark German, who leads our consumer tech coverage. Thank you very much. AT &T reported its second quarter earnings with greater than expected mobile subscriber gains. And the company's valuation will ultimately correct itself as the wireless company positions itself to be indispensable in the AI era. That's what they're saying. AT &T CEO and Chairman John Stanky joined Bloomberg Surveillance earlier today. I think there's been a stratification of pricing for customers depending on what kind of services they want to buy.

34:35There's the segment of the market that needs high-performing, symmetrical gigabit services, very robust wireless plans. That's segment of the market is willing to pay for that, and they pay a premium as a result of that exceptional value that they get back. We've played very, very well in that space, given our asset base. But there's also a segment of the market that's more value-oriented. And I would say choices have come into the market because of good regulatory posture that have allowed investment that weren't there before. And those choices are putting more value-oriented products and services at more attractive price points, but the product and service maybe isn't as robust.

35:16And at AT &T, we've played really well up market, but not as well down on the value space. And we've been working hard to get our product portfolio so that it matches up across the entire continuum of the market. You saw that in the results this quarter because our account additions, new accounts to AT &T hit like a three-year high. And that's because we're doing a lot better job down market. And there's nothing wrong with having a more affordable product that's tuned to certain parts of the market. I don't consider that a price war. I consider that meeting market needs. As long as you're doing the things that you can do upmarket, which we've done very well.

35:53And I think when you see margins the way they are at AT &T, this is like a record for us. That's a good sign that we're getting that balance correct. Over the next five to ten years, John, how do you see the breakdown of the mix of broadband and fiber on one hand, the wireless or the more budget sensitive areas and then satellite from the likes that you're seeing from Starlink? Look, my point of view is they have a fantastic product. There's great innovation that's moving in that space. And it fits part of the market that hasn't been well served, especially in less densely populated areas. And the interesting part about that is our investment has largely been in urban and densely populated suburban.

36:39We haven't pushed real hard in the rural and less densely populated areas. that tends to be more the stronghold of cable companies. I think they'll do pretty well in that space, bringing an alternative and competition in there. I think it's going to be very hard to come into the more densely urban populated areas to compete with that bundle that I just talked about earlier of fiber that is the best product in the market, best performing. It's the lowest marginal cost. Our great wireless density that far outstrips what you can do from direct-to-device and satellite, years of investment in the hard-to-reach places like stadiums.

37:17Everybody who went to a World Cup game knows how important being able to connect in a stadium is to experience what goes on socially and actually in the arena so that you can see a few replays that they're not showing there. We've been doing that for a long, long time, and it's going to be very, very hard to catch up on that infrastructure, and I think we're going to do really, really well competing in metro and suburban areas, which is where our investments have been.

37:43Ed Ludlow:That was AT &T CEO John Stanky. Coming up, there's a glimmer of good news for young workers in AI-exposed jobs after months of employment decline. Neela Richardson of ADP is going to tell us why. That's next. This is Bloomberg Tech.

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40:12Ed Ludlow:Shop GrandAppliance.com. After five straight months of declines in early career employment, There's some encouraging news for younger workers in AI-exposed jobs. New data from the Canaries dashboard shows employment for that group edged slightly higher in June, offering one of the first signs the trend may be stabilizing. Joining us for more is one of the researchers involved in the project, Nila Richardson, chief economist at ADP and a former senior economist here at Bloomberg. Really interesting data that we have been tracking for time. It's a slight change of trajectory in June, but it signals something.

40:54Ed Ludlow:What is it? Well, Ed, thank you. Thanks for having us on to talk about this exciting new report. This is a collaboration with Stanford Digital Economy Lab. And what it's showing is that early career in AI exposed fields is affected negatively in terms of employment when it comes to AI. And we've tracked that since 2022 in the AI rollout. But what's unique in June is that we're finally seeing, as you noted, that stabilization. And what's important to remember about this Canaries dashboard, it's more than just an employment index. It's a transformation index. It's showing in real time how actual AI occupations and high exposed AI careers are being affected by these new tools entering the workplace.

41:45And so that's why it's so critically important to see an uptick in June, because if we can move AI impact from automation of skills to augmentation of skills, especially with early career, then we have something. We have that secret sauce that the labor market has been waiting for.

42:05Ed Ludlow:Taken in aggregate, right, the labor market data for June shows the market cooling. but underneath something is happening. I think the way you'd put it is that it's quietly reshaping underneath that top line. Is that very specific to AI as the catalyst for that? It is. There are two drivers, in my opinion, that are affecting the labor market. It's AI and it's aging. The demographics of this change are super important. Back where I'm from, we say still waters run deep. And we see a lot of still water in the macro data. This is a low hire, low fire environment. But the depths is what we can see with this new Canaries dashboard.

42:51It's hard as a young entrant to move into a labor market that's not very dynamic. And so if you can see AI start to pull in that young labor in a different way and augment their skill base and level them up, then you have a different kind of productivity than we've ever seen in the past. And so right now, the drivers of the job market are pretty AI agnostic. It's healthcare. Those are demographically driven because of this aging workforce. But that doesn't have to stay that way. In fact, some of the most exciting innovations about AI are in healthcare. So if we can match the labor with the tech, the tech that you are so super focused on, Ed, then we have the ingredients for high-scale growth.

43:38Ed Ludlow:Right. Well, that's why I want to go back to younger workers, because that is representative of the Bloomberg Tech audience and industry as well, right? You are focused on ages 22 to 25, 26 to 30. Let's go back over those trends quickly. Yeah, since the rollout of chat GPT in 2022, in the fall of 22, we saw a noticeable decline in employment for these young workers. It's deepened even for that second stage of early career, the 26 to 31. And it was present all along for the 22 to 25. And if you juxtapose that with older workers, it looked like AI actually gave employment a boost in those AI exposed fields.

44:20Now, this is what we're talking about, AI-exposed occupations, software developers, customer service reps. That's where we're seeing the action in terms of AI impact and the negative employment trends up until recently, this June data. But if you're looking outside of AI-exposed occupations, you're not seeing the same story at all. You're seeing employment growth in these really high-demand, non-AI-exposed fields tied more to demographic change.

44:50Ed Ludlow:Nila Richardson, Chief Economist at ADP, thank you very much. Now, coming up, IBM, ServiceNow and Alphabet all report after the bell. What Wall Street is going to be watching when the numbers hit? That's next. This is Bloomberg Tech.

45:13Ed Ludlow:IBM and ServiceNow are set to report quarterly earnings today after the market close. The numbers come at a crucial time, particularly for software companies that are facing a crisis as clients shift away from traditional software in favor of AI products. Joining us, Bloomberg's, Brody Ford. So IBM pre-released, right? And that was a story where not AI is not important, right? The mainframe business in particular. They now do full earnings this evening. What do we need to know? The big question for IBM is whether the funding went from mainframes to other kinds of AI hardware, as they said, or whether this has really spread more widely.

45:50Within IBM, you mean. Exactly, right. Is their software business impacted? Are folks buying a variety of IBM products no longer because they're too busy trying to buy a bunch of memory chips before the prices go up? That's kind of the big question for IBM tonight. What's the story for service now? Story for ServiceNow is the same as a lot of application companies, which is, is the AI monetization story real? Are the growth rates going to hold up? Is the AI growth coming at the expense of their traditional businesses, or is it truly additive? I mean, it's been a similar narrative for like three years now on the application companies.

46:26Ed Ludlow:That's where I find it. You just dominate reporting of this space. like there is a common thread here across all these different software names or application layer names or it's more idiosyncratic? It remains pretty consistent across the application layer because this is the one that is getting the most kind of competitive pressure. It's not clear that they've been able to directly monetize AI in the way that a infrastructure layer name like a Microsoft or a Databricks has. Bloomberg's Brody Ford will be very busy after the closing bell. So will some other people, Another tech heavyweight reports after the bell today.

47:02Ed Ludlow:Alphabet, after ramping up AI spending to record levels, investors want to see whether those investments are driving growth across search, cloud, and AI, specifically Gemini. Joining us now, Bloomberg's Kurt Wagner, the editor who leads our coverage of big tech for us at Bloomberg. So Wall Street's just like zeroed in on CapEx spending. Are they worried about it? I think a little bit. that's evidenced not just by sort of the fact that it's such a focus for Google, but it's been a focus for Meta, as you know, Microsoft and others that haven't yet reported. So I think this is going to be an important moment, not just for Google, but for the industry at whole to sort of show that these hundreds of billions of dollars these companies have committed to AI and infrastructure this year are actually going to have a return.

47:50Ed Ludlow:And so I think Google Cloud in particular is going to be a first real test of that. Right. So a lot of people in the Bloomberg Tech audience and around the world would say, OK, Google, Google search. But really, when it comes to growth that's like AI linked, Google Cloud's where we look. I think that's right. And we saw a good report from Google last quarter. The revenue from Google Cloud was more than 20 billion for the first time, and that was better than expected. I think the numbers now, the estimate is somewhere around 22 billion, just north of that. One other thing to keep in mind, Ed, is this backlog of potential revenue for them.

48:25Ed Ludlow:I think last quarter they said they had$460 billion of cloud backlog. So the faster they can get data centers and compute online, obviously the faster that goes from just a paper commitment to actual revenue for the company. So going to be focused a lot on Google Cloud revenue, but also what does the backlog look like and how quickly are they turning those commitments into real dollars? You know what's really exciting? It's just day one. Google is just the first to report. And then there's loads more. But often how it works is like Google signals something for the other hyperscalers. Right. I think that that's why we try and take a bigger picture this evening.

49:03Ed Ludlow:That's right. And I love that you and I can get excited about day one of big tech earnings. This is great for that. But I think next week we have Meta, we have Amazon, Microsoft all reporting. And a lot of the narratives and a lot of the stories are going to be similar, even with Meta, which hasn't historically had a cloud offering. And as you've seen and as we've talked about, they're now looking like they're going to get into the mix on that too, right? So if Google is starting to show promising signs with its cloud business with that demand, if it's still high, it shows obviously a strong appetite for AI across the board.

49:34Ed Ludlow:You can probably assume that might be reflected by some of those other companies as well. Kurt Wagner, who leads the team covering the biggest technology companies in America, thank you very much. That does it for the edition of Bloomberg Tech. So we talked about the calendar. This is what it looks like. Alphabet, Tesla, ServiceNow IBM, after the market closed today, Wednesday, Intel Thursday, then many more next week. The open AI hugging face story is so important. Recap on the podcast. That's how we started the show. You know where to find it online. Apple, Spotify, iHeart, and all the Bloomberg platforms.

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